GRAND RAPIDS, Mich., Jan. 17, 2017 /PRNewswire/
-- Mercantile Bank Corporation (NASDAQ: 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