GRAND RAPIDS, Mich.,
July 16, 2019 /PRNewswire/ --
Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported
net income of $11.7 million, or
$0.71 per diluted share, for the
second quarter of 2019, compared with net income of $9.4 million, or $0.57 per diluted share, for the respective
prior-year period. Net income during the first six months of
2019 totaled $23.5 million, or
$1.43 per diluted share, compared to
$20.3 million, or $1.22 per diluted share, during the first six
months of 2018.
A bank owned life insurance claim increased reported net income
during the second quarter of 2019 by approximately $1.3 million, or $0.08 per diluted share. Excluding the
impact of this transaction, diluted earnings per share increased
$0.06, or 10.5 percent, during the
second quarter of 2019 compared to the prior-year second
quarter. Bank owned life insurance claims and a gain on the
sale of a former branch facility increased reported net income
during the first six months of 2019 by approximately $3.1 million, or $0.19 per diluted share, while the successful
collection of certain nonperforming commercial loans increased
reported net income during the respective 2018 period by
approximately $1.7 million, or
$0.10 per diluted share.
Excluding the impacts of these transactions, diluted earnings per
share increased $0.12, or 10.7
percent, during the first six months of 2019 compared to the
respective prior-year period.
"We are very pleased to conclude the first half of 2019 with
another quarter of solid operating results," said Robert B. Kaminski, Jr., President and Chief
Executive Officer of Mercantile. "Our sound financial
condition, sustained strength in commercial and residential
mortgage loan originations, and expected new loan fundings elicit
confidence that the strong results achieved during the first six
months of the year will continue throughout the last half of the
year."
Second quarter highlights include:
- Robust earnings performance and capital position
- Healthy net interest margin
- Increased fee income
- Controlled overhead costs
- Strong asset quality, as reflected by low levels of
nonperforming assets and loans in the 30- to 89-days delinquent
category
- Annualized net loan growth of almost 12 percent
- New commercial term loan originations of approximately
$134 million
- Continued strength in commercial and residential loan
pipelines
Operating Results
Total revenue, which consists of net interest income and
noninterest income, was $37.5 million
during the second quarter of 2019, up $3.7
million, or 10.9 percent, from the prior-year second
quarter. Reflecting a higher level of earning assets, net
interest income of $31.1 million
during the second quarter of 2019 was up $1.9 million, or 6.5 percent, from the
second quarter of 2018.
The net interest margin was 3.79 percent in the second quarter
of 2019. The yield on average earning assets equaled 4.85
percent during the second quarter of 2019, up from 4.60 percent
during the respective 2018 period mainly due to an increased yield
on commercial loans. The improved yield on commercial loans
primarily reflects the positive impact of higher interest rates on
variable-rate commercial loans stemming from the Federal Open
Market Committee's raising of the targeted federal funds rate by 25
basis points in each of June, September, and December 2018.
The cost of funds equaled 1.06 percent during the second quarter of
2019, up from 0.68 percent during the prior-year second quarter
mainly due to an increased cost of time deposits and a change in
funding mix. Increased reliance on more costly wholesale funds
during the twelve months ended June, 30, 2019, most of which
occurred in the second half of 2018 and January 2019, was necessitated by various funding
requirements, including ongoing loan growth and seasonal deposit
withdrawals by certain business customers for bonus and tax
payments.
Net interest income and the net interest margin during the
second quarters of 2019 and 2018, and the first six months of the
current year and prior year, were affected by purchase accounting
accretion and amortization associated with fair value
measurements. Increases in interest income on loans totaling
$0.6 million and $0.8 million were recorded during the second
quarters of 2019 and 2018, respectively, and increases of
$0.8 million and $3.0 million were recorded during the first six
months of 2019 and 2018, respectively. Purchased loan
accretion amounts vary from period to period as a result of
periodic cash flow re-estimations, loan payoffs, and payment
performance. Increases in interest expense on subordinated
debentures totaling $0.2 million were
recorded during both the current-year and prior-year second
quarters, and increases of $0.3
million were recorded during both the first six months of
2019 and 2018.
Mercantile recorded a $0.9 million
provision for loan losses during the second quarter of 2019
compared to a $0.7 million provision
during the respective 2018 period. The provision expense
recorded during the current-year second quarter mainly reflected
ongoing net loan growth, while the provision expense recorded
during the second quarter of 2018 primarily reflected loan growth
and increased allocations related to certain environmental
factors.
Noninterest income during the second quarter of 2019 was
$6.3 million, compared to
$4.6 million during the prior-year
second quarter. Noninterest income during the second quarter
of 2019 included a bank owned life insurance claim of $1.3 million. Excluding the impact of this
transaction, noninterest income increased $0.5 million, or 10.9 percent, during the
current-year second quarter compared to the respective 2018
period. The higher level of noninterest income primarily
reflected increased mortgage banking activity income and credit and
debit card income. The increased mortgage banking activity
income mainly reflected the success of ongoing strategic
initiatives that were instituted to increase market penetration,
along with a higher level of refinance activity stemming from the
recent decrease in residential mortgage loan interest rates.
Increased service charges on accounts and payroll processing fees
also contributed to the improved level of noninterest
income.
Noninterest expense totaled $22.1
million during the second quarter of 2019, up $0.7 million, or 3.1 percent, from the prior-year
second quarter. The higher level of expense primarily
resulted from increased salary costs, mainly reflecting annual
employee merit pay increases and higher stock-based compensation
expense.
Mr. Kaminski continued, "As anticipated, our net interest margin
remained strong during the second quarter of 2019, depicting our
ongoing emphasis on loan pricing discipline and sound
underwriting. We are pleased with the growth in key fee
income categories, and we remain steadfast in our efforts to
achieve growth initiatives in a cost-conscious manner. The
noteworthy increase in mortgage banking activity income reflects
the success of continuing strategic initiatives designed to further
market penetration, along with a spike in refinance activity
spurred by the recent decline in residential mortgage loan interest
rates."
Balance Sheet
As of June 30, 2019, total assets
were $3.58 billion, up $212 million, or 6.3 percent, from December 31, 2018. Total loans and
interest-earning deposits increased $128
million and $82.3 million,
respectively, over the same time period. During the twelve
months ended June 30, 2019, total
loans were up $245 million, or 9.3
percent. Approximately $134
million and $259 million in
commercial term loans to new and existing borrowers were originated
during the second quarter and first six months of 2019,
respectively, as ongoing sales and relationship-building efforts
resulted in increased lending opportunities. As of
June 30, 2019, unfunded commitments
on commercial construction and development loans totaled
approximately $129 million, which are
expected to be largely funded over the next 12 to 18 months.
The growth in interest-earning deposits mainly stemmed from certain
deposit-gathering initiatives and an increase in wholesale
funds.
Ray Reitsma, President of
Mercantile Bank of Michigan,
noted, "Our lending team's continuing focus on identifying new
customer relationships and meeting the needs of our existing
customer base is evidenced by the solid net loan growth realized
during the second quarter of 2019. We are very pleased with
the level of new commercial term loan originations during the
quarter, which were commensurate with quarterly originations over
the past several years. We remain committed to growing the
loan portfolio in a disciplined manner, with an ongoing emphasis on
credit quality and risk-based pricing, and maintaining the combined
commercial and industrial loan and owner-occupied commercial real
estate loan portfolios at a minimum percentage of total commercial
loans. Based on anticipated new loan fundings, we are
confident that we can continue to grow the commercial loan
portfolio in future periods. Depicting our efforts to
increase market presence and a higher level of refinance activity,
our residential mortgage loan portfolio expanded for the thirteenth
consecutive quarter. In light of the current strong pipeline,
we are optimistic that the residential mortgage loan portfolio can
also increase going forward."
As of June 30, 2019, commercial
and industrial loans and owner-occupied commercial real estate
loans combined represented approximately 58 percent of total
commercial loans, a level that has remained relatively consistent
and in line with internal expectations.
Total deposits at June 30, 2019,
were $2.62 billion, up $156 million from December
31, 2018. Local deposits and brokered deposits were up
$99.3 million and $56.2 million, respectively, during the first six
months of 2019. The growth in local deposits was mainly
driven by a special time deposit campaign that was introduced mid
first quarter and ended in early April, along with an increase in
business money market accounts. Wholesale funds were $543 million, or approximately 17 percent of
total funds, as of June 30, 2019,
compared to $474 million, or
approximately 16 percent of total funds, as of December 31, 2018. A substantial portion of
the growth in wholesale funds during the first six months of 2019
occurred in January; the monies were used primarily to fund strong
loan growth recorded in late 2018 and early 2019 and offset typical
and expected seasonal business deposit withdrawals used for bonus
and tax payments, as well as to maintain sufficient balance sheet
liquidity.
Asset Quality
Nonperforming assets at June 30,
2019, were $4.0 million, or
0.1 percent of total assets, compared to $5.0 million, or 0.2 percent of total assets, at
December 31, 2018. The level of
past due loans remains nominal, and loan relationships on the
internal watch list have remained relatively consistent in number
and dollar volume. During the second quarter of 2019, nominal
net loan recoveries, representing an annualized 0.01 percent of
average total loans, were recorded.
Capital Position
Shareholders' equity totaled $400
million as of June 30, 2019,
an increase of $24.9 million from
year-end 2018. The Bank's capital position remains above
"well-capitalized" with a total risk-based capital ratio of 12.4
percent as of June 30, 2019, compared
to 12.3 percent at December 31,
2018. At June 30, 2019, the
Bank had approximately $78 million in
excess of the 10.0 percent minimum regulatory threshold required to
be considered a "well-capitalized" institution. Mercantile
reported 16,440,356 total shares outstanding at June 30, 2019.
As part of a $20 million common
stock repurchase program announced in January 2015, and later expanded by $15 million in April
2016, Mercantile repurchased approximately 119,000 shares
for $3.6 million, or a weighted
average all-in cost per share of $30.23, during the first quarter of 2019; no
shares were repurchased during the second quarter of 2019.
Since the program's inception, Mercantile repurchased approximately
1,275,000 shares for $29.0 million,
or a weighted average all-in cost per share of $22.77. In conjunction with the anticipated
completion of its existing program, Mercantile announced a new
$20 million stock repurchase plan in
May 2019.
Mr. Kaminski concluded, "With our strong financial performance
during the first six months of 2019, we are well positioned to meet
growth and profitability goals and further enhance shareholder
value. The ongoing cash dividend program, including the
announcement of an increased third quarter regular dividend earlier
today, exhibits our long-term commitment to enhancing total
shareholder return. We continue to gain new clients through
our value-added approach and the offering of a wide-range of
products and services, and we are excited about opportunities that
we believe are available to us to expand our business in our
markets. Based on our sustained financial strength and
healthy loan pipelines, we are confident in our ability to deliver
robust performance not only during the remainder of the current
year, but into the foreseeable periods as well."
About Mercantile Bank Corporation
Based in Grand Rapids,
Michigan, Mercantile Bank Corporation is the bank holding
company for Mercantile Bank of Michigan. Mercantile provides
banking services to businesses, individuals and governmental units,
and differentiates itself on the basis of service quality and the
expertise of its banking staff. Mercantile has assets of
approximately $3.5 billion and
operates 46 banking offices. Mercantile Bank Corporation's
common stock is listed on the NASDAQ Global Select Market under the
symbol "MBWM."
Forward-Looking Statements
This news release contains comments or information that
constitute forward-looking statements (within the meaning of the
Private Securities Litigation Reform Act of 1995) that are based on
current expectations that involve a number of risks and
uncertainties. Actual results may differ materially from the
results expressed in forward-looking statements. Factors that might
cause such a difference include changes in interest rates and
interest rate relationships; demand for products and services; the
degree of competition by traditional and nontraditional
competitors; changes in banking regulation or actions by bank
regulators; changes in tax laws; changes in prices, levies, and
assessments; the impact of technological advances; governmental and
regulatory policy changes; the outcomes of contingencies; trends in
customer behavior as well as their ability to repay loans; changes
in local real estate values; changes in the national and local
economies; and other factors, including risk factors, disclosed
from time to time in filings made by Mercantile with the Securities
and Exchange Commission. Mercantile undertakes no obligation to
update or clarify forward-looking statements, whether as a result
of new information, future events or otherwise.
FOR FURTHER
INFORMATION:
|
|
Robert B. Kaminski,
Jr.
|
Charles
Christmas
|
President &
CEO
|
Executive Vice
President & CFO
|
616-726-1502
|
616-726-1202
|
rkaminski@mercbank.com
|
cchristmas@mercbank.com
|
Mercantile Bank
Corporation
|
|
|
|
|
|
|
Second Quarter 2019
Results
|
|
|
|
|
|
|
MERCANTILE BANK
CORPORATION
|
CONSOLIDATED BALANCE
SHEETS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
JUNE 30,
|
|
DECEMBER
31,
|
|
JUNE 30,
|
|
|
2019
|
|
2018
|
|
2018
|
ASSETS
|
|
|
|
|
|
|
Cash and
due from banks
|
$
|
57,675,000
|
$
|
64,872,000
|
$
|
56,338,000
|
Interest-earning deposits
|
|
92,750,000
|
|
10,482,000
|
|
69,402,000
|
Total cash and cash
equivalents
|
|
150,425,000
|
|
75,354,000
|
|
125,740,000
|
|
|
|
|
|
|
|
Securities available for sale
|
|
347,924,000
|
|
337,366,000
|
|
331,142,000
|
Federal
Home Loan Bank stock
|
|
18,002,000
|
|
16,022,000
|
|
11,036,000
|
|
|
|
|
|
|
|
Loans
|
|
2,881,493,000
|
|
2,753,085,000
|
|
2,636,856,000
|
Allowance for loan losses
|
|
(24,053,000)
|
|
(22,380,000)
|
|
(21,167,000)
|
Loans, net
|
|
2,857,440,000
|
|
2,730,705,000
|
|
2,615,689,000
|
|
|
|
|
|
|
|
Premises
and equipment, net
|
|
51,823,000
|
|
48,321,000
|
|
47,102,000
|
Bank
owned life insurance
|
|
67,678,000
|
|
69,647,000
|
|
69,321,000
|
Goodwill
|
|
49,473,000
|
|
49,473,000
|
|
49,473,000
|
Core
deposit intangible, net
|
|
4,634,000
|
|
5,561,000
|
|
6,514,000
|
Other
assets
|
|
28,740,000
|
|
31,458,000
|
|
32,504,000
|
|
|
|
|
|
|
|
Total
assets
|
$
|
3,576,139,000
|
$
|
3,363,907,000
|
$
|
3,288,521,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
918,581,000
|
$
|
889,784,000
|
$
|
884,470,000
|
Interest-bearing
|
|
1,700,628,000
|
|
1,573,924,000
|
|
1,645,341,000
|
Total deposits
|
|
2,619,209,000
|
|
2,463,708,000
|
|
2,529,811,000
|
|
|
|
|
|
|
|
Securities sold under agreements to repurchase
|
|
119,669,000
|
|
103,519,000
|
|
94,573,000
|
Federal
Home Loan Bank advances
|
|
374,000,000
|
|
350,000,000
|
|
230,000,000
|
Subordinated debentures
|
|
46,540,000
|
|
46,199,000
|
|
45,858,000
|
Accrued
interest and other liabilities
|
|
16,604,000
|
|
25,232,000
|
|
13,360,000
|
Total liabilities
|
|
3,176,022,000
|
|
2,988,658,000
|
|
2,913,602,000
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Common
stock
|
|
306,669,000
|
|
308,005,000
|
|
311,720,000
|
Retained
earnings
|
|
90,618,000
|
|
75,483,000
|
|
74,084,000
|
Accumulated other comprehensive income/(loss)
|
|
2,830,000
|
|
(8,239,000)
|
|
(10,885,000)
|
Total shareholders'
equity
|
|
400,117,000
|
|
375,249,000
|
|
374,919,000
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
3,576,139,000
|
$
|
3,363,907,000
|
$
|
3,288,521,000
|
Mercantile Bank
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter 2019
Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MERCANTILE BANK
CORPORATION
|
CONSOLIDATED REPORTS
OF INCOME
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
THREE MONTHS
ENDED
|
SIX MONTHS
ENDED
|
SIX MONTHS
ENDED
|
|
June 30,
2019
|
|
June 30,
2018
|
June 30,
2019
|
June 30,
2018
|
INTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans,
including fees
|
$
|
36,765,000
|
|
|
$
|
31,855,000
|
|
$
|
72,555,000
|
|
$
|
64,170,000
|
|
Investment securities
|
|
2,485,000
|
|
|
|
2,177,000
|
|
|
4,926,000
|
|
|
4,373,000
|
|
Other
interest-earning assets
|
|
569,000
|
|
|
|
287,000
|
|
|
976,000
|
|
|
757,000
|
|
Total interest
income
|
|
39,819,000
|
|
|
|
34,319,000
|
|
|
78,457,000
|
|
|
69,300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
5,529,000
|
|
|
|
3,262,000
|
|
|
10,334,000
|
|
|
6,347,000
|
|
Short-term borrowings
|
|
68,000
|
|
|
|
61,000
|
|
|
173,000
|
|
|
118,000
|
|
Federal
Home Loan Bank advances
|
|
2,261,000
|
|
|
|
988,000
|
|
|
4,494,000
|
|
|
1,933,000
|
|
Other
borrowed money
|
|
845,000
|
|
|
|
783,000
|
|
|
1,695,000
|
|
|
1,478,000
|
|
Total interest
expense
|
|
8,703,000
|
|
|
|
5,094,000
|
|
|
16,696,000
|
|
|
9,876,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
31,116,000
|
|
|
|
29,225,000
|
|
|
61,761,000
|
|
|
59,424,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan
losses
|
|
900,000
|
|
|
|
700,000
|
|
|
1,750,000
|
|
|
700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
after
|
|
|
|
|
|
|
|
|
|
|
|
|
|
provision for loan losses
|
|
30,216,000
|
|
|
|
28,525,000
|
|
|
60,011,000
|
|
|
58,724,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
charges on accounts
|
|
1,143,000
|
|
|
|
1,079,000
|
|
|
2,220,000
|
|
|
2,132,000
|
|
Credit
and debit card income
|
|
1,513,000
|
|
|
|
1,334,000
|
|
|
2,850,000
|
|
|
2,577,000
|
|
Mortgage
banking income
|
|
1,345,000
|
|
|
|
995,000
|
|
|
2,402,000
|
|
|
1,879,000
|
|
Payroll
services
|
|
355,000
|
|
|
|
317,000
|
|
|
860,000
|
|
|
800,000
|
|
Earnings
on bank owned life insurance
|
|
1,608,000
|
|
|
|
321,000
|
|
|
3,238,000
|
|
|
652,000
|
|
Other
income
|
|
370,000
|
|
|
|
504,000
|
|
|
1,397,000
|
|
|
891,000
|
|
Total noninterest
income
|
|
6,334,000
|
|
|
|
4,550,000
|
|
|
12,967,000
|
|
|
8,931,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and benefits
|
|
13,286,000
|
|
|
|
12,757,000
|
|
|
26,302,000
|
|
|
25,094,000
|
|
Occupancy
|
|
1,629,000
|
|
|
|
1,629,000
|
|
|
3,391,000
|
|
|
3,401,000
|
|
Furniture and equipment
|
|
621,000
|
|
|
|
582,000
|
|
|
1,257,000
|
|
|
1,130,000
|
|
Data
processing costs
|
|
2,295,000
|
|
|
|
2,137,000
|
|
|
4,511,000
|
|
|
4,265,000
|
|
Other
expense
|
|
4,256,000
|
|
|
|
4,309,000
|
|
|
8,456,000
|
|
|
8,671,000
|
|
Total noninterest
expense
|
|
22,087,000
|
|
|
|
21,414,000
|
|
|
43,917,000
|
|
|
42,561,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
federal income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
tax expense
|
|
14,463,000
|
|
|
|
11,661,000
|
|
|
29,061,000
|
|
|
25,094,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax
expense
|
|
2,748,000
|
|
|
|
2,215,000
|
|
|
5,522,000
|
|
|
4,767,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
$
|
11,715,000
|
|
|
$
|
9,446,000
|
|
$
|
23,539,000
|
|
$
|
20,327,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$0.71
|
|
|
|
$0.57
|
|
|
$1.43
|
|
|
$1.22
|
|
Diluted
earnings per share
|
|
$0.71
|
|
|
|
$0.57
|
|
|
$1.43
|
|
|
$1.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
basic shares outstanding
|
|
16,428,187
|
|
|
|
16,601,400
|
|
|
16,428,875
|
|
|
16,598,274
|
|
Average
diluted shares outstanding
|
|
16,434,714
|
|
|
|
16,610,819
|
|
|
16,434,941
|
|
|
16,607,593
|
|
Mercantile Bank
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter 2019
Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MERCANTILE BANK
CORPORATION
|
CONSOLIDATED
FINANCIAL HIGHLIGHTS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly
|
|
Year-To-Date
|
(dollars in
thousands except per share data)
|
2019
|
|
2019
|
|
2018
|
|
2018
|
|
2018
|
|
|
|
|
|
|
2nd
Qtr
|
|
1st
Qtr
|
|
4th
Qtr
|
|
3rd
Qtr
|
|
2nd
Qtr
|
|
2019
|
|
2018
|
EARNINGS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
$
|
31,116
|
|
30,645
|
|
30,818
|
|
29,840
|
|
29,225
|
|
61,761
|
|
59,424
|
Provision for loan losses
|
$
|
900
|
|
850
|
|
0
|
|
400
|
|
700
|
|
1,750
|
|
700
|
Noninterest income
|
$
|
6,334
|
|
6,632
|
|
5,370
|
|
4,708
|
|
4,550
|
|
12,967
|
|
8,931
|
Noninterest expense
|
$
|
22,087
|
|
21,830
|
|
21,958
|
|
21,650
|
|
21,414
|
|
43,917
|
|
42,561
|
Net
income before federal income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
tax expense
|
$
|
14,463
|
|
14,597
|
|
14,230
|
|
12,498
|
|
11,661
|
|
29,061
|
|
25,094
|
Net
income
|
$
|
11,715
|
|
11,824
|
|
11,573
|
|
10,123
|
|
9,446
|
|
23,539
|
|
20,327
|
Basic
earnings per share
|
$
|
0.71
|
|
0.72
|
|
0.70
|
|
0.61
|
|
0.57
|
|
1.43
|
|
1.22
|
Diluted
earnings per share
|
$
|
0.71
|
|
0.72
|
|
0.70
|
|
0.61
|
|
0.57
|
|
1.43
|
|
1.22
|
Average
basic shares outstanding
|
|
16,428,187
|
|
16,429,571
|
|
16,594,412
|
|
16,611,411
|
|
16,601,400
|
|
16,428,875
|
|
16,598,274
|
Average
diluted shares outstanding
|
|
16,434,714
|
|
16,435,176
|
|
16,600,108
|
|
16,619,295
|
|
16,610,819
|
|
16,434,941
|
|
16,607,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
on average assets
|
|
1.33%
|
|
1.39%
|
|
1.39%
|
|
1.22%
|
|
1.17%
|
|
1.36%
|
|
1.26%
|
Return
on average equity
|
|
12.08%
|
|
12.75%
|
|
12.40%
|
|
10.64%
|
|
10.25%
|
|
12.41%
|
|
11.15%
|
Net
interest margin (fully tax-equivalent)
|
3.79%
|
|
3.88%
|
|
3.98%
|
|
3.87%
|
|
3.92%
|
|
3.83%
|
|
3.99%
|
Efficiency ratio
|
|
58.98%
|
|
58.56%
|
|
60.68%
|
|
62.67%
|
|
63.40%
|
|
58.77%
|
|
62.26%
|
Full-time equivalent employees
|
|
652
|
|
631
|
|
630
|
|
637
|
|
667
|
|
652
|
|
667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YIELD ON ASSETS /
COST OF FUNDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on
loans
|
|
5.18%
|
|
5.21%
|
|
5.08%
|
|
4.91%
|
|
4.92%
|
|
5.19%
|
|
5.03%
|
Yield on
securities
|
|
2.85%
|
|
2.82%
|
|
2.80%
|
|
2.70%
|
|
2.64%
|
|
2.83%
|
|
2.62%
|
Yield on
other interest-earning assets
|
|
2.38%
|
|
2.40%
|
|
2.20%
|
|
1.98%
|
|
1.80%
|
|
2.42%
|
|
1.64%
|
Yield on
total earning assets
|
|
4.85%
|
|
4.89%
|
|
4.80%
|
|
4.60%
|
|
4.60%
|
|
4.87%
|
|
4.65%
|
Yield on
total assets
|
|
4.53%
|
|
4.56%
|
|
4.46%
|
|
4.28%
|
|
4.27%
|
|
4.55%
|
|
4.32%
|
Cost of
deposits
|
|
0.85%
|
|
0.77%
|
|
0.63%
|
|
0.56%
|
|
0.53%
|
|
0.82%
|
|
0.51%
|
Cost of
borrowed funds
|
|
2.40%
|
|
2.43%
|
|
2.22%
|
|
2.14%
|
|
2.01%
|
|
2.41%
|
|
1.92%
|
Cost of
interest-bearing liabilities
|
|
1.55%
|
|
1.47%
|
|
1.26%
|
|
1.11%
|
|
1.02%
|
|
1.51%
|
|
0.98%
|
Cost of
funds (total earning assets)
|
|
1.06%
|
|
1.01%
|
|
0.82%
|
|
0.73%
|
|
0.68%
|
|
1.04%
|
|
0.66%
|
Cost of
funds (total assets)
|
|
0.99%
|
|
0.94%
|
|
0.76%
|
|
0.68%
|
|
0.63%
|
|
0.97%
|
|
0.61%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PURCHASE
ACCOUNTING ADJUSTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
portfolio - increase interest income
|
$
|
569
|
|
211
|
|
603
|
|
386
|
|
777
|
|
780
|
|
3,048
|
Trust
preferred - increase interest expense
|
$
|
171
|
|
171
|
|
171
|
|
171
|
|
171
|
|
342
|
|
342
|
Core
deposit intangible - increase overhead
|
$
|
450
|
|
477
|
|
477
|
|
477
|
|
530
|
|
927
|
|
1,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MORTGAGE BANKING
ACTIVITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
mortgage loans originated
|
$
|
80,205
|
|
44,932
|
|
44,448
|
|
66,829
|
|
62,032
|
|
125,137
|
|
102,969
|
Purchase
mortgage loans originated
|
$
|
41,986
|
|
29,891
|
|
29,729
|
|
47,704
|
|
41,239
|
|
71,877
|
|
66,376
|
Refinance mortgage loans originated
|
$
|
38,219
|
|
15,041
|
|
14,719
|
|
19,125
|
|
20,793
|
|
53,260
|
|
36,593
|
Total
saleable mortgage loans
|
$
|
49,396
|
|
21,502
|
|
21,805
|
|
30,713
|
|
24,114
|
|
70,898
|
|
43,927
|
Net gain
on sale of mortgage loans
|
$
|
1,419
|
|
698
|
|
829
|
|
1,116
|
|
851
|
|
2,117
|
|
1,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible
equity to tangible assets
|
|
9.82%
|
|
9.41%
|
|
9.68%
|
|
9.98%
|
|
9.87%
|
|
9.82%
|
|
9.87%
|
Tier 1
leverage capital ratio
|
|
11.17%
|
|
11.16%
|
|
11.41%
|
|
11.76%
|
|
11.81%
|
|
11.17%
|
|
11.81%
|
Common
equity risk-based capital ratio
|
|
10.47%
|
|
10.46%
|
|
10.41%
|
|
10.93%
|
|
11.03%
|
|
10.47%
|
|
11.03%
|
Tier 1
risk-based capital ratio
|
|
11.82%
|
|
11.84%
|
|
11.80%
|
|
12.35%
|
|
12.49%
|
|
11.82%
|
|
12.49%
|
Total
risk-based capital ratio
|
|
12.55%
|
|
12.56%
|
|
12.50%
|
|
13.05%
|
|
13.19%
|
|
12.55%
|
|
13.19%
|
Tier 1
capital
|
$
|
388,788
|
|
379,334
|
|
373,721
|
|
382,829
|
|
375,167
|
|
388,788
|
|
375,167
|
Tier 1
plus tier 2 capital
|
$
|
412,841
|
|
402,469
|
|
396,102
|
|
404,521
|
|
396,334
|
|
412,841
|
|
396,334
|
Total
risk-weighted assets
|
$
|
3,289,958
|
|
3,204,295
|
|
3,167,655
|
|
3,100,158
|
|
3,003,778
|
|
3,289,958
|
|
3,003,778
|
Book
value per common share
|
$
|
24.34
|
|
23.37
|
|
22.70
|
|
22.84
|
|
22.57
|
|
24.34
|
|
22.57
|
Tangible
book value per common share
|
$
|
21.05
|
|
20.05
|
|
19.37
|
|
19.50
|
|
19.20
|
|
21.05
|
|
19.20
|
Cash
dividend per common share
|
$
|
0.26
|
|
0.26
|
|
1.00
|
|
0.24
|
|
0.22
|
|
0.52
|
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET
QUALITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
loan charge-offs
|
$
|
78
|
|
174
|
|
354
|
|
169
|
|
273
|
|
252
|
|
927
|
Recoveries
|
$
|
96
|
|
79
|
|
1,042
|
|
294
|
|
766
|
|
175
|
|
1,893
|
Net loan
charge-offs (recoveries)
|
$
|
(18)
|
|
95
|
|
(688)
|
|
(125)
|
|
(493)
|
|
77
|
|
(966)
|
Net loan
charge-offs to average loans
|
|
(0.01%)
|
|
0.01%
|
|
(0.10%)
|
|
(0.02%)
|
|
(0.08%)
|
|
0.01%
|
|
(0.08%)
|
Allowance for loan losses
|
$
|
24,053
|
|
23,135
|
|
22,380
|
|
21,692
|
|
21,167
|
|
24,053
|
|
21,167
|
Allowance to originated loans
|
|
0.89%
|
|
0.89%
|
|
0.88%
|
|
0.88%
|
|
0.89%
|
|
0.89%
|
|
0.89%
|
Nonperforming loans
|
$
|
3,505
|
|
4,138
|
|
4,141
|
|
4,852
|
|
4,965
|
|
3,505
|
|
4,965
|
Other
real estate/repossessed assets
|
$
|
446
|
|
396
|
|
811
|
|
948
|
|
842
|
|
446
|
|
842
|
Nonperforming loans to total loans
|
|
0.12%
|
|
0.15%
|
|
0.15%
|
|
0.18%
|
|
0.19%
|
|
0.12%
|
|
0.19%
|
Nonperforming assets to total assets
|
|
0.11%
|
|
0.13%
|
|
0.15%
|
|
0.18%
|
|
0.18%
|
|
0.11%
|
|
0.18%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONPERFORMING
ASSETS - COMPOSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
development
|
$
|
33
|
|
45
|
|
0
|
|
0
|
|
0
|
|
33
|
|
0
|
Construction
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Owner occupied /
rental
|
$
|
3,225
|
|
3,404
|
|
3,555
|
|
3,908
|
|
3,650
|
|
3,225
|
|
3,650
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
development
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Construction
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Owner
occupied
|
$
|
642
|
|
791
|
|
1,363
|
|
1,543
|
|
1,957
|
|
642
|
|
1,957
|
Non-owner
occupied
|
$
|
26
|
|
62
|
|
0
|
|
0
|
|
0
|
|
26
|
|
0
|
Non-real
estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
assets
|
$
|
2
|
|
207
|
|
17
|
|
331
|
|
180
|
|
2
|
|
180
|
Consumer
assets
|
$
|
23
|
|
25
|
|
17
|
|
18
|
|
20
|
|
23
|
|
20
|
Total
nonperforming assets
|
|
3,951
|
|
4,534
|
|
4,952
|
|
5,800
|
|
5,807
|
|
3,951
|
|
5,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONPERFORMING
ASSETS - RECON
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
4,534
|
|
4,952
|
|
5,800
|
|
5,807
|
|
8,126
|
|
4,952
|
|
9,403
|
Additions - originated loans/former branch
|
$
|
26
|
|
539
|
|
1,247
|
|
999
|
|
300
|
|
565
|
|
1,726
|
Merger-related activity
|
$
|
34
|
|
0
|
|
0
|
|
5
|
|
17
|
|
34
|
|
46
|
Return
to performing status
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
(175)
|
Principal payments
|
$
|
(512)
|
|
(382)
|
|
(1,836)
|
|
(857)
|
|
(778)
|
|
(894)
|
|
(2,335)
|
Sale
proceeds
|
$
|
(74)
|
|
(429)
|
|
(128)
|
|
(147)
|
|
(1,807)
|
|
(503)
|
|
(2,106)
|
Loan
charge-offs
|
$
|
(36)
|
|
(146)
|
|
(57)
|
|
(3)
|
|
(50)
|
|
(182)
|
|
(647)
|
Valuation write-downs
|
$
|
(21)
|
|
0
|
|
(74)
|
|
(4)
|
|
(1)
|
|
(21)
|
|
(105)
|
Ending
balance
|
$
|
3,951
|
|
4,534
|
|
4,952
|
|
5,800
|
|
5,807
|
|
3,951
|
|
5,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOAN PORTFOLIO
COMPOSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial &
industrial
|
$
|
881,196
|
|
839,207
|
|
822,723
|
|
818,113
|
|
776,995
|
|
881,196
|
|
776,995
|
Land development &
construction
|
$
|
45,158
|
|
45,892
|
|
44,885
|
|
39,396
|
|
37,868
|
|
45,158
|
|
37,868
|
Owner occupied comm'l
R/E
|
$
|
556,868
|
|
551,517
|
|
548,619
|
|
542,730
|
|
533,075
|
|
556,868
|
|
533,075
|
Non-owner occupied
comm'l R/E
|
$
|
852,844
|
|
835,679
|
|
816,282
|
|
811,767
|
|
818,376
|
|
852,844
|
|
818,376
|
Multi-family &
residential rental
|
$
|
128,489
|
|
127,903
|
|
127,597
|
|
94,101
|
|
95,656
|
|
128,489
|
|
95,656
|
Total commercial
|
$
|
2,464,555
|
|
2,400,198
|
|
2,360,106
|
|
2,306,107
|
|
2,261,970
|
|
2,464,555
|
|
2,261,970
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 family
mortgages
|
$
|
335,618
|
|
316,315
|
|
307,540
|
|
301,765
|
|
283,657
|
|
335,618
|
|
283,657
|
Home equity &
other consumer
|
$
|
81,320
|
|
83,126
|
|
85,439
|
|
89,545
|
|
91,229
|
|
81,320
|
|
91,229
|
Total retail
|
$
|
416,938
|
|
399,441
|
|
392,979
|
|
391,310
|
|
374,886
|
|
416,938
|
|
374,886
|
Total loans
|
$
|
2,881,493
|
|
2,799,639
|
|
2,753,085
|
|
2,697,417
|
|
2,636,856
|
|
2,881,493
|
|
2,636,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
END OF PERIOD
BALANCES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
2,881,493
|
|
2,799,639
|
|
2,753,085
|
|
2,697,417
|
|
2,636,856
|
|
2,881,493
|
|
2,636,856
|
Securities
|
$
|
365,926
|
|
355,878
|
|
353,388
|
|
337,603
|
|
342,178
|
|
365,926
|
|
342,178
|
Other
interest-earning assets
|
$
|
92,750
|
|
168,572
|
|
10,482
|
|
28,193
|
|
69,402
|
|
92,750
|
|
69,402
|
Total
earning assets (before allowance)
|
$
|
3,340,169
|
|
3,324,089
|
|
3,116,955
|
|
3,063,213
|
|
3,048,436
|
|
3,340,169
|
|
3,048,436
|
Total
assets
|
$
|
3,576,139
|
|
3,551,754
|
|
3,363,907
|
|
3,300,106
|
|
3,288,521
|
|
3,576,139
|
|
3,288,521
|
Noninterest-bearing deposits
|
$
|
918,581
|
|
857,734
|
|
889,784
|
|
879,442
|
|
884,470
|
|
918,581
|
|
884,470
|
Interest-bearing deposits
|
$
|
1,700,628
|
|
1,753,240
|
|
1,573,924
|
|
1,629,368
|
|
1,645,341
|
|
1,700,628
|
|
1,645,341
|
Total
deposits
|
$
|
2,619,209
|
|
2,610,974
|
|
2,463,708
|
|
2,508,810
|
|
2,529,811
|
|
2,619,209
|
|
2,529,811
|
Total
borrowed funds
|
$
|
543,098
|
|
544,566
|
|
513,220
|
|
401,575
|
|
373,642
|
|
543,098
|
|
373,642
|
Total
interest-bearing liabilities
|
$
|
2,243,726
|
|
2,297,806
|
|
2,087,144
|
|
2,030,943
|
|
2,018,983
|
|
2,243,726
|
|
2,018,983
|
Shareholders' equity
|
$
|
400,117
|
|
383,729
|
|
375,249
|
|
379,465
|
|
374,919
|
|
400,117
|
|
374,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE
BALANCES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
2,848,343
|
|
2,787,430
|
|
2,706,617
|
|
2,658,092
|
|
2,596,828
|
|
2,818,055
|
|
2,574,573
|
Securities
|
$
|
357,718
|
|
354,459
|
|
343,597
|
|
342,593
|
|
340,990
|
|
356,098
|
|
344,690
|
Other
interest-earning assets
|
$
|
94,616
|
|
67,915
|
|
30,564
|
|
61,810
|
|
63,336
|
|
81,339
|
|
93,318
|
Total
earning assets (before allowance)
|
$
|
3,300,677
|
|
3,209,804
|
|
3,080,778
|
|
3,062,495
|
|
3,001,154
|
|
3,255,492
|
|
3,012,581
|
Total
assets
|
$
|
3,529,598
|
|
3,441,774
|
|
3,312,648
|
|
3,295,129
|
|
3,232,038
|
|
3,485,929
|
|
3,240,867
|
Noninterest-bearing deposits
|
$
|
875,645
|
|
852,247
|
|
905,065
|
|
893,181
|
|
848,650
|
|
864,011
|
|
827,052
|
Interest-bearing deposits
|
$
|
1,719,433
|
|
1,668,563
|
|
1,579,632
|
|
1,628,346
|
|
1,635,755
|
|
1,694,138
|
|
1,662,795
|
Total
deposits
|
$
|
2,595,078
|
|
2,520,810
|
|
2,484,697
|
|
2,521,527
|
|
2,484,405
|
|
2,558,149
|
|
2,489,847
|
Total
borrowed funds
|
$
|
530,802
|
|
532,864
|
|
434,365
|
|
383,830
|
|
365,124
|
|
531,827
|
|
370,975
|
Total
interest-bearing liabilities
|
$
|
2,250,235
|
|
2,201,427
|
|
2,013,997
|
|
2,012,176
|
|
2,000,879
|
|
2,225,965
|
|
2,033,770
|
Shareholders' equity
|
$
|
389,133
|
|
376,103
|
|
370,175
|
|
377,574
|
|
365,521
|
|
382,654
|
|
367,666
|
View original
content:http://www.prnewswire.com/news-releases/mercantile-bank-corporation-reports-strong-second-quarter-2019-results-300885093.html
SOURCE Mercantile Bank Corporation