ex99_2.htm

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Supplemental Data

Non-performing assets(1)
	December 31,
	2013			2012
	(Dollars in thousands)
Non-accrual loans	$	17,905		$	32,929
Loans 90 days or more past due and still accruing interest		-			7
Total non-performing loans		17,905			32,936
Other real estate and repossessed assets		18,282			26,133
Total non-performing assets	$	36,187		$	59,069
As a percent of Portfolio Loans
Non-performing loans		1.30	%		2.32	%
Allowance for loan losses		2.35			3.12
Non-performing assets to total assets		1.64			2.92
Allowance for loan losses as a percent of non-performing loans		180.54			134.43

(1)	Excludes loans classified as “troubled debt restructured” that are not past due and vehicle service contract counterparty receivables, net.

Troubled debt restructurings (“TDR”)
	December 31, 2013
	Commercial		Retail			Total
	(In thousands)
Performing TDR’s	$	35,134	$	79,753		$	114,887
Non-performing TDR’s (1)		4,347		4,988	(2)		9,335
Total	$	39,481	$	84,741		$	124,222

	December 31, 2012
	Commercial		Retail			Total
	(In thousands)
Performing TDR’s	$	40,753	$	85,977		$	126,730
Non-performing TDR’s (1)		7,756		9,177	(2)		16,933
Total	$	48,509	$	95,154		$	143,663

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

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

Allowance for loan losses	Twelve months ended
	December 31,
	2013						2012
				Unfunded						Unfunded
	Loans			Commitments			Loans			Commitments
	(Dollars in thousands)
Balance at beginning of period	$	44,275		$	598		$	58,884		$	1,286
Additions (deduction)
Provision for loan losses		(3,988	)		-			6,887			-
Recoveries credited to allowance		8,270			-			6,522			-
Loans charged against the allowance		(16,232	)		-			(27,408	)		-
Reclassification to loans held for sale		-						(610	)
Deductions included in non-interest expense		-			(90	)		-			(688	)
Balance at end of period	$	32,325		$	508		$	44,275		$	598

Net loans charged against the allowance to average Portfolio Loans		0.58	%					1.39	%

Alternative Sources of Funds

	December 31,
	2013						2012
			Average						Average
	Amount		Maturity	Rate			Amount		Maturity	Rate
	(Dollars in thousands)
Brokered CDs	$	13,469	0.3 years		1.33	%	$	14,591	0.6 years		1.70	%
Fixed-rate FHLB advances		17,181	3.5 years		6.38			17,622	4.5 years		6.38
Total	$	30,650	2.1 years		4.16	%	$	32,213	2.7 years		4.26	%

Capitalization
	December 31,
	2013			2012
	(In thousands)
Subordinated debentures	$	40,723		$	50,175
Amount not qualifying as regulatory capital		(1,223	)		(1,507	)
Amount qualifying as regulatory capital		39,500			48,668
Shareholders’ equity
Convertible preferred stock		-			84,204
Common stock		351,173			251,237
Accumulated deficit		(110,347	)		(192,408	)
Accumulated other comprehensive loss		(9,245	)		(8,058	)
Total shareholders’ equity		231,581			134,975
Total capitalization	$	271,081		$	183,643

Non-Interest Income
	Three months ended							Twelve months ended
	December 31,		September 30,		December 31,			December 31,
	2013		2013		2012			2013			2012
	(In thousands)
Service charges on deposit accounts	$	3,473	$	3,614	$	4,395		$	14,076		$	17,887
Interchange income		1,820		1,852		2,135			7,362			9,188
Net gains (losses) on assets
Mortgage loans		1,607		1,570		5,282			10,022			17,323
Securities		190		14		72			395			1,226
Other than temporary impairment loss on securities
Total impairment loss		-		-		(7	)		(26	)		(339	)
Loss recognized in other comprehensive income		-		-		-			-			-
Net impairment loss recognized in earnings		-		-		(7	)		(26	)		(339	)
Mortgage loan servicing		1,192		338		882			3,806			166
Investment and insurance commissions		429		447		560			1,709			2,146
Bank owned life insurance		335		353		401			1,363			1,622
Title insurance fees		421		409		484			1,682			1,963
Increase in fair value of U.S. Treasury warrant		-		-		(74	)		(1,025	)		(285	)
Net gain on branch sale		-		-		5,402			-			5,402
Other		1,446		1,240		1,865			5,465			7,266
Total non-interest income	$	10,913	$	9,837	$	21,397		$	44,829		$	63,565

Capitalized Mortgage Loan Servicing Rights
	Three months ended December 31,						Twelve months ended December 31,
	2013			2012			2013			2012
	(In thousands)
Balance at beginning of period	$	13,051		$	10,205		$	11,013		$	11,229
Originated servicing rights capitalized		549			1,058			3,210			4,006
Amortization		(634	)		(1,328	)		(3,745	)		(4,679	)
Change in valuation allowance		744			1,078			3,232			457
Balance at end of period	$	13,710		$	11,013		$	13,710		$	11,013

Valuation allowance at end of period	$	2,855		$	6,087		$	2,855		$	6,087

Mortgage Loan Activity

	Three months ended									Twelve months ended
	December 31,			September 30,			December 31,			December 31,
	2013			2013			2012			2013			2012
	(Dollars in thousands)
Mortgage loans originated	$	72,317		$	97,391		$	153,821		$	419,494		$	538,717
Mortgage loans sold		66,917			96,989			143,138			407,235			510,488
Mortgage loans sold with servicing rights released		10,849			16,017			23,459			57,099			83,296
Net gains on the sale of mortgage loans		1,607			1,570			5,282			10,022			17,323
Net gains as a percent of mortgage loans sold (“Loan Sales Margin”)		2.40	%		1.62	%		3.69	%		2.46	%		3.39	%
Fair value adjustments included in the Loan Sales Margin		(0.38	)		(0.89	)		(0.15	)		(0.55	)		0.28

Non-Interest Expense
	Three months ended									Twelve months ended
	December 31,			September 30,			December 31,			December 31,
	2013			2013			2012			2013			2012
	(In thousands)
Compensation	$	8,435		$	8,529		$	9,804		$	33,515		$	39,002
Performance-based compensation		1,821			2,104			2,140			6,507			5,672
Payroll taxes and employee benefits		2,055			1,958			2,441			7,902			9,309
Compensation and employee benefits		12,311			12,591			14,385			47,924			53,983
Occupancy, net		2,257			2,017			2,416			8,845			10,104
Data processing		1,971			2,090			2,049			8,019			8,009
Loan and collection		1,374			1,584			1,836			6,886			9,965
Vehicle service contract counterparty contingencies		1,434			149			551			4,837			1,629
Furniture, fixtures and equipment		1,122			1,051			1,145			4,293			4,635
Communications		714			695			886			2,919			3,677
Legal and professional fees		616			487			1,058			2,459			4,175
FDIC deposit insurance		409			685			817			2,435			3,306
Advertising		552			652			652			2,433			2,494
Provision for loss reimbursement on sold loans		(284	)		1,417			361			2,152			1,112
Interchange expense		407			410			478			1,645			1,799
Credit card and bank service fees		288			310			383			1,263			2,091
Net losses on other real estate and repossessed assets		146			119			943			1,237			2,854
Supplies		257			277			248			1,028			1,281
Amortization of intangible assets		203			203			249			812			1,065
Write-down of property and equipment held for sale		-			-			-			-			860
Recoveries related to unfunded lending commitments		(33	)		(86	)		(91	)		(90	)		(688	)
Other		1,225			1,283			1,541			5,021			4,384
Total non-interest expense	$	24,969		$	25,934		$	29,907		$	104,118		$	116,735

Average Balances and Tax Equivalent Rates
	Three Months Ended
	December 31,
	2013							2012
	Average							Average
	Balance		Interest		Rate(3)			Balance		Interest		Rate(3)
Assets (1)	(Dollars in thousands)
Taxable loans	$	1,386,716	$	19,515		5.60	%	$	1,503,104	$	22,285		5.91	%
Tax-exempt loans (2)		5,084		82		6.40			6,432		104		6.43
Taxable securities		398,843		1,287		1.28			201,790		688		1.36
Tax-exempt securities (2)		41,483		516		4.93			24,766		373		5.99
Cash – interest bearing		107,258		87		0.32			345,904		220		0.25
Other investments		22,854		244		4.24			20,696		210		4.04
Interest Earning Assets		1,962,238		21,731		4.40			2,102,692		23,880		4.53
Cash and due from banks		44,388							51,863
Other assets, net		185,766							150,592
Total Assets	$	2,192,392						$	2,305,147

Liabilities
Savings and interest-bearing checking	$	916,736		267		0.12		$	1,030,245		378		0.15
Time deposits		438,418		1,076		0.97			514,696		1,583		1.22
Other borrowings		58,989		831		5.59			67,850		879		5.15
Interest Bearing Liabilities		1,414,143		2,174		0.61			1,612,791		2,840		0.70
Non-interest bearing deposits		512,234							521,874
Other liabilities		35,894							43,363
Shareholders’ equity		230,121							127,119
Total liabilities and shareholders’ equity	$	2,192,392						$	2,305,147

Net Interest Income			$	19,557						$	21,040

Net Interest Income as a Percent of Average Interest Earning Assets						3.96	%						3.99	%

(1)	All domestic.

(2)	Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 35%

(3)	Annualized.

Average Balances and Tax Equivalent Rates
	Twelve Months Ended
	December 31,
	2013							2012
	Average							Average
	Balance		Interest		Rate			Balance		Interest		Rate
Assets (1)	(Dollars in thousands)
Taxable loans	$	1,408,305	$	80,434		5.71	%	$	1,543,592	$	93,494		6.06	%
Tax-exempt loans (2)		5,491		354		6.45			6,864		440		6.41
Taxable securities		305,468		4,059		1.33			216,355		2,934		1.36
Tax-exempt securities (2)		32,051		1,680		5.24			26,111		1,593		6.10
Cash – interest bearing		139,082		396		0.28			337,311		858		0.25
Other investments		21,673		901		4.16			20,645		782		3.79
Interest Earning Assets		1,912,070		87,824		4.59			2,150,878		100,101		4.65
Cash and due from banks		44,745							53,926
Other assets, net		164,281							159,925
Total Assets	$	2,121,096						$	2,364,729

Liabilities
Savings and interest-bearing checking	$	908,740		1,131		0.12		$	1,060,882		1,830		0.17
Time deposits		423,291		4,575		1.08			552,903		7,083		1.28
Other borrowings		65,517		3,456		5.27			72,240		4,230		5.86
Interest Bearing Liabilities		1,397,548		9,162		0.66			1,686,025		13,143		0.78
Non-interest bearing deposits		500,673							523,926
Other liabilities		38,462							40,719
Shareholders’ equity		184,413							114,059
Total liabilities and shareholders’ equity	$	2,121,096						$	2,364,729

Net Interest Income			$	78,662						$	86,958

Net Interest Income as a Percent of Average Interest Earning Assets						4.11	%						4.04	%

Commercial Loan Portfolio Analysis as of December 31, 2013
			Total Commercial Loans
			Watch Credits						Percent of Loan
Loan Category	All Loans		Performing		Non- performing		Total		Category in Watch Credit
	(Dollars in thousands)
Land	$	11,507	$	1,472	$	742	$	2,214		19.2	%
Land Development		12,604		3,216		295		3,511		27.9
Construction		7,643		441		-		441		5.8
Income Producing		251,006		21,702		1,898		23,600		9.4
Owner Occupied		206,156		20,358		1,849		22,207		10.8
Total Commercial Real Estate Loans (1)	$	488,916	$	47,189		4,784	$	51,973		10.6

Other Commercial Loans(1)	$	146,270	$	12,315		585	$	12,900		8.8
Total non-performing commercial loans					$	5,369