GRAND RAPIDS, Mich.,
Jan. 22, 2019 /PRNewswire/ --
Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported
net income of $11.6 million, or
$0.70 per diluted share, for the
fourth quarter of 2018, compared with net income of $8.0 million, or $0.48 per diluted share, for the respective
prior-year period. For the full year 2018, Mercantile
reported net income of $42.0 million,
or $2.53 per diluted share, compared
with net income of $31.3 million, or
$1.90 per diluted share, for the full
year 2017.
Net income during the fourth quarter and full year 2018
benefited from a reduction in the corporate federal income tax
rate, which was lowered from 35 percent to 21 percent on
January 1, 2018, as a result of the
enactment of the Tax Cuts and Jobs Act. Mercantile's
effective tax rate was 18.7 percent and 18.9 percent during the
fourth quarter and full year 2018, respectively, down from 35.9
percent and 32.1 percent during the respective prior-year
periods.
The fourth quarter and full year were highlighted by:
- Robust earnings and capital position
- Strong and stable net interest margin
- Solid growth in a variety of fee income categories
- Controlled overhead costs
- Strong asset quality, as depicted by low levels of
nonperforming assets and loans in the 30- to 89-days delinquent
category
- Net loan growth of $195 million,
or nearly 8 percent, during the full year
- New commercial term loan originations of approximately
$136 million during the fourth
quarter and $508 million during the
full year
- Sustained strength in commercial loan pipeline
- Announced first quarter 2019 regular cash dividend of
$0.26 per common share, an increase
of 4.0 percent from the regular cash dividend paid during the
fourth quarter of 2018
- Mercantile Bank of Michigan
received a Community Reinvestment Act rating of "Outstanding" for
the fourth consecutive examination
"We are very pleased that the solid operating performance we
demonstrated during the first nine months of 2018 continued during
the fourth quarter," said Robert B.
Kaminski, Jr., President and Chief Executive Officer of
Mercantile. "Our financial performance exhibited throughout
the year reflects a solid net interest margin, strong asset
quality, increases in certain fee income categories, and controlled
overhead costs. In spite of continuing competitive pressures
in our markets, we were able to record robust growth in the loan
portfolio. Based on our current commercial and residential
loan pipelines, we are confident that solid loan growth can be
realized in future periods. In addition to being pleased with
our ongoing financial strength, we are proud to report that
Mercantile Bank of Michigan once
again received an "Outstanding" Community Reinvestment Act rating,
which depicts our continuing focus on meeting the needs of the
communities we serve."
Operating Results
Total revenue, which consists of net interest income and
noninterest income, was $36.2 million
during the fourth quarter of 2018, up $3.3
million, or 10.0 percent, from the prior-year fourth
quarter. Net interest income during the fourth quarter of
2018 was $30.8 million, up
$2.4 million, or
8.5 percent, from the fourth quarter of 2017, primarily
reflecting a 22 basis point increase in the net interest margin and
a 6.8 percent increase in average total loans. Total revenue
was $139 million during the full year
2018, up $10.3 million, or 8.0
percent, from 2017. Net interest income was $120 million in 2018, up $10.3 million, or 9.4 percent, from the prior
year, mainly reflecting a 17 basis point increase in the net
interest margin and a 5.9 percent increase in average total
loans.
The net interest margin was 3.98 percent in the fourth quarter
of 2018, up from 3.76 percent in the prior-year fourth
quarter. The improved net interest margin depicts a higher
yield on average earning assets, mainly reflecting an increased
yield on commercial loans and a change in earning asset mix, which
more than offset a higher cost of funds, primarily resulting from
increased costs of certain non-time deposit accounts, time
deposits, and borrowed funds. The increased yield on
commercial loans primarily reflects the impact of higher interest
rates on variable-rate commercial loans, which comprised about 55
percent of total commercial loans, stemming from the Federal Open
Market Committee raising the targeted federal funds rate by 25
basis points in each of the past five quarters. The change in
earning asset mix mainly reflects loan growth and a reduction in
interest-earning deposit balances. On average,
higher-yielding loans represented 87.9 percent of earning assets
during the fourth quarter of 2018, up from 84.0 percent during the
prior-year fourth quarter, while lower-yielding interest-earning
deposit balances represented 1.0 percent of earning assets during
the fourth quarter of 2018, down from 4.6 percent during the fourth
quarter of 2017.
The net interest margin was 3.96 percent in 2018, up from 3.79
percent in 2017. The increased net interest margin reflects a
higher yield on average earning assets, primarily depicting an
improved yield on commercial loans, which more than offset a higher
cost of funds, mainly resulting from increased costs of certain
non-time deposit accounts, time deposits, and borrowed funds.
The increased yield on commercial loans primarily reflects the
impact of higher interest rates on variable-rate commercial loans
stemming from the Federal Open Market Committee raising the
targeted federal funds rate by 25 basis points on four occasions
during 2018 and three occasions during 2017.
Net interest income and the net interest margin during 2018 and
2017 were also affected by purchase accounting accretion and
amortization entries associated with the fair value measurements
recorded effective June 1,
2014. Increases in interest income on loans totaling
$4.0 million and $4.6 million were recorded during 2018 and 2017,
respectively. Purchased loan accretion amounts vary from
period to period as a result of periodic cash flow re-estimations,
loan payoffs, and payment performance. An increase in
interest expense on subordinated debentures totaling $0.7 million was recorded during both 2018 and
2017.
Mercantile recorded no provision expense during the fourth
quarter of 2018, compared to a provision expense of $0.6 million during the prior-year fourth
quarter. During 2018, Mercantile recorded a provision for
loan losses of $1.1 million, compared
to a provision of $3.0 million during
2017. No provision expense was recorded during the fourth
quarter of 2018 as the positive impact of net loan recoveries
offset increased reserve allocations necessitated by loan growth
and changes in loan loss reserve environmental factors. The
provision expense recorded during 2018 and 2017 primarily reflects
ongoing loan growth and periodic adjustments to loan loss reserve
environmental factors.
Noninterest income during the fourth quarter of 2018 was
$5.4 million. Noninterest
income during the quarter included a one-time $0.9 million accounting adjustment related to
mortgage banking activities in prior years; excluding this
adjustment, noninterest income decreased slightly in the fourth
quarter of 2018 compared to the prior-year fourth quarter.
Noninterest income totaled $19.0
million during both 2018 and 2017. Noninterest income
during 2018 included the previously mentioned mortgage banking
activity adjustment, while noninterest income during 2017 included
a $1.4 million bank owned life
insurance death benefit claim; excluding these transactions,
noninterest income increased $0.5
million, or 2.9 percent, during 2018 compared to 2017.
Growth in credit and debit card fees, payroll processing revenue,
and treasury management income during the fourth quarter of 2018
was more than offset by a decline in mortgage banking activity
income, while growth in these revenue streams during the full year
2018 surpassed a decrease in mortgage banking activity
income. Although Mercantile believes its market share
increased during 2018, mortgage banking activity income declined
during the 2018 periods compared to the respective 2017 periods
primarily due to the impacts of a limited supply of homes for sale
in the Bank's markets and lower refinance activity due to rising
residential mortgage loan interest rates.
Noninterest expense totaled $22.0
million during the fourth quarter of 2018, up $2.1 million, or 10.6 percent, from the
prior-year fourth quarter. Noninterest expense during 2018
was $86.2 million, an increase of
$6.5 million, or 8.1 percent, from
the $79.7 million expensed during
2017. The higher level of expense in the 2018 periods
primarily resulted from increased salary costs, mainly reflecting
annual employee merit pay increases and higher stock-based
compensation expense. In addition, a one-time pay increase
for all hourly employees that totaled $1.6
million on an annualized basis became effective on
April 1, 2018, contributing to the
higher level of noninterest expense.
Mr. Kaminski continued, "As expected, our ongoing emphasis on
disciplined loan pricing and sound underwriting, along with a
beneficial balance sheet structure, produced a healthy and steady
net interest margin throughout 2018. Our improved yield on
earning assets, mainly reflecting increased interest rates on
variable-rate commercial loans, more than offset a higher cost of
funds stemming from the continuing rising interest rate
environment. We anticipate that any further interest rate
hikes initiated by the Federal Open Market Committee will have a
positive impact on our net interest income in light of our current
balance sheet structure. We are pleased with the increases in
certain fee income categories and remain committed to controlling
overhead costs. Although our mortgage banking activity income
was hampered in 2018 by a lack of inventory in our markets and
lower refinance activity, we are hopeful that our current loan
pipeline, prominent level of pre-qualifications, and heightened
efforts to sell a greater percentage of originated mortgage loans
should result in solid levels of income in future periods."
Balance Sheet
As of December 31, 2018, total
assets were $3.36 billion, up
$77.2 million, or 2.3 percent, from
December 31, 2017. Total loans
increased $195 million, or 7.6
percent, to $2.75 billion over the
same time period. Approximately $136 million and
$508 million in commercial term loans
to new and existing borrowers were originated during the fourth
quarter and full year of 2018, respectively, as ongoing sales and
relationship-building efforts resulted in increased lending
opportunities. As of December 31,
2018, unfunded commitments on commercial construction and
development loans totaled approximately $170
million, which are expected to be largely funded over the
next 12 to 18 months.
Ray Reitsma, President of
Mercantile Bank of Michigan,
noted, "We are very pleased with the net loan growth achieved
during 2018, along with the level of new commercial term loan
originations, which exceeded $500
million for the fourth consecutive year. Net loan
growth during 2018 reflects higher levels of commercial loans and
residential mortgage loans. All commercial loan segments,
most notably the commercial and industrial loan portfolio, grew
during the year. The solid growth in commercial loans depicts
our ongoing efforts to identify new lending opportunities and meet
the credit needs of our existing customers, while growth in
residential mortgage loans reflects the continuing success of
strategic initiatives that were centered on increasing our market
penetration. We remain committed to growing the loan
portfolio with an emphasis on risk-based pricing and sound
underwriting parameters. In light of our current commercial
loan and residential loan pipelines, additional lending
opportunities conveyed by commercial lenders, and the level of
residential mortgage loan pre-qualifications, we believe that we
can grow the commercial and residential loan portfolios in future
periods."
As of December 31, 2018,
commercial and industrial loans and owner-occupied commercial real
estate loans combined represented approximately 58 percent of total
commercial loans.
Total deposits at December 31,
2018 were $2.46 billion, down
$58.7 million from December 31, 2017. Local deposits were down
$69.2 million, and out-of-area
deposits were up $10.5 million since
year-end 2017. The decrease in local deposits during the
current year mainly depicts the managed reduction of public unit
time deposits given the strong competition and resulting relatively
high interest rates in Mercantile's markets and declines in certain
personal account products stemming from depositors using funds for
personal investments and expenditures. Noninterest-bearing
checking accounts reflected solid growth during 2018 primarily due
to new commercial loan relationships. Wholesale funds were
$474 million, or approximately 16
percent of total funds, as of December 31,
2018, compared to $323
million, or about 11 percent of total funds, as of
December 31, 2017.
Asset Quality
Nonperforming assets at December 31,
2018, were $5.0 million, or
0.2 percent of total assets, compared to $9.4 million, or 0.3 percent of total assets, at
December 31, 2017. The decline
in nonperforming assets during 2018 primarily reflects successful
loan collection efforts and sales of bank-owned properties that
were no longer being used or considered for use as bank
facilities. The level of past due loans remains nominal, and
loan relationships on the internal watch list generally declined in
number and dollar volume during 2018. Net loan recoveries
were $0.7 million during the fourth
quarter of 2018 and $1.8 million for
the full year 2018. Net loan charge-offs were $0.3 million during the fourth quarter of 2017
and $1.4 million for the full year
2017, representing 0.05 percent and 0.06 percent of average total
loans, respectively.
Capital Position
Shareholders' equity totaled $375
million as of December 31,
2018, an increase of $9.4
million from year-end 2017. The Bank's capital
position remains above "well-capitalized" with a total risk-based
capital ratio of 12.3 percent as of December
31, 2018, compared to 12.6 percent at December 31, 2017. At December 31, 2018, the Bank had approximately
$72 million in excess of the 10.0
percent minimum regulatory threshold required to be considered a
"well-capitalized" institution. Mercantile reported
16,534,256 total shares outstanding at December 31, 2018.
As part of a $20 million common
stock repurchase program announced in January of 2015, which was
expanded by $15 million in early
2016, Mercantile repurchased approximately 200,000 shares for
$5.9 million, or a weighted average
all-in cost per share of $29.73,
during the fourth quarter of 2018; no shares were repurchased
during the first nine months of 2018. As of December 31, 2018, future share repurchases
totaling $9.6 million could be made
under the program.
Mr. Kaminski concluded, "Our strong financial performance during
2018 enabled us to reward shareholders with the increased payment
of regular quarterly cash dividends and a special dividend during
the fourth quarter. As demonstrated by our continuing cash
dividend program, including the announcement of an increased first
quarter 2019 regular cash dividend earlier today, we remain
dedicated to building shareholder value. Our
relationship-based banking philosophy, which entails meeting
customers' needs through the efficient delivery of a wide array of
products and services, continues to attract new clients and has
allowed us to retain existing customers. We believe that our
sound financial condition positions us to meet growth objectives
and enhance shareholder value in future periods."
About Mercantile Bank Corporation
Based in Grand Rapids,
Michigan, Mercantile Bank Corporation is the bank holding
company for Mercantile Bank of Michigan. Mercantile provides
banking services to businesses, individuals and governmental units,
and differentiates itself on the basis of service quality and the
expertise of its banking staff. Mercantile has assets of
approximately $3.4 billion and
operates 47 banking offices. Mercantile Bank Corporation's
common stock is listed on the NASDAQ Global Select Market under the
symbol "MBWM."
Forward-Looking Statements
This news release contains comments or information that
constitute forward-looking statements (within the meaning of the
Private Securities Litigation Reform Act of 1995) that are based on
current expectations that involve a number of risks and
uncertainties. Actual results may differ materially from the
results expressed in forward-looking statements. Factors that might
cause such a difference include changes in interest rates and
interest rate relationships; demand for products and services; the
degree of competition by traditional and nontraditional
competitors; changes in banking regulation or actions by bank
regulators; changes in tax laws; changes in prices, levies, and
assessments; the impact of technological advances; governmental and
regulatory policy changes; the outcomes of contingencies; trends in
customer behavior as well as their ability to repay loans; changes
in local real estate values; changes in the national and local
economies; and other factors, including risk factors, disclosed
from time to time in filings made by Mercantile with the Securities
and Exchange Commission. Mercantile undertakes no obligation to
update or clarify forward-looking statements, whether as a result
of new information, future events or otherwise.
FOR FURTHER
INFORMATION:
|
|
|
|
Robert B.
Kaminski, Jr.
|
Charles
Christmas
|
President
and CEO
|
Executive Vice
President and CFO
|
616-726-1502
|
616-726-1202
|
rkaminski@mercbank.com
|
cchristmas@mercbank.com
|
Mercantile Bank
Corporation
|
|
|
|
|
|
|
Fourth Quarter 2018
Results
|
|
|
|
|
|
|
MERCANTILE BANK
CORPORATION
|
CONSOLIDATED BALANCE
SHEETS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
DECEMBER
31,
|
|
DECEMBER
31,
|
|
DECEMBER
31,
|
|
|
2018
|
|
2017
|
|
2016
|
ASSETS
|
|
|
|
|
|
|
Cash and
due from banks
|
$
|
64,872,000
|
$
|
55,127,000
|
$
|
50,200,000
|
Interest-earning deposits
|
|
10,482,000
|
|
144,974,000
|
|
133,396,000
|
Total cash and cash
equivalents
|
|
75,354,000
|
|
200,101,000
|
|
183,596,000
|
|
|
|
|
|
|
|
Securities available for sale
|
|
337,366,000
|
|
335,744,000
|
|
328,060,000
|
Federal
Home Loan Bank stock
|
|
16,022,000
|
|
11,036,000
|
|
8,026,000
|
|
|
|
|
|
|
|
Loans
|
|
2,753,085,000
|
|
2,558,552,000
|
|
2,378,620,000
|
Allowance for loan losses
|
|
(22,380,000)
|
|
(19,501,000)
|
|
(17,961,000)
|
Loans, net
|
|
2,730,705,000
|
|
2,539,051,000
|
|
2,360,659,000
|
|
|
|
|
|
|
|
Premises
and equipment, net
|
|
48,321,000
|
|
46,034,000
|
|
45,456,000
|
Bank
owned life insurance
|
|
69,647,000
|
|
68,689,000
|
|
67,198,000
|
Goodwill
|
|
49,473,000
|
|
49,473,000
|
|
49,473,000
|
Core
deposit intangible
|
|
5,561,000
|
|
7,600,000
|
|
9,957,000
|
Other
assets
|
|
31,458,000
|
|
28,976,000
|
|
30,146,000
|
|
|
|
|
|
|
|
Total
assets
|
$
|
3,363,907,000
|
$
|
3,286,704,000
|
$
|
3,082,571,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
889,784,000
|
$
|
866,380,000
|
$
|
810,600,000
|
Interest-bearing
|
|
1,573,924,000
|
|
1,655,985,000
|
|
1,564,385,000
|
Total deposits
|
|
2,463,708,000
|
|
2,522,365,000
|
|
2,374,985,000
|
|
|
|
|
|
|
|
Securities sold under agreements to repurchase
|
|
103,519,000
|
|
118,748,000
|
|
131,710,000
|
Federal
Home Loan Bank advances
|
|
350,000,000
|
|
220,000,000
|
|
175,000,000
|
Subordinated debentures
|
|
46,199,000
|
|
45,517,000
|
|
44,835,000
|
Accrued
interest and other liabilities
|
|
25,232,000
|
|
14,204,000
|
|
15,230,000
|
Total liabilities
|
|
2,988,658,000
|
|
2,920,834,000
|
|
2,741,760,000
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Common
stock
|
|
308,005,000
|
|
309,772,000
|
|
305,488,000
|
Retained
earnings
|
|
75,483,000
|
|
60,132,000
|
|
40,904,000
|
Accumulated other comprehensive income/(loss)
|
|
(8,239,000)
|
|
(4,034,000)
|
|
(5,581,000)
|
Total shareholders'
equity
|
|
375,249,000
|
|
365,870,000
|
|
340,811,000
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
3,363,907,000
|
$
|
3,286,704,000
|
$
|
3,082,571,000
|
|
|
|
|
|
|
|
Mercantile Bank
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter 2018
Results
|
|
|
|
|
|
|
|
|
|
|
|
|
MERCANTILE BANK
CORPORATION
|
CONSOLIDATED REPORTS
OF INCOME
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
THREE MONTHS
ENDED
|
TWELVE MONTHS
ENDED
|
TWELVE MONTHS
ENDED
|
|
December 31,
2018
|
December 31,
2017
|
December 31,
2018
|
December 31,
2017
|
INTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans,
including fees
|
$
|
34,676,000
|
|
$
|
30,411,000
|
|
$
|
131,763,000
|
|
$
|
116,816,000
|
|
Investment securities
|
|
2,347,000
|
|
|
2,036,000
|
|
|
8,975,000
|
|
|
7,631,000
|
|
Other
interest-earning assets
|
|
172,000
|
|
|
455,000
|
|
|
1,243,000
|
|
|
1,096,000
|
|
Total interest
income
|
|
37,195,000
|
|
|
32,902,000
|
|
|
141,981,000
|
|
|
125,543,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
3,949,000
|
|
|
2,819,000
|
|
|
13,869,000
|
|
|
9,362,000
|
|
Short-term borrowings
|
|
92,000
|
|
|
48,000
|
|
|
273,000
|
|
|
190,000
|
|
Federal
Home Loan Bank advances
|
|
1,513,000
|
|
|
966,000
|
|
|
4,647,000
|
|
|
3,657,000
|
|
Other
borrowed money
|
|
823,000
|
|
|
667,000
|
|
|
3,110,000
|
|
|
2,586,000
|
|
Total interest
expense
|
|
6,377,000
|
|
|
4,500,000
|
|
|
21,899,000
|
|
|
15,795,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
30,818,000
|
|
|
28,402,000
|
|
|
120,082,000
|
|
|
109,748,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan
losses
|
|
0
|
|
|
600,000
|
|
|
1,100,000
|
|
|
2,950,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
after
|
|
|
|
|
|
|
|
|
|
|
|
|
provision for loan losses
|
|
30,818,000
|
|
|
27,802,000
|
|
|
118,982,000
|
|
|
106,798,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
charges on accounts
|
|
1,099,000
|
|
|
1,085,000
|
|
|
4,358,000
|
|
|
4,233,000
|
|
Credit
and debit card income
|
|
1,399,000
|
|
|
1,263,000
|
|
|
5,354,000
|
|
|
4,760,000
|
|
Mortgage
banking income
|
|
994,000
|
|
|
1,188,000
|
|
|
4,109,000
|
|
|
4,421,000
|
|
Payroll
services
|
|
335,000
|
|
|
323,000
|
|
|
1,462,000
|
|
|
1,305,000
|
|
Earnings
on bank owned life insurance
|
318,000
|
|
|
337,000
|
|
|
1,287,000
|
|
|
2,731,000
|
|
Other
income
|
|
1,225,000
|
|
|
307,000
|
|
|
2,440,000
|
|
|
1,551,000
|
|
Total noninterest
income
|
|
5,370,000
|
|
|
4,503,000
|
|
|
19,010,000
|
|
|
19,001,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and benefits
|
|
12,884,000
|
|
|
11,601,000
|
|
|
50,910,000
|
|
|
45,397,000
|
|
Occupancy
|
|
1,662,000
|
|
|
1,479,000
|
|
|
6,711,000
|
|
|
6,186,000
|
|
Furniture and equipment
|
|
681,000
|
|
|
543,000
|
|
|
2,470,000
|
|
|
2,168,000
|
|
Data
processing costs
|
|
2,141,000
|
|
|
2,067,000
|
|
|
8,557,000
|
|
|
8,222,000
|
|
Other
expense
|
|
4,590,000
|
|
|
4,158,000
|
|
|
17,522,000
|
|
|
17,743,000
|
|
Total noninterest
expense
|
|
21,958,000
|
|
|
19,848,000
|
|
|
86,170,000
|
|
|
79,716,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
federal income
|
|
|
|
|
|
|
|
|
|
|
|
|
tax expense
|
|
14,230,000
|
|
|
12,457,000
|
|
|
51,822,000
|
|
|
46,083,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax
expense
|
|
2,657,000
|
|
|
4,478,000
|
|
|
9,798,000
|
|
|
14,809,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
$
|
11,573,000
|
|
$
|
7,979,000
|
|
$
|
42,024,000
|
|
$
|
31,274,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$0.70
|
|
|
$0.48
|
|
|
$2.53
|
|
|
$1.90
|
|
Diluted
earnings per share
|
|
$0.70
|
|
|
$0.48
|
|
|
$2.53
|
|
|
$1.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
basic shares outstanding
|
|
16,594,412
|
|
|
16,525,625
|
|
|
16,600,612
|
|
|
16,478,968
|
|
Average
diluted shares outstanding
|
|
16,600,108
|
|
|
16,536,225
|
|
|
16,606,416
|
|
|
16,489,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mercantile Bank
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter 2018
Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MERCANTILE BANK
CORPORATION
|
CONSOLIDATED
FINANCIAL HIGHLIGHTS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly
|
|
Year-To-Date
|
(dollars in
thousands except per share data)
|
2018
|
|
2018
|
|
2018
|
|
2018
|
|
2017
|
|
|
|
|
|
|
4th
Qtr
|
|
3rd
Qtr
|
|
2nd
Qtr
|
|
1st
Qtr
|
|
4th
Qtr
|
|
2018
|
|
2017
|
EARNINGS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
$
|
30,818
|
|
29,840
|
|
29,225
|
|
30,199
|
|
28,402
|
|
120,082
|
|
109,748
|
Provision for loan losses
|
$
|
0
|
|
400
|
|
700
|
|
0
|
|
600
|
|
1,100
|
|
2,950
|
Noninterest income
|
$
|
5,370
|
|
4,708
|
|
4,550
|
|
4,381
|
|
4,503
|
|
19,010
|
|
19,001
|
Noninterest expense
|
$
|
21,958
|
|
21,650
|
|
21,414
|
|
21,147
|
|
19,848
|
|
86,170
|
|
79,716
|
Net
income before federal income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
tax expense
|
$
|
14,230
|
|
12,498
|
|
11,661
|
|
13,433
|
|
12,457
|
|
51,822
|
|
46,083
|
Net
income
|
$
|
11,573
|
|
10,123
|
|
9,446
|
|
10,881
|
|
7,979
|
|
42,024
|
|
31,274
|
Basic
earnings per share
|
$
|
0.70
|
|
0.61
|
|
0.57
|
|
0.66
|
|
0.48
|
|
2.53
|
|
1.90
|
Diluted
earnings per share
|
$
|
0.70
|
|
0.61
|
|
0.57
|
|
0.66
|
|
0.48
|
|
2.53
|
|
1.90
|
Average
basic shares outstanding
|
|
16,594,412
|
|
16,611,411
|
|
16,601,400
|
|
16,595,115
|
|
16,525,625
|
|
16,600,612
|
|
16,478,968
|
Average
diluted shares outstanding
|
|
16,600,108
|
|
16,619,295
|
|
16,610,819
|
|
16,604,325
|
|
16,536,225
|
|
16,606,416
|
|
16,489,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
on average assets
|
|
1.39%
|
|
1.22%
|
|
1.17%
|
|
1.36%
|
|
0.97%
|
|
1.28%
|
|
1.00%
|
Return
on average equity
|
|
12.40%
|
|
10.64%
|
|
10.25%
|
|
12.07%
|
|
8.70%
|
|
11.33%
|
|
8.82%
|
Net
interest margin (fully tax-equivalent)
|
3.98%
|
|
3.87%
|
|
3.92%
|
|
4.06%
|
|
3.76%
|
|
3.96%
|
|
3.79%
|
Efficiency ratio
|
|
60.68%
|
|
62.67%
|
|
63.40%
|
|
61.15%
|
|
60.32%
|
|
61.95%
|
|
61.92%
|
Full-time equivalent employees
|
|
630
|
|
637
|
|
667
|
|
640
|
|
641
|
|
630
|
|
641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YIELD ON ASSETS /
COST OF FUNDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on
loans
|
|
5.08%
|
|
4.91%
|
|
4.92%
|
|
5.14%
|
|
4.76%
|
|
5.01%
|
|
4.70%
|
Yield on
securities
|
|
2.80%
|
|
2.70%
|
|
2.64%
|
|
2.61%
|
|
2.60%
|
|
2.69%
|
|
2.47%
|
Yield on
other interest-earning assets
|
2.20%
|
|
1.98%
|
|
1.80%
|
|
1.52%
|
|
1.29%
|
|
1.79%
|
|
1.21%
|
Yield on
total earning assets
|
|
4.80%
|
|
4.60%
|
|
4.60%
|
|
4.70%
|
|
4.35%
|
|
4.68%
|
|
4.33%
|
Yield on
total assets
|
|
4.46%
|
|
4.28%
|
|
4.27%
|
|
4.37%
|
|
4.04%
|
|
4.35%
|
|
4.02%
|
Cost of
deposits
|
|
0.63%
|
|
0.56%
|
|
0.53%
|
|
0.50%
|
|
0.45%
|
|
0.56%
|
|
0.39%
|
Cost of
borrowed funds
|
|
2.22%
|
|
2.14%
|
|
2.01%
|
|
1.83%
|
|
1.74%
|
|
2.06%
|
|
1.68%
|
Cost of
interest-bearing liabilities
|
|
1.26%
|
|
1.11%
|
|
1.02%
|
|
0.94%
|
|
0.88%
|
|
1.08%
|
|
0.80%
|
Cost of
funds (total earning assets)
|
|
0.82%
|
|
0.73%
|
|
0.68%
|
|
0.64%
|
|
0.59%
|
|
0.72%
|
|
0.54%
|
Cost of
funds (total assets)
|
|
0.76%
|
|
0.68%
|
|
0.63%
|
|
0.60%
|
|
0.55%
|
|
0.67%
|
|
0.50%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PURCHASE
ACCOUNTING ADJUSTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
portfolio - increase interest income
|
$
|
603
|
|
386
|
|
777
|
|
2,271
|
|
683
|
|
4,037
|
|
4,608
|
Trust
preferred - increase interest expense
|
$
|
171
|
|
171
|
|
171
|
|
171
|
|
171
|
|
684
|
|
684
|
Core
deposit intangible - increase overhead
|
$
|
477
|
|
477
|
|
530
|
|
556
|
|
556
|
|
2,040
|
|
2,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MORTGAGE BANKING
ACTIVITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
mortgage loans originated
|
$
|
44,448
|
|
66,829
|
|
62,032
|
|
40,937
|
|
62,526
|
|
214,246
|
|
223,224
|
Purchase
mortgage loans originated
|
$
|
29,729
|
|
47,704
|
|
41,239
|
|
25,137
|
|
33,958
|
|
143,809
|
|
135,850
|
Refinance mortgage loans originated
|
$
|
14,719
|
|
19,125
|
|
20,793
|
|
15,800
|
|
28,568
|
|
70,437
|
|
87,374
|
Total
mortgage loans sold
|
$
|
21,805
|
|
30,713
|
|
24,114
|
|
19,813
|
|
26,254
|
|
96,445
|
|
107,946
|
Net gain
on sale of mortgage loans
|
$
|
829
|
|
1,116
|
|
851
|
|
729
|
|
1,051
|
|
3,525
|
|
3,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible
equity to tangible assets
|
|
9.68%
|
|
9.98%
|
|
9.87%
|
|
9.63%
|
|
9.56%
|
|
9.68%
|
|
9.56%
|
Tier 1
leverage capital ratio
|
|
11.41%
|
|
11.76%
|
|
11.81%
|
|
11.50%
|
|
11.24%
|
|
11.41%
|
|
11.28%
|
Common
equity risk-based capital ratio
|
10.41%
|
|
10.93%
|
|
11.03%
|
|
11.04%
|
|
10.71%
|
|
10.41%
|
|
10.76%
|
Tier 1
risk-based capital ratio
|
|
11.80%
|
|
12.35%
|
|
12.49%
|
|
12.52%
|
|
12.19%
|
|
11.80%
|
|
12.23%
|
Total
risk-based capital ratio
|
|
12.50%
|
|
13.05%
|
|
13.19%
|
|
13.20%
|
|
12.85%
|
|
12.50%
|
|
12.89%
|
Tier 1
capital
|
$
|
373,721
|
|
382,829
|
|
375,167
|
|
367,546
|
|
359,047
|
|
373,721
|
|
360,533
|
Tier 1
plus tier 2 capital
|
$
|
396,102
|
|
404,521
|
|
396,334
|
|
387,520
|
|
378,548
|
|
396,102
|
|
380,035
|
Total
risk-weighted assets
|
$
|
3,167,655
|
|
3,100,158
|
|
3,003,778
|
|
2,935,367
|
|
2,946,527
|
|
3,167,655
|
|
2,948,013
|
Book
value per common share
|
$
|
22.70
|
|
22.84
|
|
22.57
|
|
22.19
|
|
22.05
|
|
22.70
|
|
22.05
|
Tangible
book value per common share
|
$
|
19.37
|
|
19.50
|
|
19.20
|
|
18.79
|
|
18.61
|
|
19.37
|
|
18.61
|
Cash
dividend per common share
|
$
|
1.00
|
|
0.24
|
|
0.22
|
|
0.22
|
|
0.19
|
|
1.68
|
|
0.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET
QUALITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
loan charge-offs
|
$
|
354
|
|
169
|
|
273
|
|
654
|
|
920
|
|
1,450
|
|
3,235
|
Recoveries
|
$
|
1,042
|
|
294
|
|
766
|
|
1,127
|
|
628
|
|
3,229
|
|
1,825
|
Net loan
charge-offs (recoveries)
|
$
|
(688)
|
|
(125)
|
|
(493)
|
|
(473)
|
|
292
|
|
(1,779)
|
|
1,410
|
Net loan
charge-offs to average loans
|
(0.10%)
|
|
(0.02%)
|
|
(0.08%)
|
|
(0.08%)
|
|
0.05%
|
|
(0.07%)
|
|
0.06%
|
Allowance for loan losses
|
$
|
22,380
|
|
21,692
|
|
21,167
|
|
19,974
|
|
19,501
|
|
22,380
|
|
19,501
|
Allowance to originated loans
|
|
0.88%
|
|
0.88%
|
|
0.89%
|
|
0.87%
|
|
0.88%
|
|
0.88%
|
|
0.88%
|
Nonperforming loans
|
$
|
4,141
|
|
4,852
|
|
4,965
|
|
5,742
|
|
7,143
|
|
4,141
|
|
7,143
|
Other
real estate/repossessed assets
|
$
|
811
|
|
948
|
|
842
|
|
2,384
|
|
2,260
|
|
811
|
|
2,260
|
Nonperforming loans to total loans
|
|
0.15%
|
|
0.18%
|
|
0.19%
|
|
0.23%
|
|
0.28%
|
|
0.15%
|
|
0.28%
|
Nonperforming assets to total assets
|
|
0.15%
|
|
0.18%
|
|
0.18%
|
|
0.25%
|
|
0.29%
|
|
0.15%
|
|
0.29%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONPERFORMING
ASSETS - COMPOSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
development
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Construction
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Owner occupied /
rental
|
$
|
3,555
|
|
3,908
|
|
3,650
|
|
3,571
|
|
3,574
|
|
3,555
|
|
3,574
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
development
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
35
|
|
0
|
|
35
|
Construction
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Owner
occupied
|
$
|
1,363
|
|
1,543
|
|
1,957
|
|
3,913
|
|
4,272
|
|
1,363
|
|
4,272
|
Non-owner
occupied
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
36
|
|
0
|
|
36
|
Non-real
estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
assets
|
$
|
17
|
|
331
|
|
180
|
|
620
|
|
1,444
|
|
17
|
|
1,444
|
Consumer
assets
|
$
|
17
|
|
18
|
|
20
|
|
22
|
|
42
|
|
17
|
|
42
|
Total
nonperforming assets
|
|
4,952
|
|
5,800
|
|
5,807
|
|
8,126
|
|
9,403
|
|
4,952
|
|
9,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONPERFORMING
ASSETS - RECON
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
5,800
|
|
5,807
|
|
8,126
|
|
9,403
|
|
10,558
|
|
9,403
|
|
6,408
|
Additions - originated loans
|
$
|
1,247
|
|
999
|
|
300
|
|
1,426
|
|
402
|
|
3,972
|
|
9,952
|
Merger-related activity
|
$
|
0
|
|
5
|
|
17
|
|
29
|
|
0
|
|
51
|
|
226
|
Return
to performing status
|
$
|
0
|
|
0
|
|
0
|
|
(175)
|
|
0
|
|
(175)
|
|
(233)
|
Principal payments
|
$
|
(1,836)
|
|
(857)
|
|
(778)
|
|
(1,557)
|
|
(688)
|
|
(5,028)
|
|
(4,234)
|
Sale
proceeds
|
$
|
(128)
|
|
(147)
|
|
(1,807)
|
|
(299)
|
|
(101)
|
|
(2,381)
|
|
(677)
|
Loan
charge-offs
|
$
|
(57)
|
|
(3)
|
|
(50)
|
|
(597)
|
|
(754)
|
|
(707)
|
|
(1,933)
|
Valuation write-downs
|
$
|
(74)
|
|
(4)
|
|
(1)
|
|
(104)
|
|
(14)
|
|
(183)
|
|
(106)
|
Ending
balance
|
$
|
4,952
|
|
5,800
|
|
5,807
|
|
8,126
|
|
9,403
|
|
4,952
|
|
9,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOAN PORTFOLIO
COMPOSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial &
industrial
|
$
|
822,723
|
|
818,113
|
|
776,995
|
|
739,805
|
|
753,764
|
|
822,723
|
|
753,764
|
Land development &
construction
|
$
|
44,885
|
|
39,396
|
|
37,868
|
|
31,437
|
|
29,872
|
|
44,885
|
|
29,872
|
Owner occupied comm'l
R/E
|
$
|
548,619
|
|
542,730
|
|
533,075
|
|
531,152
|
|
526,327
|
|
548,619
|
|
526,327
|
Non-owner occupied
comm'l R/E
|
$
|
816,282
|
|
811,767
|
|
818,376
|
|
794,206
|
|
791,685
|
|
816,282
|
|
791,685
|
Multi-family &
residential rental
|
$
|
127,597
|
|
94,101
|
|
95,656
|
|
96,428
|
|
101,918
|
|
127,597
|
|
101,918
|
Total commercial
|
$
|
2,360,106
|
|
2,306,107
|
|
2,261,970
|
|
2,193,028
|
|
2,203,566
|
|
2,360,106
|
|
2,203,566
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 family
mortgages
|
$
|
307,540
|
|
301,765
|
|
283,657
|
|
264,996
|
|
254,560
|
|
307,540
|
|
254,560
|
Home equity &
other consumer
|
$
|
85,439
|
|
89,545
|
|
91,229
|
|
93,180
|
|
100,426
|
|
85,439
|
|
100,426
|
Total retail
|
$
|
392,979
|
|
391,310
|
|
374,886
|
|
358,176
|
|
354,986
|
|
392,979
|
|
354,986
|
Total loans
|
$
|
2,753,085
|
|
2,697,417
|
|
2,636,856
|
|
2,551,204
|
|
2,558,552
|
|
2,753,085
|
|
2,558,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
END OF PERIOD
BALANCES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
2,753,085
|
|
2,697,417
|
|
2,636,856
|
|
2,551,204
|
|
2,558,552
|
|
2,753,085
|
|
2,558,552
|
Securities
|
$
|
353,388
|
|
337,603
|
|
342,178
|
|
348,024
|
|
346,780
|
|
353,388
|
|
346,780
|
Other
interest-earning assets
|
$
|
10,482
|
|
28,193
|
|
69,402
|
|
163,879
|
|
144,974
|
|
10,482
|
|
144,974
|
Total
earning assets (before allowance)
|
$
|
3,116,955
|
|
3,063,213
|
|
3,048,436
|
|
3,063,107
|
|
3,050,306
|
|
3,116,955
|
|
3,050,306
|
Total
assets
|
$
|
3,363,907
|
|
3,300,106
|
|
3,288,521
|
|
3,293,900
|
|
3,286,704
|
|
3,363,907
|
|
3,286,704
|
Noninterest-bearing deposits
|
$
|
889,784
|
|
879,442
|
|
884,470
|
|
830,187
|
|
866,380
|
|
889,784
|
|
866,380
|
Interest-bearing deposits
|
$
|
1,573,924
|
|
1,629,368
|
|
1,645,341
|
|
1,709,866
|
|
1,655,985
|
|
1,573,924
|
|
1,655,985
|
Total
deposits
|
$
|
2,463,708
|
|
2,508,810
|
|
2,529,811
|
|
2,540,053
|
|
2,522,365
|
|
2,463,708
|
|
2,522,365
|
Total
borrowed funds
|
$
|
513,220
|
|
401,575
|
|
373,642
|
|
373,824
|
|
387,468
|
|
513,220
|
|
387,468
|
Total
interest-bearing liabilities
|
$
|
2,087,144
|
|
2,030,943
|
|
2,018,983
|
|
2,083,690
|
|
2,043,453
|
|
2,087,144
|
|
2,043,453
|
Shareholders' equity
|
$
|
375,249
|
|
379,465
|
|
374,919
|
|
368,340
|
|
365,870
|
|
375,249
|
|
365,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE
BALANCES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
2,706,617
|
|
2,658,092
|
|
2,596,828
|
|
2,552,070
|
|
2,534,729
|
|
2,628,907
|
|
2,483,440
|
Securities
|
$
|
343,597
|
|
342,593
|
|
340,990
|
|
348,431
|
|
346,318
|
|
343,886
|
|
340,770
|
Other
interest-earning assets
|
$
|
30,564
|
|
61,810
|
|
63,336
|
|
123,633
|
|
138,095
|
|
69,559
|
|
90,925
|
Total
earning assets (before allowance)
|
$
|
3,080,778
|
|
3,062,495
|
|
3,001,154
|
|
3,024,134
|
|
3,019,142
|
|
3,042,352
|
|
2,915,135
|
Total
assets
|
$
|
3,312,648
|
|
3,295,129
|
|
3,232,038
|
|
3,249,794
|
|
3,248,828
|
|
3,272,637
|
|
3,142,673
|
Noninterest-bearing deposits
|
$
|
905,065
|
|
893,181
|
|
848,650
|
|
805,214
|
|
849,751
|
|
863,384
|
|
802,024
|
Interest-bearing deposits
|
$
|
1,579,632
|
|
1,628,346
|
|
1,635,755
|
|
1,690,135
|
|
1,635,727
|
|
1,633,150
|
|
1,589,778
|
Total
deposits
|
$
|
2,484,697
|
|
2,521,527
|
|
2,484,405
|
|
2,495,349
|
|
2,485,478
|
|
2,496,534
|
|
2,391,802
|
Total
borrowed funds
|
$
|
434,365
|
|
383,830
|
|
365,124
|
|
376,890
|
|
384,168
|
|
390,193
|
|
382,917
|
Total
interest-bearing liabilities
|
$
|
2,013,997
|
|
2,012,176
|
|
2,000,879
|
|
2,067,025
|
|
2,019,895
|
|
2,023,343
|
|
1,972,695
|
Shareholders' equity
|
$
|
370,175
|
|
377,574
|
|
365,521
|
|
365,521
|
|
363,823
|
|
370,796
|
|
354,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/mercantile-bank-corporation-announces-strong-fourth-quarter-and-full-year-2018-results-300781643.html
SOURCE Mercantile Bank Corporation