Mercantile Bank Corporation Announces Solid Second Quarter Results

Strong local deposit and commercial loan growth and ongoing strength in asset quality metrics highlight quarter

GRAND RAPIDS, Mich., July 16, 2024 /PRNewswire/ -- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $18.8 million, or $1.17 per diluted share, for the second quarter of 2024, compared with net income of $20.4 million, or $1.27 per diluted share, for the second quarter of 2023.  Net income during the first six months of 2024 totaled $40.3 million, or $2.50 per diluted share, compared with net income of $41.3 million, or $2.58 per diluted share, during the first six months of 2023.

"Our solid second quarter financial performance provides further evidence of our ability to successfully navigate the challenges arising from shifting economic and operating environments," said Ray Reitsma, President and Chief Executive Officer of Mercantile. "We are very pleased with the levels of local deposit and commercial loan growth during the quarter, which demonstrate our ongoing focus on new client acquisition, meeting the banking needs of existing customers, and relationship banking.  Our net interest margin remained healthy during the second quarter, which when coupled with the local deposit and commercial loan expansion and notable increases in several noninterest income categories, provided for strong operating results during the period.  As evidenced by the sustained strength in asset quality metrics, we remain committed to growing and administering the loan portfolio in a disciplined manner."

Second quarter highlights include:

• Strong local deposit growth
• Robust commercial loan portfolio expansion
• Continuing strength in commercial loan pipeline
• Substantial increases in several noninterest income revenue streams
• Sustained low levels of nonperforming assets, past due loans, and loan charge-offs
• Solid capital position

Operating Results

Net revenue, consisting of net interest income and noninterest income, was $56.8 million during the second quarter of 2024, up $1.6 million, or 2.8 percent, from $55.2 million during the prior-year second quarter.  Net interest income during the current-year second quarter was $47.1 million, down $0.5 million, or 1.0 percent, from $47.6 million during the respective 2023 period as higher yields on, along with growth in, earning assets were more than offset by an increased cost of funds. Noninterest income totaled $9.7 million during the second quarter of 2024, up $2.0 million, or 26.6 percent, from $7.7 million during the second quarter of 2023.  The increase in noninterest income mainly reflected higher levels of mortgage banking income and service charges on accounts. 

The net interest margin was 3.63 percent in the second quarter of 2024, down from 4.05 percent in the prior-year second quarter.  The yield on average earning assets was 6.07 percent during the current-year second quarter, an increase from 5.61 percent during the respective 2023 period.  The higher yield primarily resulted from an increased yield on loans.  The yield on loans was 6.64 percent during the second quarter of 2024, up from 6.19 percent during the second quarter of 2023 mainly due to higher interest rates on variable-rate commercial loans resulting from the Federal Open Market Committee ("FOMC") raising the targeted federal funds rate in an effort to reduce elevated inflation levels.  The FOMC increased the targeted federal funds rate by 75 basis points during the period of March 2023 through July 2023, during which time average variable-rate commercial loans represented approximately 68 percent of average total commercial loans.

The cost of funds was 2.44 percent in the second quarter of 2024, up from 1.56 percent in the second quarter of 2023 primarily due to higher costs of deposits and borrowed funds, reflecting the impact of the rising interest rate environment.  A change in funding mix, mainly consisting of a decrease in noninterest-bearing and lower-cost deposits and an increase in higher-cost money market accounts and time deposits stemming from deposit migration and new deposit relationships, also contributed to the increased cost of funds.

Mercantile recorded provisions for credit losses of $3.5 million and $2.0 million during the second quarters of 2024 and 2023, respectively.  The provision expense recorded during the current-year second quarter primarily reflected an individual allocation for a nonperforming commercial loan relationship and allocations necessitated by net loan growth.  The provision expense recorded during the second quarter of 2023 mainly reflected allocations required by net loan growth and adjustments to historical loss factors to better represent Mercantile's expectations for future credit losses.

Noninterest income totaled $9.7 million during the second quarter of 2024, up $2.0 million, or 26.6 percent, from $7.7 million during the second quarter of 2023.  The growth primarily resulted from increases in mortgage banking income and service charges on accounts, with the latter mainly stemming from enhanced use of cash management products.  The higher level of mortgage banking income primarily resulted from an increased loan sold percentage, which rose from approximately 43 percent during the second quarter of 2023 to approximately 75 percent during the second quarter of 2024.  Increases in payroll service fees, bank owned life insurance income, and interest rate swap income also contributed to the higher level of noninterest income.

Noninterest expense totaled $29.7 million during the second quarter of 2024, compared to $27.8 million during the prior-year second quarter.  The increase in noninterest expense mainly resulted from larger salary costs, reflecting annual merit pay increases, market adjustments, higher residential mortgage lender commissions and incentives, and lower residential mortgage loan deferred salary costs.  Higher levels of data processing costs, primarily reflecting increased transaction volume and software support costs, and health insurance claims also contributed to the rise in noninterest expense.

Mr. Reitsma commented, "We are very pleased with the noteworthy increases in mortgage banking income and treasury management fees.  The growth in mortgage banking income mainly reflected the success of a strategic initiative to increase the percentage of loans originated with the intent to sell, while the higher level of treasury management fees, which was fueled by increases in service charges on accounts and payroll processing fees, in large part stemmed from the expanded use of products and services. Our net interest margin, while decreasing as anticipated due to a higher cost of funds, remained above historical levels during the second quarter of 2024.  We regularly review our operating processes to identify further opportunities to improve efficiency while meeting balance sheet growth objectives and continuing to provide customers with the excellent service that they have become accustomed to.  Despite the unique circumstances surrounding a troubled nonreal-estate-related commercial loan relationship that necessitated a sizeable reserve allocation, we believe the credit trends associated with our commercial loan portfolio remain solid and steady."

Balance Sheet

As of June 30, 2024, total assets were $5.60 billion, up $249 million from December 31, 2023.  Total loans increased $134 million, or an annualized 6.3 percent, during the first six months of 2024, primarily reflecting commercial loan growth of $118 million, or an annualized 6.9 percent.  The commercial loan portfolio growth during the first six months of 2024 occurred despite the full payoffs and partial paydowns of certain larger relationships, which aggregated approximately $76 million during the period.  The payoffs and paydowns primarily resulted from customers using excess cash flows generated within their operations to make line of credit and unscheduled term loan principal paydowns, as well as from sales of assets.  Residential mortgage loans and other consumer loans grew $12.2 million and $4.3 million, respectively, during the first half of 2024.  Interest-earning deposits and securities available for sale increased $75.6 million and $30.8 million, respectively, during the first six months of 2024, with the growth in interest-earning deposits largely reflecting the success of a strategic initiative to enhance on-balance sheet liquidity.

As of June 30, 2024, unfunded commitments on commercial construction and development loans, which are expected to be funded over the next 12 to 18 months, and residential construction loans, which are expected to be largely funded over the next 12 months, totaled approximately $320 million and $37 million, respectively.

Commercial and industrial loans and owner-occupied commercial real estate loans combined represented approximately 57 percent of total commercial loans as of June 30, 2024, a level that has remained relatively consistent with prior periods and in line with management's expectations.

Total deposits equaled $4.15 billion as of June 30, 2024, representing an increase of $246 million, or an annualized 12.6 percent, from December 31, 2023.  Local deposits were up $261 million, or 14.0 percent annualized, during the first six months of 2024, while brokered deposits decreased $15.2 million during the respective period.  The growth in local deposits, which exceeded loan growth by over 6 percent on an annualized basis, provided for a reduction in the loan-to-deposit ratio from 110 percent as of December 31, 2023, to 107 percent as of June 30, 2024.  The increase in local deposits during the first six months of 2024, which occurred despite the typical level of seasonal noninterest-bearing deposit withdrawals by customers to make bonus and tax payments and partnership distributions, reflected new deposit relationships and growth in existing deposit relationships.  Wholesale funds were $580 million, or approximately 12 percent of total funds, at June 30, 2024, compared to $636 million, or approximately 14 percent of total funds, at December 31, 2023.  Noninterest-bearing checking accounts represented approximately 27 percent of total deposits as of June 30, 2024, which is in line with historical levels.

Mr. Reitsma noted, "The significant growth in commercial loans during the first six months of 2024, reflecting increases in all portfolio segments, occurred despite elevated amounts of full and partial payoffs and paydowns.  Our lending team has done an exceptional job of meeting existing customers' credit needs and identifying new lending opportunities, with an emphasis on securing potential clients' overall banking relationships.  In light of our robust commercial loan pipeline and credit availability for commercial construction and development loans, we believe commercial loan growth will be solid in forthcoming periods.  We are delighted with the local deposit growth during the year-to-date period, and gaining deposit market share will remain a top priority."

Asset Quality

Nonperforming assets totaled $9.1 million, or 0.2 percent of total assets, at June 30, 2024, compared to $6.2 million, or 0.1 percent of total assets, at March 31, 2024, and $3.6 million, or less than 0.1 percent of total assets, at December 31, 2023.  The increase in nonperforming assets during the first six months of 2024 substantially resulted from the deterioration of two commercial loan relationships, which were placed on nonaccrual and fully reserved for during the period.  The level of past due loans remains nominal.  During the second quarter of 2024, loan charge-offs were minimal, while recoveries of prior period loan charge-offs equaled $0.3 million, providing for net loan recoveries of $0.3 million, or an annualized 0.02 percent of average total loans.  During the first six months of 2024, loan charge-offs totaled less than $0.1 million, while recoveries of prior period loan charge-offs equaled $0.7 million, providing for net loan recoveries of $0.7 million, or an annualized 0.03 percent of average total loans.

Mr. Reitsma remarked, "Our steadfast commitment to employing thorough and disciplined underwriting practices to meet loan portfolio growth objectives is evidenced by our sustained strength in asset quality metrics.  Nonperforming assets, while increasing during the first six months of 2024 primarily due to the deterioration of two nonreal-estate-related commercial loan relationships, remain at a low level.  As reflected by continuing low levels of nonaccrual loans, past due loans, and loan charge-offs, our commercial borrowers have continued to demonstrate resiliency in dealing with the challenges stemming from current operating conditions, including higher interest rates and the associated increase in debt service requirements.  We continue to closely monitor our commercial loan portfolio for signs of systemic distress and believe our efforts to identify emerging credit issues as soon as possible will help limit the impact of any such noted issues on our overall financial condition.  Our residential mortgage loan and consumer loan portfolios, which have not exhibited signs of systemic credit deterioration, such as higher delinquency levels, have continued to perform well."

Capital Position

Shareholders' equity totaled $551 million as of June 30, 2024, up $29.0 million from December 31, 2023.  Mercantile Bank maintained "well-capitalized" positions at the end of the second quarter of 2024 and year-end 2023, with total risk-based capital ratios of 13.9 percent and 13.4 percent, respectively.  As of June 30, 2024, Mercantile Bank had approximately $204 million in excess of the 10 percent minimum regulatory threshold required to be categorized as a "well-capitalized" institution. 

All of Mercantile Bank's investments are categorized as available-for-sale.  As of June 30, 2024, the net unrealized loss on these investments totaled $67.4 million, resulting in an after-tax reduction to equity capital of $53.2 million.  Although unrealized gains and losses on investments are excluded from regulatory capital ratio calculations, Mercantile Bank's excess capital over the minimum regulatory requirement to be considered a "well-capitalized" institution would approximate $151 million on an adjusted basis.

Mercantile reported 16,137,646 total shares outstanding as of June 30, 2024.

Mr. Reitsma concluded, "Our ongoing strong financial performance has allowed us to continue our regular quarterly cash dividend program, and as demonstrated by our announcement of an increased third quarter cash dividend earlier today, we remain committed to providing shareholders with competitive returns on their investments.   We believe our robust capital position, asset quality metrics, and operating performance, along with the sustained strength in our commercial loan pipeline, position us to remain a steady and profitable performer and withstand any challenges resulting from the current operating environment and changing economic conditions.  The increases in loans and local deposits during the first six months of 2024 reflect the success of our community banking model and associated emphasis on forming mutually beneficial relationships with established and new clients."

Investor Presentation

Mercantile has prepared presentation materials that management intends to use during its previously announced second quarter 2024 conference call on Tuesday, July 16, 2024, at 10:00 a.m. Eastern Time, and from time to time thereafter in presentations about the company's operations and performance.  These materials, which are available for viewing in the Investor Relations section of Mercantile's website at www.mercbank.com, have been furnished to the U.S. Securities and Exchange Commission concurrently with this press release.

About Mercantile Bank Corporation

Based in Grand Rapids, Michigan, Mercantile Bank Corporation is the bank holding company for Mercantile Bank. Mercantile provides financial products and services in a professional and personalized manner designed to make banking easier for businesses, individuals, and governmental units. Distinguished by exceptional service, knowledgeable staff, and a commitment to the communities it serves, Mercantile is one of the largest Michigan-based banks with assets of approximately $5.6 billion. Mercantile Bank Corporation's common stock is listed on the NASDAQ Global Select Market under the symbol "MBWM."  For more information about Mercantile, visit www.mercbank.com, and follow us on Facebook, Instagram, X (formerly Twitter) @MercBank, and LinkedIn @merc-bank.

Forward-Looking Statements

This news release contains statements or information that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will," and similar references to future periods.  Any such statements 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; increasing rates of inflation and slower growth rates or recession; significant declines in the value of commercial real estate; market volatility; demand for products and services; climate impacts; labor markets; the degree of competition by traditional and nontraditional financial services companies; changes in banking regulation or actions by bank regulators; changes in tax laws and other laws and regulations applicable to us; changes in prices, levies, and assessments; the impact of technological advances; potential cyber-attacks, information security breaches and other criminal activities; litigation liabilities; governmental and regulatory policy changes; the outcomes of existing or future contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; damage to our reputation resulting from adverse publicity, regulatory actions, litigation, operational failures, and the failure to meet client expectations and other facts; the transition from LIBOR to SOFR; changes in the national and local economies; unstable political and economic environments; disease outbreaks, such as the COVID-19 pandemic or similar public health threats, and measures implemented to combat them; and other factors, including those expressed as 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.  Investors are cautioned not to place undue reliance on any forward-looking statements contained herein.

Mercantile Bank Corporation
Second Quarter 2024 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
		JUNE 30,		DECEMBER 31,		JUNE 30,
		2024		2023		2023
ASSETS
Cash and due from banks	$	61,863,000	$	70,408,000	$	69,133,000
Interest-earning deposits		135,766,000		60,125,000		138,663,000
Total cash and cash equivalents		197,629,000		130,533,000		207,796,000
Securities available for sale		647,907,000		617,092,000		608,972,000
Federal Home Loan Bank stock		21,513,000		21,513,000		21,513,000
Mortgage loans held for sale		22,126,000		18,607,000		11,942,000
Loans		4,438,245,000		4,303,758,000		4,051,843,000
Allowance for credit losses		(55,408,000)		(49,914,000)		(44,721,000)
Loans, net		4,382,837,000		4,253,844,000		4,007,122,000
Premises and equipment, net		50,158,000		50,928,000		52,291,000
Bank owned life insurance		86,001,000		85,668,000		81,500,000
Goodwill		49,473,000		49,473,000		49,473,000
Other assets		144,744,000		125,566,000		96,978,000
Total assets	$	5,602,388,000	$	5,353,224,000	$	5,137,587,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	1,119,888,000	$	1,247,640,000	$	1,371,633,000
Interest-bearing		3,026,686,000		2,653,278,000		2,385,156,000
Total deposits		4,146,574,000		3,900,918,000		3,756,789,000
Securities sold under agreements to repurchase		221,898,000		229,734,000		219,457,000
Federal Home Loan Bank advances		427,083,000		467,910,000		467,910,000
Subordinated debentures		49,987,000		49,644,000		49,301,000
Subordinated notes		89,143,000		88,971,000		88,800,000
Accrued interest and other liabilities		116,552,000		93,902,000		76,628,000
Total liabilities		5,051,237,000		4,831,079,000		4,658,885,000
SHAREHOLDERS' EQUITY
Common stock		297,591,000		295,106,000		292,906,000
Retained earnings		306,804,000		277,526,000		247,313,000
Accumulated other comprehensive income/(loss)		(53,244,000)		(50,487,000)		(61,517,000)
Total shareholders' equity		551,151,000		522,145,000		478,702,000
Total liabilities and shareholders' equity	$	5,602,388,000	$	5,353,224,000	$	5,137,587,000

 

Mercantile Bank Corporation
Second Quarter 2024 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME
(Unaudited)
	THREE MONTHS ENDED				THREE MONTHS ENDED			SIX MONTHS ENDED			SIX MONTHS ENDED
	June 30, 2024				June 30, 2023			June 30, 2024			June 30, 2023
INTEREST INCOME
Loans, including fees	$	72,819,000			$	62,006,000		$	144,089,000		$	119,159,000
Investment securities		3,624,000				3,111,000			7,046,000			6,118,000
Interest-earning deposits		2,436,000				801,000			4,469,000			1,125,000
Total interest income		78,879,000				65,918,000			155,604,000			126,402,000
INTEREST EXPENSE
Deposits		24,710,000				12,379,000			46,934,000			20,286,000
Short-term borrowings		1,757,000				914,000			3,412,000			1,373,000
Federal Home Loan Bank advances		3,252,000				3,051,000			6,651,000			4,845,000
Other borrowed money		2,088,000				2,023,000			4,173,000			3,963,000
Total interest expense		31,807,000				18,367,000			61,170,000			30,467,000
Net interest income		47,072,000				47,551,000			94,434,000			95,935,000
Provision for credit losses		3,500,000				2,000,000			4,800,000			2,600,000
Net interest income after
provision for credit losses		43,572,000				45,551,000			89,634,000			93,335,000
NONINTEREST INCOME
Service charges on accounts		1,692,000				1,064,000			3,224,000			2,041,000
Mortgage banking income		3,023,000				1,835,000			5,365,000			3,050,000
Credit and debit card income		2,266,000				2,426,000			4,387,000			4,485,000
Interest rate swap income		766,000				748,000			2,104,000			1,785,000
Payroll services		686,000				572,000			1,582,000			1,317,000
Earnings on bank owned life insurance		437,000				402,000			1,609,000			802,000
Other income		811,000				598,000			2,277,000			1,117,000
Total noninterest income		9,681,000				7,645,000			20,548,000			14,597,000
NONINTEREST EXPENSE
Salaries and benefits		17,913,000				16,461,000			36,150,000			33,143,000
Occupancy		2,220,000				2,098,000			4,509,000			4,387,000
Furniture and equipment		923,000				878,000			1,852,000			1,700,000
Data processing costs		3,415,000				2,881,000			6,704,000			6,043,000
Charitable foundation contributions		4,000				2,000			707,000			12,000
Other expense		5,262,000				5,509,000			9,758,000			11,144,000
Total noninterest expense		29,737,000				27,829,000			59,680,000			56,429,000
Income before federal income
tax expense		23,516,000				25,367,000			50,502,000			51,503,000
Federal income tax expense		4,730,000				5,010,000			10,154,000			10,171,000
Net Income	$	18,786,000			$	20,357,000		$	40,348,000		$	41,332,000
Basic earnings per share		$1.17				$1.27			$2.50			$2.58
Diluted earnings per share		$1.17				$1.27			$2.50			$2.58
Average basic shares outstanding		16,122,813				16,003,372			16,120,836			15,999,775
Average diluted shares outstanding		16,122,813				16,003,372			16,120,836			15,999,775

 

 

Mercantile Bank Corporation
Second Quarter 2024 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
		Quarterly										Year-To-Date
(dollars in thousands except per share data)		2024		2024		2023		2023		2023
		2nd Qtr		1st Qtr		4th Qtr		3rd Qtr		2nd Qtr		2024		2023
EARNINGS
Net interest income	$	47,072		47,361		48,649		48,961		47,551		94,434		95,935
Provision for credit losses	$	3,500		1,300		1,800		3,300		2,000		4,800		2,600
Noninterest income	$	9,681		10,868		8,300		9,246		7,645		20,548		14,597
Noninterest expense	$	29,737		29,944		29,940		28,920		27,829		59,680		56,429
Net income before federal income
tax expense	$	23,516		26,985		25,209		25,987		25,367		50,502		51,503
Net income	$	18,786		21,562		20,030		20,855		20,357		40,348		41,332
Basic earnings per share	$	1.17		1.34		1.25		1.30		1.27		2.50		2.58
Diluted earnings per share	$	1.17		1.34		1.25		1.30		1.27		2.50		2.58
Average basic shares outstanding		16,122,813		16,118,858		16,044,223		16,018,419		16,003,372		16,120,836		15,999,775
Average diluted shares outstanding		16,122,813		16,118,858		16,044,223		16,018,419		16,003,372		16,120,836		15,999,775
PERFORMANCE RATIOS
Return on average assets		1.36 %		1.61 %		1.52 %		1.60 %		1.64 %		1.48 %		1.69 %
Return on average equity		13.93 %		16.41 %		16.04 %		17.07 %		17.23 %		15.15 %		17.97 %
Net interest margin (fully tax-equivalent)		3.63 %		3.74 %		3.92 %		3.98 %		4.05 %		3.68 %		4.16 %
Efficiency ratio		52.40 %		51.42 %		52.57 %		49.68 %		50.42 %		51.90 %		51.05 %
Full-time equivalent employees		670		642		651		643		665		670		665
YIELD ON ASSETS / COST OF FUNDS
Yield on loans		6.64 %		6.65 %		6.53 %		6.37 %		6.19 %		6.65 %		6.05 %
Yield on securities		2.30 %		2.20 %		2.18 %		2.13 %		2.00 %		2.25 %		1.98 %
Yield on other interest-earning assets		5.28 %		5.35 %		5.31 %		5.26 %		4.88 %		5.31 %		4.65 %
Yield on total earning assets		6.07 %		6.06 %		5.95 %		5.78 %		5.61 %		6.06 %		5.48 %
Yield on total assets		5.72 %		5.72 %		5.61 %		5.45 %		5.30 %		5.72 %		5.18 %
Cost of deposits		2.42 %		2.25 %		1.94 %		1.67 %		1.36 %		2.33 %		1.12 %
Cost of borrowed funds		3.56 %		3.51 %		3.15 %		2.98 %		2.90 %		3.53 %		2.73 %
Cost of interest-bearing liabilities		3.40 %		3.27 %		2.96 %		2.69 %		2.37 %		3.33 %		2.06 %
Cost of funds (total earning assets)		2.44 %		2.32 %		2.03 %		1.80 %		1.56 %		2.38 %		1.32 %
Cost of funds (total assets)		2.31 %		2.19 %		1.91 %		1.70 %		1.48 %		2.25 %		1.25 %
MORTGAGE BANKING ACTIVITY
Total mortgage loans originated	$	122,728		79,930		88,187		108,602		117,563		202,658		189,554
Purchase mortgage loans originated	$	103,939		57,668		75,365		93,520		100,941		161,607		157,669
Refinance mortgage loans originated	$	18,789		22,262		12,822		15,082		16,622		41,051		31,885
Mortgage loans originated with intent to sell	$	91,490		59,280		59,135		69,305		50,734		150,770		75,638
Income on sale of mortgage loans	$	2,487		2,064		1,487		2,386		1,570		4,551		2,520
CAPITAL
Tangible equity to tangible assets		9.03 %		8.99 %		8.91 %		8.33 %		8.43 %		9.03 %		8.43 %
Tier 1 leverage capital ratio		10.85 %		10.88 %		10.84 %		10.64 %		10.73 %		10.85 %		10.73 %
Common equity risk-based capital ratio		10.46 %		10.41 %		10.07 %		10.41 %		10.25 %		10.46 %		10.25 %
Tier 1 risk-based capital ratio		11.36 %		11.33 %		10.99 %		11.38 %		11.24 %		11.36 %		11.24 %
Total risk-based capital ratio		14.10 %		14.05 %		13.69 %		14.21 %		14.03 %		14.10 %		14.03 %
Tier 1 capital	$	602,835		587,888		570,730		554,634		537,802		602,835		537,802
Tier 1 plus tier 2 capital	$	748,097		729,410		710,905		692,252		671,323		748,097		671,323
Total risk-weighted assets	$	5,306,911		5,190,106		5,192,970		4,872,424		4,784,428		5,306,911		4,784,428
Book value per common share	$	34.15		33.29		32.38		30.16		29.89		34.15		29.89
Tangible book value per common share	$	31.09		30.22		29.31		27.06		26.78		31.09		26.78
Cash dividend per common share	$	0.35		0.35		0.34		0.34		0.33		0.70		0.66
ASSET QUALITY
Gross loan charge-offs	$	26		15		53		243		461		41		567
Recoveries	$	296		439		160		230		305		735		442
Net loan charge-offs (recoveries)	$	(270)		(424)		(107)		13		156		(694)		125
Net loan charge-offs to average loans		(0.02 %)		(0.04 %)		(0.01 %)		< 0.01%		0.02 %		(0.03 %)		0.01 %
Allowance for credit losses	$	55,408		51,638		49,914		48,006		44,721		55,408		44,721
Allowance to loans		1.25 %		1.19 %		1.16 %		1.17 %		1.10 %		1.25 %		1.10 %
Nonperforming loans	$	9,129		6,040		3,415		5,889		2,099		9,129		2,099
Other real estate/repossessed assets	$	0		200		200		51		661		0		661
Nonperforming loans to total loans		0.21 %		0.14 %		0.08 %		0.14 %		0.05 %		0.21 %		0.05 %
Nonperforming assets to total assets		0.16 %		0.11 %		0.07 %		0.11 %		0.05 %		0.16 %		0.05 %
NONPERFORMING ASSETS - COMPOSITION
Residential real estate:
Land development	$	1		1		1		1		2		1		2
Construction	$	0		0		0		0		0		0		0
Owner occupied / rental	$	2,288		3,370		3,095		1,913		1,793		2,288		1,793
Commercial real estate:
Land development	$	0		0		0		0		0		0		0
Construction	$	0		0		0		0		0		0		0
Owner occupied	$	0		200		270		738		716		0		716
Non-owner occupied	$	0		0		0		0		0		0		0
Non-real estate:
Commercial assets	$	6,840		2,669		249		3,288		249		6,840		249
Consumer assets	$	0		0		0		0		0		0		0
Total nonperforming assets	$	9,129		6,240		3,615		5,940		2,760		9,129		2,760
NONPERFORMING ASSETS - RECON
Beginning balance	$	6,240		3,615		5,940		2,760		8,443		3,615		7,728
Additions	$	4,570		2,802		2,166		4,163		273		7,372		1,596
Return to performing status	$	0		0		0		0		0		0		(31)
Principal payments	$	(1,481)		(177)		(4,402)		(166)		(5,526)		(1,658)		(6,041)
Sale proceeds	$	(200)		0		(51)		(661)		0		(200)		0
Loan charge-offs	$	0		0		(38)		(156)		(430)		0		(492)
Valuation write-downs	$	0		0		0		0		0		0		0
Ending balance	$	9,129		6,240		3,615		5,940		2,760		9,129		2,760
LOAN PORTFOLIO COMPOSITION
Commercial:
Commercial & industrial	$	1,275,745		1,222,638		1,254,586		1,184,993		1,229,588		1,275,745		1,229,588
Land development & construction	$	76,247		75,091		74,752		72,921		72,682		76,247		72,682
Owner occupied comm'l R/E	$	732,844		719,338		717,667		671,083		659,201		732,844		659,201
Non-owner occupied comm'l R/E	$	1,059,052		1,045,614		1,035,684		1,000,411		957,221		1,059,052		957,221
Multi-family & residential rental	$	389,390		366,961		332,609		308,229		287,285		389,390		287,285
Total commercial	$	3,533,278		3,429,642		3,415,298		3,237,637		3,205,977		3,533,278		3,205,977
Retail:
1-4 family mortgages & home equity	$	849,626		840,653		837,407		816,849		795,661		849,626		795,661
Other consumer	$	55,341		51,711		51,053		49,890		50,205		55,341		50,205
Total retail	$	904,967		892,364		888,460		866,739		845,866		904,967		845,866
Total loans	$	4,438,245		4,322,006		4,303,758		4,104,376		4,051,843		4,438,245		4,051,843
END OF PERIOD BALANCES
Loans	$	4,438,245		4,322,006		4,303,758		4,104,376		4,051,843		4,438,245		4,051,843
Securities	$	669,420		630,666		638,605		613,818		630,485		669,420		630,485
Interest-earning deposits	$	135,766		184,625		60,125		201,436		138,663		135,766		138,663
Total earning assets (before allowance)	$	5,243,431		5,137,297		5,002,488		4,919,630		4,820,991		5,243,431		4,820,991
Total assets	$	5,602,388		5,465,953		5,353,224		5,251,012		5,137,587		5,602,388		5,137,587
Noninterest-bearing deposits	$	1,119,888		1,134,995		1,247,640		1,309,672		1,371,633		1,119,888		1,371,633
Interest-bearing deposits	$	3,026,686		2,872,815		2,653,278		2,591,063		2,385,156		3,026,686		2,385,156
Total deposits	$	4,146,574		4,007,810		3,900,918		3,900,735		3,756,789		4,146,574		3,756,789
Total borrowed funds	$	789,327		815,744		837,335		761,431		826,558		789,327		826,558
Total interest-bearing liabilities	$	3,816,013		3,688,559		3,490,613		3,352,494		3,211,714		3,816,013		3,211,714
Shareholders' equity	$	551,151		536,644		522,145		483,211		478,702		551,151		478,702
AVERAGE BALANCES
Loans	$	4,396,475		4,299,163		4,184,070		4,054,279		4,017,690		4,347,819		3,973,256
Securities	$	640,627		634,099		618,517		626,714		634,607		637,363		631,137
Interest-earning deposits	$	182,636		150,234		118,996		208,932		64,958		166,435		48,113
Total earning assets (before allowance)	$	5,219,738		5,083,496		4,921,583		4,889,925		4,717,255		5,151,617		4,652,506
Total assets	$	5,533,262		5,384,675		5,224,238		5,180,847		4,988,413		5,458,969		4,922,511
Noninterest-bearing deposits	$	1,139,887		1,175,884		1,281,201		1,359,238		1,361,901		1,157,886		1,426,331
Interest-bearing deposits	$	2,957,011		2,790,308		2,600,703		2,466,834		2,278,877		2,873,659		2,231,902
Total deposits	$	4,096,898		3,966,192		3,881,904		3,826,072		3,640,778		4,031,545		3,658,233
Total borrowed funds	$	800,577		816,848		773,491		806,376		827,105		808,713		752,330
Total interest-bearing liabilities	$	3,757,588		3,607,156		3,374,194		3,273,210		3,105,982		3,682,372		2,984,232
Shareholders' equity	$	540,868		527,180		495,431		484,624		473,983		534,024		483,810

 

 

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SOURCE Mercantile Bank Corporation