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Mercantile Bank Corporation Announces Robust Third Quarter 2022 Results

MBWM

Significant increase in net interest income, solid loan growth, and ongoing strength in asset quality metrics highlight quarter

GRAND RAPIDS, Mich., Oct. 18, 2022 /PRNewswire/ -- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $16.0 million, or $1.01 per diluted share, for the third quarter of 2022, compared with net income of $15.1 million, or $0.95 per diluted share, for the respective prior-year period. Net income during the first nine months of 2022 totaled $39.3 million, or $2.48 per diluted share, compared to $47.4 million, or $2.95 per diluted share, during the first nine months of 2021.

"We are very pleased with our third quarter operating results," said Robert B. Kaminski, Jr., President and Chief Executive Officer of Mercantile. "Substantial growth in net interest income, primarily reflecting an improved net interest margin, continued loan growth, increases in certain key fee income categories and a manageable overhead cost structure, have more than offset a significantly reduced level of mortgage banking income stemming from unfavorable market conditions. Our continuing efforts to meet the credit needs of existing clients and attract new loan relationships, while adhering to our underwriting standards, have been successful as evidenced by the significant growth in commercial loans and residential mortgage loans and persistent strength in asset quality metrics. We take pride in our role as a trusted consultant and assisting our customers in dealing with the challenges posed by the current economic environment and associated operating conditions, including elevated inflation levels, supply chain disruptions, increasing interest rates, and staffing issues."

Third quarter highlights include:

  • Significant increase in net interest income reflecting net interest margin expansion and loan growth
  • Notable increases in several key fee income categories
  • Substantial commercial loan and residential mortgage loan growth
  • Sustained strength in commercial loan pipeline
  • Ongoing low level of nonperforming assets, no loan charge-offs, and no loans placed on nonaccrual status
  • Strong capital position
Operating Results

Total revenue, which consists of net interest income and noninterest income, was $49.6 million during the third quarter of 2022, compared to $46.7 million during the prior-year third quarter. Net interest income during the current-year third quarter was $42.4 million, up $11.3 million, or approximately 36 percent, from $31.1 million during the respective 2021 period, reflecting continued earning asset growth and net interest margin expansion. Noninterest income totaled $7.3 million during the third quarter of 2022, down from $15.6 million during the third quarter of 2021 mainly due to decreased mortgage banking income and interest rate swap income, which more than offset noteworthy increases in several key fee income categories.

The net interest margin was 3.56 percent in the third quarter of 2022, up from 2.88 percent in the second quarter of 2022 and 2.71 percent in the prior-year third quarter. The yield on average earning assets was 4.04 percent during the current-year third quarter, up from 3.32 percent during the second quarter of 2022 and 3.13 percent during the third quarter of 2021. The increased yield on average earning assets primarily resulted from a higher yield on loans, a change in earning asset mix, comprised of a decrease in lower-yielding interest-earning deposits and an increase in higher-yielding loans as a percentage of earning assets, and an increased yield on other interest-earning assets. The yield on loans was 4.56 percent during the third quarter of 2022, up from 3.97 percent during the second quarter of 2022 and 4.07 percent during the prior-year third quarter mainly due to higher interest rates on variable-rate commercial loans stemming from the Federal Open Market Committee ("FOMC") significantly raising the targeted federal funds rate in an effort to curb elevated inflation levels. The FOMC increased the targeted federal funds rate by 300 basis points during the period of March 2022 through September 2022. The increase in loan yield during the third quarter of 2022 compared to the respective 2021 period was achieved despite a significant reduction in Paycheck Protection Program net loan fee accretion. As of September 30, 2022, approximately 64 percent of the commercial loan portfolio consisted of variable-rate loans.

The cost of funds was 0.48 percent in the third quarter of 2022, up from 0.42 percent in the prior-year third quarter primarily due to higher costs of trust preferred securities and deposits, reflecting the impact of the rising interest rate environment, and the issuance of $90.0 million in subordinated notes in December of 2021 and January of 2022. Subordinated note issuance proceeds of $85.0 million were injected into Mercantile Bank as an increase to equity capital to support anticipated loan growth. The cost of funds during the current-year third quarter increased slightly from the second quarter of 2022.

The persistence of a significant volume of excess on-balance sheet liquidity, which initially surfaced in the second quarter of 2020 as a result of the COVID-19 environment, negatively impacted the yield on average earning assets by 10 basis points and 51 basis points during the third quarters of 2022 and 2021, respectively, and the net interest margin by 7 basis points and 44 basis points during the respective periods. The excess funds, consisting almost entirely of low-yielding deposits with the Federal Reserve Bank of Chicago, are mainly a product of local deposit growth and Paycheck Protection Program loan forgiveness activities.

Mercantile recorded a provision for credit losses of $2.9 million during the third quarter of 2022, compared to a provision expense of $1.9 million during the third quarter of 2021. The provision expense recorded during the current-year third quarter mainly reflected allocations necessitated by commercial loan and residential mortgage loan growth, an increased specific reserve for a distressed commercial loan relationship, and a decline in forecasted economic conditions. The provision expense recorded during the prior-year third quarter primarily reflected allocations associated with commercial loan growth. Mercantile's adoption of Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments, on January 1, 2022, resulted in a $0.4 million one-time reduction to the allowance for credit losses.

Noninterest income during the third quarter of 2022 was $7.3 million, compared to $15.6 million during the respective 2021 period. The lower level of noninterest income almost entirely stemmed from decreased mortgage banking income and interest rate swap income, which more than offset growth in several key fee income revenue streams, including service charges on accounts, credit and debit card income, and payroll servicing fees. Ongoing strength in purchase residential mortgage loan originations during the third quarter of 2022 partially mitigated the negative impacts of higher interest rates, lower refinance activity, a reduced sold percentage, and a decreased gain on sale rate on mortgage banking income during the period when compared to the prior-year third quarter. The residential mortgage loan sold percentage declined from approximately 69 percent during the third quarter of 2021 to about 36 percent during the current-year third quarter, in large part reflecting customers' preferences for adjustable-rate loans in the current interest rate environment and construction loans representing a higher percentage of overall mortgage loan production.

Noninterest expense totaled $26.8 million during the third quarter of 2022, compared to $26.2 million during the prior-year third quarter. The slight growth in noninterest expense mainly resulted from increased salary costs, reflecting a larger bonus accrual and annual employee merit pay increases, which more than offset higher residential mortgage loan deferred salary costs as well as decreased residential mortgage lender commissions and associated incentives.

Mr. Kaminski commented, "Our net interest income increased substantially during the third quarter and first nine months of 2022 as a result of net interest margin expansion and loan growth, and we believe our balance sheet structure will provide for additional growth in net interest income in future periods as the FOMC is expected to continue to raise interest rates in an effort to curb inflation. We are pleased that the increase in net interest income, coupled with loan growth and increases in several key fee income categories, have outweighed the significant reduction in mortgage banking income resulting from various headwinds, including higher residential mortgage loan interest rates and the associated lower level of refinance activity. We remain focused on growing in a disciplined manner and are continually examining our operating costs to help identify further opportunities to augment efficiency."

Balance Sheet

As of September 30, 2022, total assets were $5.02 billion, down $241 million from December 31, 2021. Total loans increased $427 million during the first nine months of 2022, reflecting growth in core commercial loans of $232 million and residential mortgage loans of $233 million, which more than offset a reduction in Paycheck Protection Program loans of $37.5 million. Core commercial loans and residential mortgage loans grew $73.6 million and $81.8 million, respectively, during the third quarter of 2022. The increases in core commercial loans during the third quarter and first nine months of 2022 equated to annualized growth rates of nearly 10 percent and 11 percent, respectively. As of September 30, 2022, 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 anticipated to be largely funded over the next 12 months, totaled $169 million and $84.0 million, respectively. Interest-earning deposits decreased $695 million during the first nine months of 2022 as excess overnight funds were used to fund loan growth and wholesale fund maturities, as well as securities purchases. In addition, a customer's withdrawal of a majority of funds that were deposited in late 2021 following the sale of a business, as well as other fund withdrawals by customers to make routine tax payments, contributed to the reduced level of interest-earning deposits.

Ray Reitsma, President of Mercantile Bank, noted, "Our ongoing efforts to expand the loan portfolio were once again successful and provided for solid growth in commercial loans and residential mortgage loans during the third quarter of 2022. The growth in commercial loans during the third quarter and first nine months of 2022 occurred in spite of payoffs of certain larger relationships aggregating approximately $34 million and $158 million during the respective timeframes. The payoffs stemmed from customers' sales of businesses and assets and the refinancing of debt with U.S. government agencies, with about $27 million of the payoffs during the year-to-date period being related to customers that were enduring financial difficulties. Increases in commercial and industrial loans represented approximately one-third and one-half of the growth in commercial loans during the third quarter and first nine months of the current year, respectively, affording our sales team additional opportunities to market treasury management products and enhance commercial banking-related income. We are pleased with the level of residential mortgage loan production, especially when considering the ongoing headwinds that have limited market opportunities. We believe the continuing strength of our commercial loan pipeline and solid levels of credit availability on commercial construction and development loans and residential mortgage construction loans provide momentum as we conclude 2022 and head into 2023."

Commercial and industrial loans and owner-occupied commercial real estate loans together represented approximately 59 percent of total commercial loans as of September 30, 2022, a level that has remained relatively consistent with prior periods and in line with our expectations.

Total deposits at September 30, 2022, were $3.85 billion, down $237 million, or 5.8 percent, from December 31, 2021. Local deposits and brokered deposits decreased $213 million and $23.9 million, respectively, during the first nine months of 2022. The decline in local deposits primarily reflected the previously mentioned customer withdrawal of funds and customers' normal tax payment levels. Wholesale funds were $338 million, or approximately 8 percent of total funds, at September 30, 2022, compared to $398 million, or approximately 9 percent of total funds, at December 31, 2021.

Asset Quality

Nonperforming assets totaled $1.4 million, $2.5 million, and $2.9 million at September 30, 2022, December 31, 2021, and September 30, 2021, respectively, with each dollar amount representing less than 0.1 percent of total assets as of the respective dates. The level of past due loans remains nominal. During the third quarter of 2022, no loan charge-offs were recorded, while recoveries of prior period loan charge-offs were $0.2 million, providing for net loan recoveries of $0.2 million, or an annualized 0.03 percent of average total loans.

Mr. Reitsma commented, "Our unwavering focus on sound loan underwriting has enabled us to once again report strong asset quality metrics. As our borrowers continue to operate in an economic environment full of challenges, including elevated levels of inflation, unfavorable labor market conditions, and ongoing supply chain issues, we remain committed to diligently monitoring our loan portfolio for any signals of deterioration and quickly implementing corrective measures to alleviate the impact of any identified credit weakness on our overall financial condition."

Capital Position

Shareholders' equity totaled $416 million as of September 30, 2022, down from $457 million at year-end 2021 mainly due to a $68.7 million increase in the after-tax net unrealized holding loss on securities available for sale resulting from higher market interest rates. Mercantile Bank's capital position remains "well-capitalized" with a total risk-based capital ratio of 13.4 percent as of September 30, 2022, compared to 13.6 percent at December 31, 2021. At September 30, 2022, Mercantile Bank had approximately $150 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a "well-capitalized" institution. Mercantile reported 15,866,243 total shares outstanding at September 30, 2022.

Mr. Kaminski concluded, "Our sustained financial strength has allowed us to continue our regular cash dividend program and provide shareholders with competitive returns on their investments while supporting the ongoing growth in our loan portfolio. In light of our strong overall financial condition, including solid capital levels, outstanding asset quality metrics, robust operating performance, including the possibility of augmenting net interest income from probable further FOMC rate hikes, and considerable loan origination opportunities, we believe we are well positioned to withstand the negative impacts associated with a likely weakened economic environment. We remain focused on being a consistent and profitable performer."

Investor Presentation

Mercantile has prepared presentation materials that management intends to use during its previously announced third quarter 2022 conference call on Tuesday, October 18, 2022, at 10:00 a.m. Eastern Time, and from time to time thereafter in presentations about the Company's operations and performance. These materials have been furnished to the U.S. Securities and Exchange Commission concurrently with this press release, and are also available on Mercantile's website at www.mercbank.com.

About Mercantile Bank Corporation

Based in Grand Rapids, Michigan, Mercantile Bank Corporation is the bank holding company for Mercantile Bank. 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 $5.0 billion and operates 46 banking offices. 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 and Twitter @MercBank and on LinkedIn at www.linkedin.com/company/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; significant declines in the value of commercial real estate; market volatility; demand for products and services; the degree of competition by traditional and nontraditional financial services companies; changes in banking regulation or actions by bank regulators; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; potential cyber-attacks, information security breaches and other criminal activities; litigation liabilities; governmental and regulatory policy changes; the outcomes of existing or future contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; damage to our reputation resulting from adverse publicity, regulatory actions, litigation, operational failures, and the failure to meet client expectations and other facts; changes in the method of determining Libor and the phase-out of Libor; changes in the national and local economies, including the ongoing disruption to financial markets and other economic activity caused by the COVID-19 pandemic and unstable political and economic environments; 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.

MBWM-ER

FOR FURTHER INFORMATION:






Robert B. Kaminski, Jr.

Charles Christmas



President and CEO

Executive Vice President and CFO



616-726-1502

616-726-1202



rkaminski@mercbank.com

cchristmas@mercbank.com

Mercantile Bank Corporation







Third Quarter 2022 Results







MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)










SEPTEMBER 30,


DECEMBER 31,


SEPTEMBER 30,



2022


2021


2021

ASSETS







Cash and due from banks

$

63,105,000

$

59,405,000

$

83,804,000

Interest-earning deposits


220,909,000


915,755,000


741,557,000

Total cash and cash equivalents


284,014,000


975,160,000


825,361,000








Securities available for sale


582,999,000


592,743,000


559,564,000

Federal Home Loan Bank stock


17,721,000


18,002,000


18,002,000

Mortgage loans held for sale


14,411,000


16,117,000


47,247,000








Loans


3,880,958,000


3,453,459,000


3,313,709,000

Allowance for credit losses


(39,120,000)


(35,363,000)


(37,423,000)

Loans, net


3,841,838,000


3,418,096,000


3,276,286,000








Premises and equipment, net


52,117,000


57,298,000


57,465,000

Bank owned life insurance


75,880,000


75,242,000


72,963,000

Goodwill


49,473,000


49,473,000


49,473,000

Core deposit intangible, net


741,000


1,351,000


1,589,000

Other assets


97,740,000


54,267,000


56,462,000








Total assets

$

5,016,934,000

$

5,257,749,000

$

4,964,412,000















LIABILITIES AND SHAREHOLDERS' EQUITY







Deposits:







Noninterest-bearing

$

1,716,904,000

$

1,677,952,000

$

1,647,380,000

Interest-bearing


2,129,181,000


2,405,241,000


2,221,611,000

Total deposits


3,846,085,000


4,083,193,000


3,868,991,000








Securities sold under agreements to repurchase


198,605,000


197,463,000


175,850,000

Federal Home Loan Bank advances


338,263,000


374,000,000


394,000,000

Subordinated debentures


48,787,000


48,244,000


48,074,000

Subordinated notes


88,542,000


73,646,000


0

Accrued interest and other liabilities


80,391,000


24,644,000


25,219,000

Total liabilities


4,600,673,000


4,801,190,000


4,512,134,000








SHAREHOLDERS' EQUITY







Common stock


289,219,000


285,752,000


285,033,000

Retained earnings


199,505,000


174,536,000


167,541,000

Accumulated other comprehensive income/(loss)


(72,463,000)


(3,729,000)


(296,000)

Total shareholders' equity


416,261,000


456,559,000


452,278,000








Total liabilities and shareholders' equity

$

5,016,934,000

$

5,257,749,000

$

4,964,412,000

Mercantile Bank Corporation














Third Quarter 2022 Results














MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF INCOME

(Unaudited)
















THREE MONTHS ENDED


THREE MONTHS ENDED

NINE MONTHS ENDED

NINE MONTHS ENDED


September 30, 2022


September 30, 2021

September 30, 2022

September 30, 2021

INTEREST INCOME














Loans, including fees

$

43,807,000



$

33,656,000


$

113,061,000


$

100,430,000


Investment securities


2,702,000




1,941,000



7,496,000



5,375,000


Other interest-earning assets


1,620,000




291,000



3,004,000



642,000


Total interest income


48,129,000




35,888,000



123,561,000



106,447,000
















INTEREST EXPENSE














Deposits


2,299,000




2,184,000



5,997,000



7,247,000


Short-term borrowings


53,000




46,000



153,000



122,000


Federal Home Loan Bank advances


1,755,000




2,072,000



5,530,000



6,149,000


Other borrowed money


1,646,000




462,000



4,294,000



1,401,000


Total interest expense


5,753,000




4,764,000



15,974,000



14,919,000
















Net interest income


42,376,000




31,124,000



107,587,000



91,528,000
















Provision for credit losses


2,900,000




1,900,000



3,500,000



(900,000)
















Net interest income after














provision for credit losses


39,476,000




29,224,000



104,087,000



92,428,000
















NONINTEREST INCOME














Service charges on accounts


1,579,000




1,324,000



4,489,000



3,687,000


Credit and debit card income


2,086,000




1,947,000



6,101,000



5,545,000


Mortgage banking income


1,764,000




6,554,000



6,991,000



23,049,000


Interest rate swap income


566,000




3,938,000



2,347,000



6,086,000


Payroll services


533,000




412,000



1,635,000



1,374,000


Earnings on bank owned life insurance


238,000




298,000



1,310,000



872,000


Gain on sale of branch


0




0



0



1,058,000


Other income


487,000




1,095,000



1,399,000



1,916,000


Total noninterest income


7,253,000




15,568,000



24,272,000



43,587,000
















NONINTEREST EXPENSE














Salaries and benefits


16,656,000




15,975,000



47,842,000



47,255,000


Occupancy


2,001,000




2,030,000



6,168,000



6,021,000


Furniture and equipment


953,000




929,000



2,822,000



2,719,000


Data processing costs


3,139,000




2,746,000



9,203,000



8,138,000


Charitable foundation contribution


4,000




0



509,000



0


Other expense


4,003,000




4,530,000



12,896,000



13,386,000


Total noninterest expense


26,756,000




26,210,000



79,440,000



77,519,000
















Income before federal income














tax expense


19,973,000




18,582,000



48,919,000



58,496,000
















Federal income tax expense


3,943,000




3,531,000



9,659,000



11,114,000
















Net Income

$

16,030,000



$

15,051,000


$

39,260,000


$

47,382,000
















Basic earnings per share


$1.01




$0.95



$2.48



$2.95


Diluted earnings per share


$1.01




$0.95



$2.48



$2.95
















Average basic shares outstanding


15,861,551




15,859,955



15,850,422



16,084,806


Average diluted shares outstanding


15,861,551




15,860,314



15,850,439



16,085,274


Mercantile Bank Corporation















Third Quarter 2022 Results















MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)


















Quarterly


Year-To-Date

(dollars in thousands except per share data)


2022


2022


2022


2021


2021







3rd Qtr


2nd Qtr


1st Qtr


4th Qtr


3rd Qtr


2022


2021

EARNINGS















Net interest income

$

42,376


34,326


30,885


32,534


31,124


107,587


91,528

Provision for loan losses

$

2,900


500


100


(3,400)


1,900


3,500


(900)

Noninterest income

$

7,253


7,741


9,277


12,632


15,568


24,272


43,587

Noninterest expense

$

26,756


26,942


25,742


33,347


26,210


79,440


77,519

Net income before federal income















tax expense

$

19,973


14,625


14,320


15,219


18,582


48,919


58,496

Net income

$

16,030


11,737


11,492


11,639


15,051


39,260


47,382

Basic earnings per share

$

1.01


0.74


0.73


0.74


0.95


2.48


2.95

Diluted earnings per share

$

1.01


0.74


0.73


0.74


0.95


2.48


2.95

Average basic shares outstanding


15,861,551


15,848,681


15,840,801


15,696,204


15,859,955


15,850,422


16,084,806

Average diluted shares outstanding


15,861,551


15,848,681


15,841,037


15,696,451


15,860,314


15,850,439


16,085,274
















PERFORMANCE RATIOS















Return on average assets


1.27 %


0.93 %


0.90 %


0.92 %


1.23 %


1.03 %


1.34 %

Return on average equity


14.79 %


10.98 %


10.36 %


10.15 %


13.10 %


12.03 %


14.12 %

Net interest margin (fully tax-equivalent)


3.56 %


2.88 %


2.57 %


2.74 %


2.71 %


3.00 %


2.76 %

Efficiency ratio


53.91 %


64.05 %


64.10 %


73.83 %


56.13 %


60.25 %


57.37 %

Full-time equivalent employees


635


651


630


627


629


635


629
















YIELD ON ASSETS / COST OF FUNDS















Yield on loans


4.56 %


3.97 %


3.87 %


4.07 %


4.07 %


4.15 %


4.06 %

Yield on securities


1.79 %


1.68 %


1.52 %


1.46 %


1.46 %


1.66 %


1.53 %

Yield on other interest-earning assets


2.15 %


0.76 %


0.19 %


0.15 %


0.16 %


0.75 %


0.13 %

Yield on total earning assets


4.04 %


3.32 %


2.99 %


3.12 %


3.13 %


3.45 %


3.21 %

Yield on total assets


3.80 %


3.13 %


2.82 %


2.94 %


2.94 %


3.25 %


3.01 %

Cost of deposits


0.24 %


0.19 %


0.19 %


0.19 %


0.23 %


0.20 %


0.26 %

Cost of borrowed funds


1.99 %


1.90 %


1.82 %


1.66 %


1.67 %


1.90 %


1.72 %

Cost of interest-bearing liabilities


0.81 %


0.72 %


0.66 %


0.63 %


0.69 %


0.73 %


0.75 %

Cost of funds (total earning assets)


0.48 %


0.44 %


0.42 %


0.38 %


0.42 %


0.45 %


0.45 %

Cost of funds (total assets)


0.45 %


0.41 %


0.39 %


0.36 %


0.39 %


0.42 %


0.42 %
















MORTGAGE BANKING ACTIVITY















Total mortgage loans originated

$

163,902


190,896


168,187


210,228


259,512


522,985


742,011

Purchase mortgage loans originated

$

140,898


157,423


101,409


124,557


143,635


399,730


369,640

Refinance mortgage loans originated

$

23,004


33,473


66,778


85,671


115,877


123,255


372,371

Total saleable mortgage loans

$

59,740


52,328


75,747


129,546


177,837


187,815


513,989

Income on sale of mortgage loans

$

1,779


1,751


3,204


6,850


6,659


6,734


23,531
















CAPITAL















Tangible equity to tangible assets


7.37 %


7.56 %


7.53 %


7.79 %


8.17 %


7.37 %


8.17 %

Tier 1 leverage capital ratio


9.63 %


9.31 %


9.04 %


9.19 %


9.33 %


9.63 %


9.33 %

Common equity risk-based capital ratio


9.81 %


9.84 %


10.02 %


10.12 %


10.34 %


9.81 %


10.34 %

Tier 1 risk-based capital ratio


10.86 %


10.91 %


11.13 %


11.26 %


11.53 %


10.86 %


11.53 %

Total risk-based capital ratio


13.71 %


13.78 %


14.09 %


13.95 %


12.47 %


13.71 %


12.47 %

Tier 1 capital

$

485,499


473,065


464,396


456,133


448,010


485,499


448,010

Tier 1 plus tier 2 capital

$

613,161


597,495


587,976


565,143


484,594


613,161


484,594

Total risk-weighted assets

$

4,471,939


4,337,040


4,173,590


4,051,253


3,884,999


4,471,939


3,884,999

Book value per common share

$

26.24


27.05


27.55


28.82


28.78


26.24


28.78

Tangible book value per common share

$

23.07


23.87


24.36


25.61


25.53


23.07


25.53

Cash dividend per common share

$

0.32


0.31


0.31


0.30


0.30


0.94


0.88
















ASSET QUALITY















Gross loan charge-offs

$

0


15


205


179


744


220


865

Recoveries

$

246


336


294


1,519


354


876


1,221

Net loan charge-offs (recoveries)

$

(246)


(321)


(89)


(1,340)


390


(656)


(356)

Net loan charge-offs to average loans


(0.03 %)


(0.04 %)


(0.01 %)


(0.16 %)


0.05 %


(0.02 %)


(0.01 %)

Allowance for credit losses

$

39,120


35,974


35,153


35,363


37,423


39,120


37,423

Allowance to loans


1.01 %


0.97 %


0.99 %


1.02 %


1.13 %


1.01 %


1.13 %

Nonperforming loans

$

1,416


1,787


1,612


2,468


2,766


1,416


2,766

Other real estate/repossessed assets

$

0


0


0


0


111


0


111

Nonperforming loans to total loans


0.04 %


0.05 %


0.05 %


0.07 %


0.08 %


0.04 %


0.08 %

Nonperforming assets to total assets


0.03 %


0.04 %


0.03 %


0.05 %


0.06 %


0.03 %


0.06 %
















NONPERFORMING ASSETS - COMPOSITION













Residential real estate:















Land development

$

30


30


31


32


33


30


33

Construction

$

0


0


0


0


0


0


0

Owner occupied / rental

$

1,138


1,508


1,579


1,768


2,063


1,138


2,063

Commercial real estate:















Land development

$

0


0


0


0


0


0


0

Construction

$

0


0


0


0


0


0


0

Owner occupied

$

0


0


0


0


100


0


100

Non-owner occupied

$

0


0


0


0


0


0


0

Non-real estate:















Commercial assets

$

248


248


0


662


673


248


673

Consumer assets

$

0


1


2


6


8


0


8

Total nonperforming assets


1,416


1,787


1,612


2,468


2,877


1,416


2,877
















NONPERFORMING ASSETS - RECON















Beginning balance

$

1,787


1,612


2,468


2,877


3,150


2,468


4,085

Additions

$

0


309


93


218


361


402


999

Return to performing status

$

(160)


0


(213)


0


(50)


(373)


(165)

Principal payments

$

(211)


(134)


(641)


(377)


(291)


(986)


(1,334)

Sale proceeds

$

0


0


0


(111)


(209)


0


(286)

Loan charge-offs

$

0


0


(95)


(139)


0


(95)


(88)

Valuation write-downs

$

0


0


0


0


(84)


0


(334)

Ending balance

$

1,416


1,787


1,612


2,468


2,877


1,416


2,877
















LOAN PORTFOLIO COMPOSITION















Commercial:















Commercial & industrial

$

1,213,630


1,187,650


1,153,814


1,137,419


1,074,394


1,213,630


1,074,394

Land development & construction

$

60,970


57,808


52,693


43,240


38,380


60,970


38,380

Owner occupied comm'l R/E

$

643,577


598,593


582,732


565,758


551,762


643,577


551,762

Non-owner occupied comm'l R/E

$

1,002,638


1,003,118


1,007,361


1,027,415


998,697


1,002,638


998,697

Multi-family & residential rental

$

224,247


224,591


207,962


176,593


179,126


224,247


179,126

Total commercial

$

3,145,062


3,071,760


3,004,562


2,950,425


2,842,359


3,145,062


2,842,359

Retail:















1-4 family mortgages

$

705,442


623,599


522,556


442,546


411,618


705,442


411,618

Home equity & other consumer

$

30,454


28,441


28,672


60,488


59,732


30,454


59,732

Total retail

$

735,896


652,040


551,228


503,034


471,350


735,896


471,350

Total loans

$

3,880,958


3,723,800


3,555,790


3,453,459


3,313,709


3,880,958


3,313,709
















END OF PERIOD BALANCES















Loans

$

3,880,958


3,723,800


3,555,790


3,453,459


3,313,709


3,880,958


3,313,709

Securities

$

600,720


621,359


623,382


610,745


577,566


600,720


577,566

Other interest-earning assets

$

220,909


389,938


698,724


915,755


741,557


220,909


741,557

Total earning assets (before allowance)

$

4,702,587


4,735,097


4,877,896


4,979,959


4,632,832


4,702,587


4,632,832

Total assets

$

5,016,934


5,058,555


5,175,899


5,257,749


4,964,412


5,016,934


4,964,412

Noninterest-bearing deposits

$

1,716,904


1,740,432


1,686,203


1,677,952


1,647,380


1,716,904


1,647,380

Interest-bearing deposits

$

2,129,181


2,133,461


2,290,048


2,405,241


2,221,611


2,129,181


2,221,611

Total deposits

$

3,846,085


3,873,893


3,976,251


4,083,193


3,868,991


3,846,085


3,868,991

Total borrowed funds

$

675,332


703,809


724,578


694,588


619,441


675,332


619,441

Total interest-bearing liabilities

$

2,804,513


2,837,270


3,014,626


3,099,829


2,841,052


2,804,513


2,841,052

Shareholders' equity

$

416,261


428,983


436,471


456,559


452,278


416,261


452,278
















AVERAGE BALANCES















Loans

$

3,814,338


3,633,587


3,484,511


3,373,551


3,276,863


3,645,353


3,308,119

Securities

$

618,043


615,733


613,317


600,852


547,336


615,715


484,020

Other interest-earning assets

$

294,969


530,571


784,193


738,328


733,801


534,786


648,780

Total earning assets (before allowance)

$

4,727,350


4,779,891


4,882,021


4,712,731


4,558,000


4,795,854


4,440,919

Total assets

$

5,025,998


5,077,458


5,168,562


5,010,786


4,856,611


5,090,150


4,730,482

Noninterest-bearing deposits

$

1,723,609


1,706,349


1,625,453


1,708,052


1,641,158


1,685,497


1,590,969

Interest-bearing deposits

$

2,144,047


2,201,797


2,364,437


2,194,644


2,125,920


2,235,952


2,076,221

Total deposits

$

3,867,656


3,908,146


3,989,890


3,902,696


3,767,078


3,921,449


3,667,190

Total borrowed funds

$

689,091


705,774


707,478


632,036


614,061


700,713


595,105

Total interest-bearing liabilities

$

2,833,138


2,907,571


3,071,915


2,826,680


2,739,981


2,936,665


2,671,326

Shareholders' equity

$

430,093


428,873


449,863


455,084


455,902


436,204


448,516

Cision View original content:https://www.prnewswire.com/news-releases/mercantile-bank-corporation-announces-robust-third-quarter-2022-results-301651421.html

SOURCE Mercantile Bank Corporation