INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2

Attached files

file	filename
8-K - 8-K - INDEPENDENT BANK CORP /MI/	brhc10013763_8k.htm
EX-99.1 - EXHIBIT 99.1 - INDEPENDENT BANK CORP /MI/	brhc10013763_ex99-1.htm
EX-99.3 - EXHIBIT 99.3 - INDEPENDENT BANK CORP /MI/	brhc10013763_ex99-3.htm

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Supplemental Data

Non-performing assets ⁽¹⁾

	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
	(Dollars in thousands)
Non-accrual loans	$	12,938		$	17,454		$	10,178		$	7,124		$	7,798
Loans 90 days or more past due and still accruing interest		5			-			-			-			-
Subtotal		12,943			17,454			10,178			7,124			7,798
Less: Government guaranteed loans		604			676			646			475			436
Total non-performing loans		12,339			16,778			9,532			6,649			7,362
Other real estate and repossessed assets		1,569			1,494			1,865			1,789			1,990
Total non-performing assets	$	13,908		$	18,272		$	11,397		$	8,438		$	9,352

As a percent of Portfolio Loans
Non-performing loans		0.43	%		0.62	%		0.35	%		0.24	%		0.27	%
Allowance for loan losses		1.20			1.20			0.96			0.96			0.96
Non-performing assets to total assets		0.34			0.50			0.32			0.24			0.27
Allowance for loan losses as a percent of non-performing loans		279.60			193.68			274.32			393.26			351.85

⁽¹⁾	Excludes loans classified as “trouble debt restructured” that are not past due.

Troubled debt restructurings (“TDR”)

	June 30, 2020
	Commercial		Retail ⁽¹⁾			Total
	(In thousands)
Performing TDR’s	$	13,973	$	38,554		$	52,527
Non-performing TDR’s ⁽²⁾		1,234		2,022	⁽³⁾		3,256
Total	$	15,207	$	40,576		$	55,783

	December 31, 2019
	Commercial		Retail ⁽¹⁾			Total
	(In thousands)
Performing TDR’s	$	7,974	$	39,601		$	47,575
Non-performing TDR’s ⁽²⁾		540		2,607	⁽³⁾		3,147
Total	$	8,514	$	42,208		$	50,722

(1)	Retail loans include mortgage and installment loan segments.

(2)	Included in non-performing assets table above.

(3)	Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis.

Allowance for loan losses

	Six months ended June 30,
	2020					2019
				Unfunded					Unfunded
	Loans			Commitments		Loans			Commitments
	(Dollars in thousands)
Balance at beginning of period	$	26,148		$	1,542	$	24,888		$	1,296
Additions (deductions)
Provision for loan losses		11,909			-		1,316			-
Recoveries credited to allowance		1,754			-		1,457			-
Loans charged against the allowance		(5,311	)		-		(1,758	)		-
Additions included in non-interest expense		-			230		-			187
Balance at end of period	$	34,500		$	1,772	$	25,903		$	1,483

Net loans charged against the allowance to average Portfolio Loans		0.26	%				0.02	%

Capitalization

	June 30, 2020			December 31, 2019
	(In thousands)
Subordinated debt	$	39,283		$	-
Subordinated debentures		39,490			39,456
Amount not qualifying as regulatory capital		(507	)		(1,224	)
Amount qualifying as regulatory capital		78,266			38,232
Shareholders’ equity
Common stock		338,989			352,344
Retained earnings		12,338			1,611
Accumulated other comprehensive income (loss)		3,796			(3,786	)
Total shareholders’ equity		355,123			350,169
Total capitalization	$	433,389		$	388,401

Non-Interest Income

	Three months ended									Six months ended
	June 30, 2020			March 31, 2020			June 30, 2019			June 30,
	June 30, 2020			March 31, 2020			June 30, 2019			2020			2019
	(In thousands)
Service charges on deposit accounts	$	1,623		$	2,591		$	2,800		$	4,214		$	5,440
Interchange income		2,526			2,457			2,604		$	4,983		$	4,959
Net gains on assets
Mortgage loans		17,642			8,840			4,302			26,482			7,913
Securities		-			253			0			253			304
Mortgage loan servicing, net		(3,022	)		(5,300	)		(1,907	)		(8,322	)		(3,122	)
Investment and insurance commissions		435			513			450			948			747
Bank owned life insurance		265			270			270			535			512
Other		898			1,380			1,386			2,278			3,111
Total non-interest income	$	20,367		$	11,004		$	9,905		$	31,371		$	19,864

Capitalized Mortgage Loan Servicing Rights

	Three months ended June 30,						Six months ended June 30,
	2020			2019			2020			2019
	(In thousands)
Balance at beginning of period	$	14,829		$	19,909		$	19,171		$	21,400
Servicing rights acquired		-			-			-		$	-
Originated servicing rights capitalized		3,611			1,407			6,243			2,607
Change in fair value		(4,667	)		(3,422	)		(11,641	)		(6,113	)
Balance at end of period	$	13,773		$	17,894		$	13,773		$	17,894

Mortgage Loan Activity

	Three months ended									Six months ended
	June 30, 2020			March 31, 2020			June 30, 2019			June 30,
	June 30, 2020			March 31, 2020			June 30, 2019			2020			2019
	(Dollars in thousands)
Mortgage loans originated	$	470,626		$	311,078		$	241,402		$	781,704		$	379,160
Mortgage loans sold		379,048			262,260			131,636			641,308			286,161
Net gains on mortgage loans		17,642			8,840			4,302			26,482			7,913
Net gains as a percent of mortgage loans sold (“Loan Sales Margin”)		4.65	%		3.37	%		3.27	%		4.13	%		2.77	%
Fair value adjustments included in the Loan Sales Margin		1.14			0.78			0.74			0.99			0.66

Non-Interest Expense

	Three months ended								Six months ended
	June 30, 2020			March 31, 2020		June 30, 2019			June 30,
	June 30, 2020			March 31, 2020		June 30, 2019			2020		2019
	(In thousands)
Compensation	$	9,668		$	10,703	$	10,185		$	20,371	$	20,666
Performance-based compensation		3,809			2,121		2,296			5,930		4,516
Payroll taxes and employee benefits		2,802			3,685		3,450			6,487		7,100
Compensation and employee benefits		16,279			16,509		15,931			32,788		32,282
Occupancy, net		2,159			2,460		2,131			4,619		4,636
Data processing		1,590			2,355		2,171			3,945		4,315
Furniture, fixtures and equipment		1,090			1,036		1,006			2,126		2,035
Communications		800			803		717			1,603		1,486
Interchange expense		726			859		753			1,585		1,441
Loan and collection		756			805		628			1,561		1,262
Advertising		364			683		627			1,047		1,299
Legal and professional fees		468			393		371			861		740
FDIC deposit insurance		430			370		342			800		710
Amortization of intangible assets		255			255		273			510		545
Branch closure costs		417			-		-			417		-
Conversion related expenses		346			56		-			402		-
Supplies		203			184		153			387		311
Costs related to unfunded lending commitments		111			119		27			230		187
Credit card and bank service fees		94			99		97			193		200
Provision for loss reimbursement on sold loans		77			37		35			114		146
Net (gains) losses on other real estate and repossessed assets		(9	)		109		(198	)		100		(79	)
Other		1,190			1,587		1,528			2,777		3,066
Total non-interest expense	$	27,346		$	28,719	$	26,592		$	56,065	$	54,582

Average Balances and Tax Equivalent Rates

	Three Months Ended June 30,
	2020							2019
	Average Balance		Interest		Rate ⁽²⁾			Average Balance		Interest		Rate ⁽²⁾
	(Dollars in thousands)
Assets
Taxable loans	$	2,906,843	$	29,793		4.11	%	$	2,692,168	$	33,762		5.02	%
Tax-exempt loans ⁽¹⁾		7,014		88		5.05			7,480		94		5.04
Taxable securities		535,345		2,847		2.13			392,075		3,034		3.10
Tax-exempt securities⁽¹⁾		124,781		998		3.20			49,448		406		3.28
Interest bearing cash		67,204		18		0.11			31,734		115		1.45
Other investments		18,427		233		5.09			18,359		264		5.77
Interest Earning Assets		3,659,614		33,977		3.72			3,191,264		37,675		4.73
Cash and due from banks		45,714							33,252
Other assets, net		163,080							163,882
Total Assets	$	3,868,408						$	3,388,398

Liabilities
Savings and interest- bearing checking	$	1,754,503		505		0.12		$	1,413,073		2,647		0.75
Time deposits		494,411		1,883		1.53			664,909		3,374		2.04
Other borrowings		153,447		904		2.37			77,678		796		4.11
Interest Bearing Liabilities		2,402,361		3,292		0.55			2,155,660		6,817		1.27
Non-interest bearing deposits		1,054,388							851,903
Other liabilities		70,053							42,581
Shareholders’ equity		341,606							338,254
Total liabilities and shareholders’ equity	$	3,868,408						$	3,388,398

Net Interest Income			$	30,685						$	30,858

Net Interest Income as a Percent of Average Interest Earning Assets						3.36	%						3.87	%

(1)	Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.

(2)	Annualized

Average Balances and Tax Equivalent Rates

	Six Months Ended June 30,
	2020							2019
	Average Balance		Interest		Rate⁽²⁾			Average Balance		Interest		Rate⁽²⁾
	(Dollars in thousands)
Assets
Taxable loans	$	2,832,876	$	61,481		4.36	%	$	2,652,893	$	66,362		5.03	%
Tax-exempt loans ⁽¹⁾		7,438		185		5.00			8,081		197		4.92
Taxable securities		501,720		5,906		2.35			390,966		6,040		3.09
Tax-exempt securities⁽¹⁾		92,040		1,488		3.23			53,148		875		3.29
Interest bearing cash		52,814		146		0.56			48,381		426		1.78
Other investments		18,393		471		5.15			18,359		528		5.80
Interest Earning Assets		3,505,281		69,677		3.99			3,171,828		74,428		4.72
Cash and due from banks		47,663							33,744
Other assets, net		164,167							167,270
Total Assets	$	3,717,111						$	3,372,842

Liabilities
Savings and interest- bearing checking	$	1,685,046		2,435		0.29		$	1,387,208		4,969		0.72
Time deposits		544,642		4,653		1.72			676,606		6,733		2.01
Other borrowings		126,491		1,592		2.53			71,901		1,508		4.23
Interest Bearing Liabilities		2,356,179		8,680		0.74			2,135,715		13,210		1.25
Non-interest bearing deposits		955,114							855,732
Other liabilities		60,540							41,481
Shareholders’ equity		345,278							339,914
Total liabilities and shareholders’ equity	$	3,717,111						$	3,372,842

Net Interest Income			$	60,997						$	61,218

Net Interest Income as a Percent of Average Interest Earning Assets						3.49	%						3.88	%

(1)	Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.

(2)	Annualized

Commercial Loan Portfolio Analysis as of June 30, 2020

	Total Commercial Loans
			Watch Credits						Percent of Loan
Loan Category	All Loans		Performing		Non-accrual		Total		Category in Watch Credit
	(Dollars in thousands)
Land	$	11,168	$	183	$	673	$	856		7.7	%
Land Development		12,448		38		-		38		0.3
Construction		109,725		36		-		36		0.0
Income Producing		401,619		15,157		-		15,157		3.8
Owner Occupied		297,295		22,941		3,702		26,643		9.0
Total Commercial Real Estate Loans	$	832,255	$	38,355		4,375	$	42,730		5.1

Other Commercial Loans	$	530,701	$	20,646		511	$	21,157		4.0
Total non-performing commercial loans					$	4,886

Commercial Loan Portfolio Analysis as of December 31, 2019

	Total Commercial Loans
			Watch Credits						Percent of Loan
Loan Category	All Loans		Performing		Non-accrual		Total		Category in Watch Credit
	(Dollars in thousands)
Land	$	11,235	$	275	$	735	$	1,010		9.0	%
Land Development		12,899		-		-		-		0.0
Construction		97,463		-		-		-		0.0
Income Producing		409,897		15,347		-		15,347		3.7
Owner Occupied		323,694		35,485		295		35,780		11.1
Total Commercial Real Estate Loans	$	855,188	$	51,107		1,030	$	52,137		6.1

Other Commercial Loans	$	311,507	$	20,580		347	$	20,927		6.7
Total non-performing commercial loans					$	1,377

INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - July 28, 2020

Attached files

INDEPENDENT BANK CORP /MI/ Reports