Press Release

Mercantile Bank Corporation Announces Strong Fourth Quarter and Full Year 2018 Results

Robust profitability and loan growth of nearly 8 percent highlight 2018

Company Release - 1/22/2019 5:01 AM ET

GRAND RAPIDS, Mich., Jan. 22, 2019 /PRNewswire/ -- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $11.6 million, or $0.70 per diluted share, for the fourth quarter of 2018, compared with net income of $8.0 million, or $0.48 per diluted share, for the respective prior-year period.  For the full year 2018, Mercantile reported net income of $42.0 million, or $2.53 per diluted share, compared with net income of $31.3 million, or $1.90 per diluted share, for the full year 2017.

Net income during the fourth quarter and full year 2018 benefited from a reduction in the corporate federal income tax rate, which was lowered from 35 percent to 21 percent on January 1, 2018, as a result of the enactment of the Tax Cuts and Jobs Act.  Mercantile's effective tax rate was 18.7 percent and 18.9 percent during the fourth quarter and full year 2018, respectively, down from 35.9 percent and 32.1 percent during the respective prior-year periods.

The fourth quarter and full year were highlighted by:

  • Robust earnings and capital position
  • Strong and stable net interest margin
  • Solid growth in a variety of fee income categories
  • Controlled overhead costs
  • Strong asset quality, as depicted by low levels of nonperforming assets and loans in the 30- to 89-days delinquent category
  • Net loan growth of $195 million, or nearly 8 percent, during the full year
  • New commercial term loan originations of approximately $136 million during the fourth quarter and $508 million during the full year
  • Sustained strength in commercial loan pipeline
  • Announced first quarter 2019 regular cash dividend of $0.26 per common share, an increase of 4.0 percent from the regular cash dividend paid during the fourth quarter of 2018
  • Mercantile Bank of Michigan received a Community Reinvestment Act rating of "Outstanding" for the fourth consecutive examination

"We are very pleased that the solid operating performance we demonstrated during the first nine months of 2018 continued during the fourth quarter," said Robert B. Kaminski, Jr., President and Chief Executive Officer of Mercantile.  "Our financial performance exhibited throughout the year reflects a solid net interest margin, strong asset quality, increases in certain fee income categories, and controlled overhead costs.  In spite of continuing competitive pressures in our markets, we were able to record robust growth in the loan portfolio.  Based on our current commercial and residential loan pipelines, we are confident that solid loan growth can be realized in future periods.  In addition to being pleased with our ongoing financial strength, we are proud to report that Mercantile Bank of Michigan once again received an "Outstanding" Community Reinvestment Act rating, which depicts our continuing focus on meeting the needs of the communities we serve."  

Operating Results

Total revenue, which consists of net interest income and noninterest income, was $36.2 million during the fourth quarter of 2018, up $3.3 million, or 10.0 percent, from the prior-year fourth quarter.  Net interest income during the fourth quarter of 2018 was $30.8 million, up $2.4 million, or 8.5 percent, from the fourth quarter of 2017, primarily reflecting a 22 basis point increase in the net interest margin and a 6.8 percent increase in average total loans.  Total revenue was $139 million during the full year 2018, up $10.3 million, or 8.0 percent, from 2017.  Net interest income was $120 million in 2018, up $10.3 million, or 9.4 percent, from the prior year, mainly reflecting a 17 basis point increase in the net interest margin and a 5.9 percent increase in average total loans.

The net interest margin was 3.98 percent in the fourth quarter of 2018, up from 3.76 percent in the prior-year fourth quarter.  The improved net interest margin depicts a higher yield on average earning assets, mainly reflecting an increased yield on commercial loans and a change in earning asset mix, which more than offset a higher cost of funds, primarily resulting from increased costs of certain non-time deposit accounts, time deposits, and borrowed funds.  The increased yield on commercial loans primarily reflects the impact of higher interest rates on variable-rate commercial loans, which comprised about 55 percent of total commercial loans, stemming from the Federal Open Market Committee raising the targeted federal funds rate by 25 basis points in each of the past five quarters.  The change in earning asset mix mainly reflects loan growth and a reduction in interest-earning deposit balances.  On average, higher-yielding loans represented 87.9 percent of earning assets during the fourth quarter of 2018, up from 84.0 percent during the prior-year fourth quarter, while lower-yielding interest-earning deposit balances represented 1.0 percent of earning assets during the fourth quarter of 2018, down from 4.6 percent during the fourth quarter of 2017. 

The net interest margin was 3.96 percent in 2018, up from 3.79 percent in 2017.  The increased net interest margin reflects a higher yield on average earning assets, primarily depicting an improved yield on commercial loans, which more than offset a higher cost of funds, mainly resulting from increased costs of certain non-time deposit accounts, time deposits, and borrowed funds.  The increased yield on commercial loans primarily reflects the impact of higher interest rates on variable-rate commercial loans stemming from the Federal Open Market Committee raising the targeted federal funds rate by 25 basis points on four occasions during 2018 and three occasions during 2017.

Net interest income and the net interest margin during 2018 and 2017 were also affected by purchase accounting accretion and amortization entries associated with the fair value measurements recorded effective June 1, 2014.  Increases in interest income on loans totaling $4.0 million and $4.6 million were recorded during 2018 and 2017, respectively.  Purchased loan accretion amounts vary from period to period as a result of periodic cash flow re-estimations, loan payoffs, and payment performance.  An increase in interest expense on subordinated debentures totaling $0.7 million was recorded during both 2018 and 2017. 

Mercantile recorded no provision expense during the fourth quarter of 2018, compared to a provision expense of $0.6 million during the prior-year fourth quarter.  During 2018, Mercantile recorded a provision for loan losses of $1.1 million, compared to a provision of $3.0 million during 2017.  No provision expense was recorded during the fourth quarter of 2018 as the positive impact of net loan recoveries offset increased reserve allocations necessitated by loan growth and changes in loan loss reserve environmental factors.  The provision expense recorded during 2018 and 2017 primarily reflects ongoing loan growth and periodic adjustments to loan loss reserve environmental factors.

Noninterest income during the fourth quarter of 2018 was $5.4 million.  Noninterest income during the quarter included a one-time $0.9 million accounting adjustment related to mortgage banking activities in prior years; excluding this adjustment, noninterest income decreased slightly in the fourth quarter of 2018 compared to the prior-year fourth quarter.    Noninterest income totaled $19.0 million during both 2018 and 2017.  Noninterest income during 2018 included the previously mentioned mortgage banking activity adjustment, while noninterest income during 2017 included a $1.4 million bank owned life insurance death benefit claim; excluding these transactions, noninterest income increased $0.5 million, or 2.9 percent, during 2018 compared to 2017.  Growth in credit and debit card fees, payroll processing revenue, and treasury management income during the fourth quarter of 2018 was more than offset by a decline in mortgage banking activity income, while growth in these revenue streams during the full year 2018 surpassed a decrease in mortgage banking activity income.  Although Mercantile believes its market share increased during 2018, mortgage banking activity income declined during the 2018 periods compared to the respective 2017 periods primarily due to the impacts of a limited supply of homes for sale in the Bank's markets and lower refinance activity due to rising residential mortgage loan interest rates.

Noninterest expense totaled $22.0 million during the fourth quarter of 2018, up $2.1 million, or 10.6 percent, from the prior-year fourth quarter.  Noninterest expense during 2018 was $86.2 million, an increase of $6.5 million, or 8.1 percent, from the $79.7 million expensed during 2017.  The higher level of expense in the 2018 periods primarily resulted from increased salary costs, mainly reflecting annual employee merit pay increases and higher stock-based compensation expense.  In addition, a one-time pay increase for all hourly employees that totaled $1.6 million on an annualized basis became effective on April 1, 2018, contributing to the higher level of noninterest expense.

Mr. Kaminski continued, "As expected, our ongoing emphasis on disciplined loan pricing and sound underwriting, along with a beneficial balance sheet structure, produced a healthy and steady net interest margin throughout 2018.  Our improved yield on earning assets, mainly reflecting increased interest rates on variable-rate commercial loans, more than offset a higher cost of funds stemming from the continuing rising interest rate environment.  We anticipate that any further interest rate hikes initiated by the Federal Open Market Committee will have a positive impact on our net interest income in light of our current balance sheet structure.  We are pleased with the increases in certain fee income categories and remain committed to controlling overhead costs.  Although our mortgage banking activity income was hampered in 2018 by a lack of inventory in our markets and lower refinance activity, we are hopeful that our current loan pipeline, prominent level of pre-qualifications, and heightened efforts to sell a greater percentage of originated mortgage loans should result in solid levels of income in future periods."

Balance Sheet

As of December 31, 2018, total assets were $3.36 billion, up $77.2 million, or 2.3 percent, from December 31, 2017.  Total loans increased $195 million, or 7.6 percent, to $2.75 billion over the same time period.  Approximately $136 million and $508 million in commercial term loans to new and existing borrowers were originated during the fourth quarter and full year of 2018, respectively, as ongoing sales and relationship-building efforts resulted in increased lending opportunities.  As of December 31, 2018, unfunded commitments on commercial construction and development loans totaled approximately $170 million, which are expected to be largely funded over the next 12 to 18 months. 

Ray Reitsma, President of Mercantile Bank of Michigan, noted, "We are very pleased with the net loan growth achieved during 2018, along with the level of new commercial term loan originations, which exceeded $500 million for the fourth consecutive year.  Net loan growth during 2018 reflects higher levels of commercial loans and residential mortgage loans.  All commercial loan segments, most notably the commercial and industrial loan portfolio, grew during the year.  The solid growth in commercial loans depicts our ongoing efforts to identify new lending opportunities and meet the credit needs of our existing customers, while growth in residential mortgage loans reflects the continuing success of strategic initiatives that were centered on increasing our market penetration.  We remain committed to growing the loan portfolio with an emphasis on risk-based pricing and sound underwriting parameters.  In light of our current commercial loan and residential loan pipelines, additional lending opportunities conveyed by commercial lenders, and the level of residential mortgage loan pre-qualifications, we believe that we can grow the commercial and residential loan portfolios in future periods."

As of December 31, 2018, commercial and industrial loans and owner-occupied commercial real estate loans combined represented approximately 58 percent of total commercial loans. 

Total deposits at December 31, 2018 were $2.46 billion, down $58.7 million from December 31, 2017.  Local deposits were down $69.2 million, and out-of-area deposits were up $10.5 million since year-end 2017.  The decrease in local deposits during the current year mainly depicts the managed reduction of public unit time deposits given the strong competition and resulting relatively high interest rates in Mercantile's markets and declines in certain personal account products stemming from depositors using funds for personal investments and expenditures.  Noninterest-bearing checking accounts reflected solid growth during 2018 primarily due to new commercial loan relationships.  Wholesale funds were $474 million, or approximately 16 percent of total funds, as of December 31, 2018, compared to $323 million, or about 11 percent of total funds, as of December 31, 2017. 

Asset Quality

Nonperforming assets at December 31, 2018, were $5.0 million, or 0.2 percent of total assets, compared to $9.4 million, or 0.3 percent of total assets, at December 31, 2017.  The decline in nonperforming assets during 2018 primarily reflects successful loan collection efforts and sales of bank-owned properties that were no longer being used or considered for use as bank facilities.  The level of past due loans remains nominal, and loan relationships on the internal watch list generally declined in number and dollar volume during 2018.  Net loan recoveries were $0.7 million during the fourth quarter of 2018 and $1.8 million for the full year 2018.  Net loan charge-offs were $0.3 million during the fourth quarter of 2017 and $1.4 million for the full year 2017, representing 0.05 percent and 0.06 percent of average total loans, respectively.

Capital Position

Shareholders' equity totaled $375 million as of December 31, 2018, an increase of $9.4 million from year-end 2017.  The Bank's capital position remains above "well-capitalized" with a total risk-based capital ratio of 12.3 percent as of December 31, 2018, compared to 12.6 percent at December 31, 2017.  At December 31, 2018, the Bank had approximately $72 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a "well-capitalized" institution.  Mercantile reported 16,534,256 total shares outstanding at December 31, 2018.

As part of a $20 million common stock repurchase program announced in January of 2015, which was expanded by $15 million in early 2016, Mercantile repurchased approximately 200,000 shares for $5.9 million, or a weighted average all-in cost per share of $29.73, during the fourth quarter of 2018; no shares were repurchased during the first nine months of 2018.  As of December 31, 2018, future share repurchases totaling $9.6 million could be made under the program.

Mr. Kaminski concluded, "Our strong financial performance during 2018 enabled us to reward shareholders with the increased payment of regular quarterly cash dividends and a special dividend during the fourth quarter.  As demonstrated by our continuing cash dividend program, including the announcement of an increased first quarter 2019 regular cash dividend earlier today, we remain dedicated to building shareholder value.  Our relationship-based banking philosophy, which entails meeting customers' needs through the efficient delivery of a wide array of products and services, continues to attract new clients and has allowed us to retain existing customers.  We believe that our sound financial condition positions us to meet growth objectives and enhance shareholder value in future periods."

About Mercantile Bank Corporation

Based in Grand Rapids, Michigan, Mercantile Bank Corporation is the bank holding company for Mercantile Bank of Michigan.  Mercantile provides banking services to businesses, individuals and governmental units, and differentiates itself on the basis of service quality and the expertise of its banking staff. Mercantile has assets of approximately $3.4 billion and operates 47 banking offices.  Mercantile Bank Corporation's common stock is listed on the NASDAQ Global Select Market under the symbol "MBWM."

Forward-Looking Statements

This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and nontraditional competitors; changes in banking regulation or actions by bank regulators; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; changes in the national and local economies; and other factors, including risk factors, disclosed from time to time in filings made by Mercantile with the Securities and Exchange Commission. Mercantile undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

FOR FURTHER INFORMATION:




            Robert B. Kaminski, Jr.                                       

Charles Christmas

            President and CEO                                               

Executive Vice President and CFO

            616-726-1502                                                         

616-726-1202

            rkaminski@mercbank.com                                   

cchristmas@mercbank.com

 

Mercantile Bank Corporation







Fourth Quarter 2018 Results







MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)










DECEMBER 31,


DECEMBER 31,


DECEMBER 31,



2018


2017


2016

ASSETS







   Cash and due from banks

$

64,872,000

$

55,127,000

$

50,200,000

   Interest-earning deposits


10,482,000


144,974,000


133,396,000

      Total cash and cash equivalents


75,354,000


200,101,000


183,596,000








   Securities available for sale


337,366,000


335,744,000


328,060,000

   Federal Home Loan Bank stock


16,022,000


11,036,000


8,026,000








   Loans


2,753,085,000


2,558,552,000


2,378,620,000

   Allowance for loan losses


(22,380,000)


(19,501,000)


(17,961,000)

      Loans, net


2,730,705,000


2,539,051,000


2,360,659,000








   Premises and equipment, net


48,321,000


46,034,000


45,456,000

   Bank owned life insurance


69,647,000


68,689,000


67,198,000

   Goodwill


49,473,000


49,473,000


49,473,000

   Core deposit intangible


5,561,000


7,600,000


9,957,000

   Other assets


31,458,000


28,976,000


30,146,000








      Total assets

$

3,363,907,000

$

3,286,704,000

$

3,082,571,000















LIABILITIES AND SHAREHOLDERS' EQUITY







   Deposits:







      Noninterest-bearing

$

889,784,000

$

866,380,000

$

810,600,000

      Interest-bearing


1,573,924,000


1,655,985,000


1,564,385,000

         Total deposits


2,463,708,000


2,522,365,000


2,374,985,000








   Securities sold under agreements to repurchase


103,519,000


118,748,000


131,710,000

   Federal Home Loan Bank advances


350,000,000


220,000,000


175,000,000

   Subordinated debentures


46,199,000


45,517,000


44,835,000

   Accrued interest and other liabilities


25,232,000


14,204,000


15,230,000

         Total liabilities


2,988,658,000


2,920,834,000


2,741,760,000








SHAREHOLDERS' EQUITY







   Common stock


308,005,000


309,772,000


305,488,000

   Retained earnings


75,483,000


60,132,000


40,904,000

   Accumulated other comprehensive income/(loss)


(8,239,000)


(4,034,000)


(5,581,000)

      Total shareholders' equity


375,249,000


365,870,000


340,811,000








      Total liabilities and shareholders' equity

$

3,363,907,000

$

3,286,704,000

$

3,082,571,000








 

 

Mercantile Bank Corporation













Fourth Quarter 2018 Results













MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF INCOME

(Unaudited)















THREE MONTHS ENDED

THREE MONTHS ENDED

TWELVE MONTHS ENDED

TWELVE MONTHS ENDED


December 31, 2018

December 31, 2017

December 31, 2018

December 31, 2017

INTEREST INCOME













   Loans, including fees

$

34,676,000


$

30,411,000


$

131,763,000


$

116,816,000


   Investment securities


2,347,000



2,036,000



8,975,000



7,631,000


   Other interest-earning assets


172,000



455,000



1,243,000



1,096,000


      Total interest income


37,195,000



32,902,000



141,981,000



125,543,000















INTEREST EXPENSE













   Deposits


3,949,000



2,819,000



13,869,000



9,362,000


   Short-term borrowings


92,000



48,000



273,000



190,000


   Federal Home Loan Bank advances


1,513,000



966,000



4,647,000



3,657,000


   Other borrowed money


823,000



667,000



3,110,000



2,586,000


      Total interest expense


6,377,000



4,500,000



21,899,000



15,795,000















      Net interest income


30,818,000



28,402,000



120,082,000



109,748,000















Provision for loan losses


0



600,000



1,100,000



2,950,000















      Net interest income after













         provision for loan losses


30,818,000



27,802,000



118,982,000



106,798,000















NONINTEREST INCOME













   Service charges on accounts


1,099,000



1,085,000



4,358,000



4,233,000


   Credit and debit card income


1,399,000



1,263,000



5,354,000



4,760,000


   Mortgage banking income


994,000



1,188,000



4,109,000



4,421,000


   Payroll services


335,000



323,000



1,462,000



1,305,000


   Earnings on bank owned life insurance

318,000



337,000



1,287,000



2,731,000


   Other income


1,225,000



307,000



2,440,000



1,551,000


      Total noninterest income


5,370,000



4,503,000



19,010,000



19,001,000















NONINTEREST EXPENSE













   Salaries and benefits


12,884,000



11,601,000



50,910,000



45,397,000


   Occupancy


1,662,000



1,479,000



6,711,000



6,186,000


   Furniture and equipment


681,000



543,000



2,470,000



2,168,000


   Data processing costs


2,141,000



2,067,000



8,557,000



8,222,000


   Other expense


4,590,000



4,158,000



17,522,000



17,743,000


      Total noninterest expense


21,958,000



19,848,000



86,170,000



79,716,000















      Income before federal income













         tax expense


14,230,000



12,457,000



51,822,000



46,083,000















Federal income tax expense


2,657,000



4,478,000



9,798,000



14,809,000















      Net Income

$

11,573,000


$

7,979,000


$

42,024,000


$

31,274,000















   Basic earnings per share


$0.70



$0.48



$2.53



$1.90


   Diluted earnings per share


$0.70



$0.48



$2.53



$1.90















   Average basic shares outstanding


16,594,412



16,525,625



16,600,612



16,478,968


   Average diluted shares outstanding


16,600,108



16,536,225



16,606,416



16,489,070















 

 

Mercantile Bank Corporation















Fourth Quarter 2018 Results















MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)


















Quarterly


Year-To-Date

(dollars in thousands except per share data)

2018


2018


2018


2018


2017







4th Qtr


3rd Qtr


2nd Qtr


1st Qtr


4th Qtr


2018


2017

EARNINGS















   Net interest income

$

30,818


29,840


29,225


30,199


28,402


120,082


109,748

   Provision for loan losses

$

0


400


700


0


600


1,100


2,950

   Noninterest income

$

5,370


4,708


4,550


4,381


4,503


19,010


19,001

   Noninterest expense

$

21,958


21,650


21,414


21,147


19,848


86,170


79,716

   Net income before federal income















      tax expense

$

14,230


12,498


11,661


13,433


12,457


51,822


46,083

   Net income

$

11,573


10,123


9,446


10,881


7,979


42,024


31,274

   Basic earnings per share

$

0.70


0.61


0.57


0.66


0.48


2.53


1.90

   Diluted earnings per share

$

0.70


0.61


0.57


0.66


0.48


2.53


1.90

   Average basic shares outstanding


16,594,412


16,611,411


16,601,400


16,595,115


16,525,625


16,600,612


16,478,968

   Average diluted shares outstanding


16,600,108


16,619,295


16,610,819


16,604,325


16,536,225


16,606,416


16,489,070
















PERFORMANCE RATIOS















   Return on average assets


1.39%


1.22%


1.17%


1.36%


0.97%


1.28%


1.00%

   Return on average equity


12.40%


10.64%


10.25%


12.07%


8.70%


11.33%


8.82%

   Net interest margin (fully tax-equivalent)

3.98%


3.87%


3.92%


4.06%


3.76%


3.96%


3.79%

   Efficiency ratio


60.68%


62.67%


63.40%


61.15%


60.32%


61.95%


61.92%

   Full-time equivalent employees


630


637


667


640


641


630


641
















YIELD ON ASSETS / COST OF FUNDS















   Yield on loans


5.08%


4.91%


4.92%


5.14%


4.76%


5.01%


4.70%

   Yield on securities


2.80%


2.70%


2.64%


2.61%


2.60%


2.69%


2.47%

   Yield on other interest-earning assets

2.20%


1.98%


1.80%


1.52%


1.29%


1.79%


1.21%

   Yield on total earning assets


4.80%


4.60%


4.60%


4.70%


4.35%


4.68%


4.33%

   Yield on total assets


4.46%


4.28%


4.27%


4.37%


4.04%


4.35%


4.02%

   Cost of deposits


0.63%


0.56%


0.53%


0.50%


0.45%


0.56%


0.39%

   Cost of borrowed funds


2.22%


2.14%


2.01%


1.83%


1.74%


2.06%


1.68%

   Cost of interest-bearing liabilities


1.26%


1.11%


1.02%


0.94%


0.88%


1.08%


0.80%

   Cost of funds (total earning assets)


0.82%


0.73%


0.68%


0.64%


0.59%


0.72%


0.54%

   Cost of funds (total assets)


0.76%


0.68%


0.63%


0.60%


0.55%


0.67%


0.50%
















PURCHASE ACCOUNTING ADJUSTMENTS













   Loan portfolio - increase interest income

$

603


386


777


2,271


683


4,037


4,608

   Trust preferred - increase interest expense

$

171


171


171


171


171


684


684

   Core deposit intangible - increase overhead

$

477


477


530


556


556


2,040


2,357
















MORTGAGE BANKING ACTIVITY















   Total mortgage loans originated

$

44,448


66,829


62,032


40,937


62,526


214,246


223,224

   Purchase mortgage loans originated

$

29,729


47,704


41,239


25,137


33,958


143,809


135,850

   Refinance mortgage loans originated

$

14,719


19,125


20,793


15,800


28,568


70,437


87,374

   Total mortgage loans sold

$

21,805


30,713


24,114


19,813


26,254


96,445


107,946

   Net gain on sale of mortgage loans

$

829


1,116


851


729


1,051


3,525


3,926
















CAPITAL















   Tangible equity to tangible assets


9.68%


9.98%


9.87%


9.63%


9.56%


9.68%


9.56%

   Tier 1 leverage capital ratio


11.41%


11.76%


11.81%


11.50%


11.24%


11.41%


11.28%

   Common equity risk-based capital ratio

10.41%


10.93%


11.03%


11.04%


10.71%


10.41%


10.76%

   Tier 1 risk-based capital ratio


11.80%


12.35%


12.49%


12.52%


12.19%


11.80%


12.23%

   Total risk-based capital ratio


12.50%


13.05%


13.19%


13.20%


12.85%


12.50%


12.89%

   Tier 1 capital

$

373,721


382,829


375,167


367,546


359,047


373,721


360,533

   Tier 1 plus tier 2 capital

$

396,102


404,521


396,334


387,520


378,548


396,102


380,035

   Total risk-weighted assets

$

3,167,655


3,100,158


3,003,778


2,935,367


2,946,527


3,167,655


2,948,013

   Book value per common share

$

22.70


22.84


22.57


22.19


22.05


22.70


22.05

   Tangible book value per common share

$

19.37


19.50


19.20


18.79


18.61


19.37


18.61

   Cash dividend per common share

$

1.00


0.24


0.22


0.22


0.19


1.68


0.74
















ASSET QUALITY















   Gross loan charge-offs

$

354


169


273


654


920


1,450


3,235

   Recoveries

$

1,042


294


766


1,127


628


3,229


1,825

   Net loan charge-offs (recoveries)

$

(688)


(125)


(493)


(473)


292


(1,779)


1,410

   Net loan charge-offs to average loans

(0.10%)


(0.02%)


(0.08%)


(0.08%)


0.05%


(0.07%)


0.06%

   Allowance for loan losses

$

22,380


21,692


21,167


19,974


19,501


22,380


19,501

   Allowance to originated loans


0.88%


0.88%


0.89%


0.87%


0.88%


0.88%


0.88%

   Nonperforming loans

$

4,141


4,852


4,965


5,742


7,143


4,141


7,143

   Other real estate/repossessed assets

$

811


948


842


2,384


2,260


811


2,260

   Nonperforming loans to total loans


0.15%


0.18%


0.19%


0.23%


0.28%


0.15%


0.28%

   Nonperforming assets to total assets


0.15%


0.18%


0.18%


0.25%


0.29%


0.15%


0.29%
















NONPERFORMING ASSETS - COMPOSITION













   Residential real estate:















      Land development

$

0


0


0


0


0


0


0

      Construction

$

0


0


0


0


0


0


0

      Owner occupied / rental

$

3,555


3,908


3,650


3,571


3,574


3,555


3,574

   Commercial real estate:















      Land development

$

0


0


0


0


35


0


35

      Construction

$

0


0


0


0


0


0


0

      Owner occupied  

$

1,363


1,543


1,957


3,913


4,272


1,363


4,272

      Non-owner occupied

$

0


0


0


0


36


0


36

   Non-real estate:















      Commercial assets

$

17


331


180


620


1,444


17


1,444

      Consumer assets

$

17


18


20


22


42


17


42

   Total nonperforming assets


4,952


5,800


5,807


8,126


9,403


4,952


9,403
















NONPERFORMING ASSETS - RECON















   Beginning balance

$

5,800


5,807


8,126


9,403


10,558


9,403


6,408

   Additions - originated loans

$

1,247


999


300


1,426


402


3,972


9,952

   Merger-related activity

$

0


5


17


29


0


51


226

   Return to performing status

$

0


0


0


(175)


0


(175)


(233)

   Principal payments

$

(1,836)


(857)


(778)


(1,557)


(688)


(5,028)


(4,234)

   Sale proceeds

$

(128)


(147)


(1,807)


(299)


(101)


(2,381)


(677)

   Loan charge-offs

$

(57)


(3)


(50)


(597)


(754)


(707)


(1,933)

   Valuation write-downs

$

(74)


(4)


(1)


(104)


(14)


(183)


(106)

   Ending balance

$

4,952


5,800


5,807


8,126


9,403


4,952


9,403
















LOAN PORTFOLIO COMPOSITION















   Commercial:















      Commercial & industrial

$

822,723


818,113


776,995


739,805


753,764


822,723


753,764

      Land development & construction

$

44,885


39,396


37,868


31,437


29,872


44,885


29,872

      Owner occupied comm'l R/E

$

548,619


542,730


533,075


531,152


526,327


548,619


526,327

      Non-owner occupied comm'l R/E

$

816,282


811,767


818,376


794,206


791,685


816,282


791,685

      Multi-family & residential rental

$

127,597


94,101


95,656


96,428


101,918


127,597


101,918

         Total commercial

$

2,360,106


2,306,107


2,261,970


2,193,028


2,203,566


2,360,106


2,203,566

   Retail:















      1-4 family mortgages

$

307,540


301,765


283,657


264,996


254,560


307,540


254,560

      Home equity & other consumer

$

85,439


89,545


91,229


93,180


100,426


85,439


100,426

         Total retail

$

392,979


391,310


374,886


358,176


354,986


392,979


354,986

         Total loans

$

2,753,085


2,697,417


2,636,856


2,551,204


2,558,552


2,753,085


2,558,552
















END OF PERIOD BALANCES















   Loans

$

2,753,085


2,697,417


2,636,856


2,551,204


2,558,552


2,753,085


2,558,552

   Securities

$

353,388


337,603


342,178


348,024


346,780


353,388


346,780

   Other interest-earning assets

$

10,482


28,193


69,402


163,879


144,974


10,482


144,974

   Total earning assets (before allowance)

$

3,116,955


3,063,213


3,048,436


3,063,107


3,050,306


3,116,955


3,050,306

   Total assets

$

3,363,907


3,300,106


3,288,521


3,293,900


3,286,704


3,363,907


3,286,704

   Noninterest-bearing deposits

$

889,784


879,442


884,470


830,187


866,380


889,784


866,380

   Interest-bearing deposits

$

1,573,924


1,629,368


1,645,341


1,709,866


1,655,985


1,573,924


1,655,985

   Total deposits

$

2,463,708


2,508,810


2,529,811


2,540,053


2,522,365


2,463,708


2,522,365

   Total borrowed funds

$

513,220


401,575


373,642


373,824


387,468


513,220


387,468

   Total interest-bearing liabilities

$

2,087,144


2,030,943


2,018,983


2,083,690


2,043,453


2,087,144


2,043,453

   Shareholders' equity

$

375,249


379,465


374,919


368,340


365,870


375,249


365,870
















AVERAGE BALANCES















   Loans

$

2,706,617


2,658,092


2,596,828


2,552,070


2,534,729


2,628,907


2,483,440

   Securities

$

343,597


342,593


340,990


348,431


346,318


343,886


340,770

   Other interest-earning assets

$

30,564


61,810


63,336


123,633


138,095


69,559


90,925

   Total earning assets (before allowance)

$

3,080,778


3,062,495


3,001,154


3,024,134


3,019,142


3,042,352


2,915,135

   Total assets

$

3,312,648


3,295,129


3,232,038


3,249,794


3,248,828


3,272,637


3,142,673

   Noninterest-bearing deposits

$

905,065


893,181


848,650


805,214


849,751


863,384


802,024

   Interest-bearing deposits

$

1,579,632


1,628,346


1,635,755


1,690,135


1,635,727


1,633,150


1,589,778

   Total deposits

$

2,484,697


2,521,527


2,484,405


2,495,349


2,485,478


2,496,534


2,391,802

   Total borrowed funds

$

434,365


383,830


365,124


376,890


384,168


390,193


382,917

   Total interest-bearing liabilities

$

2,013,997


2,012,176


2,000,879


2,067,025


2,019,895


2,023,343


1,972,695

   Shareholders' equity

$

370,175


377,574


365,521


365,521


363,823


370,796


354,448
















 

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SOURCE Mercantile Bank Corporation