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Mercantile Bank Corporation$31.81($.20)(.62%)

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 Mercantile Bank Corporation Announces Strong Fourth Quarter and Full Year 2016 Results
   Tuesday, January 17, 2017 6:01:00 AM ET

Mercantile Bank Corporation (MBWM ) ("Mercantile") reported net income of $8.1 million, or $0.49 per diluted share, for the fourth quarter of 2016, compared with net income of $6.5 million, or $0.40 per diluted share, for the prior-year period. For the full year 2016, Mercantile reported net income of $31.9 million, or $1.96 per diluted share, compared with net income of $27.0 million, or $1.62 per diluted share, for the full year 2015.

The fourth quarter and year were highlighted by:

-- Strong core earnings and capital position

-- Stable and robust net interest margin

-- Strong fee income growth

-- Reduced overhead costs

-- Strong asset quality, as depicted by low levels of nonperforming assets and loans in the 30- to 89-days delinquent category

-- New commercial term loan originations of approximately $120 million during the fourth quarter and $549 million during the full year

-- Sustained strength in commercial loan pipeline

-- Announced first quarter 2017 regular cash dividend of $0.18 per common share, an increase of approximately 6 percent from the $0.17 regular cash dividend paid during the fourth quarter of 2016

"Our strong 2016 financial results reflect the success of various strategic initiatives," said Robert B. Kaminski, Jr., President and Chief Executive Officer of Mercantile. "These initiatives, which centered on net interest margin maintenance, fee enhancement, and overhead cost reductions, played a major role in Mercantile recording a company-record operating profit during the year. Our strong financial performance displayed throughout 2016 also reflects solid loan growth and stellar asset quality. Based on our strong financial condition, focus on growing the loan portfolio in a disciplined manner, and current loan prospects, we enter 2017 with a strong foundation for success."

Operating Results

Total revenue, which consists of net interest income and noninterest income, was $31.0 million during the fourth quarter of 2016, up $1.3 million or 4.5 percent from the prior-year fourth quarter. Net interest income during the fourth quarter of 2016 was $26.4 million, up $0.8 million or 3.0 percent from the fourth quarter of 2015, primarily reflecting a 5.8 percent increase in average earning assets. Total revenue was $127 million during the full year 2016, up $9.7 million or 8.3 percent from 2015. Net interest income was $106 million in 2016, up $4.7 million or 4.6 percent from the prior year, primarily reflecting a 4.1 percent increase in average earning assets and a three basis point increase in the net interest margin.

The net interest margin was 3.72 percent in the fourth quarter of 2016, down from 3.81 percent in the prior-year fourth quarter mainly due to a decreased yield on loans, reflecting the ongoing low interest rate environment and competitive industry pressures. The net interest margin was 3.86 percent in 2016, up from 3.83 percent in 2015 due to an increased yield on total earning assets, which more than offset a slight increase in the cost of funds. The higher yield primarily resulted from an increased yield on securities and a change in earning asset mix, which more than offset a decreased yield on loans. The increased yield on securities was mainly due to a significant level of accelerated discount accretion on called U.S. Government agency bonds being recorded as interest income. The accelerated discount accretion totaled $2.2 million during 2016, positively impacting the net interest margin by eight basis points. A nominal level of accelerated discount on called U.S. Government agency bonds was recorded as interest income during 2015.

The net interest margin has ranged from 3.72 percent to 4.01 percent over the past ten quarters. Mercantile’s yield on loans has generally declined during this time period, consistent with the industry and primarily due to the ongoing low interest rate environment and competitive industry pressures. In Mercantile’s case, however, the negative impact of the lower loan yield has been largely offset by assets shifting out of the low-yielding securities portfolio and into the higher-yielding loan portfolio, thus capitalizing on an opportunity growing out of the 2014 merger with Firstbank Corporation. Average loans represented about 85 percent of average earning assets during 2016, up from approximately 82 percent during 2015. The reallocation of earning assets strategy was completed during the second quarter of 2016 as the level of investments reached Mercantile’s internal policy guideline.

Net interest income and the net interest margin during 2016 and 2015 were affected by purchase accounting accretion and amortization entries associated with the fair value measurements recorded effective June 1, 2014. An increase in interest income on loans totaling $4.9 million and an increase in interest expense on subordinated debentures totaling $0.7 million were recorded during 2016. During 2015, Mercantile recorded an increase in interest income on loans totaling $5.3 million and a decrease in interest expense on deposits and FHLB advances totaling $1.4 million. In addition, Mercantile recorded an increase in interest expense on subordinated debentures totaling $0.7 million during the same time period. Mercantile expects to continue to record adjustments in interest income on loans and interest expense on subordinated debentures in future periods; however, the adjustments to interest expense on deposits and FHLB advances ended in July and June of 2015, respectively. The resulting increase in interest expense negatively impacted the net interest margin by approximately eight to ten basis points after July 31, 2015.

Mercantile recorded a $0.6 million provision for loan losses during the fourth quarter of 2016, compared to a provision expense of $0.5 million recorded during the fourth quarter of 2015. During 2016, Mercantile recorded a provision for loan losses of $2.9 million, compared to a negative loan loss provision of $1.0 million recorded during 2015. The provision expense recorded during the 2016 periods primarily reflects ongoing loan growth and assessment changes in our economic and concentration environmental factors, while the negative provision expense recorded during 2015 resulted from multiple factors, including recoveries of previously charged-off loans, reversals of specific reserves, a reduced level of loan-rating downgrades and ongoing loan-rating upgrades. The provision expense recorded during the fourth quarter of 2015 was primarily necessitated by loan growth, which more than offset reductions in the required allowance stemming from the previously mentioned factors.

Noninterest income during the fourth quarter of 2016 was $4.6 million, up $0.6 million or 13.8 percent from the prior-year fourth quarter. The increase in noninterest income mainly resulted from higher levels of service charges on deposit and sweep accounts and mortgage banking income. Noninterest income for 2016 was $21.0 million, up $5.0 million or 31.2 percent from 2015, reflecting both a $2.9 million pre-tax gain being recorded in the first quarter of 2016 in association with a trust preferred securities repurchase transaction and higher service charges on deposit and sweep accounts and mortgage banking income. The increase in service charges on deposit and sweep accounts in the 2016 periods mainly reflects an ongoing project to ensure all depositors are in a product that best meets their needs and is priced appropriately as well as increased cash management fee income. The increase in mortgage banking income in the 2016 periods primarily reflects the positive impact of recently-implemented strategic initiatives, including the hiring of additional loan originators, introduction of new and enhanced products, loan programs, and increased marketing efforts.

Noninterest expense totaled $18.4 million during the fourth quarter of 2016, down $1.7 million or 8.5 percent from the prior-year fourth quarter. Expenses related to the cost efficiency program, which was announced in October of 2015, totaled $0.8 million during the fourth quarter of 2015; no such costs were recorded during the fourth quarter of 2016. Noninterest expense for 2016 was $77.1 million, down $2.3 million or 2.9 percent from 2015. Noninterest expense during the 2016 periods was positively impacted by the cost efficiency program, which is expected to save approximately $2.7 million per year on a pre-tax basis beginning in 2017; the expected quarterly cost savings were fully realized starting in the second quarter of 2016. Decreased nonperforming asset costs and Federal Deposit Insurance Corporation ("FDIC") premiums also contributed to the lower overhead costs in the 2016 periods. The decreased FDIC insurance premiums resulted from improvements in certain financial ratios and changes to the deposit insurance assessment calculation that became effective in the third quarter of 2016.

Mr. Kaminski continued: "Although competitive pressures remain in our markets and the industry experienced net interest margin compression during 2016, our net interest margin remained strong and relatively stable during the year as we remained committed to disciplined loan pricing and underwriting. Our net interest income was positively impacted by the Federal Open Market Committee’s rate hikes in December of 2015 and 2016, and our balance sheet structure continues to position us to benefit from further rate increases. We are very pleased that the expected benefits of the strategic initiatives related to fee enhancement and overhead cost reductions were realized in 2016."

Balance Sheet

As of December 31, 2016, total assets were $3.08 billion, up $179 million or 6.2 percent from December 31, 2015. Total loans increased $101 million, or 4.4 percent, to $2.38 billion over the same time period. During the fourth quarter of 2016, total loans decreased $27.8 million or 1.2 percent. The loan contraction during this period was partially attributable to several portfolio reducing factors, including a $24 million reduction related to the placement of a large commercial loan relationship into syndication, a $15 million decrease in commercial line of credit usage, reflecting customer paydowns stemming from increased liquidity positions, a $10 million decline associated with the desire to reduce exposure to certain industries to stay within internal concentration limits, and an $8 million reduction representing watch list credit payoffs. Approximately $120 million and $549 million in commercial term loans to new and existing borrowers were originated during the fourth quarter and full year of 2016, respectively, as ongoing sales and relationship-building efforts resulted in increased lending opportunities. As of December 31, 2016, unfunded commitments on commercial construction and development loans totaled approximately $102 million, which are expected to be largely funded over the next twelve months.

Raymond Reitsma, President of the Bank, noted: "We are very pleased with the $549 million in new commercial term loan originations during 2016. Although the loan portfolio slightly contracted during the fourth quarter of 2016, we are confident that solid loan growth can be achieved in future periods in light of the robust current loan pipeline and ongoing focus on identifying new lending opportunities. Our efforts to meet loan growth objectives will be accompanied by a continuing emphasis on loan quality and disciplined loan pricing. As expected, our residential mortgage portfolio grew during the fourth quarter of 2016, reflecting the success of strategic initiatives centered on increasing our market presence."

Commercial-related real estate loans continue to comprise a majority of Mercantile’s loan portfolio, representing approximately 57 percent of total loans as of December 31, 2016. Non-owner occupied commercial real estate ("CRE") loans and owner-occupied CRE loans equaled 31 percent and 19 percent of total loans, respectively, as of December 31, 2016. Commercial and industrial loans represented 30 percent of total loans as of December 31, 2016.

As of December 31, 2016, total deposits were $2.37 billion, up $99.6 million from December 31, 2015. Local deposits were up $145 million since year-end 2015; growth in local deposits was primarily driven by new commercial loan relationships. Wholesale funds were $251 million, or approximately 9 percent of total funds, as of December 31, 2016, compared to $189 million, or approximately 8 percent of total funds, as of December 31, 2015.

Asset Quality

Nonperforming assets at December 31, 2016 were $6.4 million, or 0.2 percent of total assets, compared to $6.7 million, or 0.2 percent of total assets, as of December 31, 2015. The level of past due loans remains nominal, and loan relationships on the internal watch list generally declined throughout 2016.

Net loan charge-offs were $0.2 million during both the fourth quarter of 2016 and linked quarter and $0.9 million during the prior-year fourth quarter. Net loan charge-offs totaled $0.6 million and $3.4 million during 2016 and 2015, respectively.

Capital Position

Shareholders’ equity totaled $341 million as of December 31, 2016, an increase of $7.0 million from year-end 2015. The Bank’s capital position remains above "well-capitalized" with a total risk-based capital ratio of 13.1 percent as of December 31, 2016, compared to 13.5 percent at December 31, 2015. At December 31, 2016, the Bank had approximately $84 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a "well-capitalized" institution. Mercantile reported 16,416,695 total shares outstanding at December 31, 2016.

As part of a $20 million common stock repurchase program announced in January of 2015, Mercantile repurchased approximately 168,000 shares for $3.7 million, or a weighted average all-in cost per share of $22.23, during 2016; since the program’s inception, Mercantile has repurchased approximately 956,000 shares, or nearly 6 percent of total shares outstanding at year-end 2014, for $19.5 million, or a weighted average all-in cost per share of $20.38. Future share repurchases totaling $15.5 million can be made under the program, which was expanded by $15 million in early 2016.

Mr. Kaminski concluded: "The strong results achieved during 2016 allowed us to build shareholder value through the payment of increased regular quarterly cash dividends and the payment of a special cash dividend in the fourth quarter. The success of our relationship-based approach to banking, including efficiently delivering a wide array of products and services to customers, is reflected in the solid loan and deposit growth achieved during the year, and we will continue to use this philosophy to identify and cultivate new customer relationships in 2017. We are confident that our strong financial performance will continue in the current year, and our robust capital position should afford us the ability to meet growth objectives and enhance shareholder value."

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 $3.1 billion and operates 48 banking offices serving communities in central and western Michigan. Mercantile Bank Corporation’s common stock is listed on the NASDAQ Global Select Market under the symbol "MBWM."

Forward-Looking Statements

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

MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                   DECEMBER 31,      DECEMBER 31,      DECEMBER 31,
                                                   2016              2015              2014
ASSETS
Cash and due from banks                        $   50,200,000    $   42,829,000    $   43,754,000
Interest-earning deposits                          133,396,000       46,463,000        117,777,000
Federal funds sold                                 0                 599,000           11,207,000
Total cash and cash equivalents                    183,596,000       89,891,000        172,738,000
Securities available for sale                      328,060,000       346,992,000       432,912,000
Federal Home Loan Bank stock                       8,026,000         7,567,000         13,699,000
Loans                                              2,378,620,000     2,277,727,000     2,089,277,000
Allowance for loan losses                          (17,961,000)      (15,681,000)      (20,041,000)
Loans, net                                         2,360,659,000     2,262,046,000     2,069,236,000
Premises and equipment, net                        45,456,000        46,862,000        48,812,000
Bank owned life insurance                          67,198,000        58,971,000        57,861,000
Goodwill                                           49,473,000        49,473,000        49,473,000
Core deposit intangible                            9,957,000         12,631,000        15,624,000
Other assets                                       30,146,000        29,123,000        33,024,000
Total assets                                   $   3,082,571,000 $   2,903,556,000 $   2,893,379,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing                            $   810,600,000   $   674,568,000   $   558,738,000
Interest-bearing                                   1,564,385,000     1,600,814,000     1,718,177,000
Total deposits                                     2,374,985,000     2,275,382,000     2,276,915,000
Securities sold under agreements to repurchase     131,710,000       154,771,000       167,569,000
Federal Home Loan Bank advances                    175,000,000       68,000,000        54,022,000
Subordinated debentures                            44,835,000        55,154,000        54,472,000
Accrued interest and other liabilities             15,230,000        16,445,000        12,263,000
Total liabilities                                  2,741,760,000     2,569,752,000     2,565,241,000
SHAREHOLDERS’ EQUITY
Common stock                                       305,488,000       304,819,000       317,904,000
Retained earnings                                  40,904,000        27,722,000        10,218,000
Accumulated other comprehensive income             (5,581,000)       1,263,000         16,000
Total shareholders’ equity                         340,811,000       333,804,000       328,138,000
Total liabilities and shareholders’ equity     $   3,082,571,000 $   2,903,556,000 $   2,893,379,000
MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME
(Unaudited)
                                   THREE MONTHS ENDED             THREE MONTHS ENDED TWELVE MONTHS ENDED TWELVE MONTHS ENDED
                                   December 31, 2016              December 31, 2015  December 31, 2016   December 31, 2015
INTEREST INCOME
Loans, including fees              $                  27,830,000  $      26,643,000  $      109,049,000  $      104,106,000
Investment securities                                 1,724,000          1,879,000          9,007,000           8,007,000
Other interest-earning assets                         161,000            54,000             401,000             215,000
Total interest income                                 29,715,000         28,576,000         118,457,000         112,328,000
INTEREST EXPENSE
Deposits                                              1,940,000          1,948,000          7,549,000           7,590,000
Short-term borrowings                                 57,000             41,000             211,000             157,000
Federal Home Loan Bank advances                       668,000            259,000            2,263,000           765,000
Other borrowed money                                  615,000            669,000            2,567,000           2,642,000
Total interest expense                                3,280,000          2,917,000          12,590,000          11,154,000
Net interest income                                   26,435,000         25,659,000         105,867,000         101,174,000
Provision for loan losses                             600,000            500,000            2,900,000           (1,000,000)
Net interest income after
provision for loan losses                             25,835,000         25,159,000         102,967,000         102,174,000
NONINTEREST INCOME
Service charges on accounts                           1,075,000          864,000            4,253,000           3,308,000
Credit and debit card income                          1,093,000          1,033,000          4,278,000           4,329,000
Mortgage banking income                               1,288,000          835,000            3,866,000           3,619,000
Earnings on bank owned life insurance                 331,000            293,000            1,264,000           1,113,000
Other income                                          817,000            1,021,000          7,377,000           3,669,000
Total noninterest income                              4,604,000          4,046,000          21,038,000          16,038,000
NONINTEREST EXPENSE
Salaries and benefits                                 10,565,000         10,691,000         43,524,000          42,594,000
Occupancy                                             1,463,000          1,398,000          6,063,000           5,976,000
Furniture and equipment                               541,000            544,000            2,119,000           2,332,000
Data processing costs                                 1,990,000          2,097,000          7,939,000           7,696,000
FDIC insurance costs                                  128,000            402,000            1,236,000           1,717,000
Other expense                                         3,707,000          4,965,000          16,237,000          19,066,000
Total noninterest expense                             18,394,000         20,097,000         77,118,000          79,381,000
Income before federal income
tax expense                                           12,045,000         9,108,000          46,887,000          38,831,000
Federal income tax expense                            3,960,000          2,628,000          14,974,000          11,811,000
Net Income                         $                  8,085,000   $      6,480,000   $      31,913,000   $      27,020,000
Basic earnings per share                              $0.49              $0.40              $1.96               $1.63
Diluted earnings per share                            $0.49              $0.40              $1.96               $1.62
Average basic shares outstanding                      16,352,359         16,314,953         16,292,086          16,609,263
Average diluted shares outstanding                    16,374,117         16,352,187         16,310,730          16,642,140
MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
                                              Quarterly                                                    Year-To-Date
(dollars in thousands except per share data)  2016         2016        2016        2016        2015
                                              4th Qtr      3rd Qtr     2nd Qtr     1st Qtr     4th Qtr     2016        2015
EARNINGS
Net interest income                         $ 26,435       26,450      27,100      25,882      25,659      105,867     101,174
Provision for loan losses                   $ 600          600         1,100       600         500         2,900       (1,000)
Noninterest income                          $ 4,604        5,284       4,064       7,086       4,046       21,038      16,038
Noninterest expense                         $ 18,394       19,663      19,193      19,868      20,097      77,118      79,381
Net income before federal income
tax expense                                 $ 12,045       11,471      10,871      12,500      9,108       46,887      38,831
Net income                                  $ 8,085        7,845       7,434       8,549       6,480       31,913      27,020
Basic earnings per share                    $ 0.49         0.48        0.46        0.52        0.40        1.96        1.63
Diluted earnings per share                  $ 0.49         0.48        0.46        0.52        0.40        1.96        1.62
Average basic shares outstanding              16,352,359   16,282,804  16,240,966  16,291,654  16,314,953  16,292,086  16,609,263
Average diluted shares outstanding            16,374,117   16,307,350  16,268,839  16,325,475  16,352,187  16,310,730  16,642,140
PERFORMANCE RATIOS
Return on average assets                      1.05%        1.02%       1.01%       1.19%       0.88%       1.07%       0.94%
Return on average equity                      9.35%        9.00%       8.79%       10.18%      7.79%       9.35%       8.19%
Net interest margin (fully tax-equivalent)    3.72%        3.76%       4.01%       3.92%       3.81%       3.86%       3.83%
Efficiency ratio                              59.26%       61.96%      61.59%      60.26%      67.66%      60.77%      67.72%
Full-time equivalent employees                616          612         633         612         639         616         639
YIELD ON ASSETS / COST OF FUNDS
Yield on loans                                4.65%        4.57%       4.60%       4.72%       4.71%       4.65%       4.78%
Yield on securities                           2.27%        2.71%       3.99%       2.52%       2.21%       2.87%       2.16%
Yield on other interest-earning assets        0.51%        0.51%       0.51%       0.54%       0.25%       0.51%       0.25%
Yield on total earning assets                 4.18%        4.22%       4.45%       4.37%       4.25%       4.31%       4.25%
Yield on total assets                         3.87%        3.90%       4.12%       4.03%       3.91%       3.99%       3.92%
Cost of deposits                              0.33%        0.33%       0.32%       0.33%       0.34%       0.33%       0.33%
Cost of borrowed funds                        1.45%        1.41%       1.42%       1.53%       1.39%       1.45%       1.37%
Cost of interest-bearing liabilities          0.68%        0.66%       0.64%       0.64%       0.61%       0.66%       0.58%
Cost of funds (total earning assets)          0.46%        0.46%       0.44%       0.45%       0.44%       0.45%       0.42%
Cost of funds (total assets)                  0.42%        0.42%       0.41%       0.42%       0.40%       0.42%       0.39%
PURCHASE ACCOUNTING ADJUSTMENTS
Loan portfolio - increase interest income   $ 1,672        1,002       935         1,316       1,074       4,925       5,338
Time deposits - reduce interest expense     $ 0            0           0           0           0           0           1,371
FHLB advances - reduce interest expense     $ 0            0           0           0           0           0           22
Trust preferred - increase interest expense $ 171          171         171         171         171         684         684
Core deposit intangible - increase overhead $ 636          636         688         715         715         2,675       2,992
MORTGAGE BANKING ACTIVITY
Total mortgage loans originated             $ 46,727       52,340      39,559      24,446      31,659      163,072     147,231
Purchase mortgage loans originated          $ 21,962       25,542      21,995      8,752       15,260      78,251      58,450
Refinance mortgage loans originated         $ 24,765       26,798      17,564      15,694      16,399      84,821      88,781
Total mortgage loans sold                   $ 30,081       35,826      26,229      18,922      25,477      111,058     117,254
Net gain on sale of mortgage loans          $ 1,236        1,173       746         543         795         3,698       3,626
CAPITAL
Tangible equity to tangible assets            9.31%        9.63%       9.66%       9.68%       9.56%       9.31%       9.56%
Tier 1 leverage capital ratio                 11.17%       11.28%      11.41%      11.43%      11.56%      11.17%      11.56%
Common equity risk-based capital ratio        10.88%       10.83%      10.73%      10.86%      10.89%      10.88%      10.89%
Tier 1 risk-based capital ratio               12.47%       12.40%      12.31%      12.49%      12.83%      12.47%      12.83%
Total risk-based capital ratio                13.13%       13.05%      12.95%      13.12%      13.45%      13.13%      13.45%
Tier 1 capital                              $ 336,316      337,054     330,710     324,296     329,858     336,316     329,858
Tier 1 plus tier 2 capital                  $ 354,278      354,580     347,819     340,557     345,539     354,278     345,539
Total risk-weighted assets                  $ 2,697,727    2,718,012   2,685,823   2,596,517   2,570,015   2,697,727   2,570,015
Book value per common share                 $ 20.76        21.44       21.18       20.86       20.41       20.76       20.41
Tangible book value per common share        $ 17.14        17.76       17.45       17.07       16.61       17.14       16.61
Cash dividend per common share              $ 0.67         0.17        0.16        0.16        0.15        1.16        0.58
ASSET QUALITY
Gross loan charge-offs                      $ 970          363         397         475         1,266       2,205       6,279
Recoveries                                  $ 805          179         145         456         328         1,585       2,919
Net loan charge-offs (recoveries)           $ 165          184         252         19          938         620         3,360
Net loan charge-offs to average loans         0.03%        0.03%       0.04%       !!!! 0.01%  0.17%       0.03%       0.15%
Allowance for loan losses                   $ 17,961       17,526      17,110      16,262      15,681      17,961      15,681
Allowance to originated loans                 0.95%        0.93%       0.94%       0.94%       0.94%       0.95%       0.94%
Nonperforming loans                         $ 5,939        4,669       5,168       4,842       5,444       5,939       5,444
Other real estate/repossessed assets        $ 469          790         815         1,478       1,293       469         1,293
Nonperforming loans to total loans            0.25%        0.19%       0.22%       0.21%       0.24%       0.25%       0.24%
Nonperforming assets to total assets          0.21%        0.18%       0.20%       0.22%       0.23%       0.21%       0.23%
NONPERFORMING ASSETS - COMPOSITION
Residential real estate:
Land development                            $ 16           23          42          30          23          16          23
Construction                                $ 0            0           319         0           0           0           0
Owner occupied / rental                     $ 2,883        2,945       2,893       2,955       3,515       2,883       3,515
Commercial real estate:
Land development                            $ 95           110         125         140         155         95          155
Construction                                $ 0            0           0           0           0           0           0
Owner occupied                              $ 610          1,597       2,263       2,877       2,743       610         2,743
Non-owner occuiped                          $ 488          691         134         151         191         488         191
Non-real estate:
Commercial assets                           $ 2,293        65          165         137         69          2,293       69
Consumer assets                             $ 23           28          42          30          41          23          41
Total nonperforming assets                    6,408        5,459       5,983       6,320       6,737       6,408       6,737
NONPERFORMING ASSETS - RECON
Beginning balance                           $ 5,459        5,983       6,320       6,737       10,486      6,737       31,429
Additions - originated loans                $ 2,953        1,172       1,096       1,123       927         6,344       5,639
Merger-related activity                     $ 33           0           0           0           656         33          1,090
Return to performing status                 $ (13)         0           0           0           (48)        (13)        (48)
Principal payments                          $ (1,386)      (1,509)     (495)       (774)       (3,457)     (4,164)     (23,641)
Sale proceeds                               $ (308)        (76)        (642)       (402)       (1,300)     (1,428)     (2,377)
Loan charge-offs                            $ (263)        (101)       (261)       (356)       (172)       (981)       (4,844)
Valuation write-downs                       $ (67)         (10)        (35)        (8)         (355)       (120)       (511)
Ending balance                              $ 6,408        5,459       5,983       6,320       6,737       6,408       6,737
LOAN PORTFOLIO COMPOSITION
Commercial:
Commercial & industrial                     $ 713,903      750,330     750,136     714,612     696,303     713,903     696,303
Land development & construction             $ 34,828       37,455      40,529      39,630      45,120      34,828      45,120
Owner occupied comm’l R/E                   $ 450,464      440,705     438,798     441,662     445,919     450,464     445,919
Non-owner occupied comm’l R/E               $ 748,269      741,443     716,930     666,013     644,351     748,269     644,351
Multi-family & residential rental           $ 117,883      118,103     113,361     112,533     115,003     117,883     115,003
Total commercial                            $ 2,065,347    2,088,036   2,059,754   1,974,450   1,946,696   2,065,347   1,946,696
Retail:
1-4 family mortgages                        $ 195,226      190,715     189,119     185,535     190,385     195,226     190,385
Home equity & other consumer                $ 118,047      127,626     131,067     135,683     140,646     118,047     140,646
Total retail                                $ 313,273      318,341     320,186     321,218     331,031     313,273     331,031
Total loans                                 $ 2,378,620    2,406,377   2,379,940   2,295,668   2,277,727   2,378,620   2,277,727
END OF PERIOD BALANCES
Loans                                       $ 2,378,620    2,406,377   2,379,940   2,295,668   2,277,727   2,378,620   2,277,727
Securities                                  $ 336,086      333,469     331,478     351,372     354,559     336,086     354,559
Other interest-earning assets               $ 133,396      85,848      46,896      62,814      47,062      133,396     47,062
Total earning assets (before allowance)     $ 2,848,102    2,825,694   2,758,314   2,709,854   2,679,348   2,848,102   2,679,348
Total assets                                $ 3,082,571    3,063,964   2,999,936   2,926,056   2,903,556   3,082,571   2,903,556
Noninterest-bearing deposits                $ 810,600      731,663     733,573     678,100     674,568     810,600     674,568
Interest-bearing deposits                   $ 1,564,385    1,597,774   1,546,145   1,587,022   1,600,814   1,564,385   1,600,814
Total deposits                              $ 2,374,985    2,329,437   2,279,718   2,265,122   2,275,382   2,374,985   2,275,382
Total borrowed funds                        $ 354,902      372,917     362,665     308,148     281,830     354,902     281,830
Total interest-bearing liabilities          $ 1,919,287    1,970,691   1,908,810   1,895,170   1,882,644   1,919,287   1,882,644
Shareholders’ equity                        $ 340,811      349,471     344,577     338,553     333,804     340,811     333,804
AVERAGE BALANCES
Loans                                       $ 2,372,510    2,391,620   2,342,333   2,273,960   2,243,856   2,345,308   2,178,276
Securities                                  $ 336,493      328,993     340,866     354,499     362,390     340,172     396,079
Other interest-earning assets               $ 127,790      91,590      49,365      42,008      75,111      77,863      78,953
Total earning assets (before allowance)     $ 2,836,793    2,812,203   2,732,564   2,670,467   2,681,357   2,763,343   2,653,308
Total assets                                $ 3,064,974    3,040,324   2,952,184   2,892,229   2,909,210   2,987,784   2,881,497
Noninterest-bearing deposits                $ 773,137      733,600     702,293     652,338     656,475     715,550     606,750
Interest-bearing deposits                   $ 1,561,539    1,572,424   1,548,509   1,588,930   1,631,218   1,567,846   1,672,140
Total deposits                              $ 2,334,676    2,306,024   2,250,802   2,241,268   2,287,693   2,283,396   2,278,890
Total borrowed funds                        $ 366,905      373,973     347,191     299,956     276,585     347,134     260,891
Total interest-bearing liabilities          $ 1,928,444    1,946,397   1,895,700   1,888,886   1,907,803   1,914,980   1,933,031
Shareholders’ equity                        $ 343,122      345,944     339,357     336,870     330,032     341,340     329,787

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/mercantile-bank-corporation-announces-strong-fourth-quarter-and-full-year-2016-results-300391360.html

SOURCE Mercantile Bank Corporation

https://rt.prnewswire.com/rt.gif?NewsItemId=DE88815&Transmission_Id=201701170601PR_NEWS_USPR_____DE88815&DateId=20170117



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