Mercantile Bank Corporation Reports Strong Second Quarter 2019 Results

Continued strength in core profitability and solid loan growth highlight quarter

Published

GRAND RAPIDS, Mich., July 16, 2019 /PRNewswire/ -- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $11.7 million, or $0.71 per diluted share, for the second quarter of 2019, compared with net income of $9.4 million, or $0.57 per diluted share, for the respective prior-year period.  Net income during the first six months of 2019 totaled $23.5 million, or $1.43 per diluted share, compared to $20.3 million, or $1.22 per diluted share, during the first six months of 2018.

A bank owned life insurance claim increased reported net income during the second quarter of 2019 by approximately $1.3 million, or $0.08 per diluted share.  Excluding the impact of this transaction, diluted earnings per share increased $0.06, or 10.5 percent, during the second quarter of 2019 compared to the prior-year second quarter.  Bank owned life insurance claims and a gain on the sale of a former branch facility increased reported net income during the first six months of 2019 by approximately $3.1 million, or $0.19 per diluted share, while the successful collection of certain nonperforming commercial loans increased reported net income during the respective 2018 period by approximately $1.7 million, or $0.10 per diluted share.  Excluding the impacts of these transactions, diluted earnings per share increased $0.12, or 10.7 percent, during the first six months of 2019 compared to the respective prior-year period.

"We are very pleased to conclude the first half of 2019 with another quarter of solid operating results," said Robert B. Kaminski, Jr., President and Chief Executive Officer of Mercantile.  "Our sound financial condition, sustained strength in commercial and residential mortgage loan originations, and expected new loan fundings elicit confidence that the strong results achieved during the first six months of the year will continue throughout the last half of the year."

Second quarter highlights include:

  • Robust earnings performance and capital position
  • Healthy net interest margin
  • Increased fee income
  • Controlled overhead costs
  • Strong asset quality, as reflected by low levels of nonperforming assets and loans in the 30- to 89-days delinquent category
  • Annualized net loan growth of almost 12 percent
  • New commercial term loan originations of approximately $134 million
  • Continued strength in commercial and residential loan pipelines

Operating Results

Total revenue, which consists of net interest income and noninterest income, was $37.5 million during the second quarter of 2019, up $3.7 million, or 10.9 percent, from the prior-year second quarter.  Reflecting a higher level of earning assets, net interest income of $31.1 million during the second quarter of 2019 was up $1.9 million, or 6.5 percent, from the second quarter of 2018. 

The net interest margin was 3.79 percent in the second quarter of 2019.  The yield on average earning assets equaled 4.85 percent during the second quarter of 2019, up from 4.60 percent during the respective 2018 period mainly due to an increased yield on commercial loans.  The improved yield on commercial loans primarily reflects the positive impact of higher interest rates on variable-rate commercial loans stemming from the Federal Open Market Committee's raising of the targeted federal funds rate by 25 basis points in each of June, September, and December 2018.  The cost of funds equaled 1.06 percent during the second quarter of 2019, up from 0.68 percent during the prior-year second quarter mainly due to an increased cost of time deposits and a change in funding mix. Increased reliance on more costly wholesale funds during the twelve months ended June, 30, 2019, most of which occurred in the second half of 2018 and January 2019, was necessitated by various funding requirements, including ongoing loan growth and seasonal deposit withdrawals by certain business customers for bonus and tax payments.

Net interest income and the net interest margin during the second quarters of 2019 and 2018, and the first six months of the current year and prior year, were affected by purchase accounting accretion and amortization associated with fair value measurements.  Increases in interest income on loans totaling $0.6 million and $0.8 million were recorded during the second quarters of 2019 and 2018, respectively, and increases of $0.8 million and $3.0 million were recorded during the first six months of 2019 and 2018, respectively.   Purchased loan accretion amounts vary from period to period as a result of periodic cash flow re-estimations, loan payoffs, and payment performance.  Increases in interest expense on subordinated debentures totaling $0.2 million were recorded during both the current-year and prior-year second quarters, and increases of $0.3 million were recorded during both the first six months of 2019 and 2018.

Mercantile recorded a $0.9 million provision for loan losses during the second quarter of 2019 compared to a $0.7 million provision during the respective 2018 period.  The provision expense recorded during the current-year second quarter mainly reflected ongoing net loan growth, while the provision expense recorded during the second quarter of 2018 primarily reflected loan growth and increased allocations related to certain environmental factors.

Noninterest income during the second quarter of 2019 was $6.3 million, compared to $4.6 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 $0.5 million, or 10.9 percent, during the current-year second quarter compared to the respective 2018 period.  The higher level of noninterest income primarily reflected increased mortgage banking activity income and credit and debit card income.  The increased mortgage banking activity income mainly reflected the success of ongoing strategic initiatives that were instituted to increase market penetration, along with a higher level of refinance activity stemming from the recent decrease in residential mortgage loan interest rates.  Increased service charges on accounts and payroll processing fees also contributed to the improved level of noninterest income. 

Noninterest expense totaled $22.1 million during the second quarter of 2019, up $0.7 million, or 3.1 percent, from the prior-year second quarter.  The higher level of expense primarily resulted from increased salary costs, mainly reflecting annual employee merit pay increases and higher stock-based compensation expense.

Mr. Kaminski continued, "As anticipated, our net interest margin remained strong during the second quarter of 2019, depicting our ongoing emphasis on loan pricing discipline and sound underwriting.  We are pleased with the growth in key fee income categories, and we remain steadfast in our efforts to achieve growth initiatives in a cost-conscious manner.  The noteworthy increase in mortgage banking activity income reflects the success of continuing strategic initiatives designed to further market penetration, along with a spike in refinance activity spurred by the recent decline in residential mortgage loan interest rates."

Balance Sheet

As of June 30, 2019, total assets were $3.58 billion, up $212 million, or 6.3 percent, from December 31, 2018.  Total loans and interest-earning deposits increased $128 million and $82.3 million, respectively, over the same time period.  During the twelve months ended June 30, 2019, total loans were up $245 million, or 9.3 percent.  Approximately $134 million and $259 million in commercial term loans to new and existing borrowers were originated during the second quarter and first six months of 2019, respectively, as ongoing sales and relationship-building efforts resulted in increased lending opportunities.  As of June 30, 2019, unfunded commitments on commercial construction and development loans totaled approximately $129 million, which are expected to be largely funded over the next 12 to 18 months.  The growth in interest-earning deposits mainly stemmed from certain deposit-gathering initiatives and an increase in wholesale funds.

Ray Reitsma, President of Mercantile Bank of Michigan, noted, "Our lending team's continuing focus on identifying new customer relationships and meeting the needs of our existing customer base is evidenced by the solid net loan growth realized during the second quarter of 2019.  We are very pleased with the level of new commercial term loan originations during the quarter, which were commensurate with quarterly originations over the past several years.  We remain committed to growing the loan portfolio in a disciplined manner, with an ongoing emphasis on credit quality and risk-based pricing, and maintaining the combined commercial and industrial loan and owner-occupied commercial real estate loan portfolios at a minimum percentage of total commercial loans.  Based on anticipated new loan fundings, we are confident that we can continue to grow the commercial loan portfolio in future periods.  Depicting our efforts to increase market presence and a higher level of refinance activity, our residential mortgage loan portfolio expanded for the thirteenth consecutive quarter.  In light of the current strong pipeline, we are optimistic that the residential mortgage loan portfolio can also increase going forward."

As of June 30, 2019, commercial and industrial loans and owner-occupied commercial real estate loans combined represented approximately 58 percent of total commercial loans, a level that has remained relatively consistent and in line with internal expectations. 

Total deposits at June 30, 2019, were $2.62 billion, up $156 million from December 31, 2018.  Local deposits and brokered deposits were up $99.3 million and $56.2 million, respectively, during the first six months of 2019.  The growth in local deposits was mainly driven by a special time deposit campaign that was introduced mid first quarter and ended in early April, along with an increase in business money market accounts. Wholesale funds were $543 million, or approximately 17 percent of total funds, as of June 30, 2019, compared to $474 million, or approximately 16 percent of total funds, as of December 31, 2018.  A substantial portion of the growth in wholesale funds during the first six months of 2019 occurred in January; the monies were used primarily to fund strong loan growth recorded in late 2018 and early 2019 and offset typical and expected seasonal business deposit withdrawals used for bonus and tax payments, as well as to maintain sufficient balance sheet liquidity.

Asset Quality

Nonperforming assets at June 30, 2019, were $4.0 million, or 0.1 percent of total assets, compared to $5.0 million, or 0.2 percent of total assets, at December 31, 2018.  The level of past due loans remains nominal, and loan relationships on the internal watch list have remained relatively consistent in number and dollar volume.  During the second quarter of 2019, nominal net loan recoveries, representing an annualized 0.01 percent of average total loans, were recorded. 

Capital Position

Shareholders' equity totaled $400 million as of June 30, 2019, an increase of $24.9 million from year-end 2018.  The Bank's capital position remains above "well-capitalized" with a total risk-based capital ratio of 12.4 percent as of June 30, 2019, compared to 12.3 percent at December 31, 2018.  At June 30, 2019, the Bank had approximately $78 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a "well-capitalized" institution.  Mercantile reported 16,440,356 total shares outstanding at June 30, 2019.

As part of a $20 million common stock repurchase program announced in January 2015, and later expanded by $15 million in April 2016, Mercantile repurchased approximately 119,000 shares for $3.6 million, or a weighted average all-in cost per share of $30.23, during the first quarter of 2019; no shares were repurchased during the second quarter of 2019.  Since the program's inception, Mercantile repurchased approximately 1,275,000 shares for $29.0 million, or a weighted average all-in cost per share of $22.77.  In conjunction with the anticipated completion of its existing program, Mercantile announced a new $20 million stock repurchase plan in May 2019.

Mr. Kaminski concluded, "With our strong financial performance during the first six months of 2019, we are well positioned to meet growth and profitability goals and further enhance shareholder value.  The ongoing cash dividend program, including the announcement of an increased third quarter regular dividend earlier today, exhibits our long-term commitment to enhancing total shareholder return.  We continue to gain new clients through our value-added approach and the offering of a wide-range of products and services, and we are excited about opportunities that we believe are available to us to expand our business in our markets.  Based on our sustained financial strength and healthy loan pipelines, we are confident in our ability to deliver robust performance not only during the remainder of the current year, but into the foreseeable periods as well."

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 $3.5 billion and operates 46 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 & CEO                           Executive Vice President & CFO
616-726-1502                               616-726-1202
rkaminski@mercbank.com                cchristmas@mercbank.com

 

FOR FURTHER INFORMATION: Mercantile Bank Corporation
Robert B. Kaminski, Jr.                     Charles Christmas Second Quarter 2019 Results
President & CEO                           Executive Vice President & CFO MERCANTILE BANK CORPORATION
616-726-1502                               616-726-1202 CONSOLIDATED BALANCE SHEETS
rkaminski@mercbank.com                cchristmas@mercbank.com (Unaudited)
JUNE 30, DECEMBER 31, JUNE 30,
2019 2018 2018
ASSETS
   Cash and due from banks $ 57,675,000 $ 64,872,000 $ 56,338,000
   Interest-earning deposits 92,750,000 10,482,000 69,402,000
      Total cash and cash equivalents 150,425,000 75,354,000 125,740,000
   Securities available for sale 347,924,000 337,366,000 331,142,000
   Federal Home Loan Bank stock 18,002,000 16,022,000 11,036,000
   Loans 2,881,493,000 2,753,085,000 2,636,856,000
   Allowance for loan losses (24,053,000) (22,380,000) (21,167,000)
      Loans, net 2,857,440,000 2,730,705,000 2,615,689,000
   Premises and equipment, net 51,823,000 48,321,000 47,102,000
   Bank owned life insurance 67,678,000 69,647,000 69,321,000
   Goodwill 49,473,000 49,473,000 49,473,000
   Core deposit intangible, net 4,634,000 5,561,000 6,514,000
   Other assets 28,740,000 31,458,000 32,504,000
      Total assets $ 3,576,139,000 $ 3,363,907,000 $ 3,288,521,000
LIABILITIES AND SHAREHOLDERS' EQUITY
   Deposits:
      Noninterest-bearing $ 918,581,000 $ 889,784,000 $ 884,470,000
      Interest-bearing 1,700,628,000 1,573,924,000 1,645,341,000
         Total deposits 2,619,209,000 2,463,708,000 2,529,811,000
   Securities sold under agreements to repurchase 119,669,000 103,519,000 94,573,000
   Federal Home Loan Bank advances 374,000,000 350,000,000 230,000,000
   Subordinated debentures 46,540,000 46,199,000 45,858,000
   Accrued interest and other liabilities 16,604,000 25,232,000 13,360,000
         Total liabilities 3,176,022,000 2,988,658,000 2,913,602,000
SHAREHOLDERS' EQUITY
   Common stock 306,669,000 308,005,000 311,720,000
   Retained earnings 90,618,000 75,483,000 74,084,000
   Accumulated other comprehensive income/(loss) 2,830,000 (8,239,000) (10,885,000)
      Total shareholders' equity 400,117,000 375,249,000 374,919,000
      Total liabilities and shareholders' equity $ 3,576,139,000 $ 3,363,907,000 $ 3,288,521,000

 

FOR FURTHER INFORMATION: Mercantile Bank Corporation Mercantile Bank Corporation
Robert B. Kaminski, Jr.                     Charles Christmas Second Quarter 2019 Results Second Quarter 2019 Results
President & CEO                           Executive Vice President & CFO MERCANTILE BANK CORPORATION MERCANTILE BANK CORPORATION
616-726-1502                               616-726-1202 CONSOLIDATED BALANCE SHEETS CONSOLIDATED REPORTS OF INCOME
rkaminski@mercbank.com                cchristmas@mercbank.com (Unaudited) (Unaudited)
JUNE 30, DECEMBER 31, JUNE 30, THREE MONTHS ENDED THREE MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
2019 2018 2018 June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
ASSETS INTEREST INCOME
   Cash and due from banks $ 57,675,000 $ 64,872,000 $ 56,338,000    Loans, including fees $ 36,765,000 $ 31,855,000 $ 72,555,000 $ 64,170,000
   Interest-earning deposits 92,750,000 10,482,000 69,402,000    Investment securities 2,485,000 2,177,000 4,926,000 4,373,000
      Total cash and cash equivalents 150,425,000 75,354,000 125,740,000    Other interest-earning assets 569,000 287,000 976,000 757,000
      Total interest income 39,819,000 34,319,000 78,457,000 69,300,000
   Securities available for sale 347,924,000 337,366,000 331,142,000
   Federal Home Loan Bank stock 18,002,000 16,022,000 11,036,000 INTEREST EXPENSE
   Deposits 5,529,000 3,262,000 10,334,000 6,347,000
   Loans 2,881,493,000 2,753,085,000 2,636,856,000    Short-term borrowings 68,000 61,000 173,000 118,000
   Allowance for loan losses (24,053,000) (22,380,000) (21,167,000)    Federal Home Loan Bank advances 2,261,000 988,000 4,494,000 1,933,000
      Loans, net 2,857,440,000 2,730,705,000 2,615,689,000    Other borrowed money 845,000 783,000 1,695,000 1,478,000
      Total interest expense 8,703,000 5,094,000 16,696,000 9,876,000
   Premises and equipment, net 51,823,000 48,321,000 47,102,000
   Bank owned life insurance 67,678,000 69,647,000 69,321,000       Net interest income 31,116,000 29,225,000 61,761,000 59,424,000
   Goodwill 49,473,000 49,473,000 49,473,000
   Core deposit intangible, net 4,634,000 5,561,000 6,514,000 Provision for loan losses 900,000 700,000 1,750,000 700,000
   Other assets 28,740,000 31,458,000 32,504,000
      Net interest income after
      Total assets $ 3,576,139,000 $ 3,363,907,000 $ 3,288,521,000          provision for loan losses 30,216,000 28,525,000 60,011,000 58,724,000
NONINTEREST INCOME
LIABILITIES AND SHAREHOLDERS' EQUITY    Service charges on accounts 1,143,000 1,079,000 2,220,000 2,132,000
   Deposits:    Credit and debit card income 1,513,000 1,334,000 2,850,000 2,577,000
      Noninterest-bearing $ 918,581,000 $ 889,784,000 $ 884,470,000    Mortgage banking income 1,345,000 995,000 2,402,000 1,879,000
      Interest-bearing 1,700,628,000 1,573,924,000 1,645,341,000    Payroll services 355,000 317,000 860,000 800,000
         Total deposits 2,619,209,000 2,463,708,000 2,529,811,000    Earnings on bank owned life insurance 1,608,000 321,000 3,238,000 652,000
   Other income 370,000 504,000 1,397,000 891,000
   Securities sold under agreements to repurchase 119,669,000 103,519,000 94,573,000       Total noninterest income 6,334,000 4,550,000 12,967,000 8,931,000
   Federal Home Loan Bank advances 374,000,000 350,000,000 230,000,000
   Subordinated debentures 46,540,000 46,199,000 45,858,000 NONINTEREST EXPENSE
   Accrued interest and other liabilities 16,604,000 25,232,000 13,360,000    Salaries and benefits 13,286,000 12,757,000 26,302,000 25,094,000
         Total liabilities 3,176,022,000 2,988,658,000 2,913,602,000    Occupancy 1,629,000 1,629,000 3,391,000 3,401,000
   Furniture and equipment 621,000 582,000 1,257,000 1,130,000
SHAREHOLDERS' EQUITY    Data processing costs 2,295,000 2,137,000 4,511,000 4,265,000
   Common stock 306,669,000 308,005,000 311,720,000    Other expense 4,256,000 4,309,000 8,456,000 8,671,000
   Retained earnings 90,618,000 75,483,000 74,084,000       Total noninterest expense 22,087,000 21,414,000 43,917,000 42,561,000
   Accumulated other comprehensive income/(loss) 2,830,000 (8,239,000) (10,885,000)
      Total shareholders' equity 400,117,000 375,249,000 374,919,000       Income before federal income
         tax expense 14,463,000 11,661,000 29,061,000 25,094,000
      Total liabilities and shareholders' equity $ 3,576,139,000 $ 3,363,907,000 $ 3,288,521,000
Federal income tax expense 2,748,000 2,215,000 5,522,000 4,767,000
      Net Income $ 11,715,000 $ 9,446,000 $ 23,539,000 $ 20,327,000
   Basic earnings per share $0.71 $0.57 $1.43 $1.22
   Diluted earnings per share $0.71 $0.57 $1.43 $1.22
   Average basic shares outstanding 16,428,187 16,601,400 16,428,875 16,598,274
   Average diluted shares outstanding 16,434,714 16,610,819 16,434,941 16,607,593

 

FOR FURTHER INFORMATION: Mercantile Bank Corporation Mercantile Bank Corporation Mercantile Bank Corporation
Robert B. Kaminski, Jr.                     Charles Christmas Second Quarter 2019 Results Second Quarter 2019 Results Second Quarter 2019 Results
President & CEO                           Executive Vice President & CFO MERCANTILE BANK CORPORATION MERCANTILE BANK CORPORATION MERCANTILE BANK CORPORATION
616-726-1502                               616-726-1202 CONSOLIDATED BALANCE SHEETS CONSOLIDATED REPORTS OF INCOME CONSOLIDATED FINANCIAL HIGHLIGHTS
rkaminski@mercbank.com                cchristmas@mercbank.com (Unaudited) (Unaudited) (Unaudited)
JUNE 30, DECEMBER 31, JUNE 30, THREE MONTHS ENDED THREE MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED Quarterly Year-To-Date
2019 2018 2018 June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 (dollars in thousands except per share data) 2019 2019 2018 2018 2018
ASSETS INTEREST INCOME 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 2019 2018
   Cash and due from banks $ 57,675,000 $ 64,872,000 $ 56,338,000    Loans, including fees $ 36,765,000 $ 31,855,000 $ 72,555,000 $ 64,170,000 EARNINGS
   Interest-earning deposits 92,750,000 10,482,000 69,402,000    Investment securities 2,485,000 2,177,000 4,926,000 4,373,000    Net interest income $ 31,116 30,645 30,818 29,840 29,225 61,761 59,424
      Total cash and cash equivalents 150,425,000 75,354,000 125,740,000    Other interest-earning assets 569,000 287,000 976,000 757,000    Provision for loan losses $ 900 850 0 400 700 1,750 700
      Total interest income 39,819,000 34,319,000 78,457,000 69,300,000    Noninterest income $ 6,334 6,632 5,370 4,708 4,550 12,967 8,931
   Securities available for sale 347,924,000 337,366,000 331,142,000    Noninterest expense $ 22,087 21,830 21,958 21,650 21,414 43,917 42,561
   Federal Home Loan Bank stock 18,002,000 16,022,000 11,036,000 INTEREST EXPENSE    Net income before federal income
   Deposits 5,529,000 3,262,000 10,334,000 6,347,000       tax expense $ 14,463 14,597 14,230 12,498 11,661 29,061 25,094
   Loans 2,881,493,000 2,753,085,000 2,636,856,000    Short-term borrowings 68,000 61,000 173,000 118,000    Net income $ 11,715 11,824 11,573 10,123 9,446 23,539 20,327
   Allowance for loan losses (24,053,000) (22,380,000) (21,167,000)    Federal Home Loan Bank advances 2,261,000 988,000 4,494,000 1,933,000    Basic earnings per share $ 0.71 0.72 0.70 0.61 0.57 1.43 1.22
      Loans, net 2,857,440,000 2,730,705,000 2,615,689,000    Other borrowed money 845,000 783,000 1,695,000 1,478,000    Diluted earnings per share $ 0.71 0.72 0.70 0.61 0.57 1.43 1.22
      Total interest expense 8,703,000 5,094,000 16,696,000 9,876,000    Average basic shares outstanding 16,428,187 16,429,571 16,594,412 16,611,411 16,601,400 16,428,875 16,598,274
   Premises and equipment, net 51,823,000 48,321,000 47,102,000    Average diluted shares outstanding 16,434,714 16,435,176 16,600,108 16,619,295 16,610,819 16,434,941 16,607,593
   Bank owned life insurance 67,678,000 69,647,000 69,321,000       Net interest income 31,116,000 29,225,000 61,761,000 59,424,000
   Goodwill 49,473,000 49,473,000 49,473,000 PERFORMANCE RATIOS
   Core deposit intangible, net 4,634,000 5,561,000 6,514,000 Provision for loan losses 900,000 700,000 1,750,000 700,000    Return on average assets 1.33% 1.39% 1.39% 1.22% 1.17% 1.36% 1.26%
   Other assets 28,740,000 31,458,000 32,504,000    Return on average equity 12.08% 12.75% 12.40% 10.64% 10.25% 12.41% 11.15%
      Net interest income after    Net interest margin (fully tax-equivalent) 3.79% 3.88% 3.98% 3.87% 3.92% 3.83% 3.99%
      Total assets $ 3,576,139,000 $ 3,363,907,000 $ 3,288,521,000          provision for loan losses 30,216,000 28,525,000 60,011,000 58,724,000    Efficiency ratio 58.98% 58.56% 60.68% 62.67% 63.40% 58.77% 62.26%
   Full-time equivalent employees 652 631 630 637 667 652 667
NONINTEREST INCOME
LIABILITIES AND SHAREHOLDERS' EQUITY    Service charges on accounts 1,143,000 1,079,000 2,220,000 2,132,000 YIELD ON ASSETS / COST OF FUNDS
   Deposits:    Credit and debit card income 1,513,000 1,334,000 2,850,000 2,577,000    Yield on loans 5.18% 5.21% 5.08% 4.91% 4.92% 5.19% 5.03%
      Noninterest-bearing $ 918,581,000 $ 889,784,000 $ 884,470,000    Mortgage banking income 1,345,000 995,000 2,402,000 1,879,000    Yield on securities 2.85% 2.82% 2.80% 2.70% 2.64% 2.83% 2.62%
      Interest-bearing 1,700,628,000 1,573,924,000 1,645,341,000    Payroll services 355,000 317,000 860,000 800,000    Yield on other interest-earning assets 2.38% 2.40% 2.20% 1.98% 1.80% 2.42% 1.64%
         Total deposits 2,619,209,000 2,463,708,000 2,529,811,000    Earnings on bank owned life insurance 1,608,000 321,000 3,238,000 652,000    Yield on total earning assets 4.85% 4.89% 4.80% 4.60% 4.60% 4.87% 4.65%
   Other income 370,000 504,000 1,397,000 891,000    Yield on total assets 4.53% 4.56% 4.46% 4.28% 4.27% 4.55% 4.32%
   Securities sold under agreements to repurchase 119,669,000 103,519,000 94,573,000       Total noninterest income 6,334,000 4,550,000 12,967,000 8,931,000    Cost of deposits 0.85% 0.77% 0.63% 0.56% 0.53% 0.82% 0.51%
   Federal Home Loan Bank advances 374,000,000 350,000,000 230,000,000    Cost of borrowed funds 2.40% 2.43% 2.22% 2.14% 2.01% 2.41% 1.92%
   Subordinated debentures 46,540,000 46,199,000 45,858,000 NONINTEREST EXPENSE    Cost of interest-bearing liabilities 1.55% 1.47% 1.26% 1.11% 1.02% 1.51% 0.98%
   Accrued interest and other liabilities 16,604,000 25,232,000 13,360,000    Salaries and benefits 13,286,000 12,757,000 26,302,000 25,094,000    Cost of funds (total earning assets) 1.06% 1.01% 0.82% 0.73% 0.68% 1.04% 0.66%
         Total liabilities 3,176,022,000 2,988,658,000 2,913,602,000    Occupancy 1,629,000 1,629,000 3,391,000 3,401,000    Cost of funds (total assets) 0.99% 0.94% 0.76% 0.68% 0.63% 0.97% 0.61%
   Furniture and equipment 621,000 582,000 1,257,000 1,130,000
SHAREHOLDERS' EQUITY    Data processing costs 2,295,000 2,137,000 4,511,000 4,265,000 PURCHASE ACCOUNTING ADJUSTMENTS
   Common stock 306,669,000 308,005,000 311,720,000    Other expense 4,256,000 4,309,000 8,456,000 8,671,000    Loan portfolio - increase interest income $ 569 211 603 386 777 780 3,048
   Retained earnings 90,618,000 75,483,000 74,084,000       Total noninterest expense 22,087,000 21,414,000 43,917,000 42,561,000    Trust preferred - increase interest expense $ 171 171 171 171 171 342 342
   Accumulated other comprehensive income/(loss) 2,830,000 (8,239,000) (10,885,000)    Core deposit intangible - increase overhead $ 450 477 477 477 530 927 1,086
      Total shareholders' equity 400,117,000 375,249,000 374,919,000       Income before federal income
         tax expense 14,463,000 11,661,000 29,061,000 25,094,000 MORTGAGE BANKING ACTIVITY
      Total liabilities and shareholders' equity $ 3,576,139,000 $ 3,363,907,000 $ 3,288,521,000    Total mortgage loans originated $ 80,205 44,932 44,448 66,829 62,032 125,137 102,969
Federal income tax expense 2,748,000 2,215,000 5,522,000 4,767,000    Purchase mortgage loans originated $ 41,986 29,891 29,729 47,704 41,239 71,877 66,376
   Refinance mortgage loans originated $ 38,219 15,041 14,719 19,125 20,793 53,260 36,593
      Net Income $ 11,715,000 $ 9,446,000 $ 23,539,000 $ 20,327,000    Total saleable mortgage loans $ 49,396 21,502 21,805 30,713 24,114 70,898 43,927
   Net gain on sale of mortgage loans $ 1,419 698 829 1,116 851 2,117 1,580
   Basic earnings per share $0.71 $0.57 $1.43 $1.22
   Diluted earnings per share $0.71 $0.57 $1.43 $1.22 CAPITAL
   Tangible equity to tangible assets 9.82% 9.41% 9.68% 9.98% 9.87% 9.82% 9.87%
   Average basic shares outstanding 16,428,187 16,601,400 16,428,875 16,598,274    Tier 1 leverage capital ratio 11.17% 11.16% 11.41% 11.76% 11.81% 11.17% 11.81%
   Average diluted shares outstanding 16,434,714 16,610,819 16,434,941 16,607,593    Common equity risk-based capital ratio 10.47% 10.46% 10.41% 10.93% 11.03% 10.47% 11.03%
   Tier 1 risk-based capital ratio 11.82% 11.84% 11.80% 12.35% 12.49% 11.82% 12.49%
   Total risk-based capital ratio 12.55% 12.56% 12.50% 13.05% 13.19% 12.55% 13.19%
   Tier 1 capital $ 388,788 379,334 373,721 382,829 375,167 388,788 375,167
   Tier 1 plus tier 2 capital $ 412,841 402,469 396,102 404,521 396,334 412,841 396,334
   Total risk-weighted assets $ 3,289,958 3,204,295 3,167,655 3,100,158 3,003,778 3,289,958 3,003,778
   Book value per common share $ 24.34 23.37 22.70 22.84 22.57 24.34 22.57
   Tangible book value per common share $ 21.05 20.05 19.37 19.50 19.20 21.05 19.20
   Cash dividend per common share $ 0.26 0.26 1.00 0.24 0.22 0.52 0.44
ASSET QUALITY
   Gross loan charge-offs $ 78 174 354 169 273 252 927
   Recoveries $ 96 79 1,042 294 766 175 1,893
   Net loan charge-offs (recoveries) $ (18) 95 (688) (125) (493) 77 (966)
   Net loan charge-offs to average loans (0.01%) 0.01% (0.10%) (0.02%) (0.08%) 0.01% (0.08%)
   Allowance for loan losses $ 24,053 23,135 22,380 21,692 21,167 24,053 21,167
   Allowance to originated loans 0.89% 0.89% 0.88% 0.88% 0.89% 0.89% 0.89%
   Nonperforming loans $ 3,505 4,138 4,141 4,852 4,965 3,505 4,965
   Other real estate/repossessed assets $ 446 396 811 948 842 446 842
   Nonperforming loans to total loans 0.12% 0.15% 0.15% 0.18% 0.19% 0.12% 0.19%
   Nonperforming assets to total assets 0.11% 0.13% 0.15% 0.18% 0.18% 0.11% 0.18%
NONPERFORMING ASSETS - COMPOSITION
   Residential real estate:
      Land development $ 33 45 0 0 0 33 0
      Construction $ 0 0 0 0 0 0 0
      Owner occupied / rental $ 3,225 3,404 3,555 3,908 3,650 3,225 3,650
   Commercial real estate:
      Land development $ 0 0 0 0 0 0 0
      Construction $ 0 0 0 0 0 0 0
      Owner occupied   $ 642 791 1,363 1,543 1,957 642 1,957
      Non-owner occupied $ 26 62 0 0 0 26 0
   Non-real estate:
      Commercial assets $ 2 207 17 331 180 2 180
      Consumer assets $ 23 25 17 18 20 23 20
   Total nonperforming assets 3,951 4,534 4,952 5,800 5,807 3,951 5,807
NONPERFORMING ASSETS - RECON
   Beginning balance $ 4,534 4,952 5,800 5,807 8,126 4,952 9,403
   Additions - originated loans/former branch $ 26 539 1,247 999 300 565 1,726
   Merger-related activity $ 34 0 0 5 17 34 46
   Return to performing status $ 0 0 0 0 0 0 (175)
   Principal payments $ (512) (382) (1,836) (857) (778) (894) (2,335)
   Sale proceeds $ (74) (429) (128) (147) (1,807) (503) (2,106)
   Loan charge-offs $ (36) (146) (57) (3) (50) (182) (647)
   Valuation write-downs $ (21) 0 (74) (4) (1) (21) (105)
   Ending balance $ 3,951 4,534 4,952 5,800 5,807 3,951 5,807
LOAN PORTFOLIO COMPOSITION
   Commercial:
      Commercial & industrial $ 881,196 839,207 822,723 818,113 776,995 881,196 776,995
      Land development & construction $ 45,158 45,892 44,885 39,396 37,868 45,158 37,868
      Owner occupied comm'l R/E $ 556,868 551,517 548,619 542,730 533,075 556,868 533,075
      Non-owner occupied comm'l R/E $ 852,844 835,679 816,282 811,767 818,376 852,844 818,376
      Multi-family & residential rental $ 128,489 127,903 127,597 94,101 95,656 128,489 95,656
         Total commercial $ 2,464,555 2,400,198 2,360,106 2,306,107 2,261,970 2,464,555 2,261,970
   Retail:
      1-4 family mortgages $ 335,618 316,315 307,540 301,765 283,657 335,618 283,657
      Home equity & other consumer $ 81,320 83,126 85,439 89,545 91,229 81,320 91,229
         Total retail $ 416,938 399,441 392,979 391,310 374,886 416,938 374,886
         Total loans $ 2,881,493 2,799,639 2,753,085 2,697,417 2,636,856 2,881,493 2,636,856
END OF PERIOD BALANCES
   Loans $ 2,881,493 2,799,639 2,753,085 2,697,417 2,636,856 2,881,493 2,636,856
   Securities $ 365,926 355,878 353,388 337,603 342,178 365,926 342,178
   Other interest-earning assets $ 92,750 168,572 10,482 28,193 69,402 92,750 69,402
   Total earning assets (before allowance) $ 3,340,169 3,324,089 3,116,955 3,063,213 3,048,436 3,340,169 3,048,436
   Total assets $ 3,576,139 3,551,754 3,363,907 3,300,106 3,288,521 3,576,139 3,288,521
   Noninterest-bearing deposits $ 918,581 857,734 889,784 879,442 884,470 918,581 884,470
   Interest-bearing deposits $ 1,700,628 1,753,240 1,573,924 1,629,368 1,645,341 1,700,628 1,645,341
   Total deposits $ 2,619,209 2,610,974 2,463,708 2,508,810 2,529,811 2,619,209 2,529,811
   Total borrowed funds $ 543,098 544,566 513,220 401,575 373,642 543,098 373,642
   Total interest-bearing liabilities $ 2,243,726 2,297,806 2,087,144 2,030,943 2,018,983 2,243,726 2,018,983
   Shareholders' equity $ 400,117 383,729 375,249 379,465 374,919 400,117 374,919
AVERAGE BALANCES
   Loans $ 2,848,343 2,787,430 2,706,617 2,658,092 2,596,828 2,818,055 2,574,573
   Securities $ 357,718 354,459 343,597 342,593 340,990 356,098 344,690
   Other interest-earning assets $ 94,616 67,915 30,564 61,810 63,336 81,339 93,318
   Total earning assets (before allowance) $ 3,300,677 3,209,804 3,080,778 3,062,495 3,001,154 3,255,492 3,012,581
   Total assets $ 3,529,598 3,441,774 3,312,648 3,295,129 3,232,038 3,485,929 3,240,867
   Noninterest-bearing deposits $ 875,645 852,247 905,065 893,181 848,650 864,011 827,052
   Interest-bearing deposits $ 1,719,433 1,668,563 1,579,632 1,628,346 1,635,755 1,694,138 1,662,795
   Total deposits $ 2,595,078 2,520,810 2,484,697 2,521,527 2,484,405 2,558,149 2,489,847
   Total borrowed funds $ 530,802 532,864 434,365 383,830 365,124 531,827 370,975
   Total interest-bearing liabilities $ 2,250,235 2,201,427 2,013,997 2,012,176 2,000,879 2,225,965 2,033,770
   Shareholders' equity $ 389,133 376,103 370,175 377,574 365,521 382,654 367,666

 

 

 

Cision View original content:http://www.prnewswire.com/news-releases/mercantile-bank-corporation-reports-strong-second-quarter-2019-results-300885093.html

SOURCE Mercantile Bank Corporation

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