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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 

 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (date of earliest event reported): July 16, 2024
 

 
Mercantile Bank Corporation
(Exact name of registrant as specified in its charter)
 
Michigan 000-26719 38-3360865
(State or other jurisdiction 
of incorporation)
(Commission File 
Number)
(IRS Employer 
Identification Number)
                                                         
310 Leonard Street NW, Grand Rapids, Michigan 49504
(Address of principal executive offices) (Zip Code)
   
Registrant's telephone number, including area code 616-406-3000
                                  
   
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
MBWM
The Nasdaq Stock Market LLC
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.          ☐
 


 
Item 2.02
Results of Operations and Financial Condition.
 
Earnings Release
 
On July 16, 2024, Mercantile Bank Corporation (the “Company”) issued a press release announcing earnings and other financial results for the quarter ended June 30, 2024. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated here by reference.
 
Item 7.01
Regulation FD Disclosure.
 
The Company has prepared presentation materials (the “Conference Call & Webcast Presentation”) that management intends to use during its previously announced Second Quarter 2024 conference call on Tuesday, July 16, 2024 at 10:00 am Eastern Time, and from time to time thereafter in presentations about the Company’s operations and performance. The Company may use the Conference Call & Webcast Presentation, possibly with modifications, in presentations to current and potential investors, analysts, lenders, business partners, acquisition candidates, customers, employees and others with an interest in the Company and its business.
 
A copy of the Conference Call & Webcast Presentation is furnished as Exhibit 99.2 to this report and incorporated here by reference. The Conference Call & Webcast Presentation is also available on the Company's website at http://ir.mercbank.com. Materials on the Company’s website are not part of or incorporated by reference into this report.
 
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
 
 
Item 9.01
Financial Statements and Exhibits.
 
(d) Exhibits.
 
Exhibit Number                    Description
 
99.1
 
99.2
 
104
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2

 
 
Signatures
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Mercantile Bank Corporation
By:
/s/ Charles E. Christmas
Charles E. Christmas
Executive Vice President, Chief
    Financial Officer and Treasurer  
 
Date: July 16, 2024
 
3

 
Exhibit Index
 
 
Exhibit Number                    Description
 
99.1
Press release of Mercantile Bank Corporation dated July 16, 2024, reporting financial results and earnings for the quarter ended June 30, 2024.
 
99.2
Mercantile Bank Corporation Conference Call & Webcast Presentation dated July 16, 2024.
 
104
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EX-99.1 2 ex_684163.htm EXHIBIT 99.1 ex_684163.htm

Exhibit 99.1

 

picture22.jpg

 

Mercantile Bank Corporation Announces Solid Second Quarter Results

Strong local deposit and commercial loan growth and ongoing strength in asset quality metrics highlight quarter

 

GRAND RAPIDS, Mich., July 16, 2024 – Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $18.8 million, or $1.17 per diluted share, for the second quarter of 2024, compared with net income of $20.4 million, or $1.27 per diluted share, for the second quarter of 2023.  Net income during the first six months of 2024 totaled $40.3 million, or $2.50 per diluted share, compared with net income of $41.3 million, or $2.58 per diluted share, during the first six months of 2023.

 

“Our solid second quarter financial performance provides further evidence of our ability to successfully navigate the challenges arising from shifting economic and operating environments,” said Ray Reitsma, President and Chief Executive Officer of Mercantile. “We are very pleased with the levels of local deposit and commercial loan growth during the quarter, which demonstrate our ongoing focus on new client acquisition, meeting the banking needs of existing customers, and relationship banking.  Our net interest margin remained healthy during the second quarter, which when coupled with the local deposit and commercial loan expansion and notable increases in several noninterest income categories, provided for strong operating results during the period.  As evidenced by the sustained strength in asset quality metrics, we remain committed to growing and administering the loan portfolio in a disciplined manner.”

 

Second quarter highlights include:

 

 

Strong local deposit growth
 

Robust commercial loan portfolio expansion
 

Continuing strength in commercial loan pipeline
 

Substantial increases in several noninterest income revenue streams
 

Sustained low levels of nonperforming assets, past due loans, and loan charge-offs
 

Solid capital position

 







 

Operating Results

 

Net revenue, consisting of net interest income and noninterest income, was $56.8 million during the second quarter of 2024, up $1.6 million, or 2.8 percent, from $55.2 million during the prior-year second quarter.  Net interest income during the current-year second quarter was $47.1 million, down $0.5 million, or 1.0 percent, from $47.6 million during the respective 2023 period as higher yields on, along with growth in, earning assets were more than offset by an increased cost of funds. Noninterest income totaled $9.7 million during the second quarter of 2024, up $2.0 million, or 26.6 percent, from $7.7 million during the second quarter of 2023.  The increase in noninterest income mainly reflected higher levels of mortgage banking income and service charges on accounts. 

 

The net interest margin was 3.63 percent in the second quarter of 2024, down from 4.05 percent in the prior-year second quarter.  The yield on average earning assets was 6.07 percent during the current-year second quarter, an increase from 5.61 percent during the respective 2023 period.  The higher yield primarily resulted from an increased yield on loans.  The yield on loans was 6.64 percent during the second quarter of 2024, up from 6.19 percent during the second quarter of 2023 mainly due to higher interest rates on variable-rate commercial loans resulting from the Federal Open Market Committee (“FOMC”) raising the targeted federal funds rate in an effort to reduce elevated inflation levels.  The FOMC increased the targeted federal funds rate by 75 basis points during the period of March 2023 through July 2023, during which time average variable-rate commercial loans represented approximately 68 percent of average total commercial loans.

 

The cost of funds was 2.44 percent in the second quarter of 2024, up from 1.56 percent in the second quarter of 2023 primarily due to higher costs of deposits and borrowed funds, reflecting the impact of the rising interest rate environment.  A change in funding mix, mainly consisting of a decrease in noninterest-bearing and lower-cost deposits and an increase in higher-cost money market accounts and time deposits stemming from deposit migration and new deposit relationships, also contributed to the increased cost of funds.

 

Mercantile recorded provisions for credit losses of $3.5 million and $2.0 million during the second quarters of 2024 and 2023, respectively.  The provision expense recorded during the current-year second quarter primarily reflected an individual allocation for a nonperforming commercial loan relationship and allocations necessitated by net loan growth.  The provision expense recorded during the second quarter of 2023 mainly reflected allocations required by net loan growth and adjustments to historical loss factors to better represent Mercantile’s expectations for future credit losses.

  







 

Noninterest income totaled $9.7 million during the second quarter of 2024, up $2.0 million, or 26.6 percent, from $7.7 million during the second quarter of 2023.  The growth primarily resulted from increases in mortgage banking income and service charges on accounts, with the latter mainly stemming from enhanced use of cash management products.  The higher level of mortgage banking income primarily resulted from an increased loan sold percentage, which rose from approximately 43 percent during the second quarter of 2023 to approximately 75 percent during the second quarter of 2024.  Increases in payroll service fees, bank owned life insurance income, and interest rate swap income also contributed to the higher level of noninterest income.

 

Noninterest expense totaled $29.7 million during the second quarter of 2024, compared to $27.8 million during the prior-year second quarter.  The increase in noninterest expense mainly resulted from larger salary costs, reflecting annual merit pay increases, market adjustments, higher residential mortgage lender commissions and incentives, and lower residential mortgage loan deferred salary costs.  Higher levels of data processing costs, primarily reflecting increased transaction volume and software support costs, and health insurance claims also contributed to the rise in noninterest expense.

 

Mr. Reitsma commented, “We are very pleased with the noteworthy increases in mortgage banking income and treasury management fees.  The growth in mortgage banking income mainly reflected the success of a strategic initiative to increase the percentage of loans originated with the intent to sell, while the higher level of treasury management fees, which was fueled by increases in service charges on accounts and payroll processing fees, in large part stemmed from the expanded use of products and services. Our net interest margin, while decreasing as anticipated due to a higher cost of funds, remained above historical levels during the second quarter of 2024.  We regularly review our operating processes to identify further opportunities to improve efficiency while meeting balance sheet growth objectives and continuing to provide customers with the excellent service that they have become accustomed to.  Despite the unique circumstances surrounding a troubled non-real-estate-related commercial loan relationship that necessitated a sizeable reserve allocation, we believe the credit trends associated with our commercial loan portfolio remain solid and steady.”

 







 

Balance Sheet

 

As of June 30, 2024, total assets were $5.60 billion, up $249 million from December 31, 2023.  Total loans increased $134 million, or an annualized 6.3 percent, during the first six months of 2024, primarily reflecting commercial loan growth of $118 million, or an annualized 6.9 percent.  The commercial loan portfolio growth during the first six months of 2024 occurred despite the full payoffs and partial paydowns of certain larger relationships, which aggregated approximately $76 million during the period.  The payoffs and paydowns primarily resulted from customers using excess cash flows generated within their operations to make line of credit and unscheduled term loan principal paydowns, as well as from sales of assets.  Residential mortgage loans and other consumer loans grew $12.2 million and $4.3 million, respectively, during the first half of 2024.  Interest-earning deposits and securities available for sale increased $75.6 million and $30.8 million, respectively, during the first six months of 2024, with the growth in interest-earning deposits largely reflecting the success of a strategic initiative to enhance on-balance sheet liquidity.

 

As of June 30, 2024, unfunded commitments on commercial construction and development loans, which are expected to be funded over the next 12 to 18 months, and residential construction loans, which are expected to be largely funded over the next 12 months, totaled approximately $320 million and $37 million, respectively.

 

Commercial and industrial loans and owner-occupied commercial real estate loans combined represented approximately 57 percent of total commercial loans as of June 30, 2024, a level that has remained relatively consistent with prior periods and in line with management’s expectations.

 







 

Total deposits equaled $4.15 billion as of June 30, 2024, representing an increase of $246 million, or an annualized 12.6 percent, from December 31, 2023.  Local deposits were up $261 million, or 14.0 percent annualized, during the first six months of 2024, while brokered deposits decreased $15.2 million during the respective period.  The growth in local deposits, which exceeded loan growth by over 6 percent on an annualized basis, provided for a reduction in the loan-to-deposit ratio from 110 percent as of December 31, 2023, to 107 percent as of June 30, 2024.  The increase in local deposits during the first six months of 2024, which occurred despite the typical level of seasonal noninterest-bearing deposit withdrawals by customers to make bonus and tax payments and partnership distributions, reflected new deposit relationships and growth in existing deposit relationships.  Wholesale funds were $580 million, or approximately 12 percent of total funds, at June 30, 2024, compared to $636 million, or approximately 14 percent of total funds, at December 31, 2023.  Noninterest-bearing checking accounts represented approximately 27 percent of total deposits as of June 30, 2024, which is in line with historical levels.

 

Mr. Reitsma noted, “The significant growth in commercial loans during the first six months of 2024, reflecting increases in all portfolio segments, occurred despite elevated amounts of full and partial payoffs and paydowns.  Our lending team has done an exceptional job of meeting existing customers’ credit needs and identifying new lending opportunities, with an emphasis on securing potential clients’ overall banking relationships.  In light of our robust commercial loan pipeline and credit availability for commercial construction and development loans, we believe commercial loan growth will be solid in forthcoming periods.  We are delighted with the local deposit growth during the year-to-date period, and gaining deposit market share will remain a top priority.”

 

Asset Quality

 

Nonperforming assets totaled $9.1 million, or 0.2 percent of total assets, at June 30, 2024, compared to $6.2 million, or 0.1 percent of total assets, at March 31, 2024, and $3.6 million, or less than 0.1 percent of total assets, at December 31, 2023.  The increase in nonperforming assets during the first six months of 2024 substantially resulted from the deterioration of two commercial loan relationships, which were placed on nonaccrual and fully reserved for during the period.  The level of past due loans remains nominal.  During the second quarter of 2024, loan charge-offs were minimal, while recoveries of prior period loan charge-offs equaled $0.3 million, providing for net loan recoveries of $0.3 million, or an annualized 0.02 percent of average total loans.  During the first six months of 2024, loan charge-offs totaled less than $0.1 million, while recoveries of prior period loan charge-offs equaled $0.7 million, providing for net loan recoveries of $0.7 million, or an annualized 0.03 percent of average total loans.

 

Mr. Reitsma remarked, “Our steadfast commitment to employing thorough and disciplined underwriting practices to meet loan portfolio growth objectives is evidenced by our sustained strength in asset quality metrics.  Nonperforming assets, while increasing during the first six months of 2024 primarily due to the deterioration of two non-real-estate-related commercial loan relationships, remain at a low level.  As reflected by continuing low levels of nonaccrual loans, past due loans, and loan charge-offs, our commercial borrowers have continued to demonstrate resiliency in dealing with the challenges stemming from current operating conditions, including higher interest rates and the associated increase in debt service requirements.  We continue to closely monitor our commercial loan portfolio for signs of systemic distress and believe our efforts to identify emerging credit issues as soon as possible will help limit the impact of any such noted issues on our overall financial condition.  Our residential mortgage loan and consumer loan portfolios, which have not exhibited signs of systemic credit deterioration, such as higher delinquency levels, have continued to perform well.”

 

Capital Position

 

Shareholders’ equity totaled $551 million as of June 30, 2024, up $29.0 million from December 31, 2023.  Mercantile Bank maintained “well-capitalized” positions at the end of the second quarter of 2024 and year-end 2023, with total risk-based capital ratios of 13.9 percent and 13.4 percent, respectively.  As of June 30, 2024, Mercantile Bank had approximately $204 million in excess of the 10 percent minimum regulatory threshold required to be categorized as a “well-capitalized” institution. 

 

All of Mercantile Bank’s investments are categorized as available-for-sale.  As of June 30, 2024, the net unrealized loss on these investments totaled $67.4 million, resulting in an after-tax reduction to equity capital of $53.2 million.  Although unrealized gains and losses on investments are excluded from regulatory capital ratio calculations, Mercantile Bank’s excess capital over the minimum regulatory requirement to be considered a “well-capitalized” institution would approximate $151 million on an adjusted basis.

 

Mercantile reported 16,137,646 total shares outstanding as of June 30, 2024.

 







 

Mr. Reitsma concluded, “Our ongoing strong financial performance has allowed us to continue our regular quarterly cash dividend program, and as demonstrated by our announcement of an increased third quarter cash dividend earlier today, we remain committed to providing shareholders with competitive returns on their investments.  We believe our robust capital position, asset quality metrics, and operating performance, along with the sustained strength in our commercial loan pipeline, position us to remain a steady and profitable performer and withstand any challenges resulting from the current operating environment and changing economic conditions.  The increases in loans and local deposits during the first six months of 2024 reflect the success of our community banking model and associated emphasis on forming mutually beneficial relationships with established and new clients.”

 

Investor Presentation

 

Mercantile has prepared presentation materials that management intends to use during its previously announced second quarter 2024 conference call on Tuesday, July 16, 2024, at 10:00 a.m. Eastern Time, and from time to time thereafter in presentations about the company’s operations and performance.  These materials, which are available for viewing in the Investor Relations section of Mercantile’s website at www.mercbank.com, have been furnished to the U.S. Securities and Exchange Commission concurrently with this press release.

 

About Mercantile Bank Corporation

 

Based in Grand Rapids, Michigan, Mercantile Bank Corporation is the bank holding company for Mercantile Bank.  Mercantile provides financial products and services in a professional and personalized manner designed to make banking easier for businesses, individuals, and governmental units. Distinguished by exceptional service, a knowledgeable staff, and a commitment to the communities it serves, Mercantile is one of the largest Michigan-based banks with assets of approximately $5.6 billion. Mercantile Bank Corporation's common stock is listed on the NASDAQ Global Select Market under the symbol "MBWM."  For more information about Mercantile, visit www.mercbank.com, and follow us on Facebook, Instagram, X (formerly Twitter) @MercBank, and LinkedIn @merc-bank.

 

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 or recession; significant declines in the value of commercial real estate; market volatility; demand for products and services; climate impacts; labor markets; the degree of competition by traditional and nontraditional financial services companies; changes in banking regulation or actions by bank regulators; changes in tax laws and other laws and regulations applicable to us; changes in prices, levies, and assessments; the impact of technological advances; potential cyber-attacks, information security breaches and other criminal activities; 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; the transition from LIBOR to SOFR; changes in the national and local economies; unstable political and economic environments; disease outbreaks, such as the COVID-19 pandemic or similar public health threats, and measures implemented to combat them; 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:

 

         

Ray Reitsma Charles Christmas
President and CEO Executive Vice President and CFO
616-233-2349 616-726-1202
rreitsma@mercbank.com cchristmas@mercbank.com

                 







 

Mercantile Bank Corporation

Second Quarter 2024 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(dollars in thousands)

 

JUNE 30,

   

DECEMBER 31,

   

JUNE 30,

 
   

2024

   

2023

   

2023

 

ASSETS

                       

Cash and due from banks

  $ 61,863     $ 70,408     $ 69,133  

Interest-earning deposits

    135,766       60,125       138,663  

Total cash and cash equivalents

    197,629       130,533       207,796  
                         

Securities available for sale

    647,907       617,092       608,972  

Federal Home Loan Bank stock

    21,513       21,513       21,513  

Mortgage loans held for sale

    22,126       18,607       11,942  
                         

Loans

    4,438,245       4,303,758       4,051,843  

Allowance for credit losses

    (55,408 )     (49,914 )     (44,721 )

Loans, net

    4,382,837       4,253,844       4,007,122  
                         

Premises and equipment, net

    50,158       50,928       52,291  

Bank owned life insurance

    86,001       85,668       81,500  

Goodwill

    49,473       49,473       49,473  

Other assets

    144,744       125,566       96,978  
                         

Total assets

  $ 5,602,388     $ 5,353,224     $ 5,137,587  
                         
                         

LIABILITIES AND SHAREHOLDERS' EQUITY

                       

Deposits:

                       

Noninterest-bearing

  $ 1,119,888     $ 1,247,640     $ 1,371,633  

Interest-bearing

    3,026,686       2,653,278       2,385,156  

Total deposits

    4,146,574       3,900,918       3,756,789  
                         

Securities sold under agreements to repurchase

    221,898       229,734       219,457  

Federal Home Loan Bank advances

    427,083       467,910       467,910  

Subordinated debentures

    49,987       49,644       49,301  

Subordinated notes

    89,143       88,971       88,800  

Accrued interest and other liabilities

    116,552       93,902       76,628  

Total liabilities

    5,051,237       4,831,079       4,658,885  
                         

SHAREHOLDERS' EQUITY

                       

Common stock

    297,591       295,106       292,906  

Retained earnings

    306,804       277,526       247,313  

Accumulated other comprehensive income/(loss)

    (53,244 )     (50,487 )     (61,517 )

Total shareholders' equity

    551,151       522,145       478,702  
                         

Total liabilities and shareholders' equity

  $ 5,602,388     $ 5,353,224     $ 5,137,587  

 







 

Mercantile Bank Corporation

Second Quarter 2024 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF INCOME

(Unaudited)

 

(dollars in thousands except per share data)

 

THREE MONTHS ENDED

   

THREE MONTHS ENDED

   

SIX MONTHS ENDED

   

SIX MONTHS ENDED

 
   

June 30, 2024

   

June 30, 2023

   

June 30, 2024

   

June 30, 2023

 

INTEREST INCOME

                               

Loans, including fees

  $ 72,819     $ 62,006     $ 144,089     $ 119,159  

Investment securities

    3,624       3,111       7,046       6,118  

Interest-earning deposits

    2,436       801       4,469       1,125  

Total interest income

    78,879       65,918       155,604       126,402  
                                 

INTEREST EXPENSE

                               

Deposits

    24,710       12,379       46,934       20,286  

Short-term borrowings

    1,757       914       3,412       1,373  

Federal Home Loan Bank advances

    3,252       3,051       6,651       4,845  

Other borrowed money

    2,088       2,023       4,173       3,963  

Total interest expense

    31,807       18,367       61,170       30,467  
                                 

Net interest income

    47,072       47,551       94,434       95,935  
                                 

Provision for credit losses

    3,500       2,000       4,800       2,600  
                                 

Net interest income after provision for credit losses

    43,572       45,551       89,634       93,335  
                                 

NONINTEREST INCOME

                               

Service charges on accounts

    1,692       1,064       3,224       2,041  

Mortgage banking income

    3,023       1,835       5,365       3,050  

Credit and debit card income

    2,266       2,426       4,387       4,485  

Interest rate swap income

    766       748       2,104       1,785  

Payroll services

    686       572       1,582       1,317  

Earnings on bank owned life insurance

    437       402       1,609       802  

Other income

    811       598       2,277       1,117  

Total noninterest income

    9,681       7,645       20,548       14,597  
                                 

NONINTEREST EXPENSE

                               

Salaries and benefits

    17,913       16,461       36,150       33,143  

Occupancy

    2,220       2,098       4,509       4,387  

Furniture and equipment

    923       878       1,852       1,700  

Data processing costs

    3,415       2,881       6,704       6,043  

Charitable foundation contributions

    4       2       707       12  

Other expense

    5,262       5,509       9,758       11,144  

Total noninterest expense

    29,737       27,829       59,680       56,429  
                                 

Income before federal income tax expense

    23,516       25,367       50,502       51,503  
                                 

Federal income tax expense

    4,730       5,010       10,154       10,171  
                                 

Net Income

  $ 18,786     $ 20,357     $ 40,348     $ 41,332  
                                 

Basic earnings per share

  $ 1.17     $ 1.27     $ 2.50     $ 2.58  

Diluted earnings per share

  $ 1.17     $ 1.27     $ 2.50     $ 2.58  
                                 

Average basic shares outstanding

    16,122,813       16,003,372       16,120,836       15,999,775  

Average diluted shares outstanding

    16,122,813       16,003,372       16,120,836       15,999,775  

 







 

Mercantile Bank Corporation

Second Quarter 2024 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

  

   

Quarterly

   

Year-To-Date

 

(dollars in thousands except per share data)

 

2024

   

2024

   

2023

   

2023

   

2023

                 
   

2nd Qtr

   

1st Qtr

   

4th Qtr

   

3rd Qtr

   

2nd Qtr

   

2024

   

2023

 

EARNINGS

                                                       

Net interest income

  $ 47,072       47,361       48,649       48,961       47,551       94,434       95,935  

Provision for credit losses

  $ 3,500       1,300       1,800       3,300       2,000       4,800       2,600  

Noninterest income

  $ 9,681       10,868       8,300       9,246       7,645       20,548       14,597  

Noninterest expense

  $ 29,737       29,944       29,940       28,920       27,829       59,680       56,429  

Net income before federal income

                                                       

tax expense

  $ 23,516       26,985       25,209       25,987       25,367       50,502       51,503  

Net income

  $ 18,786       21,562       20,030       20,855       20,357       40,348       41,332  

Basic earnings per share

  $ 1.17       1.34       1.25       1.30       1.27       2.50       2.58  

Diluted earnings per share

  $ 1.17       1.34       1.25       1.30       1.27       2.50       2.58  

Average basic shares outstanding

    16,122,813       16,118,858       16,044,223       16,018,419       16,003,372       16,120,836       15,999,775  

Average diluted shares outstanding

    16,122,813       16,118,858       16,044,223       16,018,419       16,003,372       16,120,836       15,999,775  
                                                         

PERFORMANCE RATIOS

                                                       

Return on average assets

    1.36 %     1.61 %     1.52 %     1.60 %     1.64 %     1.48 %     1.69 %

Return on average equity

    13.93 %     16.41 %     16.04 %     17.07 %     17.23 %     15.15 %     17.97 %

Net interest margin (fully tax-equivalent)

    3.63 %     3.74 %     3.92 %     3.98 %     4.05 %     3.68 %     4.16 %

Efficiency ratio

    52.40 %     51.42 %     52.57 %     49.68 %     50.42 %     51.90 %     51.05 %

Full-time equivalent employees

    670       642       651       643       665       670       665  
                                                         

YIELD ON ASSETS / COST OF FUNDS

                                                       

Yield on loans

    6.64 %     6.65 %     6.53 %     6.37 %     6.19 %     6.65 %     6.05 %

Yield on securities

    2.30 %     2.20 %     2.18 %     2.13 %     2.00 %     2.25 %     1.98 %

Yield on interest-earning deposits

    5.28 %     5.35 %     5.31 %     5.26 %     4.88 %     5.31 %     4.65 %

Yield on total earning assets

    6.07 %     6.06 %     5.95 %     5.78 %     5.61 %     6.06 %     5.48 %

Yield on total assets

    5.72 %     5.72 %     5.61 %     5.45 %     5.30 %     5.72 %     5.18 %

Cost of deposits

    2.42 %     2.25 %     1.94 %     1.67 %     1.36 %     2.33 %     1.12 %

Cost of borrowed funds

    3.56 %     3.51 %     3.15 %     2.98 %     2.90 %     3.53 %     2.73 %

Cost of interest-bearing liabilities

    3.40 %     3.27 %     2.96 %     2.69 %     2.37 %     3.33 %     2.06 %

Cost of funds (total earning assets)

    2.44 %     2.32 %     2.03 %     1.80 %     1.56 %     2.38 %     1.32 %

Cost of funds (total assets)

    2.31 %     2.19 %     1.91 %     1.70 %     1.48 %     2.25 %     1.25 %
                                                         

MORTGAGE BANKING ACTIVITY

                                                       

Total mortgage loans originated

  $ 122,728       79,930       88,187       108,602       117,563       202,658       189,554  

Purchase/construction mortgage loans originated

  $ 103,939       57,668       75,365       93,520       100,941       161,607       157,669  

Refinance mortgage loans originated

  $ 18,789       22,262       12,822       15,082       16,622       41,051       31,885  

Mortgage loans originated with intent to sell

  $ 91,490       59,280       59,135       69,305       50,734       150,770       75,638  

Income on sale of mortgage loans

  $ 2,487       2,064       1,487       2,386       1,570       4,551       2,520  
                                                         

CAPITAL

                                                       

Tangible equity to tangible assets

    9.03 %     8.99 %     8.91 %     8.33 %     8.43 %     9.03 %     8.43 %

Tier 1 leverage capital ratio

    10.85 %     10.88 %     10.84 %     10.64 %     10.73 %     10.85 %     10.73 %

Common equity risk-based capital ratio

    10.46 %     10.41 %     10.07 %     10.41 %     10.25 %     10.46 %     10.25 %

Tier 1 risk-based capital ratio

    11.36 %     11.33 %     10.99 %     11.38 %     11.24 %     11.36 %     11.24 %

Total risk-based capital ratio

    14.10 %     14.05 %     13.69 %     14.21 %     14.03 %     14.10 %     14.03 %

Tier 1 capital

  $ 602,835       587,888       570,730       554,634       537,802       602,835       537,802  

Tier 1 plus tier 2 capital

  $ 748,097       729,410       710,905       692,252       671,323       748,097       671,323  

Total risk-weighted assets

  $ 5,306,911       5,190,106       5,192,970       4,872,424       4,784,428       5,306,911       4,784,428  

Book value per common share

  $ 34.15       33.29       32.38       30.16       29.89       34.15       29.89  

Tangible book value per common share

  $ 31.09       30.22       29.31       27.06       26.78       31.09       26.78  

Cash dividend per common share

  $ 0.35       0.35       0.34       0.34       0.33       0.70       0.66  
                                                         

ASSET QUALITY

                                                       

Gross loan charge-offs

  $ 26       15       53       243       461       41       567  

Recoveries

  $ 296       439       160       230       305       735       442  

Net loan charge-offs (recoveries)

  $ (270 )     (424 )     (107 )     13       156     $ (694 )     125  

Net loan charge-offs to average loans

    (0.02 %)     (0.04 %)  

(0.01

%)     < 0.01%    

0.02

%  

(0.03

%)     0.01 %

Allowance for credit losses

  $ 55,408       51,638       49,914       48,008       44,721       55,408       44,721  

Allowance to loans

    1.25 %     1.19 %     1.16 %     1.17 %     1.10 %     1.25 %     1.10 %

Nonperforming loans

  $ 9,129       6,040       3,415       5,889       2,099       9,129       2,099  

Other real estate/repossessed assets

  $ 0       200       200       51       661       0       661  

Nonperforming loans to total loans

    0.21 %     0.14 %     0.08 %     0.14 %     0.05 %     0.21 %     0.05 %

Nonperforming assets to total assets

    0.16 %     0.11 %     0.07 %     0.11 %     0.05 %     0.16 %     0.05 %
                                                         

NONPERFORMING ASSETS - COMPOSITION

                                                       

Residential real estate:

                                                       

Land development

  $ 1       1       1       1       2       1       2  

Construction

  $ 0       0       0       0       0       0       0  

Owner occupied / rental

  $ 2,288       3,370       3,095       1,913       1,793       2,288       1,793  

Commercial real estate:

                                                       

Land development

  $ 0       0       0       0       0       0       0  

Construction

  $ 0       0       0       0       0       0       0  

Owner occupied

  $ 0       200       270       738       716       0       716  

Non-owner occupied

  $ 0       0       0       0       0       0       0  

Non-real estate:

                                                       

Commercial assets

  $ 6,840       2,669       249       3,288       249       6,840       249  

Consumer assets

  $ 0       0       0       0       0       0       0  

Total nonperforming assets

  $ 9,129       6,240       3,615       5,940       2,760       9,129       2,760  
                                                         

NONPERFORMING ASSETS - RECON

                                                       

Beginning balance

  $ 6,240       3,615       5,940       2,760       8,443       3,615       7,728  

Additions

  $ 4,570       2,802       2,166       4,163       273       7,372       1,596  

Return to performing status

  $ 0       0       0       0       0       0       (31 )

Principal payments

  $ (1,481 )     (177 )     (4,402 )     (166 )     (5,526 )     (1,658 )     (6,041 )

Sale proceeds

  $ (200 )     0       (51 )     (661 )     0       (200 )     0  

Loan charge-offs

  $ 0       0       (38 )     (156 )     (430 )     0       (492 )

Valuation write-downs

  $ 0       0       0       0       0       0       0  

Ending balance

  $ 9,129       6,240       3,615       5,940       2,760       9,129       2,760  
                                                         

LOAN PORTFOLIO COMPOSITION

                                                       

Commercial:

                                                       

Commercial & industrial

  $ 1,275,745       1,222,638       1,254,586       1,184,993       1,229,588       1,275,745       1,229,588  

Land development & construction

  $ 76,247       75,091       74,752       72,921       72,682       76,247       72,682  

Owner occupied comm'l R/E

  $ 732,844       719,338       717,667       671,083       659,201       732,844       659,201  

Non-owner occupied comm'l R/E

  $ 1,059,052       1,045,614       1,035,684       1,000,411       957,221       1,059,052       957,221  

Multi-family & residential rental

  $ 389,390       366,961       332,609       308,229       287,285       389,390       287,285  

Total commercial

  $ 3,533,278       3,429,642       3,415,298       3,237,637       3,205,977       3,533,278       3,205,977  

Retail:

                                                       

1-4 family mortgages

  $ 849,626       840,653       837,407       816,849       795,661       849,626       795,661  

Other consumer

  $ 55,341       51,711       51,053       49,890       50,205       55,341       50,205  

Total retail

  $ 904,967       829,364       888,460       866,739       845,866       904,967       845,866  

Total loans

  $ 4,438,245       4,322,006       4,303,758       4,104,376       4,051,843       4,438,245       4,051,843  
                                                         

END OF PERIOD BALANCES

                                                       

Loans

  $ 4,438,245       4,322,006       4,303,758       4,104,376       4,051,843       4,438,245       4,051,843  

Securities

  $ 669,420       630,666       638,605       613,818       630,485       669,420       630,485  

Interest-earning deposits

  $ 135,766       184,625       60,125       201,436       138,663       135,766       138,663  

Total earning assets (before allowance)

  $ 5,243,431       5,137,297       5,002,488       4,919,630       4,820,991       5,243,431       4,820,991  

Total assets

  $ 5,602,388       5,465,953       5,353,224       5,251,012       5,137,587       5,602,388       5,137,587  

Noninterest-bearing deposits

  $ 1,119,888       1,134,995       1,247,640       1,309,672       1,371,633       1,119,888       1,371,633  

Interest-bearing deposits

  $ 3,026,686       2,872,815       2,653,278       2,591,063       2,385,156       3,026,686       2,385,156  

Total deposits

  $ 4,146,574       4,007,810       3,900,918       3,900,735       3,756,789       4,146,574       3,756,789  

Total borrowed funds

  $ 789,327       815,744       837,335       761,431       826,558       789,327       826,558  

Total interest-bearing liabilities

  $ 3,816,013       3,688,559       3,490,613       3,352,494       3,211,714       3,816,013       3,211,714  

Shareholders' equity

  $ 551,151       536,644       522,145       483,211       478,702       551,151       478,702  
                                                         

AVERAGE BALANCES

                                                       

Loans

  $ 4,396,475       4,299,163       4,184,070       4,054,279       4,017,690       4,347,819       3,973,256  

Securities

  $ 640,627       634,099       618,517       626,714       634,607       637,363       631,137  

Interest-earning deposits

  $ 182,636       150,234       118,996       208,932       64,958       166,435       48,113  

Total earning assets (before allowance)

  $ 5,219,738       5,083,496       4,921,583       4,889,925       4,717,255       5,151,617       4,652,506  

Total assets

  $ 5,533,262       5,384,675       5,224,238       5,180,847       4,988,413       5,458,969       4,922,511  

Noninterest-bearing deposits

  $ 1,139,887       1,175,884       1,281,201       1,359,238       1,361,901       1,157,886       1,426,331  

Interest-bearing deposits

  $ 2,957,011       2,790,308       2,600,703       2,466,834       2,278,877       2,873,659       2,231,902  

Total deposits

  $ 4,096,898       3,966,192       3,881,904       3,826,072       3,640,778       4,031,545       3,658,233  

Total borrowed funds

  $ 800,577       816,848       773,491       806,376       827,105       808,713       752,330  

Total interest-bearing liabilities

  $ 3,757,588       3,607,156       3,374,194       3,273,210       3,105,982       3,682,372       2,984,232  

Shareholders' equity

  $ 540,868       527,180       495,431       484,624       473,983       534,024       483,810  

 

 
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