WYOMING, Mich., April 7 /PRNewswire-FirstCall/ -- Mercantile Bank
Corporation (Nasdaq: MBWM) reported net income for the first quarter ended
March 31, 2005 of $4.4 million, an increase of 46.7 percent from the $3.0
million reported for the first quarter ended March 31, 2004. Diluted earnings
per share were $0.59 compared with $0.41 reported for the prior-year first
quarter period, an increase of 43.9 percent.
Gerald R. Johnson, Jr., Chairman and CEO, commented, "Our strong
commercial loan pipeline continues to be the key to our outstanding
performance. The western Michigan business community recognizes Mercantile's
extraordinary lending expertise and high service levels, which contribute to
loan growth that has consistently ranked in the top quartile of bank
performance. The rising interest rate environment favorably impacted the level
of interest income generated by our commercial loan portfolio. These factors
have led to yet another quarter of robust revenue growth.
"Outstanding loan growth is not enough. We manage our company to maximize
growth without compromising service, customer convenience or asset quality.
Revenue growth is balanced with continued investment in infrastructure and
employees. Our full-service Holland office was opened during the fourth
quarter of 2004, and we have been adding staff continuously to accommodate the
exceptional growth of our company. We are also looking forward to the May
2005 completion of our new headquarters building. Together, these investments
position Mercantile for continued growth as well as the opportunity to enhance
its already strong reputation for service, product delivery and lending
expertise."
Total revenue, comprised of net interest income and non-interest income,
was $13.9 million for the first quarter of 2005, an increase of 31.7 percent
over the $10.5 million of revenue realized during the first quarter of 2004.
Net interest income for the current quarter increased 33.4 percent over the
prior-year quarter to $12.7 million, reflecting a combination of 26.3 percent
growth in average earning assets and a 20 basis point improvement in the net
interest margin to 3.46 percent. Added Mr. Johnson, "We continue to expand
our margin and gained an additional three basis points compared with the
fourth quarter of 2004." Non-interest income was $1.2 million, a 16.5 percent
increase over last year's first quarter; the quarter reflected growth in all
fee businesses with the exception of mortgage banking, which experienced a
modest decrease.
Non-interest expense for the first quarter of 2005 was $6.9 million, an
increase of 32.9 percent over the prior-year period, principally in support of
corporate growth. Salaries and benefits, up 26.7 percent, represent the
largest dollar increase in non-interest expense; the increase was consistent
with a 26.9 percent year-over-year increase in full-time equivalent employees.
Occupancy, equipment and furniture expense rose 22.3 percent from the
investment in the Holland full-service banking office as well as the ongoing
increase in staff. Other non-interest expense rose $672,000 or 55.3 percent;
the current quarter includes a $300,000 accrual for the estimated loss related
to a letter of credit commitment in which the customer has shown signs of
financial distress. This letter of credit has not yet been drawn upon.
Mercantile's efficiency ratio remains low -- 49.41 percent for the first
quarter of 2005 compared with 48.96 percent for the prior-year period.
Asset quality, a hallmark of Mercantile's outstanding performance, remains
strong. Net charge-offs for the first quarter of 2005 were $447,000, or 0.13
percent of average loans on an annualized basis, compared with $286,000, or
0.11 percent for the prior-year first quarter. Non-performing assets were
$5.2 million, or 0.31 percent of total assets at March 31, 2005, compared with
$3.1 million, or 0.24 percent at March 31, 2004. Loan and lease loss reserves
were $18.1 million, or 1.32 percent of total loans and leases, at March 31,
2005.
Total assets were $1.66 billion at March 31, 2005, an increase of $370.9
million, or 28.7 percent, from last year's first quarter-end. Loan growth,
virtually all of which was commercial, was $263.4 million or 23.7 percent
during the same 12-month period; the increase was primarily funded by a $294.7
million, or 29.6 percent, increase in deposits.
Shareholders' equity at March 31, 2005 was $144.5 million, a twelve-month
increase of $11.4 million, or 8.6 percent. Total shares outstanding at
quarter-end were 7,212,268. Mercantile's total risk-based capital ratio at
quarter-end was 12.71 percent. Mr. Johnson concluded, "As we expand, we
continue to follow the same business model that has served Mercantile and our
clients' successfully since the Company's inception. We look forward to
sustained growth and enhanced profitability from the recent investments that
will allow us to serve our local businesses more effectively."
About Mercantile Bank Corporation
Mercantile Bank Corporation is the bank holding company for Mercantile
Bank of West Michigan. The Bank's primary service area is the Kent and Ottawa
County area of West Michigan, which includes the City of Grand Rapids, the
second-largest city in the State of Michigan. The Bank provides a wide
variety of commercial banking services primarily to businesses, individuals,
and governmental units through its five full-service offices in greater Grand
Rapids, and its Holland, Michigan office located thirty miles southwest of
Grand Rapids. Mercantile Bank Corporation's common stock is listed on the
Nasdaq National 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 non-traditional competitors; changes in banking
regulation; 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 the national and local economy; and
other factors, including risk factors, referred to from time to time in
filings made by Mercantile with the Securities and Exchange Commission.
Mercantile undertakes no obligation to update or clarify forward-looking
statements, whether as a result of new information, future events or
otherwise.
Mercantile Bank Corporation
First Quarter 2005 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
Quarterly
1st Qtr 4th Qtr 3rd Qtr
(dollars in thousands except per
share data) 2005 2004 2004
EARNINGS
Net interest income $12,655 12,082 10,856
Provision for loan and lease
losses $725 1,000 1,200
NonInterest income $1,210 1,106 1,156
NonInterest expense $6,850 6,228 6,415
Net income $4,362 4,488 3,114
Basic earnings per share $0.61 0.62 0.43
Diluted earnings per share $0.59 0.61 0.43
Average shares outstanding 7,206,322 7,189,575 7,176,032
Average diluted shares outstanding 7,345,543 7,350,178 7,318,345
PERFORMANCE RATIOS
Return on average assets 1.11% 1.18% 0.86%
Return on average common equity 12.36% 12.74% 9.06%
Net interest margin (fully tax-
equivalent) 3.46% 3.43% 3.23%
Efficiency ratio 49.41% 47.22% 53.40%
Full-time equivalent employees 212 194 190
CAPITAL
Average equity to average assets 8.99% 9.29% 9.54%
Tier 1 leverage capital ratio 11.13% 11.53% 10.75%
Tier 1 risk-based capital ratio 11.53% 11.82% 10.99%
Total risk-based capital ratio 12.71% 13.03% 12.21%
Book value per share $20.04 19.69 19.22
Cash dividend per share $0.10 0.09 0.09
ASSET QUALITY
Gross loan charge-offs $493 262 581
Net loan charge-offs $447 226 467
Net loan charge-offs to average
loans 0.13% 0.07% 0.15%
Allowance for loan and lease
losses $18,097 17,819 17,045
Allowance for loan losses to total
loans 1.32% 1.35% 1.36%
Nonperforming loans $4,016 2,842 2,985
Other real estate and repossessed
assets $1,177 0 0
Nonperforming assets to total
assets 0.31% 0.19% 0.20%
END OF PERIOD BALANCES
Loans and leases $1,374,577 1,317,124 1,253,713
Total earning assets (before
allowance) $1,575,697 1,470,238 1,404,559
Total assets $1,664,876 1,536,119 1,474,949
Deposits $1,290,017 1,159,181 1,144,857
Shareholder's equity $144,501 141,617 137,935
AVERAGE BALANCES
Loans and leases $1,345,336 1,276,913 1,219,325
Total earning assets (before
allowance) $1,511,891 1,428,121 1,361,985
Total assets $1,591,764 1,504,526 1,429,059
Deposits $1,214,890 1,150,606 1,094,166
Shareholder's equity $143,169 139,744 136,290
Mercantile Bank Corporation
First Quarter 2005 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
Quarterly
2nd Qtr 1st Qtr
(dollars in thousands except per
share data) 2004 2004
EARNINGS
Net interest income 10,000 9,489
Provision for loan and lease
losses 1,230 1,244
NonInterest income 1,001 1,039
NonInterest expense 5,400 5,155
Net income 3,146 2,973
Basic earnings per share 0.44 0.42
Diluted earnings per share 0.43 0.41
Average shares outstanding 7,172,633 7,158,970
Average diluted shares outstanding 7,322,474 7,314,126
PERFORMANCE RATIOS
Return on average assets 0.95% 0.96%
Return on average common equity 9.50% 9.10%
Net interest margin (fully tax-
equivalent) 3.24% 3.26%
Efficiency ratio 49.09% 48.96%
Full-time equivalent employees 183 167
CAPITAL
Average equity to average assets 10.01% 10.50%
Tier 1 leverage capital ratio 11.35% 11.87%
Tier 1 risk-based capital ratio 11.50% 11.99%
Total risk-based capital ratio 12.74% 13.23%
Book value per share 18.71 18.52
Cash dividend per share 0.09 0.09
ASSET QUALITY
Gross loan charge-offs 263 299
Net loan charge-offs 255 286
Net loan charge-offs to average
loans 0.09% 0.11%
Allowance for loan and lease
losses 16,312 15,337
Allowance for loan losses to total
loans 1.38% 1.38%
Nonperforming loans 3,731 3,122
Other real estate and repossessed
assets 0 0
Nonperforming assets to total
assets 0.27% 0.24%
END OF PERIOD BALANCES
Loans and leases 1,185,363 1,111,152
Total earning assets (before
allowance) 1,311,191 1,234,158
Total assets 1,378,626 1,293,935
Deposits 1,046,069 995,334
Shareholder's equity 134,272 133,075
AVERAGE BALANCES
Loans and leases 1,144,758 1,067,710
Total earning assets (before
allowance) 1,269,300 1,196,936
Total assets 1,330,507 1,250,733
Deposits 1,004,651 946,562
Shareholder's equity 133,211 131,361
Mercantile Bank Corporation
First Quarter 2005 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME
THREE MONTHS ENDED THREE MONTHS ENDED
March 31, 2005 March 31, 2004
(Unaudited) (Unaudited)
INTEREST INCOME
Loans and leases, including fees $19,772,000 $13,908,000
Investment securities 1,887,000 1,426,000
Federal funds sold 44,000 19,000
Short-term investments 2,000 1,000
Total interest income 21,705,000 15,354,000
INTEREST EXPENSE
Deposits 7,440,000 4,750,000
Short-term borrowings 338,000 170,000
Federal Home Loan Bank advances 857,000 529,000
Long-term borrowings 415,000 416,000
Total interest expense 9,050,000 5,865,000
Net interest income 12,655,000 9,489,000
Provision for loan and lease
losses 725,000 1,244,000
Net interest income after
provision for loan and
lease losses 11,930,000 8,245,000
NON INTEREST INCOME
Service charges on accounts 338,000 299,000
Net gain on sales of securities 0 78,000
Other income 872,000 662,000
Total non interest income 1,210,000 1,039,000
NON INTEREST EXPENSE
Salaries and benefits 4,159,000 3,283,000
Occupancy 518,000 386,000
Furniture and equipment 288,000 273,000
Other expense 1,885,000 1,213,000
Total non interest expense 6,850,000 5,155,000
Income before federal income
tax 6,290,000 4,129,000
Federal income tax expense 1,928,000 1,156,000
Net income $4,362,000 $2,973,000
Basic earnings per share $0.61 $0.42
Diluted earnings per share $0.59 $0.41
Average shares outstanding 7,206,322 7,158,970
Average diluted shares
outstanding 7,345,543 7,314,126
Mercantile Bank Corporation
First Quarter 2005 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31, MARCH 31,
2005 2004 2004
(Unaudited) (Audited) (Unaudited)
ASSETS
Cash and due from banks $39,255,000 $20,662,000 $29,952,000
Short-term investments 942,000 149,000 717,000
Federal funds sold 33,400,000 0 5,000,000
Total cash and cash
equivalents 73,597,000 20,811,000 35,669,000
Securities available
for sale 102,733,000 93,826,000 64,974,000
Securities held to
maturity 57,023,000 52,341,000 46,531,000
Federal Home Loan Bank
stock 7,022,000 6,798,000 5,784,000
Total loans and leases 1,374,577,000 1,317,124,000 1,111,152,000
Allowance for loan and
lease losses (18,097,000) (17,819,000) (15,337,000)
Total loans and
leases, net 1,356,480,000 1,299,305,000 1,095,815,000
Premises and equipment,
net 26,576,000 24,572,000 16,580,000
Bank owned life
insurance policies 23,986,000 23,750,000 16,618,000
Accrued interest
receivable 6,883,000 5,644,000 4,824,000
Other assets 10,576,000 9,072,000 7,140,000
Total assets $1,664,876,000 $1,536,119,000 $1,293,935,000
LIABILITIES AND
STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $135,544,000 $101,742,000 $85,900,000
Interest-bearing 1,154,473,000 1,057,439,000 909,434,000
Total deposits 1,290,017,000 1,159,181,000 995,334,000
Securities sold under
agreements to
repurchase 60,208,000 56,317,000 41,613,000
Federal funds purchased 0 15,000,000 0
Federal Home Loan Bank
advances 125,000,000 120,000,000 100,000,000
Subordinated debentures 32,990,000 32,990,000 16,495,000
Other borrowed money 1,916,000 1,609,000 1,361,000
Accrued expenses and
other liabilities 10,244,000 9,405,000 6,057,000
Total liabilities 1,520,375,000 1,394,502,000 1,160,860,000
SHAREHOLDERS' EQUITY
Common stock 131,113,000 131,010,000 118,684,000
Retained earnings 14,116,000 10,475,000 13,781,000
Accumulated other
comprehensive income
(loss) (728,000) 132,000 610,000
Total shareholders'
equity 144,501,000 141,617,000 133,075,000
Total liabilities
and shareholders'
equity $1,664,876,000 $1,536,119,000 $1,293,935,000
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SOURCE Mercantile Bank Corporation
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CONTACT:
Gerald R. Johnson, Jr., Chairman & CEO,
+1-616-406-3700, or gjohnson@mercbank.com , or Charles Christmas,
Chief Financial Officer, +1-616-406-3750, or
cchristmas@mercbank.com , both of Mercantile Bank Corporation; or
Media, Linda Margolin of Margolin & Associates, Inc.,
+1-216-765-0953, or lmm@margolinIR.com
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