GRAND RAPIDS, Mich.,
Jan. 16, 2018 /PRNewswire/
-- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile")
reported net income of $8.0 million,
or $0.48 per diluted share, for the
fourth quarter of 2017, compared with net income of $8.1 million, or $0.49 per diluted share, for the respective
prior-year period. For the full year 2017, Mercantile
reported net income of $31.3 million,
or $1.90 per diluted share, compared
with net income of $31.9 million, or
$1.96 per diluted share, for the full
year 2016.
Excluding the impacts of certain noncore transactions, diluted
earnings per share during 2017 and 2016 equaled $1.89 and $1.76,
respectively. These transactions included a Bank-owned life
insurance death benefit claim in the first quarter of 2017, the
revaluation of Mercantile's net deferred tax asset in response to
the Tax Cuts and Jobs Act becoming law in December of 2017, the
repurchase of trust preferred securities at a discount in the first
quarter of 2016, and accelerated purchase discount accretion on
called U.S. Government agency bonds during 2016.
The fourth quarter and full year were highlighted by:
- Strong core earnings and capital position
- Stable and robust net interest margin
- Solid growth in various 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
- Total loan growth of $180
million, or nearly 8 percent, during the full year
- New commercial term loan originations of approximately
$119 million during the fourth
quarter and $529 million during the
full year
- Sustained strength in commercial loan pipeline
- Announced first quarter 2018 regular cash dividend of
$0.22 per common share, an increase
of approximately 16 percent from the $0.19 regular cash dividend paid during the
fourth quarter of 2017
"Our strong 2017 financial results reflect the success of
various ongoing strategic initiatives," said Robert B. Kaminski, Jr., President and Chief
Executive Officer of Mercantile. "Our focus on net interest
margin maintenance, enhanced fee generation, and overhead cost
control played a key role in our demonstrated solid operating
performance throughout all of 2017. We are very pleased with
the level of loan growth during the year, which was achieved in a
disciplined manner and in spite of competitive pressures, and our
continuing strong asset quality. Based on our overall
financial strength and current loan pipeline and prospects, we are
well-positioned to participate in the economic strength of our
markets during 2018."
Operating Results
Total revenue, which consists of net interest income and
noninterest income, was $32.9 million
during the fourth quarter of 2017, up $1.9
million, or 6.0 percent, from the prior-year fourth
quarter. Net interest income during the fourth quarter of
2017 was $28.4 million, up
$2.0 million, or 7.4 percent, from
the fourth quarter of 2016, reflecting a higher level of earning
assets and an increased net interest margin. Total revenue
was $129 million during the full year
2017, up $1.8 million, or 1.5
percent, from 2016. Net interest income was $110 million in 2017, up $3.9 million, or 3.7 percent, from the prior
year, reflecting a higher level of earning assets.
The net interest margin was 3.76 percent in the fourth quarter
of 2017, up from 3.72 percent in the prior-year fourth
quarter. The increase in the net interest margin primarily
resulted from a higher yield on loans, mainly reflecting the
positive impact of higher interest rates on variable-rate
commercial loans stemming from the Federal Open Market Committee
("FOMC") hiking the targeted federal funds rate by 25 basis points
in December of 2016 and March, June, and December of 2017.
The cost of funds equaled 0.59 percent during the fourth quarter of
2017, up from 0.46 percent during the respective 2016 period mainly
due to increased costs of certain non-time deposit accounts, time
deposits, and borrowed funds.
The net interest margin was 3.79 percent in 2017, down from 3.86
percent in 2016 due to an increased cost of funds, which more than
offset a slight increase in the yield on average earning
assets. The cost of funds equaled 0.54 percent during 2017,
up from 0.45 percent during 2016 primarily due to higher costs of
certain non-time deposits, time deposits, and borrowed funds.
The improved yield on average earning assets mainly resulted from
an increased yield on loans, primarily reflecting higher interest
rates on variable-rate commercial loans stemming from the
previously-mentioned FOMC rate hikes, which more than offset a
decreased yield on securities, mainly reflecting a decreased level
of accelerated purchase discount accretion on called U.S.
Government agency bonds. A change in earning asset mix also
contributed to the increased yield on average earning assets;
average loans represented 85.2 percent of average earning assets
during 2017, up from 84.9 percent during 2016. The
accelerated discount accretion totaled $2.2
million during 2016, positively impacting the net interest
margin by eight basis points. A nominal level of accelerated
discount accretion on called U.S. Government agency bonds was
recorded as interest income during 2017.
Net interest income and the net interest margin during 2017 and
2016 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
$4.6 million and $4.9 million were recorded during 2017 and 2016,
respectively. An increase in interest expense on subordinated
debentures totaling $0.7 million was
recorded during both 2017 and 2016. Purchased loan accretion
amounts vary from period to period as a result of periodic cash
flow re-estimations, loan payoffs, and payment performance.
Mercantile recorded a $0.6 million
provision for loan losses during both the fourth quarter of 2017
and the prior-year fourth quarter. During 2017, Mercantile
recorded a provision for loan losses of $3.0
million, compared to a provision of $2.9 million during 2016. The provision
expense recorded during the 2017 and 2016 periods primarily
reflects ongoing loan growth and periodic adjustments to loan loss
reserve environmental factors.
Noninterest income during the fourth quarter of 2017 was
$4.5 million, down $0.1 million, or 2.2 percent, from the prior-year
fourth quarter. Growth in credit and debit card fees and
payroll processing revenue was more than offset by a decline in
other income, which was elevated in the fourth quarter of 2016
mainly as a result of payments received on certain purchased
credit-impaired loans. Noninterest income for 2017 was
$19.0 million, down $2.0 million, or 9.7 percent, from 2016.
Core noninterest income revenue streams, including treasury
management income, credit and debit card interchange fees, mortgage
banking activity income, payroll processing revenue, and customer
service fees, increased $1.2 million,
or 8.5 percent, on a combined basis in 2017 compared to the prior
year. The increase in mortgage banking activity income
primarily reflects the positive impact of strategic initiatives
that were implemented in the latter half of 2016 and throughout
2017, including the hiring of additional loan originators,
introduction of new and enhanced products, loan programs and
increased marketing efforts. Noninterest income during both
periods benefitted from certain noncore transactions, including a
Bank-owned life insurance death benefit claim in 2017 and a gain
associated with a trust preferred securities repurchase transaction
in 2016.
Noninterest expense totaled $19.8
million during the fourth quarter of 2017, up $1.5 million, or 7.9 percent, from the prior-year
fourth quarter. Noninterest expense during 2017 was
$79.7 million, an increase of
$2.6 million, or 3.4 percent, from
the $77.1 million expensed during
2016. The higher level of expense in the 2017 periods
primarily resulted from expected increases in various operating
expenses stemming from recent expansion initiatives and increased
salary expense, mainly reflecting annual employee merit pay
increases, the hiring of additional staff, a larger bonus accrual,
and greater stock-based compensation expense. A significant
portion of the increased salary expense resulting from staff
additions reflects the opening of the southeast Michigan office.
Mr. Kaminski continued, "Our net interest margin remained
relatively steady during 2017, ranging from 3.73 percent to 3.85
percent on a quarterly basis. The increase in our loan yield,
which helped offset the impact of an increased cost of funds on our
net interest margin, primarily reflects the positive impact of the
recent Federal Open Market Committee rate hikes, which outweighed
the negative impacts stemming from persistent competitive pressures
and the ongoing relatively low interest rate environment. In
light of our current balance sheet structure, we anticipate that
potential additional rate hikes will benefit our net interest
income. We are pleased with the growth in our core
noninterest income revenue streams, and we will continue our
efforts to enhance fee income in future periods."
Balance Sheet
As of December 31, 2017, total
assets were $3.29 billion, up
$204 million, or 6.6 percent, from
December 31, 2016. Total loans
increased $180 million, or 7.6
percent, to $2.56 billion over the
same time period. Approximately $119
million and $529 million in
commercial term loans to new and existing borrowers were originated
during the fourth quarter and full year of 2017, respectively, as
ongoing sales and relationship-building efforts resulted in
increased lending opportunities. As of December 31, 2017, unfunded commitments on
commercial construction and development loans totaled approximately
$154 million, which are expected to
be largely funded over the next 12 to 18 months.
Raymond Reitsma, President of
Mercantile Bank of Michigan,
noted, "We are very pleased with our new commercial term loan
originations during 2017. Although the commercial loan
portfolio slightly contracted during the fourth quarter of 2017, we
were still able to produce net loan growth during the quarter as a
result of growth in the residential mortgage portfolio. The
reduction in commercial loans stemmed from an unusually high level
of payoffs, primarily reflecting situations whereby we remained
committed to margin and credit quality preservation. The
solid growth in the commercial and industrial, owner-occupied
commercial real estate, and non-owner occupied commercial real
estate portfolios during 2017 reflects the ongoing efforts of our
lending team to identify new lending opportunities and meet the
needs of existing customers, while growth in the residential
mortgage portfolio during the year depicts the success of strategic
initiatives focused on increasing our market presence. Based
on the strength of our current loan pipelines and additional
lending opportunities reported by commercial lenders, we are
confident that we can grow the commercial and residential loan
portfolios in future periods."
Commercial and industrial loans and owner-occupied commercial
real estate ("CRE") loans combined represented approximately 58
percent of total commercial loans as of December 31, 2017. Non-owner occupied CRE
loans equaled about 36 percent of total commercial loans as of
December 31, 2017.
As of December 31, 2017, total
deposits were $2.52 billion, up
$147 million from December 31, 2016. Local deposits were up
$121 million since year-end
2016. Growth in local deposits was mainly driven by new
commercial loan relationships and the success of various deposit
account initiatives. Wholesale funds were $323 million, or approximately 11 percent of
total funds, as of December 31, 2017,
compared to $251 million, or about 9
percent of total funds, as of December 31,
2016.
Asset Quality
Nonperforming assets at December 31,
2017 were $9.4 million, or 0.3
percent of total assets, compared to $6.4
million, or 0.2 percent of total assets, at December 31, 2016. The transfer of a
Bank-owned parcel of real estate, which is no longer being
considered for use as a bank facility, from fixed assets to other
real estate owned accounted for nearly 55 percent of the
$3.0 million increase in
nonperforming assets during 2017. The parcel of real estate
is expected to be sold in the next six months for an amount that
approximates current book value. 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.
Net loan charge-offs were $0.3
million during the fourth quarter of 2017, or an annualized
0.05 percent of average loans, and $0.2
million, or an annualized 0.03 percent of average loans,
during the prior-year fourth quarter. Net loan charge-offs
totaled $1.4 million during 2017, or
0.06 percent of average loans, and $0.6
million, or 0.03 percent of average loans, during 2016.
Capital Position
Shareholders' equity totaled $366
million as of December 31,
2017, an increase of $25.1
million from year-end 2016. The Bank's capital
position remains above "well-capitalized" with a total risk-based
capital ratio of 12.6 percent as of December
31, 2017, compared to 13.1 percent at December 31, 2016. At December 31, 2017, the Bank had approximately
$77 million in excess of the 10.0
percent minimum regulatory threshold required to be considered a
"well-capitalized" institution. Mercantile reported
16,592,125 total shares outstanding at December 31, 2017.
No shares were repurchased during 2017 as part of the
$20 million stock repurchase program
that was announced in January of 2015. Future share
repurchases totaling $15.5 million
can be made under the program, which was expanded by $15 million in early 2016.
Mr. Kaminski concluded, "Our strong financial performance during
2017 positions us to meet growth objectives and further build
shareholder value. As evidenced by our ongoing cash dividend
program, including the announcement of an increased first quarter
2018 regular cash dividend earlier today, we remain committed to
enhancing shareholder value. Our relationship-based banking
approach, which focuses on meeting customers' needs through the
efficient delivery of a wide-range of products and services,
continues to be successful as depicted by the solid growth in
deposits and loans during the year. We are excited about
Mercantile's future and are confident that our demonstrated robust
operating performance will continue in the current year."
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 $3.2 billion and
operates 49 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
|
CONSOLIDATED BALANCE
SHEETS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
DECEMBER
31,
|
|
DECEMBER
31,
|
|
DECEMBER
31,
|
|
|
2017
|
|
2016
|
|
2015
|
ASSETS
|
|
|
|
|
|
|
Cash and
due from banks
|
$
|
55,127,000
|
$
|
50,200,000
|
$
|
42,829,000
|
Interest-earning deposits
|
|
144,974,000
|
|
133,396,000
|
|
46,463,000
|
Federal
fund sold
|
|
0
|
|
0
|
|
599,000
|
Total cash and cash
equivalents
|
|
200,101,000
|
|
183,596,000
|
|
89,891,000
|
|
|
|
|
|
|
|
Securities available for sale
|
|
335,744,000
|
|
328,060,000
|
|
346,992,000
|
Federal
Home Loan Bank stock
|
|
11,036,000
|
|
8,026,000
|
|
7,567,000
|
|
|
|
|
|
|
|
Loans
|
|
2,558,552,000
|
|
2,378,620,000
|
|
2,277,727,000
|
Allowance for loan losses
|
|
(19,501,000)
|
|
(17,961,000)
|
|
(15,681,000)
|
Loans, net
|
|
2,539,051,000
|
|
2,360,659,000
|
|
2,262,046,000
|
|
|
|
|
|
|
|
Premises
and equipment, net
|
|
46,034,000
|
|
45,456,000
|
|
46,862,000
|
Bank
owned life insurance
|
|
68,689,000
|
|
67,198,000
|
|
58,971,000
|
Goodwill
|
|
49,473,000
|
|
49,473,000
|
|
49,473,000
|
Core
deposit intangible
|
|
7,600,000
|
|
9,957,000
|
|
12,631,000
|
Other
assets
|
|
28,976,000
|
|
30,146,000
|
|
29,123,000
|
|
|
|
|
|
|
|
Total
assets
|
$
|
3,286,704,000
|
$
|
3,082,571,000
|
$
|
2,903,556,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
866,380,000
|
$
|
810,600,000
|
$
|
674,568,000
|
Interest-bearing
|
|
1,655,985,000
|
|
1,564,385,000
|
|
1,600,814,000
|
Total deposits
|
|
2,522,365,000
|
|
2,374,985,000
|
|
2,275,382,000
|
|
|
|
|
|
|
|
Securities sold under agreements to repurchase
|
|
118,748,000
|
|
131,710,000
|
|
154,771,000
|
Federal
Home Loan Bank advances
|
|
220,000,000
|
|
175,000,000
|
|
68,000,000
|
Subordinated debentures
|
|
45,517,000
|
|
44,835,000
|
|
55,154,000
|
Accrued
interest and other liabilities
|
|
14,204,000
|
|
15,230,000
|
|
16,445,000
|
Total liabilities
|
|
2,920,834,000
|
|
2,741,760,000
|
|
2,569,752,000
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Common
stock
|
|
309,772,000
|
|
305,488,000
|
|
304,819,000
|
Retained
earnings
|
|
60,132,000
|
|
40,904,000
|
|
27,722,000
|
Accumulated other comprehensive income/(loss)
|
|
(4,034,000)
|
|
(5,581,000)
|
|
1,263,000
|
Total shareholders'
equity
|
|
365,870,000
|
|
340,811,000
|
|
333,804,000
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
3,286,704,000
|
$
|
3,082,571,000
|
$
|
2,903,556,000
|
MERCANTILE BANK
CORPORATION
|
CONSOLIDATED REPORTS
OF INCOME
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
THREE MONTHS
ENDED
|
|
TWELVE MONTHS
ENDED
|
|
TWELVE MONTHS
ENDED
|
|
December 31,
2017
|
|
December 31,
2016
|
|
December 31,
2017
|
|
December 31,
2016
|
INTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
Loans,
including fees
|
$
|
30,411,000
|
|
$
|
27,830,000
|
|
$
|
116,816,000
|
|
$
|
109,049,000
|
Investment securities
|
|
2,036,000
|
|
|
1,724,000
|
|
|
7,631,000
|
|
|
9,007,000
|
Other
interest-earning assets
|
|
455,000
|
|
|
161,000
|
|
|
1,096,000
|
|
|
401,000
|
Total interest
income
|
|
32,902,000
|
|
|
29,715,000
|
|
|
125,543,000
|
|
|
118,457,000
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
2,819,000
|
|
|
1,940,000
|
|
|
9,362,000
|
|
|
7,549,000
|
Short-term borrowings
|
|
48,000
|
|
|
57,000
|
|
|
190,000
|
|
|
211,000
|
Federal
Home Loan Bank advances
|
|
966,000
|
|
|
668,000
|
|
|
3,657,000
|
|
|
2,263,000
|
Other
borrowed money
|
|
667,000
|
|
|
615,000
|
|
|
2,586,000
|
|
|
2,567,000
|
Total interest
expense
|
|
4,500,000
|
|
|
3,280,000
|
|
|
15,795,000
|
|
|
12,590,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
28,402,000
|
|
|
26,435,000
|
|
|
109,748,000
|
|
|
105,867,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan
losses
|
|
600,000
|
|
|
600,000
|
|
|
2,950,000
|
|
|
2,900,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
after
|
|
|
|
|
|
|
|
|
|
|
|
provision for loan losses
|
|
27,802,000
|
|
|
25,835,000
|
|
|
106,798,000
|
|
|
102,967,000
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
Service
charges on accounts
|
|
1,085,000
|
|
|
1,075,000
|
|
|
4,233,000
|
|
|
4,253,000
|
Credit
and debit card income
|
|
1,263,000
|
|
|
1,093,000
|
|
|
4,760,000
|
|
|
4,278,000
|
Mortgage
banking income
|
|
1,188,000
|
|
|
1,288,000
|
|
|
4,421,000
|
|
|
3,866,000
|
Earnings
on bank owned life insurance
|
337,000
|
|
|
331,000
|
|
|
2,731,000
|
|
|
1,264,000
|
Other
income
|
|
630,000
|
|
|
817,000
|
|
|
2,856,000
|
|
|
7,377,000
|
Total noninterest
income
|
|
4,503,000
|
|
|
4,604,000
|
|
|
19,001,000
|
|
|
21,038,000
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and benefits
|
|
11,601,000
|
|
|
10,565,000
|
|
|
45,397,000
|
|
|
43,524,000
|
Occupancy
|
|
1,479,000
|
|
|
1,463,000
|
|
|
6,186,000
|
|
|
6,063,000
|
Furniture and equipment
|
|
543,000
|
|
|
541,000
|
|
|
2,168,000
|
|
|
2,119,000
|
Data
processing costs
|
|
2,067,000
|
|
|
1,990,000
|
|
|
8,222,000
|
|
|
7,939,000
|
FDIC
insurance costs
|
|
252,000
|
|
|
128,000
|
|
|
960,000
|
|
|
1,236,000
|
Other
expense
|
|
3,906,000
|
|
|
3,707,000
|
|
|
16,783,000
|
|
|
16,237,000
|
Total noninterest
expense
|
|
19,848,000
|
|
|
18,394,000
|
|
|
79,716,000
|
|
|
77,118,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
federal income
|
|
|
|
|
|
|
|
|
|
|
|
tax expense
|
|
12,457,000
|
|
|
12,045,000
|
|
|
46,083,000
|
|
|
46,887,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax
expense
|
|
4,478,000
|
|
|
3,960,000
|
|
|
14,809,000
|
|
|
14,974,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
$
|
7,979,000
|
|
$
|
8,085,000
|
|
$
|
31,274,000
|
|
$
|
31,913,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$0.48
|
|
|
$0.49
|
|
|
$1.90
|
|
|
$1.96
|
Diluted
earnings per share
|
|
$0.48
|
|
|
$0.49
|
|
|
$1.90
|
|
|
$1.96
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
basic shares outstanding
|
|
16,525,625
|
|
|
16,352,359
|
|
|
16,478,968
|
|
|
16,292,086
|
Average
diluted shares outstanding
|
|
16,536,225
|
|
|
16,374,117
|
|
|
16,489,070
|
|
|
16,310,730
|
MERCANTILE BANK
CORPORATION
|
CONSOLIDATED
FINANCIAL HIGHLIGHTS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly
|
|
Year-To-Date
|
(dollars in
thousands except per share data)
|
2017
|
|
2017
|
|
2017
|
|
2017
|
|
2016
|
|
|
|
|
|
|
4th
Qtr
|
|
3rd
Qtr
|
|
2nd
Qtr
|
|
1st
Qtr
|
|
4th
Qtr
|
|
2017
|
|
2016
|
EARNINGS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
$
|
28,402
|
|
28,644
|
|
27,193
|
|
25,509
|
|
26,435
|
|
109,748
|
|
105,867
|
Provision for loan losses
|
$
|
600
|
|
1,000
|
|
750
|
|
600
|
|
600
|
|
2,950
|
|
2,900
|
Noninterest income
|
$
|
4,503
|
|
4,605
|
|
4,042
|
|
5,851
|
|
4,604
|
|
19,001
|
|
21,038
|
Noninterest expense
|
$
|
19,848
|
|
20,210
|
|
19,882
|
|
19,776
|
|
18,394
|
|
79,716
|
|
77,118
|
Net
income before federal income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
tax expense
|
$
|
12,457
|
|
12,039
|
|
10,603
|
|
10,984
|
|
12,045
|
|
46,083
|
|
46,887
|
Net
income
|
$
|
7,979
|
|
8,337
|
|
7,343
|
|
7,615
|
|
8,085
|
|
31,274
|
|
31,913
|
Basic
earnings per share
|
$
|
0.48
|
|
0.51
|
|
0.45
|
|
0.46
|
|
0.49
|
|
1.90
|
|
1.96
|
Diluted
earnings per share
|
$
|
0.48
|
|
0.51
|
|
0.45
|
|
0.46
|
|
0.49
|
|
1.90
|
|
1.96
|
Average
basic shares outstanding
|
|
16,525,625
|
|
16,483,492
|
|
16,471,060
|
|
16,434,647
|
|
16,352,359
|
|
16,478,968
|
|
16,292,086
|
Average
diluted shares outstanding
|
|
16,536,225
|
|
16,494,540
|
|
16,485,356
|
|
16,449,210
|
|
16,374,117
|
|
16,489,070
|
|
16,310,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
on average assets
|
|
0.97%
|
|
1.03%
|
|
0.96%
|
|
1.02%
|
|
1.05%
|
|
1.00%
|
|
1.07%
|
Return
on average equity
|
|
8.70%
|
|
9.21%
|
|
8.39%
|
|
8.99%
|
|
9.35%
|
|
8.82%
|
|
9.35%
|
Net
interest margin (fully tax-equivalent)
|
3.76%
|
|
3.83%
|
|
3.85%
|
|
3.73%
|
|
3.72%
|
|
3.79%
|
|
3.86%
|
Efficiency ratio
|
|
60.32%
|
|
60.78%
|
|
63.65%
|
|
63.06%
|
|
59.26%
|
|
61.92%
|
|
60.77%
|
Full-time equivalent employees
|
|
641
|
|
634
|
|
643
|
|
617
|
|
616
|
|
641
|
|
616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YIELD ON ASSETS /
COST OF FUNDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on
loans
|
|
4.76%
|
|
4.81%
|
|
4.69%
|
|
4.54%
|
|
4.65%
|
|
4.70%
|
|
4.65%
|
Yield on
securities
|
|
2.60%
|
|
2.50%
|
|
2.44%
|
|
2.35%
|
|
2.27%
|
|
2.47%
|
|
2.87%
|
Yield on
other interest-earning assets
|
1.29%
|
|
1.28%
|
|
0.99%
|
|
0.81%
|
|
0.51%
|
|
1.21%
|
|
0.51%
|
Yield on
total earning assets
|
|
4.35%
|
|
4.41%
|
|
4.37%
|
|
4.20%
|
|
4.18%
|
|
4.33%
|
|
4.31%
|
Yield on
total assets
|
|
4.04%
|
|
4.10%
|
|
4.05%
|
|
3.88%
|
|
3.87%
|
|
4.02%
|
|
3.99%
|
Cost of
deposits
|
|
0.45%
|
|
0.43%
|
|
0.35%
|
|
0.33%
|
|
0.33%
|
|
0.39%
|
|
0.33%
|
Cost of
borrowed funds
|
|
1.74%
|
|
1.75%
|
|
1.69%
|
|
1.53%
|
|
1.45%
|
|
1.68%
|
|
1.45%
|
Cost of
interest-bearing liabilities
|
|
0.88%
|
|
0.85%
|
|
0.77%
|
|
0.68%
|
|
0.68%
|
|
0.80%
|
|
0.66%
|
Cost of
funds (total earning assets)
|
|
0.59%
|
|
0.58%
|
|
0.52%
|
|
0.47%
|
|
0.46%
|
|
0.54%
|
|
0.45%
|
Cost of
funds (total assets)
|
|
0.55%
|
|
0.54%
|
|
0.48%
|
|
0.43%
|
|
0.42%
|
|
0.50%
|
|
0.42%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PURCHASE
ACCOUNTING ADJUSTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
portfolio - increase interest income
|
$
|
683
|
|
1,757
|
|
1,336
|
|
832
|
|
1,672
|
|
4,608
|
|
4,925
|
Trust
preferred - increase interest expense
|
$
|
171
|
|
171
|
|
171
|
|
171
|
|
171
|
|
684
|
|
684
|
Core
deposit intangible - increase overhead
|
$
|
556
|
|
556
|
|
609
|
|
636
|
|
636
|
|
2,357
|
|
2,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MORTGAGE BANKING
ACTIVITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
mortgage loans originated
|
$
|
62,526
|
|
61,962
|
|
60,371
|
|
38,365
|
|
46,727
|
|
223,224
|
|
163,072
|
Purchase
mortgage loans originated
|
$
|
33,958
|
|
41,254
|
|
39,115
|
|
21,523
|
|
21,962
|
|
135,850
|
|
78,251
|
Refinance mortgage loans originated
|
$
|
28,568
|
|
20,708
|
|
21,256
|
|
16,842
|
|
24,765
|
|
87,374
|
|
84,821
|
Total
mortgage loans sold
|
$
|
26,254
|
|
33,858
|
|
29,371
|
|
18,463
|
|
30,081
|
|
107,946
|
|
111,058
|
Net gain
on sale of mortgage loans
|
$
|
1,051
|
|
1,131
|
|
1,012
|
|
732
|
|
993
|
|
3,926
|
|
3,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible
equity to tangible assets
|
|
9.56%
|
|
9.54%
|
|
9.70%
|
|
9.77%
|
|
9.31%
|
|
9.56%
|
|
9.31%
|
Tier 1
leverage capital ratio
|
|
11.28%
|
|
11.18%
|
|
11.49%
|
|
11.53%
|
|
11.17%
|
|
11.28%
|
|
11.17%
|
Common
equity risk-based capital ratio
|
10.76%
|
|
10.54%
|
|
10.65%
|
|
10.83%
|
|
10.88%
|
|
10.76%
|
|
10.88%
|
Tier 1
risk-based capital ratio
|
|
12.23%
|
|
12.01%
|
|
12.15%
|
|
12.39%
|
|
12.47%
|
|
12.23%
|
|
12.47%
|
Total
risk-based capital ratio
|
|
12.89%
|
|
12.66%
|
|
12.79%
|
|
13.05%
|
|
13.13%
|
|
12.89%
|
|
13.13%
|
Tier 1
capital
|
$
|
360,533
|
|
354,087
|
|
347,754
|
|
341,708
|
|
336,316
|
|
360,533
|
|
336,316
|
Tier 1
plus tier 2 capital
|
$
|
380,035
|
|
373,280
|
|
366,048
|
|
359,984
|
|
354,278
|
|
380,035
|
|
354,278
|
Total
risk-weighted assets
|
$
|
2,948,013
|
|
2,949,011
|
|
2,861,605
|
|
2,757,616
|
|
2,697,727
|
|
2,948,013
|
|
2,697,727
|
Book
value per common share
|
$
|
22.05
|
|
21.99
|
|
21.69
|
|
21.13
|
|
20.76
|
|
22.05
|
|
20.76
|
Tangible
book value per common share
|
$
|
18.61
|
|
18.49
|
|
18.16
|
|
17.56
|
|
17.14
|
|
18.61
|
|
17.14
|
Cash
dividend per common share
|
$
|
0.19
|
|
0.19
|
|
0.18
|
|
0.18
|
|
0.67
|
|
0.74
|
|
1.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET
QUALITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
loan charge-offs
|
$
|
920
|
|
709
|
|
1,150
|
|
456
|
|
970
|
|
3,235
|
|
2,205
|
Recoveries
|
$
|
628
|
|
607
|
|
419
|
|
171
|
|
805
|
|
1,825
|
|
1,585
|
Net loan
charge-offs (recoveries)
|
$
|
292
|
|
102
|
|
731
|
|
285
|
|
165
|
|
1,410
|
|
620
|
Net loan
charge-offs to average loans
|
0.05%
|
|
0.02%
|
|
0.12%
|
|
0.05%
|
|
0.03%
|
|
0.06%
|
|
0.03%
|
Allowance for loan losses
|
$
|
19,501
|
|
19,193
|
|
18,295
|
|
18,276
|
|
17,961
|
|
19,501
|
|
17,961
|
Allowance to originated loans
|
|
0.88%
|
|
0.88%
|
|
0.86%
|
|
0.92%
|
|
0.95%
|
|
0.88%
|
|
0.95%
|
Nonperforming loans
|
$
|
7,143
|
|
8,231
|
|
6,450
|
|
7,292
|
|
5,939
|
|
7,143
|
|
5,939
|
Other
real estate/repossessed assets
|
$
|
2,260
|
|
2,327
|
|
789
|
|
495
|
|
469
|
|
2,260
|
|
469
|
Nonperforming loans to total loans
|
|
0.28%
|
|
0.32%
|
|
0.26%
|
|
0.30%
|
|
0.25%
|
|
0.28%
|
|
0.25%
|
Nonperforming assets to total assets
|
|
0.29%
|
|
0.32%
|
|
0.23%
|
|
0.26%
|
|
0.21%
|
|
0.29%
|
|
0.21%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONPERFORMING
ASSETS - COMPOSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
development
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
16
|
|
0
|
|
16
|
Construction
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Owner occupied /
rental
|
$
|
3,574
|
|
3,648
|
|
3,367
|
|
2,972
|
|
2,883
|
|
3,574
|
|
2,883
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
development
|
$
|
35
|
|
50
|
|
65
|
|
80
|
|
95
|
|
35
|
|
95
|
Construction
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Owner
occupied
|
$
|
4,272
|
|
4,627
|
|
1,313
|
|
1,221
|
|
610
|
|
4,272
|
|
610
|
Non-owner
occupied
|
$
|
36
|
|
84
|
|
400
|
|
421
|
|
488
|
|
36
|
|
488
|
Non-real
estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
assets
|
$
|
1,444
|
|
2,126
|
|
2,081
|
|
3,076
|
|
2,293
|
|
1,444
|
|
2,293
|
Consumer
assets
|
$
|
42
|
|
23
|
|
13
|
|
17
|
|
23
|
|
42
|
|
23
|
Total
nonperforming assets
|
|
9,403
|
|
10,558
|
|
7,239
|
|
7,787
|
|
6,408
|
|
9,403
|
|
6,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONPERFORMING
ASSETS - RECON
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
10,558
|
|
7,239
|
|
7,787
|
|
6,408
|
|
5,459
|
|
6,408
|
|
6,737
|
Additions - originated loans
|
$
|
402
|
|
4,789
|
|
1,774
|
|
2,987
|
|
2,953
|
|
9,952
|
|
6,344
|
Merger-related activity
|
$
|
0
|
|
210
|
|
16
|
|
0
|
|
33
|
|
226
|
|
33
|
Return
to performing status
|
$
|
0
|
|
(120)
|
|
0
|
|
(113)
|
|
(13)
|
|
(233)
|
|
(13)
|
Principal payments
|
$
|
(688)
|
|
(1,089)
|
|
(1,168)
|
|
(1,289)
|
|
(1,386)
|
|
(4,234)
|
|
(4,164)
|
Sale
proceeds
|
$
|
(101)
|
|
(373)
|
|
(147)
|
|
(56)
|
|
(308)
|
|
(677)
|
|
(1,428)
|
Loan
charge-offs
|
$
|
(754)
|
|
(91)
|
|
(953)
|
|
(135)
|
|
(263)
|
|
(1,933)
|
|
(981)
|
Valuation write-downs
|
$
|
(14)
|
|
(7)
|
|
(70)
|
|
(15)
|
|
(67)
|
|
(106)
|
|
(120)
|
Ending
balance
|
$
|
9,403
|
|
10,558
|
|
7,239
|
|
7,787
|
|
6,408
|
|
9,403
|
|
6,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOAN PORTFOLIO
COMPOSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial &
industrial
|
$
|
753,764
|
|
776,562
|
|
780,816
|
|
757,219
|
|
713,903
|
|
753,764
|
|
713,903
|
Land development &
construction
|
$
|
29,872
|
|
28,575
|
|
29,027
|
|
31,924
|
|
34,828
|
|
29,872
|
|
34,828
|
Owner occupied comm'l
R/E
|
$
|
526,327
|
|
485,347
|
|
491,633
|
|
452,382
|
|
450,464
|
|
526,327
|
|
450,464
|
Non-owner occupied
comm'l R/E
|
$
|
791,685
|
|
805,167
|
|
783,036
|
|
768,565
|
|
748,269
|
|
791,685
|
|
748,269
|
Multi-family &
residential rental
|
$
|
101,918
|
|
119,170
|
|
114,081
|
|
113,257
|
|
117,883
|
|
101,918
|
|
117,883
|
Total commercial
|
$
|
2,203,566
|
|
2,214,821
|
|
2,198,593
|
|
2,123,347
|
|
2,065,347
|
|
2,203,566
|
|
2,065,347
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 family
mortgages
|
$
|
254,560
|
|
236,075
|
|
220,697
|
|
205,850
|
|
195,226
|
|
254,560
|
|
195,226
|
Home equity &
other consumer
|
$
|
100,426
|
|
103,376
|
|
107,991
|
|
112,117
|
|
118,047
|
|
100,426
|
|
118,047
|
Total retail
|
$
|
354,986
|
|
339,451
|
|
328,688
|
|
317,967
|
|
313,273
|
|
354,986
|
|
313,273
|
Total loans
|
$
|
2,558,552
|
|
2,554,272
|
|
2,527,281
|
|
2,441,314
|
|
2,378,620
|
|
2,558,552
|
|
2,378,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
END OF PERIOD
BALANCES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
2,558,552
|
|
2,554,272
|
|
2,527,281
|
|
2,441,314
|
|
2,378,620
|
|
2,558,552
|
|
2,378,620
|
Securities
|
$
|
346,780
|
|
341,126
|
|
333,294
|
|
341,677
|
|
336,086
|
|
346,780
|
|
336,086
|
Other
interest-earning assets
|
$
|
144,974
|
|
123,110
|
|
48,762
|
|
12,663
|
|
133,396
|
|
144,974
|
|
133,396
|
Total
earning assets (before allowance)
|
$
|
3,050,306
|
|
3,018,508
|
|
2,909,337
|
|
2,795,654
|
|
2,848,102
|
|
3,050,306
|
|
2,848,102
|
Total
assets
|
$
|
3,286,704
|
|
3,254,655
|
|
3,143,336
|
|
3,018,919
|
|
3,082,571
|
|
3,286,704
|
|
3,082,571
|
Noninterest-bearing deposits
|
$
|
866,380
|
|
826,038
|
|
800,718
|
|
757,706
|
|
810,600
|
|
866,380
|
|
810,600
|
Interest-bearing deposits
|
$
|
1,655,985
|
|
1,663,005
|
|
1,570,003
|
|
1,520,310
|
|
1,564,385
|
|
1,655,985
|
|
1,564,385
|
Total
deposits
|
$
|
2,522,365
|
|
2,489,043
|
|
2,370,721
|
|
2,278,016
|
|
2,374,985
|
|
2,522,365
|
|
2,374,985
|
Total
borrowed funds
|
$
|
387,468
|
|
390,868
|
|
404,370
|
|
380,009
|
|
354,902
|
|
387,468
|
|
354,902
|
Total
interest-bearing liabilities
|
$
|
2,043,453
|
|
2,053,873
|
|
1,974,373
|
|
1,900,319
|
|
1,919,287
|
|
2,043,453
|
|
1,919,287
|
Shareholders' equity
|
$
|
365,870
|
|
362,546
|
|
357,499
|
|
348,050
|
|
340,811
|
|
365,870
|
|
340,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE
BALANCES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
2,534,729
|
|
2,534,364
|
|
2,472,489
|
|
2,390,030
|
|
2,372,510
|
|
2,483,440
|
|
2,345,308
|
Securities
|
$
|
346,318
|
|
339,125
|
|
338,045
|
|
339,537
|
|
336,493
|
|
340,770
|
|
340,172
|
Other
interest-earning assets
|
$
|
138,095
|
|
116,851
|
|
46,250
|
|
61,376
|
|
127,790
|
|
90,925
|
|
77,863
|
Total
earning assets (before allowance)
|
$
|
3,019,142
|
|
2,990,340
|
|
2,856,784
|
|
2,790,943
|
|
2,836,793
|
|
2,915,135
|
|
2,763,343
|
Total
assets
|
$
|
3,248,828
|
|
3,220,053
|
|
3,081,542
|
|
3,016,871
|
|
3,064,974
|
|
3,142,673
|
|
2,987,784
|
Noninterest-bearing deposits
|
$
|
849,751
|
|
805,650
|
|
785,705
|
|
766,031
|
|
773,137
|
|
802,024
|
|
715,550
|
Interest-bearing deposits
|
$
|
1,635,727
|
|
1,648,235
|
|
1,531,399
|
|
1,542,078
|
|
1,561,539
|
|
1,589,778
|
|
1,567,846
|
Total
deposits
|
$
|
2,485,478
|
|
2,453,885
|
|
2,317,104
|
|
2,308,109
|
|
2,334,676
|
|
2,391,802
|
|
2,283,396
|
Total
borrowed funds
|
$
|
384,168
|
|
393,910
|
|
400,508
|
|
352,614
|
|
366,905
|
|
382,917
|
|
347,134
|
Total
interest-bearing liabilities
|
$
|
2,019,895
|
|
2,042,145
|
|
1,931,907
|
|
1,894,692
|
|
1,928,444
|
|
1,972,695
|
|
1,914,980
|
Shareholders' equity
|
$
|
363,823
|
|
359,131
|
|
351,216
|
|
343,344
|
|
343,122
|
|
354,448
|
|
341,340
|
View original
content:http://www.prnewswire.com/news-releases/mercantile-bank-corporation-announces-strong-fourth-quarter-and-full-year-2017-results-300582651.html
SOURCE Mercantile Bank Corporation