Mercantile Bank Corporation Reports Strong Third Quarter 2021 Results

Sustained strength in core commercial loan originations, asset quality metrics, and operating performance highlight quarter
Published: Oct. 19, 2021 at 5:00 AM EDT|Updated: Oct. 19, 2021 at 5:01 AM EDT

GRAND RAPIDS, Mich., Oct. 19, 2021 /PRNewswire/ -- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $15.1 million, or $0.95 per diluted share, for the third quarter of 2021, up 40.8 percent from $10.7 million, or $0.66 per diluted share, for the respective prior-year period.  Net income during the first nine months of 2021 totaled $47.4 million, or $2.95 per diluted share, up 57.6 percent from $30.1 million, or $1.85 per diluted share, during the first nine months of 2020.

"Mercantile's talented and dedicated people, commitment to local decision making, and longstanding investments in technology all contributed to the bank's growth in commercial and residential mortgage loans, earnings, net interest income, and fee income, all while maintaining strong asset quality metrics and operating expense discipline," said Robert B. Kaminski, Jr., President and Chief Executive Officer of Mercantile.  "The significant growth in core commercial loans during the quarter, especially when considering the current economic and operating environments, is a noteworthy feat and reflects our commercial lending team's ongoing concerted effort to meet existing customers' credit needs and to foster new relationships.  Based on our current loan pipeline, we believe core commercial loan originations will remain robust during the fourth quarter and into 2022."

Third quarter highlights include:

  • Strong growth in core commercial loans and residential mortgage loans
  • Sustained strength in commercial loan and residential mortgage loan pipelines
  • Ongoing strength in asset quality metrics
  • Solid earnings and capital position
  • Growth in key fee income categories
  • Additional growth in local deposits

Operating Results

Total revenue, which consists of net interest income and noninterest income, was $46.7 million during the third quarter of 2021, up $3.9 million, or 9.1 percent, from the prior-year third quarter.  Net interest income during the third quarter of 2021 was $31.1 million, up from $29.5 million during the respective 2020 period due to the positive impact of earning asset growth, which more than offset a lower net interest margin.  Noninterest income totaled $15.6 million during the third quarter of 2021, up $2.3 million from the third quarter of 2020, mainly due to revenue associated with an interest rate swap program that was introduced during the fourth quarter of 2020.  The net interest margin was 2.71 percent in the third quarter of 2021, down from 2.86 percent in the prior-year third quarter, reflecting excess liquidity and a lower yield on securities.

The yield on average earning assets declined from 3.45 percent during the third quarter of 2020 to 3.13 percent during the respective 2021 period due to a change in earning asset mix and a decreased yield on securities.  A significant volume of excess on-balance sheet liquidity, which initially surfaced in the second quarter of 2020 as a result of the COVID-19 environment and persisted during the remainder of 2020 and first nine months of 2021, negatively impacted both the yield on average earning assets and the net interest margin by 40 basis points to 50 basis points during the third quarter and first nine months of 2021.  The excess funds, consisting primarily of low-yielding deposits with the Federal Reserve Bank of Chicago, are mainly a product of federal government stimulus programs, lower business and consumer investing and spending, and Paycheck Protection Program loan forgiveness activities.  The decreased yield on securities mainly depicted lower yields on newly purchased bonds, reflecting the declining interest rate environment, and a reduced level of accelerated discount accretion on called U.S. Government agency bonds.

The cost of funds decreased from 0.59 percent during the third quarter of 2020 to 0.42 percent during the current-year third quarter, primarily due to a change in funding mix, consisting of an increase in lower-costing non-time deposits as a percentage of total funding sources, and lower rates paid on local time deposits, reflecting the declining interest rate environment.

Mercantile recorded provision expense of $1.9 million and $3.2 million during the third quarters of 2021 and 2020, respectively.  The provision expense recorded during the current-year third quarter mainly reflected net commercial loan growth, while the provision expense recorded during the prior-year third quarter was primarily comprised of increased allocations associated with the downgrading of certain non-impaired commercial loan relationships to reflect stressed economic conditions stemming from the COVID-19 environment.

Noninterest income during the third quarter of 2021 was $15.6 million, an increase of 17.0 percent when compared to the prior-year third quarter.  The higher level of noninterest income mainly reflected fee income generated from an interest rate swap program that was introduced during the fourth quarter of 2020, which provides certain commercial borrowers with a longer-term fixed-rate option and assists Mercantile in managing associated longer-term interest rate risk.  Growth in debit and credit card income and service charges on accounts also contributed to the increased level of noninterest income.  Mortgage banking income remained sound in the third quarter of 2021 as sustained strength in purchase mortgage originations largely mitigated the negative impacts of an expected decrease in refinance activity, a lower mortgage loan sold percentage, and a decreased gain on sale rate.

Noninterest expense totaled $26.2 million during the third quarter of 2021, down $0.2 million from the third quarter of 2020.  The lower level of expense primarily resulted from decreased compensation costs, mainly reflecting a reduced bonus accrual and lower stock-based compensation expense, which more than offset increased regular salary expense primarily stemming from annual employee merit pay increases.  The bonus accrual during the third quarter of last year was increased due to a change in estimate as no accruals were recorded during the first and second quarters of the year due to COVID-19 and associated weakened economic environment.  Health insurance costs increased in the third quarter of 2021 compared to the prior-year third quarter mainly due to a higher level of claims, some of which resulted from the treatment of COVID-19 related medical conditions.  Federal Deposit Insurance Corporation deposit insurance premiums were up in the current-year third quarter compared to the respective 2020 period primarily as a result of an increased assessment base and rate.

Mr. Kaminski commented, "The growth in key fee income categories reflects our continuing efforts to augment our noninterest income revenue streams, which represented 33 percent of operating revenue in the third quarter.  Our interest rate risk swap program continues to be well received by commercial loan customers, and the ongoing success in developing new commercial and industrial loan relationships provides us with opportunities to cross sell treasury management products and services, which serve as another contributor to fee income.  Growth in residential mortgage loan purchase originations has largely offset the negative impact of an expected decline in refinance activity on mortgage banking income.  We remain committed to growing in a cost-conscious manner and are continually reviewing overhead categories in an effort to improve efficiency where feasible."

Balance Sheet

As of September 30, 2021, total assets were $4.96 billion, up $527 million, or 11.9 percent, from December 31, 2020.  Total loans increased $120 million during the first nine months of 2021, primarily reflecting net increases in core commercial loans of $298 million, of which $162 million occurred in the third quarter, and residential mortgage loans of $73.7 million, which more than offset a net reduction in Paycheck Protection Program loans of $249 million.  The growth in core commercial loans during the first nine months of 2021 equated to an annualized growth rate of approximately 16 percent.  As of September 30, 2021, unfunded commitments on commercial construction and development loans totaled approximately $155 million, which are expected to be largely funded over the next 12 to 18 months.

Interest-earning deposits increased $178 million during the first nine months of 2021, mainly reflecting continuing local deposit growth, Paycheck Protection Program forgiveness activities and an increase in sweep accounts, which outpaced loan growth and an expanded securities portfolio.

Ray Reitsma, President of Mercantile Bank of Michigan, noted, "We are very pleased with the strong levels of core commercial loan and residential mortgage loan growth during the third quarter.  The growth in the core commercial loan portfolio, which was achieved in a prudent manner with an unwavering emphasis on sound underwriting and risk-based pricing, reflects our commercial lending team's continuing focus on meeting the needs of our existing customers and successful client acquisition efforts.  A majority of the core commercial loan growth was in the commercial and industrial loan category, which typically generates additional local deposits and affords us the opportunity to cross sell treasury management products and services.  We are also pleased with the sustained strength of our commercial loan and residential loan pipelines."

Excluding the impact of Paycheck Protection Program loan originations, commercial and industrial loans and owner-occupied commercial real estate loans together represented approximately 55 percent of total commercial loans as of September 30, 2021, a level that has remained relatively consistent and in line with internal expectations.

Total deposits at September 30, 2021, were $3.87 billion, up $457 million, or 13.4 percent, from December 31, 2020.  Local deposits were up $480 million during the first nine months of 2021, while brokered deposits were down $23.0 million.  The growth in local deposits, which occurred despite typical and expected seasonal business deposit withdrawals used for bonus and tax payments, primarily reflected federal government stimulus payments, reduced business and consumer investing and spending, deposits generated from newly established commercial loan relationships, and Paycheck Protection Program loan proceeds being deposited into customers' accounts at the time the loans were originated and remaining on deposit as of September 30, 2021.  Wholesale funds were $418 million, or approximately 9 percent of total funds, as of September 30, 2021, compared to $441 million, or approximately 11 percent of total funds, as of December 31, 2020.

Asset Quality

Nonperforming assets totaled $2.9 million, $4.1 million, and $4.7 million at September 30, 2021, December 31, 2020, and September 30, 2020, respectively, with each dollar amount representing 0.1 percent of total assets as of the respective dates.  During the third quarter of 2021, loan charge-offs totaled $0.8 million, while recoveries of prior period loan charge-offs equaled $0.4 million, providing for net loan charge-offs of $0.4 million, or an annualized 0.05 percent of average total loans.  During the first nine months of 2021, loan charge-offs totaled $0.9 million, while recoveries of prior period loan charge-offs equaled $1.2 million, providing for net loan recoveries of $0.3 million, or an annualized 0.01 percent of average total loans.

Mr. Reitsma commented, "As evidenced by the continuing low levels of past due loans, gross loan charge-offs, and nonperforming assets, our asset quality metrics have remained strong during the COVID-19 pandemic.  The sustained strength in asset quality depicts our ongoing focus on proper underwriting and our commercial borrowers' business acumen and success in addressing pandemic-related challenges, including the rising costs and disruption posed by supply chain shortages and a tight labor market."

Capital Position

Shareholders' equity totaled $452 million as of September 30, 2021, an increase of $10.7 million from year-end 2020.  Mercantile Bank of Michigan's capital position remains above "well-capitalized" with a total risk-based capital ratio of 12.4 percent as of September 30, 2021, compared to 13.5 percent at December 31, 2020.  At September 30, 2021, Mercantile Bank of Michigan had approximately $94 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a "well-capitalized" institution.  Mercantile reported 15,717,663 total shares outstanding at September 30, 2021.

As part of $20.0 million common stock repurchase programs announced in May of 2019 and 2021, respectively, Mercantile repurchased approximately 289,000 shares for $8.9 million, at a weighted average all-in cost per share of $30.97, during the third quarter of 2021 and approximately 636,000 shares for $19.8 million, at a weighted average all-in cost per share of $31.14, during the first nine months of 2021.  The 2021 program replaced the 2019 program, which was nearing exhaustion.  The actual timing, number and value of shares repurchased under the program will be determined by management in its discretion and will depend on a number of factors, including Mercantile's stock price, capital position, and financial performance, general market and economic conditions, alternative uses of capital, and applicable legal requirements.  As of September 30, 2021, availability under the current program equaled $8.4 million.  The program may be discontinued at any time.

Mr. Kaminski concluded, "We are pleased that our ongoing financial strength has allowed us to continue our regular quarterly cash dividend program and provide shareholders with meaningful cash returns on their investments.  Our business model, which focuses on mutually beneficial relationship building, exceptional customer service, local decision making, and market-leading products and services, has proven effective in retaining existing clients and attracting new customers, and we believe we are well positioned to produce strong operating results in future periods and remain a consistent high performer that delivers steady and profitable growth."

Investor Presentation

Mercantile has prepared presentation materials that management intends to use during its previously announced third quarter 2021 conference call on Tuesday, October 19, 2021, at 10:00 a.m. Eastern Time, and from time to time thereafter in presentations about the Company's operations and performance.  The Investor Presentation also contains information relating to Mercantile's COVID-19 pandemic response plan, which may be modified to address new developments, as the company carefully monitors the recent surge in cases.  These materials have been furnished to the U.S. Securities and Exchange Commission concurrently with this press release, and are also available on Mercantile's website at www.mercbank.com.

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 $4.9 billion and operates 43 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 statements or information that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will," and similar references to future periods.  Any such statements 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; increasing rates of inflation and slower growth rates; significant declines in the value of commercial real estate; market volatility; demand for products and services; the degree of competition by traditional and nontraditional financial services companies; changes in banking regulation or actions by bank regulators; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; potential cyber-attacks, information security breaches and other criminal activities; our participation in the Paycheck Protection Program administered by the Small Business Administration; litigation liabilities; governmental and regulatory policy changes; the outcomes of existing or future contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; damage to our reputation resulting from adverse publicity, regulatory actions, litigation, operational failures, and the failure to meet client expectations and other facts; changes in the method of determining Libor and the phase-out of Libor; changes in the national and local economies, including the ongoing disruption to financial market and other economic activity caused by the COVID-19 pandemic; and other factors, including those expressed as 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.  Investors are cautioned not to place undue reliance on any forward-looking statements contained herein.

FOR FURTHER INFORMATION:




Robert B. Kaminski, Jr.

Charles Christmas

President & CEO 

Executive Vice President & CFO

616-726-1502

616-726-1202

rkaminski@mercbank.com 

cchristmas@mercbank.com

Mercantile Bank Corporation







Third Quarter 2021 Results







MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)










SEPTEMBER 30,


DECEMBER 31,


SEPTEMBER 30,



2021


2020


2020

ASSETS







   Cash and due from banks

$

83,804,000

$

62,832,000

$

59,283,000

   Interest-earning deposits


741,557,000


563,174,000


495,308,000

      Total cash and cash equivalents


825,361,000


626,006,000


554,591,000








   Securities available for sale


559,564,000


387,347,000


312,424,000

   Federal Home Loan Bank stock


18,002,000


18,002,000


18,002,000








   Loans


3,313,709,000


3,193,470,000


3,324,202,000

   Allowance for loan losses


(37,423,000)


(37,967,000)


(35,572,000)

      Loans, net


3,276,286,000


3,155,503,000


3,288,630,000








   Premises and equipment, net


57,465,000


58,959,000


60,446,000

   Bank owned life insurance


72,963,000


72,131,000


71,170,000

   Goodwill


49,473,000


49,473,000


49,473,000

   Core deposit intangible, net


1,589,000


2,436,000


2,754,000

   Mortgage loans held for sale


47,247,000


22,888,000


26,342,000

   Other assets


56,462,000


44,599,000


36,778,000








      Total assets

$

4,964,412,000

$

4,437,344,000

$

4,420,610,000















LIABILITIES AND SHAREHOLDERS' EQUITY







   Deposits:







      Noninterest-bearing

$

1,647,380,000

$

1,433,403,000

$

1,449,879,000

      Interest-bearing


2,221,611,000


1,978,150,000


1,922,155,000

         Total deposits


3,868,991,000


3,411,553,000


3,372,034,000








   Securities sold under agreements to repurchase


175,850,000


118,365,000


157,017,000

   Federal Home Loan Bank advances


394,000,000


394,000,000


394,000,000

   Subordinated debentures


48,074,000


47,563,000


47,392,000

   Accrued interest and other liabilities


25,219,000


24,309,000


18,267,000

         Total liabilities


4,512,134,000


3,995,790,000


3,988,710,000








SHAREHOLDERS' EQUITY







   Common stock


285,033,000


302,029,000


301,896,000

   Retained earnings


167,541,000


134,039,000


124,451,000

   Accumulated other comprehensive income/(loss)


(296,000)


5,486,000


5,553,000

      Total shareholders' equity


452,278,000


441,554,000


431,900,000








      Total liabilities and shareholders' equity

$

4,964,412,000

$

4,437,344,000

$

4,420,610,000

Mercantile Bank Corporation














Third Quarter 2021 Results














MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF INCOME

(Unaudited)
















THREE MONTHS ENDED


THREE MONTHS ENDED

NINE MONTHS ENDED

NINE MONTHS ENDED


September 30, 2021


September 30, 2020

September 30, 2021

September 30, 2020

INTEREST INCOME














   Loans, including fees

$

33,656,000



$

33,664,000


$

100,430,000


$

101,428,000


   Investment securities


1,941,000




1,788,000



5,375,000



8,554,000


   Other interest-earning assets


291,000




142,000



642,000



711,000


      Total interest income


35,888,000




35,594,000



106,447,000



110,693,000
















INTEREST EXPENSE














   Deposits


2,184,000




3,466,000



7,247,000



11,808,000


   Short-term borrowings


46,000




38,000



122,000



132,000


   Federal Home Loan Bank advances


2,072,000




2,072,000



6,149,000



6,499,000


   Other borrowed money


462,000




509,000



1,401,000



1,857,000


      Total interest expense


4,764,000




6,085,000



14,919,000



20,296,000
















      Net interest income


31,124,000




29,509,000



91,528,000



90,397,000
















Provision for loan losses


1,900,000




3,200,000



(900,000)



11,550,000
















      Net interest income after














         provision for loan losses


29,224,000




26,309,000



92,428,000



78,847,000
















NONINTEREST INCOME














   Service charges on accounts


1,324,000




1,135,000



3,687,000



3,401,000


   Mortgage banking income


6,554,000




9,479,000



23,049,000



19,746,000


   Credit and debit card income


1,947,000




1,636,000



5,545,000



4,371,000


   Interest rate swap income


3,938,000




0



6,086,000



0


   Payroll services


412,000




399,000



1,374,000



1,346,000


   Earnings on bank owned life insurance


298,000




290,000



872,000



933,000


   Gain on sale of branch


0




0



1,058,000



0


   Other income


1,095,000




368,000



1,916,000



1,042,000


      Total noninterest income


15,568,000




13,307,000



43,587,000



30,839,000
















NONINTEREST EXPENSE














   Salaries and benefits


15,975,000




16,734,000



47,255,000



44,388,000


   Occupancy


2,030,000




2,023,000



6,021,000



5,944,000


   Furniture and equipment


929,000




871,000



2,719,000



2,500,000


   Data processing costs


2,746,000




2,676,000



8,138,000



7,793,000


   Other expense


4,530,000




4,119,000



13,386,000



11,954,000


      Total noninterest expense


26,210,000




26,423,000



77,519,000



72,579,000
















      Income before federal income














         tax expense


18,582,000




13,193,000



58,496,000



37,107,000
















Federal income tax expense


3,531,000




2,507,000



11,114,000



7,051,000
















      Net Income

$

15,051,000



$

10,686,000


$

47,382,000


$

30,056,000
















   Basic earnings per share


$0.95




$0.66



$2.95



$1.85


   Diluted earnings per share


$0.95




$0.66



$2.95



$1.85
















   Average basic shares outstanding


15,859,955




16,233,196



16,084,806



16,265,208


   Average diluted shares outstanding


15,860,314




16,233,666



16,085,274



16,265,986


Mercantile Bank Corporation















Third Quarter 2021 Results















MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)


















Quarterly


Year-To-Date

(dollars in thousands except per share data)

2021


2021


2021


2020


2020







3rd Qtr


2nd Qtr


1st Qtr


4th Qtr


3rd Qtr


2021


2020

EARNINGS















   Net interest income

$

31,124


30,871


29,533


31,849


29,509


91,528


90,397

   Provision for loan losses

$

1,900


(3,100)


300


2,500


3,200


(900)


11,550

   Noninterest income

$

15,568


14,556


13,463


14,333


13,307


43,587


30,839

   Noninterest expense

$

26,210


26,192


25,117


25,941


26,423


77,519


72,579

   Net income before federal income















      tax expense

$

18,582


22,335


17,579


17,741


13,193


58,496


37,107

   Net income

$

15,051


18,091


14,239


14,082


10,686


47,382


30,056

   Basic earnings per share

$

0.95


1.12


0.87


0.87


0.66


2.95


1.85

   Diluted earnings per share

$

0.95


1.12


0.87


0.87


0.66


2.95


1.85

   Average basic shares outstanding


15,859,955


16,116,070


16,283,044


16,279,052


16,233,196


16,084,806


16,265,208

   Average diluted shares outstanding


15,860,314


16,116,666


16,283,490


16,279,243


16,233,666


16,085,274


16,265,986
















PERFORMANCE RATIOS















   Return on average assets


1.23%


1.53%


1.26%


1.25%


0.98%


1.34%


0.99%

   Return on average equity


13.10%


16.27%


13.02%


12.75%


9.86%


14.12%


9.44%

   Net interest margin (fully tax-equivalent)

2.71%


2.76%


2.77%


3.00%


2.86%


2.76%


3.19%

   Efficiency ratio


56.13%


57.66%


58.42%


56.17%


61.71%


57.37%


59.87%

   Full-time equivalent employees


629


634


621


621


618


629


618
















YIELD ON ASSETS / COST OF FUNDS















   Yield on loans


4.07%


3.99%


4.03%


4.34%


4.03%


4.06%


4.28%

   Yield on securities


1.46%


1.54%


1.61%


1.69%


2.26%


1.53%


3.47%

   Yield on other interest-earning assets


0.16%


0.12%


0.11%


0.12%


0.12%


0.13%


0.32%

   Yield on total earning assets


3.13%


3.20%


3.26%


3.55%


3.45%


3.21%


3.91%

   Yield on total assets


2.94%


3.02%


3.09%


3.35%


3.25%


3.01%


3.67%

   Cost of deposits


0.23%


0.25%


0.31%


0.37%


0.41%


0.26%


0.52%

   Cost of borrowed funds


1.67%


1.73%


1.78%


1.75%


1.78%


1.72%


1.98%

   Cost of interest-bearing liabilities


0.69%


0.74%


0.82%


0.91%


0.99%


0.75%


1.15%

   Cost of funds (total earning assets)


0.42%


0.44%


0.49%


0.55%


0.59%


0.45%


0.72%

   Cost of funds (total assets)


0.39%


0.41%


0.47%


0.51%


0.56%


0.42%


0.67%
















PURCHASE ACCOUNTING ADJUSTMENTS














   Loan portfolio - increase interest income

$

48


54


51


158


332


153


786

   Trust preferred - increase interest expense

$

171


171


171


171


171


513


513

   Core deposit intangible - increase overhead

$

238


291


318


318


318


847


1,086
















MORTGAGE BANKING ACTIVITY















   Total mortgage loans originated

$

259,512


237,299


245,200


218,904


237,195


742,011


645,540

   Purchase mortgage loans originated

$

143,635


144,476


81,529


99,490


93,068


369,640


197,621

   Refinance mortgage loans originated

$

115,877


92,823


163,671


119,414


144,127


372,371


447,919

   Total saleable mortgage loans

$

177,837


140,497


195,655


159,942


191,318


513,989


512,310

   Income on sale of mortgage loans

$

6,659


7,690


9,182


9,476


10,199


23,531


20,045
















CAPITAL















   Tangible equity to tangible assets


8.17%


8.51%


8.36%


8.89%


8.69%


8.17%


8.69%

   Tier 1 leverage capital ratio


9.33%


9.47%


9.67%


9.77%


9.80%


9.33%


9.80%

   Common equity risk-based capital ratio


10.34%


10.87%


11.11%


11.34%


11.37%


10.34%


11.37%

   Tier 1 risk-based capital ratio


11.53%


12.11%


12.41%


12.68%


12.74%


11.53%


12.74%

   Total risk-based capital ratio


12.47%


13.09%


13.51%


13.80%


13.82%


12.47%


13.82%

   Tier 1 capital

$

448,010


445,410


437,567


430,146


420,225


448,010


420,225

   Tier 1 plus tier 2 capital

$

484,594


481,324


476,462


468,113


455,797


484,594


455,797

   Total risk-weighted assets

$

3,884,999


3,677,180


3,526,161


3,391,563


3,298,047


3,884,999


3,298,047

   Book value per common share

$

28.78


28.23


27.21


27.04


26.59


28.78


26.59

   Tangible book value per common share

$

25.53


25.03


24.02


23.86


23.37


25.53


23.37

   Cash dividend per common share

$

0.30


0.29


0.29


0.28


0.28


0.88


0.84
















ASSET QUALITY















   Gross loan charge-offs

$

744


68


53


340


124


865


499

   Recoveries

$

354


386


481


234


250


1,221


632

   Net loan charge-offs (recoveries)

$

390


(318)


(428)


106


(126)


(356)


(133)

   Net loan charge-offs to average loans


0.05%


(0.04%)


(0.05%)


0.01%


(0.02%)


(0.01%)


(0.01%)

   Allowance for loan losses

$

37,423


35,913


38,695


37,967


35,572


37,423


35,572

   Allowance to loans


1.13%


1.11%


1.15%


1.19%


1.06%


1.13%


1.06%

   Allowance to loans excluding PPP loans


1.17%


1.20%


1.33%


1.33%


1.27%


1.17%


1.27%

   Nonperforming loans

$

2,766


2,746


2,793


3,384


4,141


2,766


4,141

   Other real estate/repossessed assets

$

111


404


374


701


512


111


512

   Nonperforming loans to total loans


0.08%


0.08%


0.08%


0.11%


0.12%


0.08%


0.12%

   Nonperforming assets to total assets


0.06%


0.07%


0.07%


0.09%


0.11%


0.06%


0.11%
















NONPERFORMING ASSETS - COMPOSITION













   Residential real estate:















      Land development

$

33


34


34


35


36


33


36

      Construction

$

0


0


0


0


198


0


198

      Owner occupied / rental

$

2,063


2,137


2,305


2,607


2,597


2,063


2,597

   Commercial real estate:















      Land development

$

0


0


0


0


0


0


0

      Construction

$

0


0


0


0


0


0


0

      Owner occupied  

$

100


363


646


1,232


1,576


100


1,576

      Non-owner occupied

$

0


0


0


22


23


0


23

   Non-real estate:















      Commercial assets

$

673


606


169


172


198


673


198

      Consumer assets

$

8


10


13


17


25


8


25

   Total nonperforming assets


2,877


3,150


3,167


4,085


4,653


2,877


4,653
















NONPERFORMING ASSETS - RECON















   Beginning balance

$

3,150


3,167


4,085


4,653


3,410


4,085


2,736

   Additions

$

361


522


116


972


1,615


999


3,148

   Return to performing status

$

(50)


0


(115)


0


(72)


(165)


(105)

   Principal payments

$

(291)


(484)


(559)


(1,064)


(249)


(1,334)


(637)

   Sale proceeds

$

(209)


0


(77)


(245)


0


(286)


(241)

   Loan charge-offs

$

0


(55)


(33)


(231)


(51)


(88)


(224)

   Valuation write-downs

$

(84)


0


(250)


0


0


(334)


(24)

   Ending balance

$

2,877


3,150


3,167


4,085


4,653


2,877


4,653
















LOAN PORTFOLIO COMPOSITION















   Commercial:















      Commercial & industrial

$

1,074,394


1,103,807


1,284,507


1,145,423


1,321,419


1,074,394


1,321,419

      Land development & construction

$

38,380


43,111


58,738


55,055


50,941


38,380


50,941

      Owner occupied comm'l R/E

$

551,762


550,504


544,342


529,953


549,364


551,762


549,364

      Non-owner occupied comm'l R/E

$

998,697


950,993


932,334


917,436


878,897


998,697


878,897

      Multi-family & residential rental

$

179,126


161,894


147,294


146,095


137,740


179,126


137,740

         Total commercial

$

2,842,359


2,810,309


2,967,215


2,793,962


2,938,361


2,842,359


2,938,361

   Retail:















      1-4 family mortgages

$

411,618


380,292


337,844


337,888


322,118


411,618


322,118

      Home equity & other consumer

$

59,732


58,240


59,311


61,620


63,723


59,732


63,723

         Total retail

$

471,350


438,532


397,155


399,508


385,841


471,350


385,841

         Total loans

$

3,313,709


3,248,841


3,364,370


3,193,470


3,324,202


3,313,709


3,324,202
















END OF PERIOD BALANCES















   Loans

$

3,313,709


3,248,841


3,364,370


3,193,470


3,324,202


3,313,709


3,324,202

   Securities

$

577,566


524,127


452,259


405,349


330,426


577,566


330,426

   Other interest-earning assets

$

741,557


683,638


596,855


563,174


495,308


741,557


495,308

   Total earning assets (before allowance)

$

4,632,832


4,456,606


4,413,484


4,161,993


4,149,936


4,632,832


4,149,936

   Total assets

$

4,964,412


4,757,414


4,713,023


4,437,344


4,420,610


4,964,412


4,420,610

   Noninterest-bearing deposits

$

1,647,380


1,620,829


1,605,471


1,433,403


1,449,879


1,647,380


1,449,879

   Interest-bearing deposits

$

2,221,611


2,050,442


2,039,491


1,978,150


1,922,155


2,221,611


1,922,155

   Total deposits

$

3,868,991


3,671,271


3,644,962


3,411,553


3,372,034


3,868,991


3,372,034

   Total borrowed funds

$

619,441


613,205


584,672


562,360


600,892


619,441


600,892

   Total interest-bearing liabilities

$

2,841,052


2,663,647


2,624,163


2,540,510


2,523,047


2,841,052


2,523,047

   Shareholders' equity

$

452,278


451,888


441,243


441,554


431,900


452,278


431,900
















AVERAGE BALANCES















   Loans

$

3,276,863


3,365,686


3,318,281


3,268,866


3,292,025


3,308,119


3,132,885

   Securities

$

547,336


483,805


419,514


365,631


327,668


484,020


335,443

   Other interest-earning assets

$

733,801


619,358


591,617


559,593


457,598


648,780


288,310

   Total earning assets (before allowance)

$

4,558,000


4,468,849


4,329,412


4,194,090


4,077,291


4,440,919


3,756,638

   Total assets

$

4,856,611


4,752,858


4,578,887


4,459,370


4,346,624


4,730,482


4,024,175

   Noninterest-bearing deposits

$

1,641,158


1,619,976


1,510,334


1,478,616


1,454,887


1,590,969


1,228,729

   Interest-bearing deposits

$

2,125,920


2,074,759


2,026,896


1,936,069


1,863,302


2,076,221


1,785,391

   Total deposits

$

3,767,078


3,694,735


3,537,230


3,414,685


3,318,189


3,667,190


3,014,120

   Total borrowed funds

$

614,061


594,199


576,645


588,100


583,994


595,105


569,729

   Total interest-bearing liabilities

$

2,739,981


2,668,958


2,603,541


2,524,169


2,447,296


2,671,326


2,355,120

   Shareholders' equity

$

455,902


445,930


443,548


438,171


429,865


448,516


423,924

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SOURCE Mercantile Bank Corporation

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