Press Release

Mercantile Bank Corporation Reports Second Quarter 2020 Results

Robust mortgage banking income offsets loan loss reserve build during quarter

Company Release - 7/21/2020 5:01 AM ET

GRAND RAPIDS, Mich., July 21, 2020 /PRNewswire/ -- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $8.7 million, or $0.54 per diluted share, for the second quarter of 2020, compared with net income of $11.7 million, or $0.71 per diluted share, for the respective prior-year period.  Net income during the first six months of 2020 totaled $19.4 million, or $1.19 per diluted share, compared to $23.5 million, or $1.43 per diluted share, during the first six months of 2019.

Proceeds from a bank owned life insurance claim increased net income in the prior-year second quarter by $1.3 million, or $0.08 per diluted share.  Excluding the impact of this transaction, diluted earnings per share decreased $0.09, or 14.3 percent, during the current-year second quarter compared to the respective prior-year period.  Proceeds from bank owned life insurance claims and a gain on the sale of a former branch facility increased net income in the first six months of 2019 by $3.1 million, or $0.19 per diluted share.  Excluding the impacts of these transactions, diluted earnings per share decreased $0.05, or 4.0 percent, during the first six months of 2020 compared to the respective prior-year period.

"We are pleased with our financial performance during the second quarter of 2020, especially when taking into consideration the unique and persistent challenges presented by the COVID-19 pandemic," said Robert B. Kaminski, Jr., President and Chief Executive Officer of Mercantile.  "The tremendous efforts of the Mercantile team allowed us to successfully navigate through these challenges, including meeting customers' banking needs while working remotely.  We also increased our loan loss reserve during the quarter to reflect the potential deterioration in our loan portfolio stemming from the pandemic and associated weakened economic conditions." 

Second quarter highlights include:

  • Solid capital position
  • Asset quality metrics remained strong
  • Paycheck Protection Program loan fundings of approximately $549 million
  • Continued strength in commercial loan and residential mortgage loan pipelines
  • Substantial increase in mortgage banking income
  • Controlled overhead costs

Operating Results

Total revenue, which consists of net interest income and noninterest income, was $41.6 million during the second quarter of 2020, up $4.1 million, or 11.0 percent, from the prior-year second quarter.  Net interest income during the second quarter of 2020 was $30.6 million, down $0.5 million, or 1.8 percent, from the second quarter of 2019, reflecting a decreased net interest margin, which more than offset the positive impact of earning asset growth.

The net interest margin was 3.17 percent in the second quarter of 2020, compared to 3.79 percent in the second quarter of 2019.  The yield on average earning assets was 3.85 percent during the second quarter of 2020, down from 4.85 percent during the prior-year second quarter, primarily due to a decreased yield on commercial loans, which equaled 4.20 percent in the current-year second quarter compared to 5.27 percent in the respective 2019 period.  The decreased yield on commercial loans primarily reflected reduced interest rates on variable-rate commercial loans resulting from the Federal Open Market Committee significantly lowering the targeted federal funds rate by 225 basis points during the second half of 2019 and first three months of 2020.

An improved yield on securities, which equaled 3.37 percent and 2.85 percent in the second quarters of 2020 and 2019, respectively, partially mitigated the decline in the yield on average earning assets resulting from the lower yield on commercial loans.  The increased yield on securities mainly reflected the recording of $0.9 million in accelerated discount accretion on called U.S. Government agency bonds as interest income during the second quarter of 2020.  No accelerated discount accretion was recorded during the second quarter of 2019.  The accelerated discount accretion recorded during the second quarter of 2020 positively impacted the net interest margin by 10 basis points.  As part of Mercantile's interest rate risk management program, U.S. Government agency bonds are periodically purchased at discounts during rising interest rate environments; if these bonds are called during decreasing interest rate environments, the remaining unaccreted discount amounts are immediately recognized as interest income.

Negatively impacting the net interest margin during the second quarter of 2020 was a significant volume of excess on balance sheet liquidity consisting of low-yielding deposits with the Federal Reserve Bank of Chicago and a correspondent bank.  The excess funds are primarily a product of federal government stimulus programs as well as lower business and consumer investing and spending.

The cost of funds declined from 1.06 percent during the second quarter of 2019 to 0.68 percent during the current-year second quarter, primarily due to lower rates paid on deposit accounts and borrowings, reflecting the declining interest rate environment.  A change in funding mix, consisting of an increase in lower-costing non-time deposits as a percentage of total funding sources, also contributed to the decrease in the cost of funds.

Mercantile recorded provision expense of $7.6 million and $0.9 million during the second quarters of 2020 and 2019, respectively.  The provision expense recorded during the current-year second quarter was primarily comprised of an allocation associated with the newly-created COVID-19 pandemic environmental factor ("COVID-19 factor") and an increased allocation related to the existing economic conditions environmental factor.  The COVID-19 factor was added to address the unique challenges and economic uncertainty resulting from the pandemic and its potential impact on the collectability of the loan portfolio.  The provision expense recorded during the second quarter of 2019 mainly reflected ongoing net loan growth.

Noninterest income during the second quarter of 2020 was $11.0 million, compared to $6.3 million during the prior-year second quarter.  Noninterest income during the second quarter of 2019 included a bank owned life insurance claim of $1.3 million.  Excluding the impact of this transaction, noninterest income increased $5.9 million, or nearly 118 percent, during the current-year second quarter compared to the respective 2019 period.  The higher level of noninterest income primarily reflected increased mortgage banking income, which more than offset decreased service charges on accounts and credit and debit card income.  The improved mortgage banking income mainly reflected a significant increase in refinance activity spurred by a decrease in residential mortgage loan interest rates, the continuing success of strategic initiatives that were implemented to increase market share, and an increase in the percentage of originated loans being sold.  The decline in service charges on accounts primarily resulted from reduced transaction volume in business accounts, while the decrease in credit and debit card income mainly reflected lower card usage.  The reduction in both of these revenue streams largely reflects the impact of COVID-19 related restrictions, including business shutdowns and stay-at-home orders.

Noninterest expense totaled $23.2 million during the second quarter of 2020, up $1.1 million, or 5.1 percent, from the prior-year second quarter.  The higher level of expense primarily resulted from increased compensation costs, mainly reflecting higher residential mortgage loan originator commissions and associated incentives.  In addition, higher data processing costs, primarily representing growth in transaction volume and new product offerings, and occupancy and furniture costs, mainly reflecting increased depreciation expense associated with an expansion of Mercantile's main office, contributed to the increased level of noninterest expense.

Mr. Kaminski commented, "A substantial increase in refinance activity stemming from the decreased interest rate environment, coupled with the ongoing success of strategic initiatives that were designed to expand market penetration, resulted in a record breaking level of mortgage banking income during the second quarter of 2020.  The level of purchase mortgage applications has increased in light of certain COVID-19 restrictions being lifted and is at an all-time high, and recent application activity suggests that refinance opportunities persist.  Based on the current pipeline and application volume, we believe that solid mortgage banking income can be recorded in future periods.  We expect service charges on accounts and credit and debit card income, which both declined in the second quarter of 2020 compared to the prior-year second quarter largely as a result of COVID-19 restrictions being put in place, to rebound as certain restrictions are relaxed.  We remain committed to meeting growth objectives in a cost conscious manner and are continually reviewing our branch system, product delivery channels, and treasury management solutions in an effort to identify opportunities to operate more efficiently."

Balance Sheet

As of June 30, 2020, total assets were $4.31 billion, up $681 million, or 18.8 percent, from December 31, 2019.  Total loans increased $476 million during the first six months of 2020, primarily reflecting Paycheck Protection Program loan originations of $549 million during the second quarter.  Commercial lines of credit declined $109 million during the second quarter of 2020, in large part reflecting the negative impact of stay-at-home orders on certain customers' sales volumes and the resulting reduction in borrowing needs.  As of June 30, 2020, unfunded commitments on commercial construction and development loans totaled approximately $78 million, which are expected to be largely funded over the next 12 to 18 months.  Interest-earning deposits increased $206 million during the first six months of 2020, mainly resulting from growth in certain local deposit account categories and sweep accounts.

Ray Reitsma, President of Mercantile Bank of Michigan, noted, "As evidenced by the over 2,000 loans, totaling almost $550 million, being booked during the second quarter, our team was extremely successful in assisting customers to obtain funds under the Paycheck Protection Program.  In fact, the efficient efforts of our team were noticed in the marketplace, resulting in numerous new relationship opportunities from businesses that experienced difficulties in working with their current banks to apply for Paycheck Protection Program loans.  These businesses approached us directly or were referred to us by third parties.  Our team members' focus is now shifting to assist loan recipients in the gathering and submitting of the required information to allow for the rendering of a forgiveness determination by the Small Business Administration once details of the forgiveness phase of the program are known." 

Mr. Reitsma concluded, "In addition to processing Paycheck Protection Program loans, our team members processed commercial and retail loan payment deferrals under internally developed programs designed to provide customers with needed cash flow relief.   Our asset quality metrics remained strong as of June 30, 2020, and we have continued to closely monitor the performance of our entire loan portfolio for any signs of stress brought on by the COVID-19 pandemic.  We have identified certain segments of the commercial loan portfolio, none of which exceed five percent of total commercial loans, that we believe are more susceptible to the risks presented by the pandemic and are being subjected to more stringent monitoring procedures.  Although we have spent a considerable amount of time helping customers navigate through the challenges facing them as a result of the pandemic, we have continued to allocate resources to identify and attract new client relationships and meet the conventional credit needs of our existing customers.  Our current pipeline remains strong, leading us to believe that additional commercial loans will be funded in future periods."

Excluding the impact of Paycheck Protection Program loan originations, commercial and industrial loans and owner-occupied commercial real estate loans together represented approximately 56 percent of total commercial loans as of June 30, 2020, a level that has remained relatively consistent and in line with internal expectations. 

Total deposits at June 30, 2020, were $3.26 billion, up $572 million, or 21.3 percent, from December 31, 2019.  Local deposits were up $629 million during the first six months of 2020, while brokered deposits were down $56.8 million during the same time period.  The growth in local deposits mainly reflected Paycheck Protection Program loan proceeds being deposited into customers' accounts at the time the loans were originated and remaining on deposit as of June 30, 2020.  Wholesale funds were $471 million, or approximately 12 percent of total funds, as of June 30, 2020, compared to $487 million, or approximately 15 percent of total funds, as of December 31, 2019.

Asset Quality

Nonperforming assets at June 30, 2020, were $3.4 million, or 0.1 percent of total assets, compared to $2.7 million, or 0.1 percent of total assets, at December 31, 2019, and $4.0 million, or 0.1 percent of total assets, at June 30, 2019.  During the second quarter of 2020, loan charge-offs totaled $0.3 million, while recoveries of prior period loan charge-offs equaled $0.1 million, providing for net loan charge-offs of $0.2 million, or an annualized 0.02 percent of average total loans.

Capital Position

Shareholders' equity totaled $425 million as of June 30, 2020, an increase of $8.7 million from year-end 2019.  The Bank's capital position remains above "well-capitalized" with a total risk-based capital ratio of 13.5 percent as of June 30, 2020, compared to 13.0 percent at December 31, 2019.  At June 30, 2020, the Bank had approximately $113 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a "well-capitalized" institution.  Mercantile reported 16,230,649 total shares outstanding at June 30, 2020.

As part of a $20 million common stock repurchase program announced in May 2019 and instituted in conjunction with the completion of its existing program that was introduced in January 2015 and later expanded in April 2016, Mercantile repurchased approximately 222,000 shares for $6.3 million, or a weighted average all-in cost per share of $28.25, during the first quarter of 2020; no shares were repurchased during the second quarter of 2020.  Mercantile has elected to temporarily cease stock repurchases to preserve capital for lending and other purposes while management assesses the potential impacts of the COVID-19 pandemic.  Management has the ability to reinstate the buyback program as circumstances warrant.

Mr. Kaminski concluded, "We believe our COVID-19 pandemic response plan has effectively protected our employees and customers, while allowing us to continue to meet our clients' banking needs.  The response plan remains fluid and will be updated as necessary to reflect new information and guidance provided by government agencies and health officials.  As announced earlier today, we continued our cash dividend program and provided shareholders a cash return on their investment.  We are pleased that our strong financial position enabled us to continue the program during the ongoing unique and challenging environment."

Investor Presentation

Mercantile has prepared presentation materials (the "Investor Presentation") that management intends to use during its previously announced second quarter 2020 conference call on Tuesday, July 21, 2020, at 10:00 Eastern Time, and from time to time thereafter in presentations about the Company's operations and performance.  The Investor Presentation also contains more detailed information relating to Mercantile's COVID-19 pandemic response plan.  These materials have been furnished to the U.S. Securities and Exchange Commission concurrently with this press release, and are also available on Mercantile's website at www.mercbank.com.

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 $4.3 billion and operates 40 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 may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Any such comments 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, including the significant disruption to financial market and other economic activity caused by the outbreak of COVID-19; 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 & CEO 

 Executive Vice President & CFO

616-726-1502

 616-726-1202

rkaminski@mercbank.com 

 cchristmas@mercbank.com

 

Mercantile Bank Corporation







Second Quarter 2020 Results







MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)










JUNE 30,


DECEMBER 31,


JUNE 30,



2020


2019


2019

ASSETS







   Cash and due from banks

$

84,516,000

$

53,262,000

$

57,675,000

   Interest-earning deposits


386,711,000


180,469,000


92,750,000

      Total cash and cash equivalents


471,227,000


233,731,000


150,425,000








   Securities available for sale


307,661,000


334,655,000


347,924,000

   Federal Home Loan Bank stock


18,002,000


18,002,000


18,002,000








   Loans


3,333,056,000


2,856,667,000


2,881,493,000

   Allowance for loan losses


(32,246,000)


(23,889,000)


(24,053,000)

      Loans, net


3,300,810,000


2,832,778,000


2,857,440,000








   Premises and equipment, net


59,155,000


57,327,000


51,823,000

   Bank owned life insurance


70,900,000


70,297,000


67,678,000

   Goodwill


49,473,000


49,473,000


49,473,000

   Core deposit intangible, net


3,072,000


3,840,000


4,634,000

   Other assets


34,079,000


32,812,000


28,740,000








      Total assets

$

4,314,379,000

$

3,632,915,000

$

3,576,139,000















LIABILITIES AND SHAREHOLDERS' EQUITY







   Deposits:







      Noninterest-bearing

$

1,445,620,000

$

924,916,000

$

918,581,000

      Interest-bearing


1,816,660,000


1,765,468,000


1,700,628,000

         Total deposits


3,262,280,000


2,690,384,000


2,619,209,000








   Securities sold under agreements to repurchase


167,527,000


102,675,000


119,669,000

   Federal Home Loan Bank advances


394,000,000


354,000,000


374,000,000

   Subordinated debentures


47,222,000


46,881,000


46,540,000

   Accrued interest and other liabilities


18,129,000


22,414,000


16,604,000

         Total liabilities


3,889,158,000


3,216,354,000


3,176,022,000








SHAREHOLDERS' EQUITY







   Common stock


300,897,000


305,035,000


306,669,000

   Retained earnings


118,239,000


107,831,000


90,618,000

   Accumulated other comprehensive income/(loss)


6,085,000


3,695,000


2,830,000

      Total shareholders' equity


425,221,000


416,561,000


400,117,000








      Total liabilities and shareholders' equity

$

4,314,379,000

$

3,632,915,000

$

3,576,139,000

 

Mercantile Bank Corporation














Second Quarter 2020 Results














MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF INCOME

(Unaudited)
















THREE MONTHS ENDED


THREE MONTHS ENDED

SIX MONTHS ENDED

SIX MONTHS ENDED


June 30, 2020


June 30, 2019

June 30, 2020

June 30, 2019

INTEREST INCOME














   Loans, including fees

$

34,322,000



$

36,765,000


$

67,764,000


$

72,555,000


   Investment securities


2,749,000




2,485,000



6,766,000



4,926,000


   Other interest-earning assets


93,000




569,000



568,000



976,000


      Total interest income


37,164,000




39,819,000



75,098,000



78,457,000
















INTEREST EXPENSE














   Deposits


3,700,000




5,529,000



8,342,000



10,334,000


   Short-term borrowings


55,000




68,000



94,000



173,000


   Federal Home Loan Bank advances


2,214,000




2,261,000



4,427,000



4,494,000


   Other borrowed money


624,000




845,000



1,348,000



1,695,000


      Total interest expense


6,593,000




8,703,000



14,211,000



16,696,000
















      Net interest income


30,571,000




31,116,000



60,887,000



61,761,000
















Provision for loan losses


7,600,000




900,000



8,350,000



1,750,000
















      Net interest income after














         provision for loan losses


22,971,000




30,216,000



52,537,000



60,011,000
















NONINTEREST INCOME














   Service charges on accounts


1,045,000




1,143,000



2,267,000



2,220,000


   Mortgage banking income


7,640,000




1,345,000



10,267,000



2,402,000


   Credit and debit card income


1,374,000




1,513,000



2,735,000



2,850,000


   Payroll services


370,000




355,000



947,000



860,000


   Earnings on bank owned life insurance


307,000




1,608,000



643,000



3,238,000


   Other income


248,000




370,000



675,000



1,397,000


      Total noninterest income


10,984,000




6,334,000



17,534,000



12,967,000
















NONINTEREST EXPENSE














   Salaries and benefits


14,126,000




13,286,000



27,654,000



26,302,000


   Occupancy


1,862,000




1,629,000



3,921,000



3,391,000


   Furniture and equipment


851,000




621,000



1,629,000



1,257,000


   Data processing costs


2,633,000




2,295,000



5,117,000



4,511,000


   Other expense


3,744,000




4,256,000



7,835,000



8,456,000


      Total noninterest expense


23,216,000




22,087,000



46,156,000



43,917,000
















      Income before federal income














         tax expense


10,739,000




14,463,000



23,915,000



29,061,000
















Federal income tax expense


2,041,000




2,748,000



4,545,000



5,522,000
















      Net Income

$

8,698,000



$

11,715,000


$

19,370,000


$

23,539,000
















   Basic earnings per share


$0.54




$0.71



$1.19



$1.43


   Diluted earnings per share


$0.54




$0.71



$1.19



$1.43
















   Average basic shares outstanding


16,212,500




16,428,187



16,281,391



16,428,875


   Average diluted shares outstanding


16,213,264




16,434,714



16,282,341



16,434,941


 

Mercantile Bank Corporation















Second Quarter 2020 Results















MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)


















Quarterly


Year-To-Date

(dollars in thousands except per share data)


2020


2020


2019


2019


2019







2nd Qtr


1st Qtr


4th Qtr


3rd Qtr


2nd Qtr


2020


2019

EARNINGS















   Net interest income

$

30,571


30,317


31,168


31,605


31,116


60,887


61,761

   Provision for loan losses

$

7,600


750


(700)


700


900


8,350


1,750

   Noninterest income

$

10,984


6,550


7,312


6,676


6,334


17,534


12,967

   Noninterest expense

$

23,216


22,940


23,335


22,027


22,087


46,156


43,917

   Net income before federal income















      tax expense

$

10,739


13,177


15,845


15,554


14,463


23,915


29,061

   Net income

$

8,698


10,673


13,317


12,600


11,715


19,370


23,539

   Basic earnings per share

$

0.54


0.65


0.81


0.77


0.71


1.19


1.43

   Diluted earnings per share

$

0.54


0.65


0.81


0.77


0.71


1.19


1.43

   Average basic shares outstanding


16,212,500


16,350,281


16,373,458


16,390,203


16,428,187


16,281,391


16,428,875

   Average diluted shares outstanding


16,213,264


16,351,559


16,375,740


16,393,078


16,434,714


16,282,341


16,434,941
















PERFORMANCE RATIOS















   Return on average assets


0.85%


1.19%


1.45%


1.38%


1.33%


1.01%


1.36%

   Return on average equity


8.26%


10.20%


12.87%


12.39%


12.08%


9.23%


12.41%

   Net interest margin (fully tax-equivalent)


3.17%


3.63%


3.63%


3.71%


3.79%


3.38%


3.83%

   Efficiency ratio


55.87%


62.22%


60.64%


57.54%


58.98%


58.86%


58.77%

   Full-time equivalent employees


637


626


619


624


652


637


652
















YIELD ON ASSETS / COST OF FUNDS















   Yield on loans


4.18%


4.69%


5.01%


5.06%


5.18%


4.42%


5.19%

   Yield on securities


3.37%


4.73%


2.90%


2.99%


2.85%


4.06%


2.83%

   Yield on other interest-earning assets


0.15%


1.22%


1.65%


2.15%


2.38%


0.55%


2.42%

   Yield on total earning assets


3.85%


4.54%


4.61%


4.73%


4.85%


4.17%


4.87%

   Yield on total assets


3.62%


4.23%


4.31%


4.42%


4.53%


3.91%


4.55%

   Cost of deposits


0.48%


0.70%


0.79%


0.83%


0.85%


0.58%


0.82%

   Cost of borrowed funds


1.91%


2.31%


2.36%


2.35%


2.40%


2.09%


2.41%

   Cost of interest-bearing liabilities


1.11%


1.36%


1.47%


1.52%


1.55%


1.23%


1.51%

   Cost of funds (total earning assets)


0.68%


0.91%


0.98%


1.02%


1.06%


0.79%


1.04%

   Cost of funds (total assets)


0.64%


0.85%


0.91%


0.95%


0.99%


0.74%


0.97%
















PURCHASE ACCOUNTING ADJUSTMENTS















   Loan portfolio - increase interest income

$

169


285


316


327


569


454


780

   Trust preferred - increase interest expense

$

171


171


171


171


171


342


342

   Core deposit intangible - increase overhead

$

371


397


397


397


450


768


927
















MORTGAGE BANKING ACTIVITY















   Total mortgage loans originated

$

275,486


132,859


110,611


132,852


80,205


408,345


125,137

   Purchase mortgage loans originated

$

58,015


46,538


49,407


61,839


41,986


104,553


71,877

   Refinance mortgage loans originated

$

217,471


86,321


61,204


71,013


38,219


303,792


53,260

   Total saleable mortgage loans

$

225,665


95,327


81,590


104,890


49,396


320,992


70,898

   Income on sale of mortgage loans

$

7,760


2,086


3,062


2,886


1,419


9,846


2,117
















CAPITAL















   Tangible equity to tangible assets


8.74%


10.14%


10.15%


9.67%


9.82%


8.74%


9.82%

   Tier 1 leverage capital ratio


10.21%


11.47%


11.28%


11.08%


11.17%


10.21%


11.17%

   Common equity risk-based capital ratio


11.34%


10.92%


11.00%


10.53%


10.47%


11.34%


10.47%

   Tier 1 risk-based capital ratio


12.74%


12.28%


12.36%


11.87%


11.82%


12.74%


11.82%

   Total risk-based capital ratio


13.73%


13.03%


13.09%


12.60%


12.55%


13.73%


12.55%

   Tier 1 capital

$

412,526


406,445


405,148


395,010


388,788


412,526


388,788

   Tier 1 plus tier 2 capital

$

444,772


431,273


429,038


419,424


412,841


444,772


412,841

   Total risk-weighted assets

$

3,238,444


3,309,336


3,276,754


3,327,723


3,289,958


3,238,444


3,289,958

   Book value per common share

$

26.20


25.82


25.36


24.93


24.34


26.20


24.34

   Tangible book value per common share

$

22.96


22.55


22.12


21.64


21.05


22.96


21.05

   Cash dividend per common share

$

0.28


0.28


0.27


0.27


0.26


0.56


0.52
















ASSET QUALITY















   Gross loan charge-offs

$

335


40


112


519


78


375


252

   Recoveries

$

153


229


287


180


96


382


175

   Net loan charge-offs (recoveries)

$

182


(189)


(175)


339


(18)


(7)


77

   Net loan charge-offs to average loans


0.02%


(0.03%)


(0.02%)


0.05%


(0.01%)


< (0.01%)


0.01%

   Allowance for loan losses

$

32,246


24,828


23,889


24,414


24,053


32,246


24,053

   Allowance to loans


0.97%


0.86%


0.89%


0.88%


0.89%


0.97%


0.89%

   Allowance to loans excluding PPP loans


1.16%


0.86%


0.89%


0.88%


0.89%


1.16%


0.89%

   Nonperforming loans

$

3,212


3,469


2,284


2,644


3,505


3,212


3,505

   Other real estate/repossessed assets

$

198


271


452


243


446


198


446

   Nonperforming loans to total loans


0.10%


0.12%


0.08%


0.09%


0.12%


0.10%


0.12%

   Nonperforming assets to total assets


0.08%


0.10%


0.08%


0.08%


0.11%


0.08%


0.11%
















NONPERFORMING ASSETS - COMPOSITION














   Residential real estate:















      Land development

$

36


37


34


32


33


36


33

      Construction

$

198


283


0


0


0


198


0

      Owner occupied / rental

$

2,750


2,922


2,364


2,576


3,225


2,750


3,225

   Commercial real estate:















      Land development

$

0


43


0


0


0


0


0

      Construction

$

0


0


0


0


0


0


0

      Owner occupied  

$

275


287


326


240


642


275


642

      Non-owner occupied

$

25


0


0


26


26


25


26

   Non-real estate:















      Commercial assets

$

98


156


0


0


2


98


2

      Consumer assets

$

28


12


12


13


23


28


23

   Total nonperforming assets


3,410


3,740


2,736


2,887


3,951


3,410


3,951
















NONPERFORMING ASSETS - RECON















   Beginning balance

$

3,740


2,736


2,887


3,951


4,534


2,736


4,952

   Additions - originated loans/former branch

$

220


1,344


30


339


26


1,564


565

   Other activity

$

0


(31)


135


57


34


(31)


34

   Return to performing status

$

(26)


(7)


0


(126)


0


(33)


0

   Principal payments

$

(278)


(110)


(232)


(1,014)


(512)


(388)


(894)

   Sale proceeds

$

(49)


(192)


(36)


(253)


(74)


(241)


(503)

   Loan charge-offs

$

(173)


0


(48)


(59)


(36)


(173)


(182)

   Valuation write-downs

$

(24)


0


0


(8)


(21)


(24)


(21)

   Ending balance

$

3,410


3,740


2,736


2,887


3,951


3,410


3,951
















LOAN PORTFOLIO COMPOSITION















   Commercial:















      Commercial & industrial

$

1,307,456


873,679


846,551


882,747


881,196


1,307,456


881,196

      Land development & construction

$

52,984


62,908


56,118


48,418


45,158


52,984


45,158

      Owner occupied comm'l R/E

$

567,621


579,229


579,004


567,267


556,868


567,621


556,868

      Non-owner occupied comm'l R/E

$

841,145


823,366


835,345


883,079


852,844


841,145


852,844

      Multi-family & residential rental

$

132,047


133,148


124,526


126,855


128,489


132,047


128,489

         Total commercial

$

2,901,253


2,472,330


2,441,544


2,508,366


2,464,555


2,901,253


2,464,555

   Retail:















      1-4 family mortgages

$

367,060


356,338


339,749


346,095


335,618


367,060


335,618

      Home equity & other consumer

$

64,743


72,875


75,374


78,552


81,320


64,743


81,320

         Total retail

$

431,803


429,213


415,123


424,647


416,938


431,803


416,938

         Total loans

$

3,333,056


2,901,543


2,856,667


2,933,013


2,881,493


3,333,056


2,881,493
















END OF PERIOD BALANCES















   Loans

$

3,333,056


2,901,543


2,856,667


2,933,013


2,881,493


3,333,056


2,881,493

   Securities

$

325,663


330,149


352,657


363,535


365,926


325,663


365,926

   Other interest-earning assets

$

386,711


186,938


180,469


144,263


92,750


386,711


92,750

   Total earning assets (before allowance)

$

4,045,430


3,418,630


3,389,793


3,440,811


3,340,169


4,045,430


3,340,169

   Total assets

$

4,314,379


3,657,387


3,632,915


3,710,380


3,576,139


4,314,379


3,576,139

   Noninterest-bearing deposits

$

1,445,620


956,290


924,916


967,189


918,581


1,445,620


918,581

   Interest-bearing deposits

$

1,816,660


1,689,126


1,765,468


1,799,902


1,700,628


1,816,660


1,700,628

   Total deposits

$

3,262,280


2,645,416


2,690,384


2,767,091


2,619,209


3,262,280


2,619,209

   Total borrowed funds

$

611,298


576,996


506,301


517,523


543,098


611,298


543,098

   Total interest-bearing liabilities

$

2,427,958


2,266,122


2,271,769


2,317,425


2,243,726


2,427,958


2,243,726

   Shareholders' equity

$

425,221


418,389


416,561


407,200


400,117


425,221


400,117
















AVERAGE BALANCES















   Loans

$

3,294,883


2,861,047


2,871,674


2,903,161


2,848,343


3,077,965


2,818,055

   Securities

$

333,843


344,906


362,347


363,394


357,718


339,374


356,098

   Other interest-earning assets

$

251,833


153,638


176,034


118,314


94,616


202,735


81,339

   Total earning assets (before allowance)

$

3,880,559


3,359,591


3,410,055


3,384,869


3,300,677


3,620,074


3,255,492

   Total assets

$

4,119,573


3,602,784


3,650,087


3,622,168


3,529,598


3,861,179


3,485,929

   Noninterest-bearing deposits

$

1,304,986


923,827


948,602


930,851


875,645


1,114,406


864,011

   Interest-bearing deposits

$

1,767,985


1,724,030


1,759,377


1,741,563


1,719,433


1,746,008


1,694,138

   Total deposits

$

3,072,971


2,647,857


2,707,979


2,672,414


2,595,078


2,860,414


2,558,149

   Total borrowed funds

$

607,074


517,961


509,932


529,590


530,802


562,518


531,827

   Total interest-bearing liabilities

$

2,375,059


2,241,991


2,269,309


2,271,153


2,250,235


2,308,526


2,225,965

   Shareholders' equity

$

422,230


419,612


410,593


403,350


389,133


420,921


382,654

 

Cision View original content:http://www.prnewswire.com/news-releases/mercantile-bank-corporation-reports-second-quarter-2020-results-301096644.html

SOURCE Mercantile Bank Corporation