GRAND RAPIDS, Mich.,
Jan. 21, 2020 /PRNewswire/ --
Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported
net income of $13.3 million, or
$0.81 per diluted share, for the
fourth quarter of 2019, compared with net income of $11.6 million, or $0.70 per diluted share, for the respective
prior-year period. For the full year 2019, Mercantile
reported net income of $49.5 million,
or $3.01 per diluted share, compared
with net income of $42.0 million, or
$2.53 per diluted share, for the full
year 2018.
Net gains and losses on sales and write-downs of former branch
facilities decreased reported net income during the fourth quarter
of 2019 by approximately $0.3
million, or $0.02 per diluted
share. Interest income related to purchased loan accounting
entries increased net income during the fourth quarter of 2019 by
$0.2 million, or $0.01 per diluted share, and net income during
the fourth quarter of 2018 by $0.5
million, or $0.03 per diluted
share. Excluding the impacts of these transactions, diluted
earnings per share increased $0.15,
or 22.4 percent, during the fourth quarter of 2019 compared to the
respective 2018 period.
Bank owned life insurance claims and the net impact of gains and
losses on sales and write-downs of former branch facilities
increased reported net income during 2019 by approximately
$2.7 million, or $0.16 per diluted share. Interest income
related to purchased loan accounting entries increased net income
during 2019 by $1.1 million, or
$0.07 per diluted share, and net
income during 2018 by $3.2 million,
or $0.19 per diluted share.
Excluding the impacts of these transactions, diluted earnings per
share increased $0.44, or 18.8
percent, during 2019 compared to 2018.
Fourth quarter and full year highlights include:
- Strong earnings and capital position
- Solid growth in key fee income categories
- Controlled overhead costs
- Strong asset quality
- Net loan growth of $104 million,
or nearly 4 percent, during the full year
- Sustained strength in commercial and residential mortgage loan
pipelines
- Announced first quarter 2020 regular cash dividend of
$0.28 per common share, an increase
of 3.7 percent from the regular cash dividend paid during the
fourth quarter of 2019
"We are very pleased to report another year of strong operating
performance," said Robert B. Kaminski,
Jr., President and Chief Executive Officer of
Mercantile. "Our robust financial results during 2019 reflect
continued growth in the loan portfolio, increases in certain
noninterest income revenue streams, controlled overhead costs, and
sound asset quality. Based on our strong capital position and
healthy commercial loan and residential mortgage loan pipelines and
prospects, we believe that the solid financial performance achieved
during 2019 will continue in future periods."
Operating Results
Total revenue, which consists of net interest income and
noninterest income, was $38.5 million
during the fourth quarter of 2019, up $2.3
million, or 6.3 percent, from the prior-year fourth
quarter. Reflecting a higher level of earning assets, net
interest income of $31.2 million
during the fourth quarter of 2019 was up $0.4 million, or 1.1 percent, from the
fourth quarter of 2018. Total revenue was $151 million during the full year 2019, up
$12.4 million, or 8.9 percent, from
2018. Net interest income was $125
million in 2019, up $4.5
million, or 3.7 percent, from the prior year, reflecting an
increase in earning assets.
The net interest margin was 3.63 percent in the fourth quarter
of 2019. The yield on average earning assets equaled 4.61
percent during the fourth quarter of 2019, down from 4.80 percent
during the respective 2018 period mainly due to a change in earning
asset mix and a lower interest rate environment.
Lower-yielding average interest-earning deposit balances
represented 5.2 percent of average earning assets during the
current-year fourth quarter, up from 1.0 percent during the
prior-year fourth quarter. The elevated level of
interest-earning deposits primarily reflected seasonal deposits
from municipal customers and several large commercial loan
paydowns. A lower commercial loan yield, primarily reflecting
the negative impact of reduced interest rates on variable-rate
commercial loans stemming from the Federal Open Market Committee's
("FOMC") lowering of the targeted federal funds rate by 25 basis
points in each of July, September, and October 2019, also contributed to the decreased
yield on average earning assets. The cost of funds equaled
0.98 percent during the fourth quarter of 2019, up from 0.82
percent during the prior-year fourth quarter mainly due to a change
in funding mix and an increased cost of time deposits. The
change in funding mix primarily reflected increased reliance on
more costly wholesale funds during the fourth quarter of 2018 and
January 2019, which was necessitated
by various funding requirements, including ongoing loan growth and
seasonal deposit withdrawals by certain business customers for
bonus and tax payments.
The net interest margin was 3.75 percent in 2019. The
yield on average earning assets was 4.77 percent during 2019, up
from 4.68 percent during 2018. The higher yield on average
earning assets primarily resulted from an increased yield on
commercial loans, which equaled 5.21 percent during 2019 compared
to 5.11 percent during 2018. The increased yield on
commercial loans mainly reflected higher interest rates on
variable-rate commercial loans resulting from the FOMC raising the
targeted federal funds by 25 basis points in each of March, June,
September, and December 2018. The positive impact of these
rate increases more than offset the negative impact of decreased
interest rates on variable-rate commercial loans stemming from the
FOMC lowering the targeted federal funds rate by 25 basis points in
each of July, September, and October 2019. The cost of funds
equaled 1.02 percent during 2019, up from 0.72 percent during 2018
primarily due to increased costs of time deposits and borrowed
funds and a change in funding mix. As noted previously,
increased reliance on more costly wholesale funds, most of which
occurred during the fourth quarter of 2018 and January 2019, was necessitated by various funding
requirements.
The collection of certain commercial loan prepayment fees and
the recording of accelerated discount accretion on called bonds
positively impacted the net interest margin during the fourth
quarter of 2019 and full year 2019, while a higher-than-desired
level of interest-earning deposits negatively impacted the margin
during both periods. Excluding the impacts of these factors,
the net interest margin was 3.53 percent and 3.74 percent during
the fourth quarter of 2019 and full year 2019,
respectively.
Net interest income and the net interest margin during the
fourth quarters of 2019 and 2018, and full years 2019 and 2018,
were affected by purchase accounting accretion and amortization
associated with fair value measurements. Increases in
interest income on loans totaling $0.3
million and $0.6 million were
recorded during the fourth quarters of 2019 and 2018, respectively,
and increases of $1.4 million and
$4.0 million were recorded during
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.
Mercantile recorded a negative $0.7
million provision for loan losses during the fourth quarter
of 2019, primarily reflecting certain commercial loan paydowns and
net loan recoveries being recorded during the period. 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 certain loan
loss reserve environmental factors. During 2019, Mercantile
recorded a provision for loan losses of $1.8
million, compared to a provision of $1.1 million during 2018. The provision
expense recorded during both 2019 and 2018 mainly reflected ongoing
net loan growth; in addition, the provision expense recorded during
2018 depicts increased allocations related to changes in certain
environmental factors. The amount of provision expense
necessitated by net loan growth during 2018 was partially mitigated
by net loan recoveries being recorded during the period.
Noninterest income during the fourth quarter of 2019 was
$7.3 million, which included a
$0.3 million gain on the sale of a
former branch facility. Noninterest income during the
prior-year fourth quarter was $5.4
million, which included a $0.9
million accounting adjustment related to mortgage banking
activities in prior years. Excluding the aforementioned
transactions, noninterest income increased $2.6 million, or 57.9 percent, during the fourth
quarter of 2019 compared to the respective 2018 period.
Noninterest income during 2019 was $27.0 million, compared to $19.0 million during 2018. Noninterest
income during 2019 included bank owned life insurance claims
totaling $2.6 million and gains on
the sales of former branch facilities totaling $0.8 million, while noninterest income during
2018 included the previously-mentioned $0.9
million accounting adjustment associated with mortgage
banking activities. Excluding these transactions, noninterest
income increased $5.4 million, or
29.9 percent, during 2019 compared to 2018. The improved
level of noninterest income in both 2019 periods compared to the
respective 2018 periods primarily resulted from increased mortgage
banking activity income stemming from the success of continuing
strategic initiatives designed to increase market presence, along
with a higher level of refinance activity resulting from a decrease
in residential mortgage loan interest rates and a higher percentage
of originated loans being sold. Growth in credit and debit
card income, service charges on accounts, and payroll processing
fees also contributed to the improved noninterest income in both
2019 periods.
Noninterest expense totaled $23.3
million during the fourth quarter of 2019, up $1.4 million, or 6.3 percent, from the prior-year
fourth quarter. Noninterest expense during 2019 was
$89.3 million, an increase of
$3.1 million, or 3.6 percent, from
the $86.2 million expensed during
2018. The higher level of expense in the 2019 periods
primarily resulted from increased salary costs, mainly reflecting
annual employee merit pay increases and higher mortgage loan
originator commissions. Increased stock-based compensation
also contributed to the higher level of noninterest expense in the
current-year fourth quarter compared to the respective 2018
period.
"The noteworthy increase in mortgage banking activity income
depicts the success of continuing strategic initiatives that were
created to enhance market share, an increase in the percentage of
originated residential mortgage loans being sold, and a higher
level of refinance activity resulting from decreased residential
mortgage loan interest rates," continued Mr. Kaminski. "Based
on our current residential mortgage loan pipeline and projections,
we believe mortgage banking activity income will be solid during
2020. We are also pleased with the increases in other key fee
income categories. Our focus on meeting growth objectives in
a cost-conscious manner has not wavered."
Balance Sheet
As of December 31, 2019, total
assets were $3.63 billion, up
$269 million, or 8.0 percent, from
December 31, 2018.
Interest-earning deposits and total loans increased $170 million and $104
million, respectively, over the same time period. The
growth in interest-earning deposits mainly stemmed from certain
deposit-gathering initiatives, an increase in wholesale funds, and
several large commercial loan paydowns. As of December 31, 2019, unfunded commitments on
commercial construction and development loans totaled approximately
$105 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 pleased with the net loan growth and level of new
commercial term loan originations during 2019. Net loan
growth during the year depicts increases in both commercial loans
and residential mortgage loans. All commercial loan segments,
with the exception of the multi-family and residential rental
segment, grew during the year. The solid growth in commercial
loans reflects our lending staff's ongoing focus on identifying new
lending opportunities in our markets and meeting the needs of
existing customers, while growth in residential mortgage loans
depicts the success of various strategic initiatives that were
implemented to increase our market presence. The net growth
in the commercial portfolio during 2019 was achieved despite a
contraction of nearly $67 million in
the portfolio during the fourth quarter stemming from an unusually
high level of payoffs. The payoffs primarily reflected
instances in which we remained committed to credit quality and
margin preservation, along with a few situations involving larger
borrowing relationships that refinanced the underlying real estate
with secondary market credit participants that offered long-term,
fixed rate non-recourse financing options. Based on our
current loan pipelines and additional lending opportunities
conveyed by our commercial lenders, we are confident that we can
continue to grow the commercial loan and residential loan
portfolios in future periods."
As of December 31, 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 December 31,
2019, were $2.69 billion, up
$227 million from December 31, 2018. Local deposits and
brokered deposits were up $206
million and $20.2 million,
respectively, during 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
increases in business money market accounts and noninterest-bearing
checking accounts. The growth in noninterest-bearing checking
accounts primarily reflected new commercial loan
relationships. Wholesale funds were $487 million, or approximately 15 percent of
total funds, as of December 31, 2019,
compared to $474 million, or
approximately 16 percent of total funds, as of December 31, 2018.
Asset Quality
Nonperforming assets at December 31,
2019, were $2.7 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 declined in number and dollar volume during
2019. During the fourth quarter of 2019, loan charge-offs
totaled $0.1 million while recoveries
of prior period loan charge-offs equaled $0.3 million, providing for net loan recoveries
of $0.2 million, or 0.02 percent of
average total loans. During 2019, loan charge-offs totaled
$0.9 million while recoveries of
prior period loan charge-offs equaled $0.7
million, providing for net loan charge-offs of $0.2 million, or 0.01 percent of average total
loans.
Capital Position
Shareholders' equity totaled $417
million as of December 31,
2019, an increase of $41.3
million from year-end 2018. The Bank's capital
position remains above "well-capitalized" with a total risk-based
capital ratio of 13.0 percent as of December
31, 2019, compared to 12.3 percent at December 31, 2018. At December 31, 2019, the Bank had approximately
$97 million in excess of the 10.0
percent minimum regulatory threshold required to be considered a
"well-capitalized" institution. Mercantile reported
16,425,136 total shares outstanding at December 31, 2019.
As announced in May 2019,
Mercantile instituted a $20 million
common stock repurchase program in conjunction with the completion
of its existing program that was introduced in January 2015 and later expanded in April
2016. During 2019, Mercantile repurchased approximately
233,000 shares for $7.2 million, or a
weighted average all-in cost per share of $30.79, under the former and new programs on a
combined basis. During the period of January 2015 through December 31, 2019, Mercantile repurchased
approximately 1.4 million shares for $32.6
million, or a weighted average all-in cost per share of
$23.47, under the former and new
programs on a combined basis.
Mr. Kaminski concluded, "Our strong operating performance during
2019 has positioned us to meet growth objectives and further build
shareholder value. As depicted by our ongoing cash dividend
program, including the announcement of an increased first quarter
2020 regular cash dividend earlier today, we remain focused on
providing shareholders with a competitive dividend yield and
committed to enhancing shareholder value. Our banking
philosophy, which entails developing mutually-beneficial
relationships and offering market-leading products and services
through efficient delivery channels, has continued to successfully
attract new customers and allowed us to retain existing
customers. We are excited about Mercantile's future and look
forward to sound financial performance in 2020."
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 $3.6 billion and
operates 40 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 2019
Results
|
|
|
|
|
|
|
MERCANTILE BANK
CORPORATION
|
CONSOLIDATED BALANCE
SHEETS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
DECEMBER
31,
|
|
DECEMBER
31,
|
|
DECEMBER
31,
|
|
|
2019
|
|
2018
|
|
2017
|
ASSETS
|
|
|
|
|
|
|
Cash and
due from banks
|
$
|
53,262,000
|
$
|
64,872,000
|
$
|
55,127,000
|
Interest-earning deposits
|
|
180,469,000
|
|
10,482,000
|
|
144,974,000
|
Total cash and cash
equivalents
|
|
233,731,000
|
|
75,354,000
|
|
200,101,000
|
|
|
|
|
|
|
|
Securities available for sale
|
|
334,655,000
|
|
337,366,000
|
|
335,744,000
|
Federal
Home Loan Bank stock
|
|
18,002,000
|
|
16,022,000
|
|
11,036,000
|
|
|
|
|
|
|
|
Loans
|
|
2,856,667,000
|
|
2,753,085,000
|
|
2,558,552,000
|
Allowance for loan losses
|
|
(23,889,000)
|
|
(22,380,000)
|
|
(19,501,000)
|
Loans, net
|
|
2,832,778,000
|
|
2,730,705,000
|
|
2,539,051,000
|
|
|
|
|
|
|
|
Premises
and equipment, net
|
|
57,327,000
|
|
48,321,000
|
|
46,034,000
|
Bank
owned life insurance
|
|
70,297,000
|
|
69,647,000
|
|
68,689,000
|
Goodwill
|
|
49,473,000
|
|
49,473,000
|
|
49,473,000
|
Core
deposit intangible, net
|
|
3,840,000
|
|
5,561,000
|
|
7,600,000
|
Other
assets
|
|
32,812,000
|
|
31,458,000
|
|
28,976,000
|
|
|
|
|
|
|
|
Total
assets
|
$
|
3,632,915,000
|
$
|
3,363,907,000
|
$
|
3,286,704,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
924,916,000
|
$
|
889,784,000
|
$
|
866,380,000
|
Interest-bearing
|
|
1,765,468,000
|
|
1,573,924,000
|
|
1,655,985,000
|
Total deposits
|
|
2,690,384,000
|
|
2,463,708,000
|
|
2,522,365,000
|
|
|
|
|
|
|
|
Securities sold under agreements to repurchase
|
|
102,675,000
|
|
103,519,000
|
|
118,748,000
|
Federal
Home Loan Bank advances
|
|
354,000,000
|
|
350,000,000
|
|
220,000,000
|
Subordinated debentures
|
|
46,881,000
|
|
46,199,000
|
|
45,517,000
|
Accrued
interest and other liabilities
|
|
22,414,000
|
|
25,232,000
|
|
14,204,000
|
Total liabilities
|
|
3,216,354,000
|
|
2,988,658,000
|
|
2,920,834,000
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Common
stock
|
|
305,035,000
|
|
308,005,000
|
|
309,772,000
|
Retained
earnings
|
|
107,831,000
|
|
75,483,000
|
|
60,132,000
|
Accumulated other comprehensive income/(loss)
|
|
3,695,000
|
|
(8,239,000)
|
|
(4,034,000)
|
Total shareholders'
equity
|
|
416,561,000
|
|
375,249,000
|
|
365,870,000
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
3,632,915,000
|
$
|
3,363,907,000
|
$
|
3,286,704,000
|
Mercantile Bank
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter 2019
Results
|
|
|
|
|
|
|
|
|
|
|
|
|
MERCANTILE BANK
CORPORATION
|
CONSOLIDATED REPORTS
OF INCOME
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
THREE MONTHS
ENDED
|
TWELVE MONTHS
ENDED
|
TWELVE MONTHS
ENDED
|
|
December 31,
2019
|
December 31,
2018
|
December 31,
2019
|
December 31,
2018
|
INTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans,
including fees
|
$
|
36,257,000
|
|
$
|
34,676,000
|
|
$
|
145,816,000
|
|
$
|
131,763,000
|
|
Investment securities
|
|
2,563,000
|
|
|
2,347,000
|
|
|
10,150,000
|
|
|
8,975,000
|
|
Other
interest-earning assets
|
|
744,000
|
|
|
172,000
|
|
|
2,371,000
|
|
|
1,243,000
|
|
Total interest
income
|
|
39,564,000
|
|
|
37,195,000
|
|
|
158,337,000
|
|
|
141,981,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
5,358,000
|
|
|
3,949,000
|
|
|
21,264,000
|
|
|
13,869,000
|
|
Short-term borrowings
|
|
51,000
|
|
|
92,000
|
|
|
295,000
|
|
|
273,000
|
|
Federal
Home Loan Bank advances
|
|
2,226,000
|
|
|
1,513,000
|
|
|
8,977,000
|
|
|
4,647,000
|
|
Other
borrowed money
|
|
761,000
|
|
|
823,000
|
|
|
3,267,000
|
|
|
3,110,000
|
|
Total interest
expense
|
|
8,396,000
|
|
|
6,377,000
|
|
|
33,803,000
|
|
|
21,899,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
31,168,000
|
|
|
30,818,000
|
|
|
124,534,000
|
|
|
120,082,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan
losses
|
|
(700,000)
|
|
|
0
|
|
|
1,750,000
|
|
|
1,100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
after
|
|
|
|
|
|
|
|
|
|
|
|
|
provision for loan losses
|
|
31,868,000
|
|
|
30,818,000
|
|
|
122,784,000
|
|
|
118,982,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
charges on accounts
|
|
1,178,000
|
|
|
1,099,000
|
|
|
4,584,000
|
|
|
4,358,000
|
|
Credit
and debit card income
|
|
1,528,000
|
|
|
1,399,000
|
|
|
5,925,000
|
|
|
5,354,000
|
|
Mortgage
banking income
|
|
3,194,000
|
|
|
994,000
|
|
|
8,485,000
|
|
|
4,109,000
|
|
Payroll
services
|
|
399,000
|
|
|
335,000
|
|
|
1,626,000
|
|
|
1,462,000
|
|
Earnings
on bank owned life insurance
|
319,000
|
|
|
318,000
|
|
|
3,886,000
|
|
|
1,287,000
|
|
Other
income
|
|
694,000
|
|
|
1,225,000
|
|
|
2,450,000
|
|
|
2,440,000
|
|
Total noninterest
income
|
|
7,312,000
|
|
|
5,370,000
|
|
|
26,956,000
|
|
|
19,010,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and benefits
|
|
13,851,000
|
|
|
12,884,000
|
|
|
53,833,000
|
|
|
50,910,000
|
|
Occupancy
|
|
1,972,000
|
|
|
1,662,000
|
|
|
7,061,000
|
|
|
6,711,000
|
|
Furniture and equipment
|
|
698,000
|
|
|
681,000
|
|
|
2,583,000
|
|
|
2,470,000
|
|
Data
processing costs
|
|
2,381,000
|
|
|
2,141,000
|
|
|
9,235,000
|
|
|
8,557,000
|
|
Other
expense
|
|
4,433,000
|
|
|
4,590,000
|
|
|
16,568,000
|
|
|
17,522,000
|
|
Total noninterest
expense
|
|
23,335,000
|
|
|
21,958,000
|
|
|
89,280,000
|
|
|
86,170,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
federal income
|
|
|
|
|
|
|
|
|
|
|
|
|
tax expense
|
|
15,845,000
|
|
|
14,230,000
|
|
|
60,460,000
|
|
|
51,822,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax
expense
|
|
2,528,000
|
|
|
2,657,000
|
|
|
11,004,000
|
|
|
9,798,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
$
|
13,317,000
|
|
$
|
11,573,000
|
|
$
|
49,456,000
|
|
$
|
42,024,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$0.81
|
|
|
$0.70
|
|
|
$3.01
|
|
|
$2.53
|
|
Diluted
earnings per share
|
|
$0.81
|
|
|
$0.70
|
|
|
$3.01
|
|
|
$2.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
basic shares outstanding
|
|
16,373,458
|
|
|
16,594,412
|
|
|
16,405,159
|
|
|
16,600,612
|
|
Average
diluted shares outstanding
|
|
16,375,740
|
|
|
16,600,108
|
|
|
16,409,135
|
|
|
16,606,416
|
|
Mercantile Bank
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter 2019
Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MERCANTILE BANK
CORPORATION
|
CONSOLIDATED
FINANCIAL HIGHLIGHTS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly
|
|
Year-To-Date
|
(dollars in
thousands except per share data)
|
2019
|
|
2019
|
|
2019
|
|
2019
|
|
2018
|
|
|
|
|
|
|
4th
Qtr
|
|
3rd
Qtr
|
|
2nd
Qtr
|
|
1st
Qtr
|
|
4th
Qtr
|
|
2019
|
|
2018
|
EARNINGS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
$
|
31,168
|
|
31,605
|
|
31,116
|
|
30,645
|
|
30,818
|
|
124,534
|
|
120,082
|
Provision for loan losses
|
$
|
(700)
|
|
700
|
|
900
|
|
850
|
|
0
|
|
1,750
|
|
1,100
|
Noninterest income
|
$
|
7,312
|
|
6,676
|
|
6,334
|
|
6,632
|
|
5,370
|
|
26,956
|
|
19,010
|
Noninterest expense
|
$
|
23,335
|
|
22,027
|
|
22,087
|
|
21,830
|
|
21,958
|
|
89,280
|
|
86,170
|
Net
income before federal income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
tax expense
|
$
|
15,845
|
|
15,554
|
|
14,463
|
|
14,597
|
|
14,230
|
|
60,460
|
|
51,822
|
Net
income
|
$
|
13,317
|
|
12,600
|
|
11,715
|
|
11,824
|
|
11,573
|
|
49,456
|
|
42,024
|
Basic
earnings per share
|
$
|
0.81
|
|
0.77
|
|
0.71
|
|
0.72
|
|
0.70
|
|
3.01
|
|
2.53
|
Diluted
earnings per share
|
$
|
0.81
|
|
0.77
|
|
0.71
|
|
0.72
|
|
0.70
|
|
3.01
|
|
2.53
|
Average
basic shares outstanding
|
|
16,373,458
|
|
16,390,203
|
|
16,428,187
|
|
16,429,571
|
|
16,594,412
|
|
16,405,159
|
|
16,600,612
|
Average
diluted shares outstanding
|
|
16,375,740
|
|
16,393,078
|
|
16,434,714
|
|
16,435,176
|
|
16,600,108
|
|
16,409,135
|
|
16,606,416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
on average assets
|
|
1.45%
|
|
1.38%
|
|
1.33%
|
|
1.39%
|
|
1.39%
|
|
1.39%
|
|
1.28%
|
Return
on average equity
|
|
12.87%
|
|
12.39%
|
|
12.08%
|
|
12.75%
|
|
12.40%
|
|
12.52%
|
|
11.33%
|
Net
interest margin (fully tax-equivalent)
|
3.63%
|
|
3.71%
|
|
3.79%
|
|
3.88%
|
|
3.98%
|
|
3.75%
|
|
3.96%
|
Efficiency ratio
|
|
60.64%
|
|
57.54%
|
|
58.98%
|
|
58.56%
|
|
60.68%
|
|
58.93%
|
|
61.95%
|
Full-time equivalent employees
|
|
619
|
|
624
|
|
652
|
|
631
|
|
630
|
|
619
|
|
630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YIELD ON ASSETS /
COST OF FUNDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on
loans
|
|
5.01%
|
|
5.06%
|
|
5.18%
|
|
5.21%
|
|
5.08%
|
|
5.11%
|
|
5.01%
|
Yield on
securities
|
|
2.90%
|
|
2.99%
|
|
2.85%
|
|
2.82%
|
|
2.80%
|
|
2.89%
|
|
2.69%
|
Yield on
other interest-earning assets
|
1.65%
|
|
2.15%
|
|
2.38%
|
|
2.40%
|
|
2.20%
|
|
2.07%
|
|
1.79%
|
Yield on
total earning assets
|
|
4.61%
|
|
4.73%
|
|
4.85%
|
|
4.89%
|
|
4.80%
|
|
4.77%
|
|
4.68%
|
Yield on
total assets
|
|
4.31%
|
|
4.42%
|
|
4.53%
|
|
4.56%
|
|
4.46%
|
|
4.45%
|
|
4.35%
|
Cost of
deposits
|
|
0.79%
|
|
0.83%
|
|
0.85%
|
|
0.77%
|
|
0.63%
|
|
0.81%
|
|
0.56%
|
Cost of
borrowed funds
|
|
2.36%
|
|
2.35%
|
|
2.40%
|
|
2.43%
|
|
2.22%
|
|
2.39%
|
|
2.06%
|
Cost of
interest-bearing liabilities
|
|
1.47%
|
|
1.52%
|
|
1.55%
|
|
1.47%
|
|
1.26%
|
|
1.50%
|
|
1.08%
|
Cost of
funds (total earning assets)
|
|
0.98%
|
|
1.02%
|
|
1.06%
|
|
1.01%
|
|
0.82%
|
|
1.02%
|
|
0.72%
|
Cost of
funds (total assets)
|
|
0.91%
|
|
0.95%
|
|
0.99%
|
|
0.94%
|
|
0.76%
|
|
0.95%
|
|
0.67%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PURCHASE
ACCOUNTING ADJUSTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
portfolio - increase interest income
|
$
|
316
|
|
327
|
|
569
|
|
211
|
|
603
|
|
1,423
|
|
4,037
|
Trust
preferred - increase interest expense
|
$
|
171
|
|
171
|
|
171
|
|
171
|
|
171
|
|
684
|
|
684
|
Core
deposit intangible - increase overhead
|
$
|
397
|
|
397
|
|
450
|
|
477
|
|
477
|
|
1,721
|
|
2,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MORTGAGE BANKING
ACTIVITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
mortgage loans originated
|
$
|
110,611
|
|
132,852
|
|
80,205
|
|
44,932
|
|
44,448
|
|
368,600
|
|
214,246
|
Purchase
mortgage loans originated
|
$
|
49,407
|
|
61,839
|
|
41,986
|
|
29,891
|
|
29,729
|
|
183,123
|
|
143,809
|
Refinance mortgage loans originated
|
$
|
61,204
|
|
71,013
|
|
38,219
|
|
15,041
|
|
14,719
|
|
185,477
|
|
70,437
|
Total
mortgage loans sold
|
$
|
81,590
|
|
104,890
|
|
49,396
|
|
21,502
|
|
21,805
|
|
257,378
|
|
96,445
|
Net gain
on sale of mortgage loans
|
$
|
3,062
|
|
2,886
|
|
1,419
|
|
698
|
|
829
|
|
8,065
|
|
3,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible
equity to tangible assets
|
|
10.15%
|
|
9.67%
|
|
9.82%
|
|
9.41%
|
|
9.68%
|
|
10.15%
|
|
9.68%
|
Tier 1
leverage capital ratio
|
|
11.28%
|
|
11.08%
|
|
11.17%
|
|
11.16%
|
|
11.41%
|
|
11.28%
|
|
11.41%
|
Common
equity risk-based capital ratio
|
11.00%
|
|
10.53%
|
|
10.47%
|
|
10.46%
|
|
10.41%
|
|
11.00%
|
|
10.41%
|
Tier 1
risk-based capital ratio
|
|
12.36%
|
|
11.87%
|
|
11.82%
|
|
11.84%
|
|
11.80%
|
|
12.36%
|
|
11.80%
|
Total
risk-based capital ratio
|
|
13.09%
|
|
12.60%
|
|
12.55%
|
|
12.56%
|
|
12.50%
|
|
13.09%
|
|
12.50%
|
Tier 1
capital
|
$
|
405,148
|
|
395,010
|
|
388,788
|
|
379,334
|
|
373,721
|
|
405,148
|
|
373,721
|
Tier 1
plus tier 2 capital
|
$
|
429,038
|
|
419,424
|
|
412,841
|
|
402,469
|
|
396,102
|
|
429,038
|
|
396,102
|
Total
risk-weighted assets
|
$
|
3,276,754
|
|
3,327,723
|
|
3,289,958
|
|
3,204,295
|
|
3,167,655
|
|
3,276,754
|
|
3,167,655
|
Book
value per common share
|
$
|
25.36
|
|
24.93
|
|
24.34
|
|
23.37
|
|
22.70
|
|
25.36
|
|
22.70
|
Tangible
book value per common share
|
$
|
22.12
|
|
21.64
|
|
21.05
|
|
20.05
|
|
19.37
|
|
22.12
|
|
19.37
|
Cash
dividend per common share
|
$
|
0.27
|
|
0.27
|
|
0.26
|
|
0.26
|
|
1.00
|
|
1.06
|
|
1.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET
QUALITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
loan charge-offs
|
$
|
112
|
|
519
|
|
78
|
|
174
|
|
354
|
|
883
|
|
1,450
|
Recoveries
|
$
|
287
|
|
180
|
|
96
|
|
79
|
|
1,042
|
|
642
|
|
3,229
|
Net loan
charge-offs (recoveries)
|
$
|
(175)
|
|
339
|
|
(18)
|
|
95
|
|
(688)
|
|
241
|
|
(1,779)
|
Net loan
charge-offs to average loans
|
(0.02%)
|
|
0.05%
|
|
(0.01%)
|
|
0.01%
|
|
(0.10%)
|
|
0.01%
|
|
(0.07%)
|
Allowance for loan losses
|
$
|
23,889
|
|
24,414
|
|
24,053
|
|
23,135
|
|
22,380
|
|
23,889
|
|
22,380
|
Allowance to originated loans
|
|
0.89%
|
|
0.88%
|
|
0.89%
|
|
0.89%
|
|
0.88%
|
|
0.89%
|
|
0.88%
|
Nonperforming loans
|
$
|
2,284
|
|
2,644
|
|
3,505
|
|
4,138
|
|
4,141
|
|
2,284
|
|
4,141
|
Other
real estate/repossessed assets
|
$
|
452
|
|
243
|
|
446
|
|
396
|
|
811
|
|
452
|
|
811
|
Nonperforming loans to total loans
|
|
0.08%
|
|
0.09%
|
|
0.12%
|
|
0.15%
|
|
0.15%
|
|
0.08%
|
|
0.15%
|
Nonperforming assets to total assets
|
|
0.08%
|
|
0.08%
|
|
0.11%
|
|
0.13%
|
|
0.15%
|
|
0.08%
|
|
0.15%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONPERFORMING
ASSETS - COMPOSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
development
|
$
|
34
|
|
32
|
|
33
|
|
45
|
|
0
|
|
34
|
|
0
|
Construction
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Owner occupied /
rental
|
$
|
2,364
|
|
2,576
|
|
3,225
|
|
3,404
|
|
3,555
|
|
2,364
|
|
3,555
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
development
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Construction
|
$
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Owner
occupied
|
$
|
326
|
|
240
|
|
642
|
|
791
|
|
1,363
|
|
326
|
|
1,363
|
Non-owner
occupied
|
$
|
0
|
|
26
|
|
26
|
|
62
|
|
0
|
|
0
|
|
0
|
Non-real
estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
assets
|
$
|
0
|
|
0
|
|
2
|
|
207
|
|
17
|
|
0
|
|
17
|
Consumer
assets
|
$
|
12
|
|
13
|
|
23
|
|
25
|
|
17
|
|
12
|
|
17
|
Total
nonperforming assets
|
|
2,736
|
|
2,887
|
|
3,951
|
|
4,534
|
|
4,952
|
|
2,736
|
|
4,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONPERFORMING
ASSETS - RECON
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
2,887
|
|
3,951
|
|
4,534
|
|
4,952
|
|
5,800
|
|
4,952
|
|
9,403
|
Additions - originated loans
|
$
|
30
|
|
339
|
|
26
|
|
539
|
|
1,247
|
|
934
|
|
3,972
|
Other
activity
|
$
|
135
|
|
57
|
|
34
|
|
0
|
|
0
|
|
226
|
|
51
|
Return
to performing status
|
$
|
0
|
|
(126)
|
|
0
|
|
0
|
|
0
|
|
(126)
|
|
(175)
|
Principal payments
|
$
|
(232)
|
|
(1,014)
|
|
(512)
|
|
(382)
|
|
(1,836)
|
|
(2,140)
|
|
(5,028)
|
Sale
proceeds
|
$
|
(36)
|
|
(253)
|
|
(74)
|
|
(429)
|
|
(128)
|
|
(792)
|
|
(2,381)
|
Loan
charge-offs
|
$
|
(48)
|
|
(59)
|
|
(36)
|
|
(146)
|
|
(57)
|
|
(289)
|
|
(707)
|
Valuation write-downs
|
$
|
0
|
|
(8)
|
|
(21)
|
|
0
|
|
(74)
|
|
(29)
|
|
(183)
|
Ending
balance
|
$
|
2,736
|
|
2,887
|
|
3,951
|
|
4,534
|
|
4,952
|
|
2,736
|
|
4,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOAN PORTFOLIO
COMPOSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial &
industrial
|
$
|
846,551
|
|
882,747
|
|
881,196
|
|
839,207
|
|
822,723
|
|
846,551
|
|
822,723
|
Land development &
construction
|
$
|
56,118
|
|
48,418
|
|
45,158
|
|
45,892
|
|
44,885
|
|
56,118
|
|
44,885
|
Owner occupied comm'l
R/E
|
$
|
579,004
|
|
567,267
|
|
556,868
|
|
551,517
|
|
548,619
|
|
579,004
|
|
548,619
|
Non-owner occupied
comm'l R/E
|
$
|
835,345
|
|
883,079
|
|
852,844
|
|
835,679
|
|
816,282
|
|
835,345
|
|
816,282
|
Multi-family &
residential rental
|
$
|
124,526
|
|
126,855
|
|
128,489
|
|
127,903
|
|
127,597
|
|
124,526
|
|
127,597
|
Total commercial
|
$
|
2,441,544
|
|
2,508,366
|
|
2,464,555
|
|
2,400,198
|
|
2,360,106
|
|
2,441,544
|
|
2,360,106
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 family
mortgages
|
$
|
339,749
|
|
346,095
|
|
335,618
|
|
316,315
|
|
307,540
|
|
339,749
|
|
307,540
|
Home equity &
other consumer
|
$
|
75,374
|
|
78,552
|
|
81,320
|
|
83,126
|
|
85,439
|
|
75,374
|
|
85,439
|
Total retail
|
$
|
415,123
|
|
424,647
|
|
416,938
|
|
399,441
|
|
392,979
|
|
415,123
|
|
392,979
|
Total loans
|
$
|
2,856,667
|
|
2,933,013
|
|
2,881,493
|
|
2,799,639
|
|
2,753,085
|
|
2,856,667
|
|
2,753,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
END OF PERIOD
BALANCES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
2,856,667
|
|
2,933,013
|
|
2,881,493
|
|
2,799,639
|
|
2,753,085
|
|
2,856,667
|
|
2,753,085
|
Securities
|
$
|
352,657
|
|
363,535
|
|
365,926
|
|
355,878
|
|
353,388
|
|
352,657
|
|
353,388
|
Other
interest-earning assets
|
$
|
180,469
|
|
144,263
|
|
92,750
|
|
168,572
|
|
10,482
|
|
180,469
|
|
10,482
|
Total
earning assets (before allowance)
|
$
|
3,389,793
|
|
3,440,811
|
|
3,340,169
|
|
3,324,089
|
|
3,116,955
|
|
3,389,793
|
|
3,116,955
|
Total
assets
|
$
|
3,632,915
|
|
3,710,380
|
|
3,576,139
|
|
3,551,754
|
|
3,363,907
|
|
3,632,915
|
|
3,363,907
|
Noninterest-bearing deposits
|
$
|
924,916
|
|
967,189
|
|
918,581
|
|
857,734
|
|
889,784
|
|
924,916
|
|
889,784
|
Interest-bearing deposits
|
$
|
1,765,468
|
|
1,799,902
|
|
1,700,628
|
|
1,753,240
|
|
1,573,924
|
|
1,765,468
|
|
1,573,924
|
Total
deposits
|
$
|
2,690,384
|
|
2,767,091
|
|
2,619,209
|
|
2,610,974
|
|
2,463,708
|
|
2,690,384
|
|
2,463,708
|
Total
borrowed funds
|
$
|
506,301
|
|
517,523
|
|
543,098
|
|
544,566
|
|
513,220
|
|
506,301
|
|
513,220
|
Total
interest-bearing liabilities
|
$
|
2,271,769
|
|
2,317,425
|
|
2,243,726
|
|
2,297,806
|
|
2,087,144
|
|
2,271,769
|
|
2,087,144
|
Shareholders' equity
|
$
|
416,561
|
|
407,200
|
|
400,117
|
|
383,729
|
|
375,249
|
|
416,561
|
|
375,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE
BALANCES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
2,871,674
|
|
2,903,161
|
|
2,848,343
|
|
2,787,430
|
|
2,706,617
|
|
2,853,021
|
|
2,628,907
|
Securities
|
$
|
362,347
|
|
363,394
|
|
357,718
|
|
354,459
|
|
343,597
|
|
359,512
|
|
343,886
|
Other
interest-earning assets
|
$
|
176,034
|
|
118,314
|
|
94,616
|
|
67,915
|
|
30,564
|
|
114,527
|
|
69,559
|
Total
earning assets (before allowance)
|
$
|
3,410,055
|
|
3,384,869
|
|
3,300,677
|
|
3,209,804
|
|
3,080,778
|
|
3,327,060
|
|
3,042,352
|
Total
assets
|
$
|
3,650,087
|
|
3,622,168
|
|
3,529,598
|
|
3,441,774
|
|
3,312,648
|
|
3,561,645
|
|
3,272,637
|
Noninterest-bearing deposits
|
$
|
948,602
|
|
930,851
|
|
875,645
|
|
852,247
|
|
905,065
|
|
902,180
|
|
863,384
|
Interest-bearing deposits
|
$
|
1,759,377
|
|
1,741,563
|
|
1,719,433
|
|
1,668,563
|
|
1,579,632
|
|
1,722,535
|
|
1,633,150
|
Total
deposits
|
$
|
2,707,979
|
|
2,672,414
|
|
2,595,078
|
|
2,520,810
|
|
2,484,697
|
|
2,624,715
|
|
2,496,534
|
Total
borrowed funds
|
$
|
509,932
|
|
529,590
|
|
530,802
|
|
532,864
|
|
434,365
|
|
525,745
|
|
390,193
|
Total
interest-bearing liabilities
|
$
|
2,269,309
|
|
2,271,153
|
|
2,250,235
|
|
2,201,427
|
|
2,013,997
|
|
2,248,280
|
|
2,023,343
|
Shareholders' equity
|
$
|
410,593
|
|
403,350
|
|
389,133
|
|
376,103
|
|
370,175
|
|
394,913
|
|
370,796
|
View original
content:http://www.prnewswire.com/news-releases/mercantile-bank-corporation-announces-strong-fourth-quarter-and-full-year-2019-results-300989646.html
SOURCE Mercantile Bank Corporation