EX-99.2 3 ex99_2.htm EXHIBIT 99.2

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data

Non-performing assets (1)
                             
   
December 31,
2019
   
September 30,
2019
   
June 30,
2019
   
March 31,
2019
   
December 31,
2018
 
   
(Dollars in thousands)
 
Non-accrual loans
 
$
10,178
   
$
7,124
   
$
7,798
   
$
8,849
   
$
9,029
 
Loans 90 days or more past due and still accruing interest
   
-
     
-
     
-
     
-
     
5
 
Total non-accrual loans
   
10,178
     
7,124
     
7,798
     
8,849
     
9,034
 
Less:  Government guaranteed loans
   
646
     
475
     
436
     
617
     
460
 
Total non-performing loans
   
9,532
     
6,649
     
7,362
     
8,232
     
8,574
 
Other real estate and repossessed assets
   
1,865
     
1,789
     
1,990
     
1,338
     
1,299
 
Total non-performing assets
 
$
11,397
   
$
8,438
   
$
9,352
   
$
9,570
   
$
9,873
 
                                         
As a percent of Portfolio Loans
                                       
Non-performing loans
   
0.35
%
   
0.24
%
   
0.27
%
   
0.31
%
   
0.33
%
Allowance for loan losses
   
0.96
     
0.96
     
0.96
     
0.96
     
0.96
 
Non-performing assets to total assets
   
0.32
     
0.24
     
0.27
     
0.28
     
0.29
 
Allowance for loan losses as a percent of non-performing loans
   
274.32
     
393.26
     
351.85
     
306.78
     
290.27
 

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

Troubled debt restructurings (“TDR”)
 
                   
   
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
 

   
December 31, 2018
 
   
Commercial
   
Retail (1)
   
Total
 
   
(In thousands)
 
Performing TDR’s
 
$
6,460
   
$
46,627
   
$
53,087
 
Non-performing TDR’s (2)
   
74
     
2,884
(3) 
   
2,958
 
Total
 
$
6,534
   
$
49,511
   
$
56,045
 

(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.

1

Allowance for loan losses
 
   
Twelve months ended
December 31,
 
   
2019
   
2018
 
   
Loans
   
Unfunded
Commitments
   
Loans
   
Unfunded
Commitments
 
   
(Dollars in thousands)
 
Balance at beginning of period
 
$
24,888
   
$
1,296
   
$
22,587
   
$
1,125
 
Additions (deductions)
                               
Provision for loan losses
   
824
     
-
     
1,503
     
-
 
Recoveries credited to allowance
   
3,961
     
-
     
4,622
     
-
 
Loans charged against the allowance
   
(3,525
)
   
-
     
(3,824
)
   
-
 
Additions included in non-interest expense
   
-
     
246
     
-
     
171
 
Balance at end of period
 
$
26,148
   
$
1,542
   
$
24,888
   
$
1,296
 

                               
Net loans charged against the allowance to average Portfolio Loans
   
(0.02
)%
           
(0.03
)%
       

Capitalization
           
   
December 31,
 
   
2019
   
2018
 
   
(In thousands)
 
Subordinated debentures
 
$
39,456
   
$
39,388
 
Amount not qualifying as regulatory capital
   
(1,224
)
   
(1,224
)
Amount qualifying as regulatory capital
   
38,232
     
38,164
 
Shareholders’ equity
               
Common stock
   
352,344
     
377,372
 
Accumulated deficit
   
1,611
     
(28,270
)
Accumulated other comprehensive loss
   
(3,786
)
   
(10,108
)
Total shareholders’ equity
   
350,169
     
338,994
 
Total capitalization
 
$
388,401
   
$
377,158
 

2

Non-Interest Income
                             
   
Three months ended
   
Twelve months ended
 
   
December 31,
   
September 30,
   
December 31,
   
December 31,
 
 
2019
   
2019
   
2018
   
2019
   
2018
 
   
(In thousands)
 
Service charges on deposit accounts
 
$
2,885
   
$
2,883
   
$
3,092
   
$
11,208
   
$
12,258
 
Interchange income
   
2,553
     
2,785
     
2,669
     
10,297
     
9,905
 
Net gains on assets
                                       
Mortgage loans
   
6,388
     
5,677
     
2,026
     
19,978
     
10,597
 
Securities
   
3
     
-
     
209
     
307
     
138
 
Mortgage loan servicing, net
   
1,348
     
(1,562
)
   
(1,511
)
   
(3,336
)
   
3,157
 
Investment and insurance commissions
   
461
     
450
     
537
     
1,658
     
1,971
 
Bank owned life insurance
   
298
     
301
     
257
     
1,111
     
970
 
Other
   
1,661
     
1,741
     
1,672
     
6,513
     
5,819
 
Total non-interest income
 
$
15,597
   
$
12,275
   
$
8,951
   
$
47,736
   
$
44,815
 

Capitalized Mortgage Loan Servicing Rights
             
   
Three months ended
December 31,
   
Twelve months ended
December 31,
 
   
2019
   
2018
   
2019
   
2018
 
   
(In thousands)
 
Balance at beginning of period
 
$
16,906
   
$
23,151
   
$
21,400
   
$
15,699
 
Servicing rights acquired
   
-
     
-
     
-
     
3,047
 
Originated servicing rights capitalized
   
2,539
     
1,266
     
7,303
     
4,977
 
Change in fair value
   
(274
)
   
(3,017
)
   
(9,532
)
   
(2,323
)
Balance at end of period
 
$
19,171
   
$
21,400
   
$
19,171
   
$
21,400
 

3

Mortgage Loan Activity
                             
                               
   
Three months ended
   
Twelve months ended
 
   
December 31,
   
September 30,
   
December 31,
   
December 31,
 
   
2019
   
2019
   
2018
   
2019
   
2018
 
   
(Dollars in thousands)
 
Mortgage loans originated
 
$
302,520
   
$
329,461
   
$
190,328
   
$
1,011,141
   
$
807,408
 
Mortgage loans sold
   
248,691
     
204,058
     
121,426
     
738,910
     
491,798
 
Net gains on mortgage loans
   
6,388
     
5,677
     
2,026
     
19,978
     
10,597
 
Net gains as a percent of mortgage loans sold  (“Loan Sales Margin”)
   
2.57
%
   
2.78
%
   
1.67
%
   
2.70
%
   
2.15
%
Fair value adjustments included in the Loan Sales Margin
   
(0.38
)
   
0.22
     
(0.39
)
   
0.22
     
(0.02
)

Non-Interest Expense
                             
   
Three months ended
   
Twelve months ended
 
   
December 31,
   
September 30,
   
December 31,
   
December 31,
 
   
2019
   
2019
   
2018
   
2019
   
2018
 
   
(In thousands)
 
Compensation
 
$
10,726
   
$
10,327
   
$
9,792
   
$
41,719
   
$
37,878
 
Performance-based compensation
   
4,336
     
3,214
     
2,704
     
12,066
     
11,942
 
Payroll taxes and employee benefits
   
3,484
     
3,132
     
3,076
     
13,716
     
12,258
 
Compensation and employee benefits
   
18,546
     
16,673
     
15,572
     
67,501
     
62,078
 
Occupancy, net
   
2,216
     
2,161
     
2,245
     
9,013
     
8,912
 
Data processing
   
2,308
     
2,282
     
2,082
     
8,905
     
8,262
 
Furniture, fixtures and equipment
   
1,055
     
1,023
     
1,051
     
4,113
     
4,080
 
Interchange expense
   
883
     
891
     
728
     
3,215
     
2,702
 
Communications
   
728
     
733
     
737
     
2,947
     
2,848
 
Loan and collection
   
709
     
714
     
782
     
2,685
     
2,682
 
Advertising
   
515
     
636
     
577
     
2,450
     
2,155
 
Legal and professional fees
   
533
     
541
     
528
     
1,814
     
1,839
 
Amortization of intangible assets
   
272
     
272
     
293
     
1,089
     
969
 
FDIC deposit insurance
   
(38
)
   
13
     
331
     
685
     
1,081
 
Supplies
   
164
     
163
     
173
     
638
     
689
 
Credit card and bank service fees
   
111
     
100
     
104
     
411
     
414
 
Costs (recoveries) related to unfunded lending commitments
   
(95
)
   
154
     
177
     
246
     
171
 
Provision for loss reimbursement on sold loans
   
50
     
33
     
(68
)
   
229
     
10
 
Net (gains) losses on other real estate and repossessed assets
   
(63
)
   
52
     
(53
)
   
(90
)
   
(672
)
Merger related expenses
   
-
     
-
     
111
     
-
     
3,465
 
Other
   
1,409
     
1,407
     
1,455
     
5,882
     
5,776
 
Total non-interest expense
 
$
29,303
   
$
27,848
   
$
26,825
   
$
111,733
   
$
107,461
 

4

Average Balances and Tax Equivalent Rates
       
   
Three Months Ended
December 31,
 
   
2019
   
2018
 
   
Average
Balance
   
Interest
   
Rate (2)
   
Average
Balance
   
Interest
   
Rate (2)
 
   
(Dollars in thousands)
 
Assets
                                   
Taxable loans
 
$
2,767,857
   
$
33,061
     
4.75
%
 
$
2,618,834
   
$
32,753
     
4.98
%
Tax-exempt loans (1)
   
8,180
     
100
     
4.85
     
8,780
     
107
     
4.83
 
Taxable securities
   
437,087
     
3,031
     
2.77
     
373,988
     
2,782
     
2.98
 
Tax-exempt securities (1)
   
50,929
     
408
     
3.20
     
59,915
     
512
     
3.42
 
Interest bearing cash
   
38,416
     
163
     
1.68
     
41,766
     
157
     
1.49
 
Other investments
   
18,359
     
249
     
5.38
     
18,357
     
236
     
5.10
 
Interest Earning Assets
   
3,320,828
     
37,012
     
4.44
     
3,121,640
     
36,547
     
4.66
 
Cash and due from banks
   
48,095
                     
33,915
                 
Other assets, net
   
160,821
                     
171,447
                 
Total Assets
 
$
3,529,744
                   
$
3,327,002
                 
                                                 
Liabilities
                                               
Savings and interest- bearing checking
 
$
1,547,860
     
2,441
     
0.63
   
$
1,291,994
     
1,812
     
0.56
 
Time deposits
   
611,914
     
3,046
     
1.97
     
695,316
     
3,194
     
1.82
 
Other borrowings
   
92,154
     
711
     
3.06
     
71,410
     
746
     
4.14
 
Interest Bearing Liabilities
   
2,251,928
     
6,198
     
1.09
     
2,058,720
     
5,752
     
1.11
 
Non-interest bearing deposits
   
880,325
                     
886,579
                 
Other liabilities
   
51,581
                     
36,924
                 
Shareholders’ equity
   
345,910
                     
344,779
                 
Total liabilities and shareholders’ equity
 
$
3,529,744
                   
$
3,327,002
                 
                                                 
Net Interest Income
         
$
30,814
                   
$
30,795
         
                                                 
Net Interest Income as a Percent of Average Interest Earning Assets
                   
3.70
%
                   
3.93
%



(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

5

Average Balances and Tax Equivalent Rates
       
                                     
   
Twelve Months Ended
December 31,
 
   
2019
   
2018
 
   
Average
Balance
   
Interest
   
Rate
   
Average
Balance
   
Interest
   
Rate
 
   
(Dollars in thousands)
 
Assets
                                   
Taxable loans
 
$
2,713,690
   
$
133,574
     
4.92
%
 
$
2,418,421
   
$
116,634
     
4.82
%
Tax-exempt loans (1)
   
7,937
     
391
     
4.93
     
6,118
     
292
     
4.77
 
Taxable securities
   
397,598
     
11,842
     
2.98
     
394,160
     
10,874
     
2.76
 
Tax-exempt securities (1)
   
52,324
     
1,683
     
3.22
     
67,574
     
2,192
     
3.24
 
Interest bearing cash
   
48,023
     
818
     
1.70
     
32,593
     
371
     
1.14
 
Other investments
   
18,359
     
1,043
     
5.68
     
16,936
     
920
     
5.43
 
Interest Earning Assets
   
3,237,931
     
149,351
     
4.61
     
2,935,802
     
131,283
     
4.48
 
Cash and due from banks
   
37,575
                     
33,384
                 
Other assets, net
   
164,726
                     
162,750
                 
Total Assets
 
$
3,440,232
                   
$
3,131,936
                 
                                                 
Liabilities
                                               
Savings and interest- bearing checking
 
$
1,453,061
     
10,228
     
0.70
   
$
1,218,243
     
4,696
     
0.39
 
Time deposits
   
655,718
     
13,197
     
2.01
     
632,330
     
9,782
     
1.55
 
Other borrowings
   
77,254
     
2,922
     
3.78
     
79,519
     
3,013
     
3.79
 
Interest Bearing Liabilities
   
2,186,033
     
26,347
     
1.21
     
1,930,092
     
17,491
     
0.91
 
Non-interest bearing deposits
   
867,314
                     
846,718
                 
Other liabilities
   
46,153
                     
33,354
                 
Shareholders’ equity
   
340,732
                     
321,772
                 
Total liabilities and shareholders’ equity
 
$
3,440,232
                   
$
3,131,936
                 
                                                 
Net Interest Income
         
$
123,004
                   
$
113,792
         
                                                 
Net Interest Income as a Percent of Average Interest Earning Assets
                   
3.80
%
                   
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%.

6

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
                 

Commercial Loan Portfolio Analysis as of December 31, 2018
 
                                         
   
Total Commercial Loans
 
           
Watch Credits
   
Percent of Loan
 
Loan Category
 
All Loans
   
Performing
   
Non-accrual
   
Total
   
Category in
Watch Credit
 
   
(Dollars in thousands)
 
Land
 
$
12,308
   
$
63
   
$
-
   
$
63
     
0.5
%
Land Development
   
12,155
     
338
     
-
     
338
     
2.8
 
Construction
   
59,856
     
7,901
     
-
     
7,901
     
13.2
 
Income Producing
   
388,311
     
12,430
     
-
     
12,430
     
3.2
 
Owner Occupied
   
353,572
     
23,041
     
846
     
23,887
     
6.8
 
Total Commercial Real Estate Loans
 
$
826,202
   
$
43,773
     
846
   
$
44,619
     
5.4
 
                                         
Other Commercial Loans
 
$
318,279
   
$
16,695
     
1,374
   
$
18,069
     
5.7
 
Total non-performing commercial loans
                 
$
2,220
                 


7