Mercantile Bank Corporation Announces Strong Fourth Quarter and Full Year 2018 Results

GRAND RAPIDS, Mich., Jan. 22, 2019 /PRNewswire/ -- Mercantile Bank Corporation MBWM ("Mercantile") reported net income of $11.6 million, or $0.70 per diluted share, for the fourth quarter of 2018, compared with net income of $8.0 million, or $0.48 per diluted share, for the respective prior-year period.  For the full year 2018, Mercantile reported net income of $42.0 million, or $2.53 per diluted share, compared with net income of $31.3 million, or $1.90 per diluted share, for the full year 2017.

Net income during the fourth quarter and full year 2018 benefited from a reduction in the corporate federal income tax rate, which was lowered from 35 percent to 21 percent on January 1, 2018, as a result of the enactment of the Tax Cuts and Jobs Act.  Mercantile's effective tax rate was 18.7 percent and 18.9 percent during the fourth quarter and full year 2018, respectively, down from 35.9 percent and 32.1 percent during the respective prior-year periods.

The fourth quarter and full year were highlighted by:

  • Robust earnings and capital position
  • Strong and stable net interest margin
  • Solid growth in a variety of fee income categories
  • Controlled overhead costs
  • Strong asset quality, as depicted by low levels of nonperforming assets and loans in the 30- to 89-days delinquent category
  • Net loan growth of $195 million, or nearly 8 percent, during the full year
  • New commercial term loan originations of approximately $136 million during the fourth quarter and $508 million during the full year
  • Sustained strength in commercial loan pipeline
  • Announced first quarter 2019 regular cash dividend of $0.26 per common share, an increase of 4.0 percent from the regular cash dividend paid during the fourth quarter of 2018
  • Mercantile Bank of Michigan received a Community Reinvestment Act rating of "Outstanding" for the fourth consecutive examination

"We are very pleased that the solid operating performance we demonstrated during the first nine months of 2018 continued during the fourth quarter," said Robert B. Kaminski, Jr., President and Chief Executive Officer of Mercantile.  "Our financial performance exhibited throughout the year reflects a solid net interest margin, strong asset quality, increases in certain fee income categories, and controlled overhead costs.  In spite of continuing competitive pressures in our markets, we were able to record robust growth in the loan portfolio.  Based on our current commercial and residential loan pipelines, we are confident that solid loan growth can be realized in future periods.  In addition to being pleased with our ongoing financial strength, we are proud to report that Mercantile Bank of Michigan once again received an "Outstanding" Community Reinvestment Act rating, which depicts our continuing focus on meeting the needs of the communities we serve."  

Operating Results

Total revenue, which consists of net interest income and noninterest income, was $36.2 million during the fourth quarter of 2018, up $3.3 million, or 10.0 percent, from the prior-year fourth quarter.  Net interest income during the fourth quarter of 2018 was $30.8 million, up $2.4 million, or 8.5 percent, from the fourth quarter of 2017, primarily reflecting a 22 basis point increase in the net interest margin and a 6.8 percent increase in average total loans.  Total revenue was $139 million during the full year 2018, up $10.3 million, or 8.0 percent, from 2017.  Net interest income was $120 million in 2018, up $10.3 million, or 9.4 percent, from the prior year, mainly reflecting a 17 basis point increase in the net interest margin and a 5.9 percent increase in average total loans.

The net interest margin was 3.98 percent in the fourth quarter of 2018, up from 3.76 percent in the prior-year fourth quarter.  The improved net interest margin depicts a higher yield on average earning assets, mainly reflecting an increased yield on commercial loans and a change in earning asset mix, which more than offset a higher cost of funds, primarily resulting from increased costs of certain non-time deposit accounts, time deposits, and borrowed funds.  The increased yield on commercial loans primarily reflects the impact of higher interest rates on variable-rate commercial loans, which comprised about 55 percent of total commercial loans, stemming from the Federal Open Market Committee raising the targeted federal funds rate by 25 basis points in each of the past five quarters.  The change in earning asset mix mainly reflects loan growth and a reduction in interest-earning deposit balances.  On average, higher-yielding loans represented 87.9 percent of earning assets during the fourth quarter of 2018, up from 84.0 percent during the prior-year fourth quarter, while lower-yielding interest-earning deposit balances represented 1.0 percent of earning assets during the fourth quarter of 2018, down from 4.6 percent during the fourth quarter of 2017. 

The net interest margin was 3.96 percent in 2018, up from 3.79 percent in 2017.  The increased net interest margin reflects a higher yield on average earning assets, primarily depicting an improved yield on commercial loans, which more than offset a higher cost of funds, mainly resulting from increased costs of certain non-time deposit accounts, time deposits, and borrowed funds.  The increased yield on commercial loans primarily reflects the impact of higher interest rates on variable-rate commercial loans stemming from the Federal Open Market Committee raising the targeted federal funds rate by 25 basis points on four occasions during 2018 and three occasions during 2017.

Net interest income and the net interest margin during 2018 and 2017 were also affected by purchase accounting accretion and amortization entries associated with the fair value measurements recorded effective June 1, 2014.  Increases in interest income on loans totaling $4.0 million and $4.6 million were recorded during 2018 and 2017, respectively.  Purchased loan accretion amounts vary from period to period as a result of periodic cash flow re-estimations, loan payoffs, and payment performance.  An increase in interest expense on subordinated debentures totaling $0.7 million was recorded during both 2018 and 2017. 

Mercantile recorded no provision expense during the fourth quarter of 2018, compared to a provision expense of $0.6 million during the prior-year fourth quarter.  During 2018, Mercantile recorded a provision for loan losses of $1.1 million, compared to a provision of $3.0 million during 2017.  No provision expense was recorded during the fourth quarter of 2018 as the positive impact of net loan recoveries offset increased reserve allocations necessitated by loan growth and changes in loan loss reserve environmental factors.  The provision expense recorded during 2018 and 2017 primarily reflects ongoing loan growth and periodic adjustments to loan loss reserve environmental factors.

Noninterest income during the fourth quarter of 2018 was $5.4 million.  Noninterest income during the quarter included a one-time $0.9 million accounting adjustment related to mortgage banking activities in prior years; excluding this adjustment, noninterest income decreased slightly in the fourth quarter of 2018 compared to the prior-year fourth quarter.    Noninterest income totaled $19.0 million during both 2018 and 2017.  Noninterest income during 2018 included the previously mentioned mortgage banking activity adjustment, while noninterest income during 2017 included a $1.4 million bank owned life insurance death benefit claim; excluding these transactions, noninterest income increased $0.5 million, or 2.9 percent, during 2018 compared to 2017.  Growth in credit and debit card fees, payroll processing revenue, and treasury management income during the fourth quarter of 2018 was more than offset by a decline in mortgage banking activity income, while growth in these revenue streams during the full year 2018 surpassed a decrease in mortgage banking activity income.  Although Mercantile believes its market share increased during 2018, mortgage banking activity income declined during the 2018 periods compared to the respective 2017 periods primarily due to the impacts of a limited supply of homes for sale in the Bank's markets and lower refinance activity due to rising residential mortgage loan interest rates.

Noninterest expense totaled $22.0 million during the fourth quarter of 2018, up $2.1 million, or 10.6 percent, from the prior-year fourth quarter.  Noninterest expense during 2018 was $86.2 million, an increase of $6.5 million, or 8.1 percent, from the $79.7 million expensed during 2017.  The higher level of expense in the 2018 periods primarily resulted from increased salary costs, mainly reflecting annual employee merit pay increases and higher stock-based compensation expense.  In addition, a one-time pay increase for all hourly employees that totaled $1.6 million on an annualized basis became effective on April 1, 2018, contributing to the higher level of noninterest expense.

Mr. Kaminski continued, "As expected, our ongoing emphasis on disciplined loan pricing and sound underwriting, along with a beneficial balance sheet structure, produced a healthy and steady net interest margin throughout 2018.  Our improved yield on earning assets, mainly reflecting increased interest rates on variable-rate commercial loans, more than offset a higher cost of funds stemming from the continuing rising interest rate environment.  We anticipate that any further interest rate hikes initiated by the Federal Open Market Committee will have a positive impact on our net interest income in light of our current balance sheet structure.  We are pleased with the increases in certain fee income categories and remain committed to controlling overhead costs.  Although our mortgage banking activity income was hampered in 2018 by a lack of inventory in our markets and lower refinance activity, we are hopeful that our current loan pipeline, prominent level of pre-qualifications, and heightened efforts to sell a greater percentage of originated mortgage loans should result in solid levels of income in future periods."

Balance Sheet

As of December 31, 2018, total assets were $3.36 billion, up $77.2 million, or 2.3 percent, from December 31, 2017.  Total loans increased $195 million, or 7.6 percent, to $2.75 billion over the same time period.  Approximately $136 million and $508 million in commercial term loans to new and existing borrowers were originated during the fourth quarter and full year of 2018, respectively, as ongoing sales and relationship-building efforts resulted in increased lending opportunities.  As of December 31, 2018, unfunded commitments on commercial construction and development loans totaled approximately $170 million, which are expected to be largely funded over the next 12 to 18 months. 

Ray Reitsma, President of Mercantile Bank of Michigan, noted, "We are very pleased with the net loan growth achieved during 2018, along with the level of new commercial term loan originations, which exceeded $500 million for the fourth consecutive year.  Net loan growth during 2018 reflects higher levels of commercial loans and residential mortgage loans.  All commercial loan segments, most notably the commercial and industrial loan portfolio, grew during the year.  The solid growth in commercial loans depicts our ongoing efforts to identify new lending opportunities and meet the credit needs of our existing customers, while growth in residential mortgage loans reflects the continuing success of strategic initiatives that were centered on increasing our market penetration.  We remain committed to growing the loan portfolio with an emphasis on risk-based pricing and sound underwriting parameters.  In light of our current commercial loan and residential loan pipelines, additional lending opportunities conveyed by commercial lenders, and the level of residential mortgage loan pre-qualifications, we believe that we can grow the commercial and residential loan portfolios in future periods."

As of December 31, 2018, commercial and industrial loans and owner-occupied commercial real estate loans combined represented approximately 58 percent of total commercial loans. 

Total deposits at December 31, 2018 were $2.46 billion, down $58.7 million from December 31, 2017.  Local deposits were down $69.2 million, and out-of-area deposits were up $10.5 million since year-end 2017.  The decrease in local deposits during the current year mainly depicts the managed reduction of public unit time deposits given the strong competition and resulting relatively high interest rates in Mercantile's markets and declines in certain personal account products stemming from depositors using funds for personal investments and expenditures.  Noninterest-bearing checking accounts reflected solid growth during 2018 primarily due to new commercial loan relationships.  Wholesale funds were $474 million, or approximately 16 percent of total funds, as of December 31, 2018, compared to $323 million, or about 11 percent of total funds, as of December 31, 2017. 

Asset Quality

Nonperforming assets at December 31, 2018, were $5.0 million, or 0.2 percent of total assets, compared to $9.4 million, or 0.3 percent of total assets, at December 31, 2017.  The decline in nonperforming assets during 2018 primarily reflects successful loan collection efforts and sales of bank-owned properties that were no longer being used or considered for use as bank facilities.  The level of past due loans remains nominal, and loan relationships on the internal watch list generally declined in number and dollar volume during 2018.  Net loan recoveries were $0.7 million during the fourth quarter of 2018 and $1.8 million for the full year 2018.  Net loan charge-offs were $0.3 million during the fourth quarter of 2017 and $1.4 million for the full year 2017, representing 0.05 percent and 0.06 percent of average total loans, respectively.

Capital Position

Shareholders' equity totaled $375 million as of December 31, 2018, an increase of $9.4 million from year-end 2017.  The Bank's capital position remains above "well-capitalized" with a total risk-based capital ratio of 12.3 percent as of December 31, 2018, compared to 12.6 percent at December 31, 2017.  At December 31, 2018, the Bank had approximately $72 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a "well-capitalized" institution.  Mercantile reported 16,534,256 total shares outstanding at December 31, 2018.

As part of a $20 million common stock repurchase program announced in January of 2015, which was expanded by $15 million in early 2016, Mercantile repurchased approximately 200,000 shares for $5.9 million, or a weighted average all-in cost per share of $29.73, during the fourth quarter of 2018; no shares were repurchased during the first nine months of 2018.  As of December 31, 2018, future share repurchases totaling $9.6 million could be made under the program.

Mr. Kaminski concluded, "Our strong financial performance during 2018 enabled us to reward shareholders with the increased payment of regular quarterly cash dividends and a special dividend during the fourth quarter.  As demonstrated by our continuing cash dividend program, including the announcement of an increased first quarter 2019 regular cash dividend earlier today, we remain dedicated to building shareholder value.  Our relationship-based banking philosophy, which entails meeting customers' needs through the efficient delivery of a wide array of products and services, continues to attract new clients and has allowed us to retain existing customers.  We believe that our sound financial condition positions us to meet growth objectives and enhance shareholder value in future periods."

About Mercantile Bank Corporation

Based in Grand Rapids, Michigan, Mercantile Bank Corporation is the bank holding company for Mercantile Bank of Michigan.  Mercantile provides banking services to businesses, individuals and governmental units, and differentiates itself on the basis of service quality and the expertise of its banking staff. Mercantile has assets of approximately $3.4 billion and operates 47 banking offices.  Mercantile Bank Corporation's common stock is listed on the NASDAQ Global Select Market under the symbol "MBWM."

Forward-Looking Statements

This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and nontraditional competitors; changes in banking regulation or actions by bank regulators; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; changes in the national and local economies; and other factors, including risk factors, disclosed from time to time in filings made by Mercantile with the Securities and Exchange Commission. Mercantile undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

FOR FURTHER INFORMATION:







            Robert B. Kaminski, Jr.                                       

Charles Christmas

            President and CEO                                               

Executive Vice President and CFO

            616-726-1502                                                         

616-726-1202

            rkaminski@mercbank.com                                   

cchristmas@mercbank.com

 

Mercantile Bank Corporation













Fourth Quarter 2018 Results













MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)



















DECEMBER 31,



DECEMBER 31,



DECEMBER 31,





2018



2017



2016

ASSETS













   Cash and due from banks

$

64,872,000

$

55,127,000

$

50,200,000

   Interest-earning deposits



10,482,000



144,974,000



133,396,000

      Total cash and cash equivalents



75,354,000



200,101,000



183,596,000















   Securities available for sale



337,366,000



335,744,000



328,060,000

   Federal Home Loan Bank stock



16,022,000



11,036,000



8,026,000















   Loans



2,753,085,000



2,558,552,000



2,378,620,000

   Allowance for loan losses



(22,380,000)



(19,501,000)



(17,961,000)

      Loans, net



2,730,705,000



2,539,051,000



2,360,659,000















   Premises and equipment, net



48,321,000



46,034,000



45,456,000

   Bank owned life insurance



69,647,000



68,689,000



67,198,000

   Goodwill



49,473,000



49,473,000



49,473,000

   Core deposit intangible



5,561,000



7,600,000



9,957,000

   Other assets



31,458,000



28,976,000



30,146,000















      Total assets

$

3,363,907,000

$

3,286,704,000

$

3,082,571,000





























LIABILITIES AND SHAREHOLDERS' EQUITY













   Deposits:













      Noninterest-bearing

$

889,784,000

$

866,380,000

$

810,600,000

      Interest-bearing



1,573,924,000



1,655,985,000



1,564,385,000

         Total deposits



2,463,708,000



2,522,365,000



2,374,985,000















   Securities sold under agreements to repurchase



103,519,000



118,748,000



131,710,000

   Federal Home Loan Bank advances



350,000,000



220,000,000



175,000,000

   Subordinated debentures



46,199,000



45,517,000



44,835,000

   Accrued interest and other liabilities



25,232,000



14,204,000



15,230,000

         Total liabilities



2,988,658,000



2,920,834,000



2,741,760,000















SHAREHOLDERS' EQUITY













   Common stock



308,005,000



309,772,000



305,488,000

   Retained earnings



75,483,000



60,132,000



40,904,000

   Accumulated other comprehensive income/(loss)



(8,239,000)



(4,034,000)



(5,581,000)

      Total shareholders' equity



375,249,000



365,870,000



340,811,000















      Total liabilities and shareholders' equity

$

3,363,907,000

$

3,286,704,000

$

3,082,571,000















 

 

Mercantile Bank Corporation

























Fourth Quarter 2018 Results

























MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF INCOME

(Unaudited)





























THREE MONTHS ENDED

THREE MONTHS ENDED

TWELVE MONTHS ENDED

TWELVE MONTHS ENDED



December 31, 2018

December 31, 2017

December 31, 2018

December 31, 2017

INTEREST INCOME

























   Loans, including fees

$

34,676,000



$

30,411,000



$

131,763,000



$

116,816,000



   Investment securities



2,347,000





2,036,000





8,975,000





7,631,000



   Other interest-earning assets



172,000





455,000





1,243,000





1,096,000



      Total interest income



37,195,000





32,902,000





141,981,000





125,543,000





























INTEREST EXPENSE

























   Deposits



3,949,000





2,819,000





13,869,000





9,362,000



   Short-term borrowings



92,000





48,000





273,000





190,000



   Federal Home Loan Bank advances



1,513,000





966,000





4,647,000





3,657,000



   Other borrowed money



823,000





667,000





3,110,000





2,586,000



      Total interest expense



6,377,000





4,500,000





21,899,000





15,795,000





























      Net interest income



30,818,000





28,402,000





120,082,000





109,748,000





























Provision for loan losses



0





600,000





1,100,000





2,950,000





























      Net interest income after

























         provision for loan losses



30,818,000





27,802,000





118,982,000





106,798,000





























NONINTEREST INCOME

























   Service charges on accounts



1,099,000





1,085,000





4,358,000





4,233,000



   Credit and debit card income



1,399,000





1,263,000





5,354,000





4,760,000



   Mortgage banking income



994,000





1,188,000





4,109,000





4,421,000



   Payroll services



335,000





323,000





1,462,000





1,305,000



   Earnings on bank owned life insurance

318,000





337,000





1,287,000





2,731,000



   Other income



1,225,000





307,000





2,440,000





1,551,000



      Total noninterest income



5,370,000





4,503,000





19,010,000





19,001,000





























NONINTEREST EXPENSE

























   Salaries and benefits



12,884,000





11,601,000





50,910,000





45,397,000



   Occupancy



1,662,000





1,479,000





6,711,000





6,186,000



   Furniture and equipment



681,000





543,000





2,470,000





2,168,000



   Data processing costs



2,141,000





2,067,000





8,557,000





8,222,000



   Other expense



4,590,000





4,158,000





17,522,000





17,743,000



      Total noninterest expense



21,958,000





19,848,000





86,170,000





79,716,000





























      Income before federal income

























         tax expense



14,230,000





12,457,000





51,822,000





46,083,000





























Federal income tax expense



2,657,000





4,478,000





9,798,000





14,809,000





























      Net Income

$

11,573,000



$

7,979,000



$

42,024,000



$

31,274,000





























   Basic earnings per share



$0.70





$0.48





$2.53





$1.90



   Diluted earnings per share



$0.70





$0.48





$2.53





$1.90





























   Average basic shares outstanding



16,594,412





16,525,625





16,600,612





16,478,968



   Average diluted shares outstanding



16,600,108





16,536,225





16,606,416





16,489,070





























 

 

Mercantile Bank Corporation





























Fourth Quarter 2018 Results





























MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)



































Quarterly



Year-To-Date

(dollars in thousands except per share data)

2018



2018



2018



2018



2017













4th Qtr



3rd Qtr



2nd Qtr



1st Qtr



4th Qtr



2018



2017

EARNINGS





























   Net interest income

$

30,818



29,840



29,225



30,199



28,402



120,082



109,748

   Provision for loan losses

$

0



400



700



0



600



1,100



2,950

   Noninterest income

$

5,370



4,708



4,550



4,381



4,503



19,010



19,001

   Noninterest expense

$

21,958



21,650



21,414



21,147



19,848



86,170



79,716

   Net income before federal income





























      tax expense

$

14,230



12,498



11,661



13,433



12,457



51,822



46,083

   Net income

$

11,573



10,123



9,446



10,881



7,979



42,024



31,274

   Basic earnings per share

$

0.70



0.61



0.57



0.66



0.48



2.53



1.90

   Diluted earnings per share

$

0.70



0.61



0.57



0.66



0.48



2.53



1.90

   Average basic shares outstanding



16,594,412



16,611,411



16,601,400



16,595,115



16,525,625



16,600,612



16,478,968

   Average diluted shares outstanding



16,600,108



16,619,295



16,610,819



16,604,325



16,536,225



16,606,416



16,489,070































PERFORMANCE RATIOS





























   Return on average assets



1.39%



1.22%



1.17%



1.36%



0.97%



1.28%



1.00%

   Return on average equity



12.40%



10.64%



10.25%



12.07%



8.70%



11.33%



8.82%

   Net interest margin (fully tax-equivalent)

3.98%



3.87%



3.92%



4.06%



3.76%



3.96%



3.79%

   Efficiency ratio



60.68%



62.67%



63.40%



61.15%



60.32%



61.95%



61.92%

   Full-time equivalent employees



630



637



667



640



641



630



641































YIELD ON ASSETS / COST OF FUNDS





























   Yield on loans



5.08%



4.91%



4.92%



5.14%



4.76%



5.01%



4.70%

   Yield on securities



2.80%



2.70%



2.64%



2.61%



2.60%



2.69%



2.47%

   Yield on other interest-earning assets

2.20%



1.98%



1.80%



1.52%



1.29%



1.79%



1.21%

   Yield on total earning assets



4.80%



4.60%



4.60%



4.70%



4.35%



4.68%



4.33%

   Yield on total assets



4.46%



4.28%



4.27%



4.37%



4.04%



4.35%



4.02%

   Cost of deposits



0.63%



0.56%



0.53%



0.50%



0.45%



0.56%



0.39%

   Cost of borrowed funds



2.22%



2.14%



2.01%



1.83%



1.74%



2.06%



1.68%

   Cost of interest-bearing liabilities



1.26%



1.11%



1.02%



0.94%



0.88%



1.08%



0.80%

   Cost of funds (total earning assets)



0.82%



0.73%



0.68%



0.64%



0.59%



0.72%



0.54%

   Cost of funds (total assets)



0.76%



0.68%



0.63%



0.60%



0.55%



0.67%



0.50%































PURCHASE ACCOUNTING ADJUSTMENTS

























   Loan portfolio - increase interest income

$

603



386



777



2,271



683



4,037



4,608

   Trust preferred - increase interest expense

$

171



171



171



171



171



684



684

   Core deposit intangible - increase overhead

$

477



477



530



556



556



2,040



2,357































MORTGAGE BANKING ACTIVITY





























   Total mortgage loans originated

$

44,448



66,829



62,032



40,937



62,526



214,246



223,224

   Purchase mortgage loans originated

$

29,729



47,704



41,239



25,137



33,958



143,809



135,850

   Refinance mortgage loans originated

$

14,719



19,125



20,793



15,800



28,568



70,437



87,374

   Total mortgage loans sold

$

21,805



30,713



24,114



19,813



26,254



96,445



107,946

   Net gain on sale of mortgage loans

$

829



1,116



851



729



1,051



3,525



3,926































CAPITAL





























   Tangible equity to tangible assets



9.68%



9.98%



9.87%



9.63%



9.56%



9.68%



9.56%

   Tier 1 leverage capital ratio



11.41%



11.76%



11.81%



11.50%



11.24%



11.41%



11.28%

   Common equity risk-based capital ratio

10.41%



10.93%



11.03%



11.04%



10.71%



10.41%



10.76%

   Tier 1 risk-based capital ratio



11.80%



12.35%



12.49%



12.52%



12.19%



11.80%



12.23%

   Total risk-based capital ratio



12.50%



13.05%



13.19%



13.20%



12.85%



12.50%



12.89%

   Tier 1 capital

$

373,721



382,829



375,167



367,546



359,047



373,721



360,533

   Tier 1 plus tier 2 capital

$

396,102



404,521



396,334



387,520



378,548



396,102



380,035

   Total risk-weighted assets

$

3,167,655



3,100,158



3,003,778



2,935,367



2,946,527



3,167,655



2,948,013

   Book value per common share

$

22.70



22.84



22.57



22.19



22.05



22.70



22.05

   Tangible book value per common share

$

19.37



19.50



19.20



18.79



18.61



19.37



18.61

   Cash dividend per common share

$

1.00



0.24



0.22



0.22



0.19



1.68



0.74































ASSET QUALITY





























   Gross loan charge-offs

$

354



169



273



654



920



1,450



3,235

   Recoveries

$

1,042



294



766



1,127



628



3,229



1,825

   Net loan charge-offs (recoveries)

$

(688)



(125)



(493)



(473)



292



(1,779)



1,410

   Net loan charge-offs to average loans

(0.10%)



(0.02%)



(0.08%)



(0.08%)



0.05%



(0.07%)



0.06%

   Allowance for loan losses

$

22,380



21,692



21,167



19,974



19,501



22,380



19,501

   Allowance to originated loans



0.88%



0.88%



0.89%



0.87%



0.88%



0.88%



0.88%

   Nonperforming loans

$

4,141



4,852



4,965



5,742



7,143



4,141



7,143

   Other real estate/repossessed assets

$

811



948



842



2,384



2,260



811



2,260

   Nonperforming loans to total loans



0.15%



0.18%



0.19%



0.23%



0.28%



0.15%



0.28%

   Nonperforming assets to total assets



0.15%



0.18%



0.18%



0.25%



0.29%



0.15%



0.29%































NONPERFORMING ASSETS - COMPOSITION

























   Residential real estate:





























      Land development

$

0



0



0



0



0



0



0

      Construction

$

0



0



0



0



0



0



0

      Owner occupied / rental

$

3,555



3,908



3,650



3,571



3,574



3,555



3,574

   Commercial real estate:





























      Land development

$

0



0



0



0



35



0



35

      Construction

$

0



0



0



0



0



0



0

      Owner occupied  

$

1,363



1,543



1,957



3,913



4,272



1,363



4,272

      Non-owner occupied

$

0



0



0



0



36



0



36

   Non-real estate:





























      Commercial assets

$

17



331



180



620



1,444



17



1,444

      Consumer assets

$

17



18



20



22



42



17



42

   Total nonperforming assets



4,952



5,800



5,807



8,126



9,403



4,952



9,403































NONPERFORMING ASSETS - RECON





























   Beginning balance

$

5,800



5,807



8,126



9,403



10,558



9,403



6,408

   Additions - originated loans

$

1,247



999



300



1,426



402



3,972



9,952

   Merger-related activity

$

0



5



17



29



0



51



226

   Return to performing status

$

0



0



0



(175)



0



(175)



(233)

   Principal payments

$

(1,836)



(857)



(778)



(1,557)



(688)



(5,028)



(4,234)

   Sale proceeds

$

(128)



(147)



(1,807)



(299)



(101)



(2,381)



(677)

   Loan charge-offs

$

(57)



(3)



(50)



(597)



(754)



(707)



(1,933)

   Valuation write-downs

$

(74)



(4)



(1)



(104)



(14)



(183)



(106)

   Ending balance

$

4,952



5,800



5,807



8,126



9,403



4,952



9,403































LOAN PORTFOLIO COMPOSITION





























   Commercial:





























      Commercial & industrial

$

822,723



818,113



776,995



739,805



753,764



822,723



753,764

      Land development & construction

$

44,885



39,396



37,868



31,437



29,872



44,885



29,872

      Owner occupied comm'l R/E

$

548,619



542,730



533,075



531,152



526,327



548,619



526,327

      Non-owner occupied comm'l R/E

$

816,282



811,767



818,376



794,206



791,685



816,282



791,685

      Multi-family & residential rental

$

127,597



94,101



95,656



96,428



101,918



127,597



101,918

         Total commercial

$

2,360,106



2,306,107



2,261,970



2,193,028



2,203,566



2,360,106



2,203,566

   Retail:





























      1-4 family mortgages

$

307,540



301,765



283,657



264,996



254,560



307,540



254,560

      Home equity & other consumer

$

85,439



89,545



91,229



93,180



100,426



85,439



100,426

         Total retail

$

392,979



391,310



374,886



358,176



354,986



392,979



354,986

         Total loans

$

2,753,085



2,697,417



2,636,856



2,551,204



2,558,552



2,753,085



2,558,552































END OF PERIOD BALANCES





























   Loans

$

2,753,085



2,697,417



2,636,856



2,551,204



2,558,552



2,753,085



2,558,552

   Securities

$

353,388



337,603



342,178



348,024



346,780



353,388



346,780

   Other interest-earning assets

$

10,482



28,193



69,402



163,879



144,974



10,482



144,974

   Total earning assets (before allowance)

$

3,116,955



3,063,213



3,048,436



3,063,107



3,050,306



3,116,955



3,050,306

   Total assets

$

3,363,907



3,300,106



3,288,521



3,293,900



3,286,704



3,363,907



3,286,704

   Noninterest-bearing deposits

$

889,784



879,442



884,470



830,187



866,380



889,784



866,380

   Interest-bearing deposits

$

1,573,924



1,629,368



1,645,341



1,709,866



1,655,985



1,573,924



1,655,985

   Total deposits

$

2,463,708



2,508,810



2,529,811



2,540,053



2,522,365



2,463,708



2,522,365

   Total borrowed funds

$

513,220



401,575



373,642



373,824



387,468



513,220



387,468

   Total interest-bearing liabilities

$

2,087,144



2,030,943



2,018,983



2,083,690



2,043,453



2,087,144



2,043,453

   Shareholders' equity

$

375,249



379,465



374,919



368,340



365,870



375,249



365,870































AVERAGE BALANCES





























   Loans

$

2,706,617



2,658,092



2,596,828



2,552,070



2,534,729



2,628,907



2,483,440

   Securities

$

343,597



342,593



340,990



348,431



346,318



343,886



340,770

   Other interest-earning assets

$

30,564



61,810



63,336



123,633



138,095



69,559



90,925

   Total earning assets (before allowance)

$

3,080,778



3,062,495



3,001,154



3,024,134



3,019,142



3,042,352



2,915,135

   Total assets

$

3,312,648



3,295,129



3,232,038



3,249,794



3,248,828



3,272,637



3,142,673

   Noninterest-bearing deposits

$

905,065



893,181



848,650



805,214



849,751



863,384



802,024

   Interest-bearing deposits

$

1,579,632



1,628,346



1,635,755



1,690,135



1,635,727



1,633,150



1,589,778

   Total deposits

$

2,484,697



2,521,527



2,484,405



2,495,349



2,485,478



2,496,534



2,391,802

   Total borrowed funds

$

434,365



383,830



365,124



376,890



384,168



390,193



382,917

   Total interest-bearing liabilities

$

2,013,997



2,012,176



2,000,879



2,067,025



2,019,895



2,023,343



1,972,695

   Shareholders' equity

$

370,175



377,574



365,521



365,521



363,823



370,796



354,448































 

Cision View original content:http://www.prnewswire.com/news-releases/mercantile-bank-corporation-announces-strong-fourth-quarter-and-full-year-2018-results-300781643.html

SOURCE Mercantile Bank Corporation

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