EX-99.2 3 ex99_2.htm EXHIBIT 99.2

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data

Non-performing assets (1)
       
   
September 30,
   
December 31,
 
   
2014
   
2013
 
   
(Dollars in thousands)
 
Non-accrual loans
 
$
17,543
   
$
17,905
 
Loans 90 days or more past due and still accruing interest
   
-
     
-
 
Total non-performing loans
   
17,543
     
17,905
 
Other real estate and repossessed assets
   
9,376
     
18,282
 
Total non-performing assets
 
$
26,919
   
$
36,187
 
                 
As a percent of Portfolio Loans
               
Non-performing loans
   
1.25
%
   
1.30
%
Allowance for loan losses
   
1.97
     
2.35
 
Non-performing assets to total assets
   
1.20
     
1.64
 
Allowance for loan losses as a percent of non-performing loans
   
156.80
     
180.54
 

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

Troubled debt restructurings ("TDR")

   
September 30, 2014
 
   
Commercial
   
Retail
   
Total
 
   
(In thousands)
 
Performing TDR's
 
$
30,768
   
$
75,680
   
$
106,448
 
Non-performing TDR's(1)
   
3,263
     
5,515
(2) 
   
8,778
 
Total
 
$
34,031
   
$
81,195
   
$
115,226
 
                         
   
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
 

(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.

1

Allowance for loan losses
 
   
Nine months ended
 
   
September 30,
 
   
2014
   
2013
 
       
Unfunded
       
Unfunded
 
   
Loans
   
Commitments
   
Loans
   
Commitments
 
   
(Dollars in thousands)
 
Balance at beginning of period
 
$
32,325
   
$
508
   
$
44,275
   
$
598
 
Additions (deductions)
                               
Provision for loan losses
   
(2,049
)
   
-
     
(3,153
)
   
-
 
Recoveries credited to allowance
   
5,438
     
-
     
6,893
     
-
 
Loans charged against the allowance
   
(8,206
)
   
-
     
(13,578
)
   
-
 
Additions (deductions) included in non-interest expense
   
-
     
27
     
-
     
(57
)
Balance at end of period
 
$
27,508
   
$
535
   
$
34,437
   
$
541
 
                                 
Net loans charged against the allowance to average Portfolio Loans (annualized)
   
0.27
%
           
0.65
%
       
 
Capitalization
       
   
September 30,
   
December 31,
 
   
2014
   
2013
 
   
(In thousands)
 
Subordinated debentures
 
$
40,723
   
$
40,723
 
Amount not qualifying as regulatory capital
   
(1,223
)
   
(1,223
)
Amount qualifying as regulatory capital
   
39,500
     
39,500
 
Shareholders’ equity
               
Common stock
   
352,129
     
351,173
 
Accumulated deficit
   
(98,979
)
   
(110,347
)
Accumulated other comprehensive loss
   
(6,083
)
   
(9,245
)
Total shareholders’ equity
   
247,067
     
231,581
 
Total capitalization
 
$
286,567
   
$
271,081
 

2

Non-Interest Income
                   
   
Three months ended
   
Nine months ended
 
   
September 30,
   
June 30,
   
September 30,
   
September 30,
 
   
2014
   
2014
   
2013
   
2014
   
2013
 
   
(In thousands)
 
Service charges on deposit accounts
 
$
3,579
   
$
3,532
   
$
3,614
   
$
10,166
   
$
10,603
 
Interchange income
   
1,984
     
2,067
     
1,852
     
5,992
     
5,542
 
Net gains (losses) on assets
                                       
Mortgage loans
   
1,490
     
1,505
     
1,570
     
4,139
     
8,415
 
Securities
   
168
     
54
     
14
     
334
     
205
 
Other than temporary impairment loss on securities
                                       
Total impairment loss
   
(9
)
   
-
     
-
     
(9
)
   
(26
)
Loss recognized in other comprehensive income
   
-
     
-
     
-
     
-
     
-
 
Net impairment loss recognized in earnings
   
(9
)
   
-
     
-
     
(9
)
   
(26
)
Mortgage loan servicing
   
932
     
193
     
338
     
1,389
     
2,614
 
Investment and insurance commissions
   
404
     
499
     
447
     
1,305
     
1,280
 
Bank owned life insurance
   
361
     
341
     
353
     
1,021
     
1,028
 
Title insurance fees
   
243
     
217
     
409
     
734
     
1,261
 
Increase in fair value of U.S. Treasury warrant
   
-
     
-
     
-
     
-
     
(1,025
)
Other
   
1,391
     
1,668
     
1,240
     
4,503
     
4,019
 
Total non-interest income
 
$
10,543
   
$
10,076
   
$
9,837
   
$
29,574
   
$
33,916
 

Capitalized Mortgage Loan Servicing Rights
 
   
Three months ended
   
Nine months ended
 
   
September 30,
   
September 30,
 
   
2014
   
2013
   
2014
   
2013
 
   
(In thousands)
 
Balance at beginning of period
 
$
12,796
   
$
13,037
   
$
13,710
   
$
11,013
 
Originated servicing rights capitalized
   
489
     
772
     
1,253
     
2,661
 
Amortization
   
(628
)
   
(793
)
   
(1,827
)
   
(3,111
)
Change in valuation allowance
   
523
     
35
     
44
     
2,488
 
Balance at end of period
 
$
13,180
   
$
13,051
   
$
13,180
   
$
13,051
 
                                 
Valuation allowance at end of period
 
$
2,811
   
$
3,599
   
$
2,811
   
$
3,599
 

3

Mortgage Loan Activity
                   
                     
   
Three months ended
   
Nine months ended
 
   
September 30,
   
June 30,
   
September 30,
   
September 30,
 
   
2014
   
2014
   
2013
   
2014
   
2013
 
   
(Dollars in thousands)
 
Mortgage loans originated
 
$
77,501
   
$
65,430
   
$
97,391
   
$
187,172
   
$
347,177
 
Mortgage loans sold
   
62,007
     
46,965
     
96,989
     
156,090
     
340,318
 
Mortgage loans sold with servicing rights released
   
11,229
     
8,357
     
16,017
     
27,447
     
46,250
 
Net gains on the sale of mortgage loans
   
1,490
     
1,505
     
1,570
     
4,139
     
8,415
 
Net gains as a percent of mortgage loans sold  ("Loan Sales Margin")
   
2.40
%
   
3.20
%
   
1.62
%
   
2.65
%
   
2.47
%
Fair value adjustments included in the Loan Sales Margin
   
(0.13
)
   
0.61
     
(0.89
)
   
0.09
     
(0.58
)

Non-Interest Expense
                   
   
Three months ended
   
Nine months ended
 
   
September 30,
   
June 30,
   
September 30,
   
September 30,
 
   
2014
   
2014
   
2013
   
2014
   
2013
 
   
(In thousands)
 
Compensation
 
$
8,574
   
$
8,439
   
$
8,529
   
$
25,321
   
$
25,080
 
Performance-based compensation
   
1,203
     
1,233
     
2,104
     
3,348
     
4,686
 
Payroll taxes and employee benefits
   
1,941
     
2,146
     
1,958
     
6,105
     
5,847
 
Compensation and employee benefits
   
11,718
     
11,818
     
12,591
     
34,774
     
35,613
 
Occupancy, net
   
2,079
     
2,153
     
2,017
     
6,715
     
6,588
 
Data processing
   
1,790
     
1,777
     
2,090
     
5,653
     
6,048
 
Loan and collection
   
1,391
     
1,427
     
1,584
     
4,283
     
5,512
 
Furniture, fixtures and equipment
   
1,005
     
1,053
     
1,051
     
3,127
     
3,171
 
Communications
   
712
     
711
     
695
     
2,212
     
2,205
 
Advertising
   
427
     
601
     
652
     
1,547
     
1,881
 
Legal and professional fees
   
559
     
420
     
487
     
1,380
     
1,843
 
FDIC deposit insurance
   
396
     
422
     
685
     
1,235
     
2,026
 
Interchange expense
   
368
     
342
     
410
     
1,112
     
1,238
 
Supplies
   
249
     
258
     
277
     
746
     
771
 
Credit card and bank service fees
   
226
     
245
     
310
     
734
     
975
 
Amortization of intangible assets
   
134
     
134
     
203
     
402
     
609
 
Vehicle service contract counterparty contingencies
   
28
     
73
     
149
     
169
     
3,403
 
Cost (recoveries) related to unfunded lending commitments
   
12
     
5
     
(86
)
   
27
     
(57
)
Provision for loss reimbursement on sold loans
   
-
     
15
     
1,417
     
(466
)
   
2,436
 
Net (gains) losses on other real estate and repossessed assets
   
(285
)
   
(38
)
   
119
     
(410
)
   
1,091
 
Other
   
1,275
     
1,144
     
1,283
     
3,804
     
3,796
 
Total non-interest expense
 
$
22,084
   
$
22,560
   
$
25,934
   
$
67,044
   
$
79,149
 

4

Average Balances and Tax Equivalent Rates
     
                         
   
Three Months Ended
 
   
September 30,
 
    2014     2013  
   
Average
           
Average
         
   
Balance
   
Interest
   
Rate (3)
   
Balance
   
Interest
   
Rate (3)
 
   
(Dollars in thousands)
 
Assets (1)
                       
Taxable loans
 
$
1,390,811
   
$
17,768
     
5.08
%
 
$
1,396,709
   
$
20,027
     
5.70
%
Tax-exempt loans (2)
   
4,803
     
77
     
6.36
     
5,321
     
86
     
6.41
 
Taxable securities
   
484,687
     
1,644
     
1.35
     
337,299
     
1,109
     
1.30
 
Tax-exempt securities (2)
   
40,613
     
430
     
4.20
     
35,242
     
433
     
4.87
 
Interest bearing cash and repurchase agreement
   
76,529
     
61
     
0.32
     
117,971
     
68
     
0.23
 
Other investments
   
23,415
     
264
     
4.47
     
21,496
     
242
     
4.47
 
Interest Earning Assets
   
2,020,858
     
20,244
     
3.98
     
1,914,038
     
21,965
     
4.57
 
Cash and due from banks
   
46,643
                     
46,069
                 
Other assets, net
   
179,861
                     
188,705
                 
Total Assets
 
$
2,247,362
                   
$
2,148,812
                 
                                                 
Liabilities
                                               
Savings and interest-bearing checking
 
$
949,039
     
270
     
0.11
   
$
910,422
     
294
     
0.13
 
Time deposits
   
402,951
     
966
     
0.95
     
415,090
     
1,077
     
1.03
 
Other borrowings
   
67,114
     
649
     
3.84
     
67,578
     
884
     
5.19
 
Interest Bearing Liabilities
   
1,419,104
     
1,885
     
0.53
     
1,393,090
     
2,255
     
0.64
 
Non-interest bearing deposits
   
551,617
                     
502,357
                 
Other liabilities
   
30,734
                     
37,143
                 
Shareholders’ equity
   
245,907
                     
216,222
                 
Total liabilities and shareholders’ equity
 
$
2,247,362
                   
$
2,148,812
                 
                                                 
Net Interest Income
         
$
18,359
                   
$
19,710
         
                                                 
Net Interest Income as a Percent of Average Interest Earning Assets
                   
3.61
%
                   
4.10
%
 

(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

5

Average Balances and Tax Equivalent Rates
     
                         
   
Nine Months Ended
 
   
September 30,
 
    2014     2013  
   
Average
           
Average
         
   
Balance
   
Interest
   
Rate (3)
   
Balance
   
Interest
   
Rate (3)
 
   
(Dollars in thousands)
 
Assets (1)
                       
Taxable loans
 
$
1,377,884
   
$
54,024
     
5.24
%
 
$
1,415,545
   
$
60,919
     
5.75
%
Tax-exempt loans (2)
   
5,028
     
239
     
6.36
     
5,628
     
272
     
6.46
 
Taxable securities
   
470,995
     
4,623
     
1.31
     
274,002
     
2,772
     
1.35
 
Tax-exempt securities (2)
   
41,493
     
1,268
     
4.09
     
28,873
     
1,164
     
5.39
 
Interest bearing cash and repurchase agreement
   
87,511
     
219
     
0.33
     
149,807
     
272
     
0.24
 
Other investments
   
23,416
     
857
     
4.89
     
21,274
     
694
     
4.36
 
Interest Earning Assets
   
2,006,327
     
61,230
     
4.08
     
1,895,129
     
66,093
     
4.66
 
Cash and due from banks
   
45,137
                     
44,866
                 
Other assets, net
   
184,709
                     
157,038
                 
Total Assets
 
$
2,236,173
                   
$
2,097,033
                 
                                                 
Liabilities
                                               
Savings and interest-bearing checking
 
$
953,008
     
799
     
0.11
   
$
906,046
     
864
     
0.13
 
Time deposits
   
421,775
     
2,990
     
0.95
     
418,193
     
3,499
     
1.12
 
Other borrowings
   
59,362
     
1,720
     
3.87
     
67,716
     
2,625
     
5.18
 
Interest Bearing Liabilities
   
1,434,145
     
5,509
     
0.51
     
1,391,955
     
6,988
     
0.67
 
Non-interest bearing deposits
   
529,654
                     
496,777
                 
Other liabilities
   
32,226
                     
39,292
                 
Shareholders’ equity
   
240,148
                     
169,009
                 
Total liabilities and shareholders’ equity
 
$
2,236,173
                   
$
2,097,033
                 
                                                 
Net Interest Income
         
$
55,721
                   
$
59,105
         
                                                 
Net Interest Income as a Percent of Average Interest Earning Assets
                   
3.71
%
                   
4.17
%
 

(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

6

Commercial Loan Portfolio Analysis as of September 30, 2014
 
                     
   
Total Commercial Loans
 
       
Watch Credits
   
Percent of Loan
Category in Watch Credit
 
Loan Category
 
All Loans
   
Performing
   
Non-performing
   
Total
     
     
Land
 
$
9,083
   
$
1,222
   
$
502
   
$
1,724
     
19.0
%
Land Development
   
11,684
     
6,114
     
230
     
6,344
     
54.3
 
Construction
   
12,572
     
27
     
-
     
27
     
0.2
 
Income Producing
   
245,319
     
14,410
     
1,339
     
15,749
     
6.4
 
Owner Occupied
   
205,647
     
18,471
     
1,807
     
20,278
     
9.9
 
Total Commercial Real Estate Loans
 
$
484,305
   
$
40,244
     
3,878
   
$
44,122
     
9.1
 
                                         
Other Commercial Loans
 
$
187,782
   
$
11,624
     
543
   
$
12,167
     
6.5
 
Total non-performing commercial loans
                 
$
4,421
                 
 
 
7