GRAND RAPIDS, Mich.,
Oct. 16, 2018 /PRNewswire/
-- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile")
reported net income of $10.1 million,
or $0.61 per diluted share, for the
third quarter of 2018, compared with net income of $8.3 million, or $0.51 per diluted share, for the respective
prior-year period. Net income during the first nine months of
2018 totaled $30.5 million, or
$1.83 per diluted share, compared to
$23.3 million, or $1.41 per diluted share, during the first nine
months of 2017.
Interest income related to purchased loan accounting entries
increased net income during the third quarter of 2018 by
$0.3 million, or $0.02 per diluted share, and net income during
the first nine months of 2018 by $2.7
million, or $0.16 per diluted
share; during the respective 2017 periods, net income increased
$1.1 million, or $0.07 per diluted share, and $2.6 million, or $0.15 per diluted share, as a result of these
entries. A bank owned life insurance claim during the first
quarter of 2017 increased reported net income during the first nine
months of 2017 by $1.2 million, or
$0.07 per diluted share.
Excluding the impacts of these transactions, diluted earnings per
share increased $0.15, or 34.1
percent, during the third quarter of 2018 compared to the
prior-year third quarter, and $0.48,
or 40.3 percent, during the first nine months of 2018 compared to
the respective 2017 period.
Net income during the third quarter of 2018 and the first nine
months of 2018 benefited from a reduction in the corporate federal
income tax rate, which was lowered from 35 percent to 21 percent on
January 1, 2018, as a result of the
enactment of the Tax Cuts and Jobs Act. Mercantile's
effective tax rate was 19.0 percent during both the third quarter
and first nine months of 2018, down from 30.8 percent and 30.7
percent during the respective prior-year periods.
"We are pleased to report that our current quarter operating
results represent a continuation of the robust performance
demonstrated during the first half of the year," said Robert B. Kaminski, Jr., President and Chief
Executive Officer of Mercantile. "Our sustained strength in
core profitability, sound capital position, and healthy commercial
and residential mortgage loan pipelines position us to finish the
year in strong fashion and take advantage of future growth
opportunities."
Third quarter highlights include:
- Strong earnings performance and capital position
- Robust net interest margin
- Growth in several fee income categories
- Controlled overhead costs
- Strong asset quality, as reflected by low levels of
nonperforming assets and loans in the 30- to 89-days delinquent
category
- New commercial term loan originations of approximately
$119 million
- Continued strength in commercial loan pipeline
Operating Results
Total revenue, which consists of net interest income and
noninterest income, was $34.5 million
during the third quarter of 2018, up $1.3
million, or 3.9 percent, from the prior-year third
quarter. Net interest income during the third quarter of 2018
was $29.8 million, up $1.2 million, or 4.2 percent, from the third
quarter of 2017, reflecting a higher level of earning assets and an
increased net interest margin.
The net interest margin was 3.87 percent in the third quarter of
2018, up from 3.83 percent in the prior-year third quarter.
The improved net interest margin exhibits a higher yield on average
earning assets, primarily reflecting an increased yield on
commercial loans and a change in earning asset mix, which more than
offset a higher cost of funds, mainly due to increased costs of
certain non-time deposit accounts, time deposits, and borrowed
funds. The increased yield on commercial loans primarily
reflects the impact of higher interest rates on certain
variable-rate commercial loans stemming from the Federal Open
Market Committee raising the targeted federal funds rate by 25
basis points in each of the past four quarters. The change in
earning asset mix mainly reflects loan growth and a reduction in
interest-earning deposit balances. On average,
higher-yielding loans represented 86.8 percent of earning assets
during the third quarter of 2018, up from 84.8 percent during the
prior-year third quarter, while lower-yielding interest-earning
deposit balances represented 2.0 percent of earning assets during
the current-year third quarter, down from 3.9 percent during the
respective 2017 period.
Net interest income and the net interest margin during the third
quarters of 2018 and 2017 were affected by purchase accounting
accretion and amortization entries associated with the fair value
measurements recorded effective June
1, 2014. Increases in interest income on loans
totaling $0.4 million and
$1.8 million were recorded during the
third quarters of 2018 and 2017, respectively. Purchased loan
accretion amounts vary from period to period as a result of
periodic cash flow re-estimations, loan payoffs, and payment
performance. Increases in interest expense on subordinated
debentures totaling $0.2 million were
recorded during both the current-year third quarter and prior-year
third quarter.
Mercantile recorded provisions for loan losses of $0.4 million and $1.0
million during the third quarters of 2018 and 2017,
respectively. The provision expense recorded during the third
quarter of 2018 primarily reflects loan growth, while the provision
expense recorded during the prior-year third quarter mainly
reflects an increased allocation related to the economic conditions
environmental factor and loan growth.
Noninterest income during the third quarter of 2018 was
$4.7 million, up $0.1 million, or 2.2 percent, from the
$4.6 million recorded during the
third quarter of 2017. The increase in noninterest income
primarily reflects higher credit and debit card fees, service
charges on accounts, and payroll processing revenue. Mortgage
banking activity income declined slightly in the third quarter of
2018 compared to the prior-year third quarter, mainly reflecting
the impacts of rising residential mortgage loan interest rates and
a limited supply of homes for sale in Mercantile's markets.
Noninterest expense totaled $21.7
million during the third quarter of 2018, up $1.4 million, or 7.1 percent, from the respective
2017 period. The higher level of expense primarily resulted
from increased salary costs, mainly reflecting annual employee
merit pay increases and higher stock-based compensation expense, as
well as pay increases for all hourly employees.
Mr. Kaminski continued, "As anticipated, our net interest margin
remained strong during the third quarter of 2018, reflecting
ongoing sound asset quality, disciplined loan pricing, and a
beneficial balance sheet structure. Our cost of funds
continued to trend upwards in the third quarter, reflecting the
continuing rising interest rate environment; however, its impact
was more than offset by an increased yield on earning assets,
primarily reflecting higher interest rates on certain variable-rate
commercial loans. We believe that our current balance sheet
structure postures our net interest income to benefit from any
further Federal Open Market Committee tightening. Our
strategic initiatives related to enhancing fee income continue to
be successful, and we remain focused on controlling overhead
costs. Although mortgage banking activity income continues to
be hampered by the increasing interest rate environment and lack of
inventory in our markets, we are pleased with the current pipeline
and elevated level of pre-qualifications, and are enhancing our
efforts to sell a greater percentage of originated mortgage
loans."
Balance Sheet
As of September 30, 2018, total
assets were $3.30 billion, up
$13.4 million from December 31, 2017. Over the same time
period, total loans increased $139
million, equating to an annualize growth rate of 7.2
percent, while interest-earning deposits decreased $117 million, or 80.6 percent. During the
twelve months ended September 30,
2018, total loans were up $143
million, or 5.6 percent, while interest-earning deposits
were down $94.9 million, or 77.1
percent. The declines in interest-earning deposit balances
primarily resulted from the funds being used to meet loan funding
requirements. Approximately $119
million in commercial term loans to new and existing
borrowers were originated during the third quarter of 2018, as
continuing sales and relationship-building efforts resulted in
additional lending opportunities. As of September 30, 2018, unfunded commitments on
commercial construction and development loans totaled approximately
$152 million, which are expected to
be largely funded over the next 12 to 18 months.
Raymond Reitsma, President of
Mercantile Bank of Michigan,
noted, "After experiencing sluggish net loan growth during the
fourth quarter of 2017 and a slight contraction in the loan
portfolio during the first quarter of 2018 primarily due to certain
larger commercial loan payoffs, we are very pleased with the net
growth of $146 million during the
combined second and third quarters of the current year, which
produced an annualized growth rate of about 7 percent for the first
nine months of 2018. The loan growth realized during the past
two quarters reflects growth in the commercial portfolio, most
notably in the commercial and industrial category, as well as the
residential mortgage loan portfolio. We continue to attract
new customer relationships and meet the needs of our existing
customers with an ongoing commitment to sound underwriting and
appropriate pricing. Based on our current pipeline, we
believe that the commercial loan portfolio will reflect solid
growth in future periods. Our strategic initiatives that were
designed to increase residential mortgage market penetration
continue to be effective, as depicted by growth in the portfolio
for the tenth consecutive quarter. Residential mortgage loan
pre-qualifications remain elevated, with the current level being
about two times higher than the level at the same time last
year."
As of September 30, 2018,
commercial and industrial loans and owner-occupied commercial real
estate ("CRE") loans combined represented approximately 59 percent
of total commercial loans, while non-owner occupied CRE loans
equaled about 35 percent of total commercial loans.
Total deposits at September 30,
2018 were $2.51 billion, down
$13.6 million and up $19.8 million from December 31, 2017, and September 30, 2017, respectively, while local
deposits were up $7.9 million and
$43.2 million during the respective
time periods. New commercial loan relationships and the
success of various deposit account initiatives drove the growth in
local deposits. Wholesale funds were $321 million, or approximately 11 percent of
total funds, as of September 30,
2018, compared to $323 million
and $325 million as of December 31, 2017, and September 30, 2017, respectively.
Asset Quality
Nonperforming assets at September 30,
2018, were $5.8 million, or
0.2 percent of total assets, compared to $9.4 million, or 0.3 percent of total assets, at
December 31, 2017. The decline
in nonperforming assets during the first nine months of 2018
primarily reflects successful loan collection efforts and sales of
bank-owned properties that were no longer being used or considered
for use as bank facilities. The level of past due loans
remains nominal, and loan relationships on the internal watch list
generally declined in number and dollar volume during the first
nine months of 2018. Net loan recoveries were $0.1 million during the third quarter of 2018 and
$1.1 million during the first nine
months of 2018. Net loan charge-offs totaled $0.1 million during the prior-year third quarter
and $1.1 million during the first
nine months of 2017.
Capital Position
Shareholders' equity totaled $379
million as of September 30,
2018, an increase of $13.6
million from year-end 2017. The Bank's capital
position remains above "well-capitalized" with a total risk-based
capital ratio of 12.8 percent as of September 30, 2018, compared to 12.6 percent at
December 31, 2017. At
September 30, 2018, the Bank had
approximately $87 million in excess
of the 10.0 percent minimum regulatory threshold required to be
considered a "well-capitalized" institution. Mercantile
reported 16,616,502 total shares outstanding at September 30, 2018.
Mr. Kaminski concluded, "Our strong financial performance during
the first nine months of 2018 positions us to meet profitability
and growth targets. As evidenced by the ongoing cash dividend
program, including the announcement of an increased fourth quarter
dividend and special dividend earlier today, we remain committed to
enhancing total shareholder value. Our market-leading
products and services and focus on developing mutually-beneficial
relationships have been instrumental in our ability to gain new
clients and retain existing customers successfully. We
are excited about the opportunities that are available to us in our
markets as we continue to seek out prospective customers."
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 $3.3 billion and
operates 47 banking offices. Mercantile Bank Corporation's
common stock is listed on the NASDAQ Global Select Market under the
symbol "MBWM."
Forward-Looking Statements
This news release contains comments or information that
constitute forward-looking statements (within the meaning of the
Private Securities Litigation Reform Act of 1995) that are based on
current expectations that involve a number of risks and
uncertainties. Actual results may differ materially from the
results expressed in forward-looking statements. Factors that might
cause such a difference include: changes in interest rates and
interest rate relationships; demand for products and services; the
degree of competition by traditional and nontraditional
competitors; changes in banking regulation or actions by bank
regulators; changes in tax laws; changes in prices, levies, and
assessments; the impact of technological advances; governmental and
regulatory policy changes; the outcomes of contingencies; trends in
customer behavior as well as their ability to repay loans; changes
in local real estate values; changes in the national and local
economies; and other factors, including risk factors, disclosed
from time to time in filings made by Mercantile with the Securities
and Exchange Commission. Mercantile undertakes no obligation to
update or clarify forward-looking statements, whether as a result
of new information, future events, or otherwise.
Mercantile Bank
Corporation
|
|
|
|
|
|
|
Third Quarter 2018
Results
|
|
|
|
|
|
|
MERCANTILE BANK
CORPORATION
|
CONSOLIDATED BALANCE
SHEETS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
SEPTEMBER
30,
|
|
DECEMBER
31,
|
|
SEPTEMBER
30,
|
|
|
2018
|
|
2017
|
|
2017
|
ASSETS
|
|
|
|
|
|
|
Cash and
due from banks
|
$
|
51,824,000
|
$
|
55,127,000
|
$
|
53,941,000
|
Interest-earning deposits
|
|
28,193,000
|
|
144,974,000
|
|
123,110,000
|
Total cash and cash
equivalents
|
|
80,017,000
|
|
200,101,000
|
|
177,051,000
|
|
|
|
|
|
|
|
Securities available for sale
|
|
326,531,000
|
|
335,744,000
|
|
330,090,000
|
Federal
Home Loan Bank stock
|
|
11,072,000
|
|
11,036,000
|
|
11,036,000
|
|
|
|
|
|
|
|
Loans
|
|
2,697,417,000
|
|
2,558,552,000
|
|
2,554,272,000
|
Allowance for loan losses
|
|
(21,692,000)
|
|
(19,501,000)
|
|
(19,193,000)
|
Loans, net
|
|
2,675,725,000
|
|
2,539,051,000
|
|
2,535,079,000
|
|
|
|
|
|
|
|
Premises
and equipment, net
|
|
48,104,000
|
|
46,034,000
|
|
45,606,000
|
Bank
owned life insurance
|
|
69,628,000
|
|
68,689,000
|
|
66,858,000
|
Goodwill
|
|
49,473,000
|
|
49,473,000
|
|
49,473,000
|
Core
deposit intangible
|
|
6,038,000
|
|
7,600,000
|
|
8,156,000
|
Other
assets
|
|
33,518,000
|
|
28,976,000
|
|
31,306,000
|
|
|
|
|
|
|
|
Total
assets
|
$
|
3,300,106,000
|
$
|
3,286,704,000
|
$
|
3,254,655,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
879,442,000
|
$
|
866,380,000
|
$
|
826,038,000
|
Interest-bearing
|
|
1,629,368,000
|
|
1,655,985,000
|
|
1,663,005,000
|
Total deposits
|
|
2,508,810,000
|
|
2,522,365,000
|
|
2,489,043,000
|
|
|
|
|
|
|
|
Securities sold under agreements to repurchase
|
|
112,378,000
|
|
118,748,000
|
|
122,280,000
|
Federal
Home Loan Bank advances
|
|
240,000,000
|
|
220,000,000
|
|
220,000,000
|
Subordinated debentures
|
|
46,029,000
|
|
45,517,000
|
|
45,347,000
|
Accrued
interest and other liabilities
|
|
13,424,000
|
|
14,204,000
|
|
15,439,000
|
Total liabilities
|
|
2,920,641,000
|
|
2,920,834,000
|
|
2,892,109,000
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Common
stock
|
|
312,544,000
|
|
309,772,000
|
|
309,033,000
|
Retained
earnings
|
|
80,275,000
|
|
61,001,000
|
|
55,258,000
|
Accumulated other comprehensive income/(loss)
|
|
(13,354,000)
|
|
(4,903,000)
|
|
(1,745,000)
|
Total shareholders'
equity
|
|
379,465,000
|
|
365,870,000
|
|
362,546,000
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
3,300,106,000
|
$
|
3,286,704,000
|
$
|
3,254,655,000
|
Mercantile Bank
Corporation
|
Third Quarter 2018
Results
|
MERCANTILE BANK
CORPORATION
|
CONSOLIDATED REPORTS
OF INCOME
|
(Unaudited)
|
|
|
THREE MONTHS
ENDED
|
|
|
THREE MONTHS
ENDED
|
|
NINE MONTHS
ENDED
|
|
NINE MONTHS
ENDED
|
|
September 30,
2018
|
|
|
September 30,
2017
|
|
September 30,
2018
|
|
September 30,
2017
|
INTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans,
including fees
|
$
|
32,918,000
|
|
|
$
|
30,746,000
|
|
$
|
97,087,000
|
|
$
|
86,406,000
|
Investment securities
|
|
2,255,000
|
|
|
|
1,906,000
|
|
|
6,628,000
|
|
|
5,594,000
|
Other
interest-earning assets
|
|
313,000
|
|
|
|
382,000
|
|
|
1,071,000
|
|
|
641,000
|
Total interest
income
|
|
35,486,000
|
|
|
|
33,034,000
|
|
|
104,786,000
|
|
|
92,641,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
3,574,000
|
|
|
|
2,652,000
|
|
|
9,921,000
|
|
|
6,543,000
|
Short-term borrowings
|
|
63,000
|
|
|
|
45,000
|
|
|
181,000
|
|
|
142,000
|
Federal
Home Loan Bank advances
|
|
1,201,000
|
|
|
|
1,033,000
|
|
|
3,134,000
|
|
|
2,690,000
|
Other
borrowed money
|
|
808,000
|
|
|
|
660,000
|
|
|
2,286,000
|
|
|
1,920,000
|
Total interest
expense
|
|
5,646,000
|
|
|
|
4,390,000
|
|
|
15,522,000
|
|
|
11,295,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
29,840,000
|
|
|
|
28,644,000
|
|
|
89,264,000
|
|
|
81,346,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan
losses
|
|
400,000
|
|
|
|
1,000,000
|
|
|
1,100,000
|
|
|
2,350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
after
|
|
|
|
|
|
|
|
|
|
|
|
|
provision for loan losses
|
|
29,440,000
|
|
|
|
27,644,000
|
|
|
88,164,000
|
|
|
78,996,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
charges on accounts
|
|
1,127,000
|
|
|
|
1,076,000
|
|
|
3,259,000
|
|
|
3,148,000
|
Credit
and debit card income
|
|
1,378,000
|
|
|
|
1,215,000
|
|
|
3,955,000
|
|
|
3,497,000
|
Mortgage
banking income
|
|
1,235,000
|
|
|
|
1,326,000
|
|
|
3,115,000
|
|
|
3,233,000
|
Payroll
services
|
|
328,000
|
|
|
|
285,000
|
|
|
1,128,000
|
|
|
983,000
|
Earnings
on bank owned life insurance
|
|
318,000
|
|
|
|
328,000
|
|
|
969,000
|
|
|
2,394,000
|
Other
income
|
|
322,000
|
|
|
|
375,000
|
|
|
1,213,000
|
|
|
1,243,000
|
Total noninterest
income
|
|
4,708,000
|
|
|
|
4,605,000
|
|
|
13,639,000
|
|
|
14,498,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and benefits
|
|
12,932,000
|
|
|
|
11,636,000
|
|
|
38,027,000
|
|
|
33,796,000
|
Occupancy
|
|
1,648,000
|
|
|
|
1,598,000
|
|
|
5,049,000
|
|
|
4,707,000
|
Furniture and equipment
|
|
659,000
|
|
|
|
543,000
|
|
|
1,789,000
|
|
|
1,625,000
|
Data
processing costs
|
|
2,150,000
|
|
|
|
2,071,000
|
|
|
6,415,000
|
|
|
6,155,000
|
Other
expense
|
|
4,261,000
|
|
|
|
4,362,000
|
|
|
12,931,000
|
|
|
13,585,000
|
Total noninterest
expense
|
|
21,650,000
|
|
|
|
20,210,000
|
|
|
64,211,000
|
|
|
59,868,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
federal income
|
|
|
|
|
|
|
|
|
|
|
|
|
tax expense
|
|
12,498,000
|
|
|
|
12,039,000
|
|
|
37,592,000
|
|
|
33,626,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax
expense
|
|
2,375,000
|
|
|
|
3,702,000
|
|
|
7,142,000
|
|
|
10,331,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
$
|
10,123,000
|
|
|
$
|
8,337,000
|
|
$
|
30,450,000
|
|
$
|
23,295,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$0.61
|
|
|
|
$0.51
|
|
|
$1.83
|
|
|
$1.41
|
Diluted
earnings per share
|
|
$0.61
|
|
|
|
$0.51
|
|
|
$1.83
|
|
|
$1.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
basic shares outstanding
|
|
16,611,411
|
|
|
|
16,483,492
|
|
|
16,602,701
|
|
|
16,463,245
|
Average
diluted shares outstanding
|
|
16,619,295
|
|
|
|
16,494,540
|
|
|
16,610,544
|
|
|
16,474,534
|
Mercantile Bank
Corporation
|
Third Quarter 2018
Results
|
MERCANTILE BANK
CORPORATION
|
CONSOLIDATED
FINANCIAL HIGHLIGHTS
|
(Unaudited)
|
|
|
|
Quarterly
|
|
Year-To-Date
|
(dollars in
thousands except per share data)
|
2018
|
|
2018
|
|
2018
|
|
2017
|
|
2017
|
|
|
|
|
|
|
3rd
Qtr
|
|
2nd
Qtr
|
|
1st
Qtr
|
|
4th
Qtr
|
|
3rd
Qtr
|
|
2018
|
|
2017
|
EARNINGS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
$
|
29,840
|
|
29,225
|
|
30,199
|
|
28,402
|
|
28,644
|
|
89,264
|
|
81,346
|
Provision for loan losses
|
$
|
400
|
|
700
|
|
0
|
|
600
|
|
1,000
|
|
1,100
|
|
2,350
|
Noninterest income
|
$
|
4,708
|
|
4,550
|
|
4,381
|
|
4,503
|
|
4,605
|
|
13,639
|
|
14,498
|
Noninterest expense
|
$
|
21,650
|
|
21,414
|
|
21,147
|
|
19,848
|
|
20,210
|
|
64,211
|
|
59,868
|
Net
income before federal income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
tax expense
|
$
|
12,498
|
|
11,661
|
|
13,433
|
|
12,457
|
|
12,039
|
|
37,592
|
|
33,626
|
Net
income
|
$
|
10,123
|
|
9,446
|
|
10,881
|
|
7,979
|
|
8,337
|
|
30,450
|
|
23,295
|
Basic
earnings per share
|
$
|
0.61
|
|
0.57
|
|
0.66
|
|
0.48
|
|
0.51
|
|
1.83
|
|
1.41
|
Diluted
earnings per share
|
$
|
0.61
|
|
0.57
|
|
0.66
|
|
0.48
|
|
0.51
|
|
1.83
|
|
1.41
|
Average
basic shares outstanding
|
|
16,611,411
|
|
16,601,400
|
|
16,595,115
|
|
16,525,625
|
|
16,483,492
|
|
16,602,701
|
|
16,463,245
|
Average
diluted shares outstanding
|
|
16,619,295
|
|
16,610,819
|
|
16,604,325
|
|
16,536,225
|
|
16,494,540
|
|
16,610,544
|
|
16,474,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
on average assets
|
|
1.22%
|
|
1.17%
|
|
1.36%
|
|
0.97%
|
|
1.03%
|
|
1.25%
|
|
1.00%
|
Return
on average equity
|
|
10.64%
|
|
10.25%
|
|
12.07%
|
|
8.70%
|
|
9.21%
|
|
10.97%
|
|
8.87%
|
Net
interest margin (fully tax-equivalent)
|
3.87%
|
|
3.92%
|
|
4.06%
|
|
3.76%
|
|
3.83%
|
|
3.95%
|
|
3.80%
|
Efficiency ratio
|
|
62.67%
|
|
63.40%
|
|
61.15%
|
|
60.32%
|
|
60.78%
|
|
62.40%
|
|
62.46%
|
Full-time equivalent employees
|
|
637
|
|
667
|
|
640
|
|
641
|
|
634
|
|
637
|
|
634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YIELD ON ASSETS /
COST OF FUNDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on
loans
|
|
4.91%
|
|
4.92%
|
|
5.14%
|
|
4.76%
|
|
4.81%
|
|
4.99%
|
|
4.68%
|
Yield on
securities
|
|
2.70%
|
|
2.64%
|
|
2.61%
|
|
2.60%
|
|
2.50%
|
|
2.65%
|
|
2.43%
|
Yield on
other interest-earning assets
|
|
1.98%
|
|
1.80%
|
|
1.52%
|
|
1.29%
|
|
1.28%
|
|
1.73%
|
|
1.14%
|
Yield on
total earning assets
|
|
4.60%
|
|
4.60%
|
|
4.70%
|
|
4.35%
|
|
4.41%
|
|
4.63%
|
|
4.32%
|
Yield on
total assets
|
|
4.28%
|
|
4.27%
|
|
4.37%
|
|
4.04%
|
|
4.10%
|
|
4.31%
|
|
4.01%
|
Cost of
deposits
|
|
0.56%
|
|
0.53%
|
|
0.50%
|
|
0.45%
|
|
0.43%
|
|
0.53%
|
|
0.37%
|
Cost of
borrowed funds
|
|
2.14%
|
|
2.01%
|
|
1.83%
|
|
1.74%
|
|
1.75%
|
|
2.00%
|
|
1.66%
|
Cost of
interest-bearing liabilities
|
|
1.11%
|
|
1.02%
|
|
0.94%
|
|
0.88%
|
|
0.85%
|
|
1.02%
|
|
0.77%
|
Cost of
funds (total earning assets)
|
|
0.73%
|
|
0.68%
|
|
0.64%
|
|
0.59%
|
|
0.58%
|
|
0.68%
|
|
0.52%
|
Cost of
funds (total assets)
|
|
0.68%
|
|
0.63%
|
|
0.60%
|
|
0.55%
|
|
0.54%
|
|
0.64%
|
|
0.49%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PURCHASE
ACCOUNTING ADJUSTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
portfolio - increase interest income
|
$
|
386
|
|
777
|
|
2,271
|
|
683
|
|
1,757
|
|
3,434
|
|
3,925
|
Trust
preferred - increase interest expense
|
$
|
171
|
|
171
|
|
171
|
|
171
|
|
171
|
|
513
|
|
513
|
Core
deposit intangible - increase overhead
|
$
|
477
|
|
530
|
|
556
|
|
556
|
|
556
|
|
1,563
|
|
1,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MORTGAGE BANKING
ACTIVITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
mortgage loans originated
|
$
|
66,829
|
|
62,032
|
|
40,937
|
|
62,526
|
|
61,962
|
|
169,798
|
|
160,698
|
Purchase
mortgage loans originated
|
$
|
47,704
|
|
41,239
|
|
25,137
|
|
33,958
|
|
41,254
|
|
114,080
|
|
101,892
|
Refinance mortgage loans originated
|
$
|
19,125
|
|
20,793
|
|
15,800
|
|
28,568
|
|
20,708
|
|
55,718
|
|
58,806
|
Total
mortgage loans sold
|
$
|
30,713
|
|
24,114
|
|
19,813
|
|
26,254
|
|
33,858
|
|
74,640
|
|
81,692
|
Net gain
on sale of mortgage loans
|
$
|
1,116
|
|
851
|
|
729
|
|
1,051
|
|
1,131
|
|
2,696
|
|
2,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible
equity to tangible assets
|
|
9.98%
|
|
9.87%
|
|
9.63%
|
|
9.56%
|
|
9.54%
|
|
9.98%
|
|
9.54%
|
Tier 1
leverage capital ratio
|
|
11.76%
|
|
11.81%
|
|
11.50%
|
|
11.24%
|
|
11.18%
|
|
11.76%
|
|
11.18%
|
Common
equity risk-based capital ratio
|
|
10.93%
|
|
11.03%
|
|
11.04%
|
|
10.71%
|
|
10.54%
|
|
10.93%
|
|
10.54%
|
Tier 1
risk-based capital ratio
|
|
12.35%
|
|
12.49%
|
|
12.52%
|
|
12.19%
|
|
12.01%
|
|
12.35%
|
|
12.01%
|
Total
risk-based capital ratio
|
|
13.05%
|
|
13.19%
|
|
13.20%
|
|
12.85%
|
|
12.66%
|
|
13.05%
|
|
12.66%
|
Tier 1
capital
|
$
|
382,829
|
|
375,167
|
|
367,546
|
|
359,047
|
|
354,087
|
|
382,829
|
|
354,087
|
Tier 1
plus tier 2 capital
|
$
|
404,521
|
|
396,334
|
|
387,520
|
|
378,548
|
|
373,280
|
|
404,521
|
|
373,280
|
Total
risk-weighted assets
|
$
|
3,100,158
|
|
3,003,778
|
|
2,935,367
|
|
2,946,527
|
|
2,949,011
|
|
3,100,158
|
|
2,949,011
|
Book
value per common share
|
$
|
22.84
|
|
22.57
|
|
22.19
|
|
22.05
|
|
21.99
|
|
22.84
|
|
21.99
|
Tangible
book value per common share
|
$
|
19.50
|
|
19.20
|
|
18.79
|
|
18.61
|
|
18.49
|
|
19.50
|
|
18.49
|
Cash
dividend per common share
|
$
|
0.24
|
|
0.22
|
|
0.22
|
|
0.19
|
|
0.19
|
|
0.68
|
|
0.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET
QUALITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
loan charge-offs
|
$
|
169
|
|
273
|
|
654
|
|
920
|
|
709
|
|
1,096
|
|
2,315
|
Recoveries
|
$
|
294
|
|
766
|
|
1,127
|
|
628
|
|
607
|
|
2,187
|
|
1,197
|
Net loan
charge-offs (recoveries)
|
$
|
(125)
|
|
(493)
|
|
(473)
|
|
292
|
|
102
|
|
(1,091)
|
|
1,118
|
Net loan
charge-offs to average loans
|
|
(0.02%)
|
|
(0.08%)
|
|
(0.08%)
|
|
0.05%
|
|
0.02%
|
|
(0.06%)
|
|
0.06%
|
Allowance for loan losses
|
$
|
21,692
|
|
21,167
|
|
19,974
|
|
19,501
|
|
19,193
|
|
21,692
|
|
19,193
|
Allowance to originated loans
|
|
0.88%
|
|
0.89%
|
|
0.87%
|
|
0.88%
|
|
0.88%
|
|
0.88%
|
|
0.88%
|
Nonperforming loans
|
$
|
4,852
|
|
4,965
|
|
5,742
|
|
7,143
|
|
8,231
|
|
4,852
|
|
8,231
|
Other
real estate/repossessed assets
|
$
|
948
|
|
842
|
|
2,384
|
|
2,260
|
|
2,327
|
|
948
|
|
2,327
|
Nonperforming loans to total loans
|
|
0.18%
|
|
0.19%
|
|
0.23%
|
|
0.28%
|
|
0.32%
|
|
0.18%
|
|
0.32%
|
Nonperforming assets to total assets
|
|
0.18%
|
|
0.18%
|
|
0.25%
|
|
0.29%
|
|
0.32%
|
|
0.18%
|
|
0.32%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONPERFORMING
ASSETS - COMPOSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
development
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Construction
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Owner occupied /
rental
|
$
|
3,908
|
|
3,650
|
|
3,571
|
|
3,574
|
|
3,648
|
|
3,908
|
|
3,648
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
development
|
$
|
0
|
|
0
|
|
0
|
|
35
|
|
50
|
|
0
|
|
50
|
Construction
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Owner
occupied
|
$
|
1,543
|
|
1,957
|
|
3,913
|
|
4,272
|
|
4,627
|
|
1,543
|
|
4,627
|
Non-owner
occupied
|
$
|
0
|
|
0
|
|
0
|
|
36
|
|
84
|
|
0
|
|
84
|
Non-real
estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
assets
|
$
|
331
|
|
180
|
|
620
|
|
1,444
|
|
2,126
|
|
331
|
|
2,126
|
Consumer
assets
|
$
|
18
|
|
20
|
|
22
|
|
42
|
|
23
|
|
18
|
|
23
|
Total
nonperforming assets
|
|
5,800
|
|
5,807
|
|
8,126
|
|
9,403
|
|
10,558
|
|
5,800
|
|
10,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONPERFORMING
ASSETS - RECON
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
5,807
|
|
8,126
|
|
9,403
|
|
10,558
|
|
7,239
|
|
9,403
|
|
6,408
|
Additions - originated loans
|
$
|
999
|
|
300
|
|
1,426
|
|
402
|
|
4,789
|
|
2,725
|
|
9,550
|
Merger-related activity
|
$
|
5
|
|
17
|
|
29
|
|
0
|
|
210
|
|
51
|
|
226
|
Return
to performing status
|
$
|
0
|
|
0
|
|
(175)
|
|
0
|
|
(120)
|
|
(175)
|
|
(233)
|
Principal payments
|
$
|
(857)
|
|
(778)
|
|
(1,557)
|
|
(688)
|
|
(1,089)
|
|
(3,192)
|
|
(3,546)
|
Sale
proceeds
|
$
|
(147)
|
|
(1,807)
|
|
(299)
|
|
(101)
|
|
(373)
|
|
(2,253)
|
|
(576)
|
Loan
charge-offs
|
$
|
(3)
|
|
(50)
|
|
(597)
|
|
(754)
|
|
(91)
|
|
(650)
|
|
(1,179)
|
Valuation write-downs
|
$
|
(4)
|
|
(1)
|
|
(104)
|
|
(14)
|
|
(7)
|
|
(109)
|
|
(92)
|
Ending
balance
|
$
|
5,800
|
|
5,807
|
|
8,126
|
|
9,403
|
|
10,558
|
|
5,800
|
|
10,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOAN PORTFOLIO
COMPOSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial &
industrial
|
$
|
818,113
|
|
776,995
|
|
739,805
|
|
753,764
|
|
776,562
|
|
818,113
|
|
776,562
|
Land development &
construction
|
$
|
39,396
|
|
37,868
|
|
31,437
|
|
29,872
|
|
28,575
|
|
39,396
|
|
28,575
|
Owner occupied comm'l
R/E
|
$
|
542,730
|
|
533,075
|
|
531,152
|
|
526,327
|
|
485,347
|
|
542,730
|
|
485,347
|
Non-owner occupied
comm'l R/E
|
$
|
811,767
|
|
818,376
|
|
794,206
|
|
791,685
|
|
805,167
|
|
811,767
|
|
805,167
|
Multi-family &
residential rental
|
$
|
94,101
|
|
95,656
|
|
96,428
|
|
101,918
|
|
119,170
|
|
94,101
|
|
119,170
|
Total commercial
|
$
|
2,306,107
|
|
2,261,970
|
|
2,193,028
|
|
2,203,566
|
|
2,214,821
|
|
2,306,107
|
|
2,214,821
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 family
mortgages
|
$
|
301,765
|
|
283,657
|
|
264,996
|
|
254,560
|
|
236,075
|
|
301,765
|
|
236,075
|
Home equity &
other consumer
|
$
|
89,545
|
|
91,229
|
|
93,180
|
|
100,426
|
|
103,376
|
|
89,545
|
|
103,376
|
Total retail
|
$
|
391,310
|
|
374,886
|
|
358,176
|
|
354,986
|
|
339,451
|
|
391,310
|
|
339,451
|
Total loans
|
$
|
2,697,417
|
|
2,636,856
|
|
2,551,204
|
|
2,558,552
|
|
2,554,272
|
|
2,697,417
|
|
2,554,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
END OF PERIOD
BALANCES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
2,697,417
|
|
2,636,856
|
|
2,551,204
|
|
2,558,552
|
|
2,554,272
|
|
2,697,417
|
|
2,554,272
|
Securities
|
$
|
337,603
|
|
342,178
|
|
348,024
|
|
346,780
|
|
341,126
|
|
337,603
|
|
341,126
|
Other
interest-earning assets
|
$
|
28,193
|
|
69,402
|
|
163,879
|
|
144,974
|
|
123,110
|
|
28,193
|
|
123,110
|
Total
earning assets (before allowance)
|
$
|
3,063,213
|
|
3,048,436
|
|
3,063,107
|
|
3,050,306
|
|
3,018,508
|
|
3,063,213
|
|
3,018,508
|
Total
assets
|
$
|
3,300,106
|
|
3,288,521
|
|
3,293,900
|
|
3,286,704
|
|
3,254,655
|
|
3,300,106
|
|
3,254,655
|
Noninterest-bearing deposits
|
$
|
879,442
|
|
884,470
|
|
830,187
|
|
866,380
|
|
826,038
|
|
879,442
|
|
826,038
|
Interest-bearing deposits
|
$
|
1,629,368
|
|
1,645,341
|
|
1,709,866
|
|
1,655,985
|
|
1,663,005
|
|
1,629,368
|
|
1,663,005
|
Total
deposits
|
$
|
2,508,810
|
|
2,529,811
|
|
2,540,053
|
|
2,522,365
|
|
2,489,043
|
|
2,508,810
|
|
2,489,043
|
Total
borrowed funds
|
$
|
401,575
|
|
373,642
|
|
373,824
|
|
387,468
|
|
390,868
|
|
401,575
|
|
390,868
|
Total
interest-bearing liabilities
|
$
|
2,030,943
|
|
2,018,983
|
|
2,083,690
|
|
2,043,453
|
|
2,053,873
|
|
2,030,943
|
|
2,053,873
|
Shareholders' equity
|
$
|
379,465
|
|
374,919
|
|
368,340
|
|
365,870
|
|
362,546
|
|
379,465
|
|
362,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE
BALANCES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
2,658,092
|
|
2,596,828
|
|
2,552,070
|
|
2,534,729
|
|
2,534,364
|
|
2,602,718
|
|
2,466,156
|
Securities
|
$
|
342,593
|
|
340,990
|
|
348,431
|
|
346,318
|
|
339,125
|
|
343,983
|
|
338,901
|
Other
interest-earning assets
|
$
|
61,810
|
|
63,336
|
|
123,633
|
|
138,095
|
|
116,851
|
|
82,700
|
|
75,029
|
Total
earning assets (before allowance)
|
$
|
3,062,495
|
|
3,001,154
|
|
3,024,134
|
|
3,019,142
|
|
2,990,340
|
|
3,029,401
|
|
2,880,086
|
Total
assets
|
$
|
3,295,129
|
|
3,232,038
|
|
3,249,794
|
|
3,248,828
|
|
3,220,053
|
|
3,259,153
|
|
3,106,899
|
Noninterest-bearing deposits
|
$
|
893,181
|
|
848,650
|
|
805,214
|
|
849,751
|
|
805,650
|
|
849,337
|
|
785,940
|
Interest-bearing deposits
|
$
|
1,628,346
|
|
1,635,755
|
|
1,690,135
|
|
1,635,727
|
|
1,648,235
|
|
1,651,186
|
|
1,574,293
|
Total
deposits
|
$
|
2,521,527
|
|
2,484,405
|
|
2,495,349
|
|
2,485,478
|
|
2,453,885
|
|
2,500,523
|
|
2,360,233
|
Total
borrowed funds
|
$
|
383,830
|
|
365,124
|
|
376,890
|
|
384,168
|
|
393,910
|
|
375,307
|
|
382,496
|
Total
interest-bearing liabilities
|
$
|
2,012,176
|
|
2,000,879
|
|
2,067,025
|
|
2,019,895
|
|
2,042,145
|
|
2,026,493
|
|
1,956,789
|
Shareholders' equity
|
$
|
377,574
|
|
365,521
|
|
365,521
|
|
363,823
|
|
359,131
|
|
371,005
|
|
351,288
|
View original
content:http://www.prnewswire.com/news-releases/mercantile-bank-corporation-reports-strong-third-quarter-2018-results-300731380.html
SOURCE Mercantile Bank Corporation