Mercantile Bank Corporation : Reports Strong Second Quarter 2021 Results

GRAND RAPIDS, Mich., July 20, 2021 /PRNewswire/ -- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $18.1 million, or $1.12 per diluted share, for the second quarter of 2021, compared with net income of $8.7 million, or $0.54 per diluted share, for the respective prior-year period.  Net income during the first six months of 2021 totaled $32.3 million, or $2.00 per diluted share, compared to $19.4 million, or $1.19 per diluted share, during the first six months of 2020.

"We are very pleased to report another quarter of strong financial performance," said Robert B. Kaminski, Jr., President and Chief Executive Officer of Mercantile.  "The growth in core commercial loans during the first half of 2021 reflects our unwavering focus on meeting the traditional credit needs of our existing clients and developing new relationships, while at the same time assisting customers with Paycheck Protection Program lending activities. 

"As evidenced by the continuing strength in mortgage banking income, our strategic initiatives designed to increase market share remained effective during the period.  As Mercantile employees return to their physical locations in light of currently improving COVID-19 conditions, I would like to personally thank each of them for their exceptional efforts to assist our customers with their banking needs during these challenging times.  The resiliency displayed by our team members and clients during the pandemic has been truly remarkable, and we look forward to continuing to build mutually beneficial relationships with existing and prospective customers."

Second quarter highlights include:

• Strong earnings and capital position
• Robust mortgage banking income and growth in other key fee income categories
• Loan loss reserve release, primarily reflecting improved economic and business conditions
• Continued strength in asset quality metrics
• Solid growth in core commercial loans and residential mortgage loans
• Sustained strength in commercial loan and residential mortgage loan pipelines
• Further growth in local deposits
• Announced third quarter 2021 regular cash dividend of $0.30 per common share, an increase of 3.4 percent from the regular cash dividend paid during the second quarter of 2021

Operating Results

Total revenue, which consists of net interest income and noninterest income, was $45.4 million during the second quarter of 2021, up $3.9 million, or 9.3 percent, from the prior-year second quarter.  Net interest income during the second quarter of 2021 was $30.9 million, up from $30.6 million during the respective 2020 period due to the positive impact of earning asset growth, which more than offset a lower net interest margin.  Noninterest income totaled $14.6 million during the second quarter of 2021, up $3.6 million from the second quarter of 2020, mainly due to increased interest rate swap income, a gain on the sale of a branch facility, and higher credit and debit card income.  The net interest margin was 2.76 percent in the second quarter of 2021, compared to 3.17 percent in the prior-year second quarter.  The decreased net interest margin resulted from the lower interest rate environment and a higher level of excess liquidity.

The yield on average earning assets declined from 3.85 percent during the second quarter of 2020 to 3.20 percent during the respective 2021 period mainly due to a change in earning asset mix and decreased yields on commercial loans and securities.  The lower yield on commercial loans primarily stemmed from the origination of new loans and renewal of maturing loans in the decreased interest rate environment.  The decreased yield on securities mainly reflected a lower level of accelerated discount accretion on called U.S. Government agency bonds and reduced yields on newly purchased bonds, attributed to the declining interest rate environment.  Accelerated discount accretion totaled $0.9 million during the second quarter of 2020; no accelerated discount accretion was recorded during the second quarter of 2021. 

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 and has persisted during the remainder of 2020 and first six months of 2021, negatively impacted both the yield on average earning assets and the net interest margin by 35 basis points to 40 basis points during the second quarter and first six months of 2021.  The excess funds, consisting primarily of low-yielding deposits with the Federal Reserve Bank of Chicago, are mainly a product of federal government stimulus programs, lower business and consumer investing and spending, and Paycheck Protection Program forgiveness activities.

The cost of funds decreased from 0.68 percent during the second quarter of 2020 to 0.44 percent during the current-year second quarter, primarily due to a change in funding mix, consisting of an increase in lower-costing non-time deposits as a percentage of total funding sources, and lower rates paid on local time deposits, reflecting the declining interest rate environment.

Mercantile recorded a negative provision expense of $3.1 million during the second quarter of 2021, compared to a provision expense of $7.6 million during the prior-year second quarter.  The negative provision expense recorded during the current-year second quarter was mainly comprised of a reduced allocation associated with the economic and business conditions environmental factor, reflecting improvement in both current and forecasted economic conditions.  The provision expense recorded during the second quarter of 2020 mainly consisted of an allocation related to a newly created COVID-19 pandemic environmental factor and an increased allocation related to the existing economic and business conditions environmental factor.

Noninterest income during the second quarter of 2021 was $14.6 million, compared to $11.0 million during the prior-year second quarter.  Noninterest income during the current-year second quarter included a $1.1 million gain on the sale of a branch facility.  Excluding the impact of this transaction, noninterest income increased $2.5 million, or nearly 23 percent, during the second quarter of 2021 compared to the respective 2020 period.  The higher level of noninterest income mainly reflected fee income generated from an interest rate swap program that was introduced during the fourth quarter of 2020 and increased credit and debit card income.  The interest rate swap program provides certain commercial borrowers with a longer-term fixed-rate option and assists Mercantile in managing associated longer-term interest rate risk.  Growth in service charges on accounts and payroll service fees also contributed to the increased level of noninterest income.  Mortgage banking income remained solid during the second quarter of 2021, slightly exceeding the amount recorded during the prior-year second quarter as an increase in purchase mortgage loans offset a decline in refinance mortgage loans.

Noninterest expense totaled $26.2 million during the second quarter of 2021, up $3.0 million, or 12.8 percent, from the second quarter of 2020.  The higher level of expense primarily resulted from increased compensation costs, mainly reflecting a bonus accrual, increased health insurance costs, annual employee merit pay increases, and a lower level of deferred salary expense related to Paycheck Protection Program loan originations.  No bonus accrual was recorded during the second quarter of 2020 due to COVID-19 and associated weakened economic environment.  The increase in health insurance costs mainly reflected a higher level of claims, some of which resulted from the treatment of COVID-19 related medical conditions.

Mr. Kaminski commented, "Despite an expected reduction in refinance activity, we were able to record another quarter of strong mortgage banking income, in large part reflecting increased purchase activity and the ongoing success of strategic initiatives that were implemented to boost market share.  In an effort to enhance mortgage loan production, we will continue to identify opportunities to add lending talent to the mortgage team and expand our market presence.  Based on the current loan pipeline and application volume, along with our recent lender hires and entrance into new markets, we believe solid mortgage banking income can be realized in future periods. 

"We remain committed to improving our noninterest income revenue streams and are very pleased with the success of the recently introduced interest rate swap program, along with the growth in other key fee income categories.  Our desire to meet growth objectives in a cost-conscious manner remains a priority, and we will continue to regularly review our branch system and other expense categories to identify potential opportunities to conduct business more efficiently."

Balance Sheet

As of June 30, 2021, total assets were $4.76 billion, up $320 million, or 7.2 percent, from December 31, 2020.  Total loans increased $55.4 million during the first six months of 2021, primarily reflecting net growth in core commercial loans and residential mortgage loans of $135 million and $42.4 million, respectively, which more than offset a net reduction in Paycheck Protection Program loans of $120 million.  As of June 30, 2021, unfunded commitments on commercial construction and development loans totaled approximately $167 million, which are expected to be largely funded over the next 12 to 18 months.  Interest-earning deposits increased $120 million during the first six months of 2021, mainly reflecting ongoing local deposit growth, Paycheck Protection Program forgiveness activities and an increase in sweep accounts, which outpaced loan growth and an expanded securities portfolio.

Ray Reitsma, President of Mercantile Bank of Michigan, noted, "During the second quarter, we continued our efforts to grow the commercial loan portfolio by assessing and meeting the credit needs of our existing customers and fostering relationships with new clients.  We remain focused on growing the portfolio in a prudent manner, with emphasis on proper underwriting and risk-based pricing.  We are very pleased with the levels of net core commercial loan and residential mortgage loan growth during the quarter, along with the ongoing strength of our commercial loan and residential mortgage loan pipelines."

Excluding the impact of Paycheck Protection Program loan originations, commercial and industrial loans and owner-occupied commercial real estate loans together represented approximately 55 percent of total commercial loans as of June 30, 2021, a level that has remained relatively consistent and in line with internal expectations. 

Total deposits at June 30, 2021, were $3.67 billion, up $260 million, or 7.6 percent, from December 31, 2020.  Local deposits were up $276 million during the first six months of 2021, while brokered deposits were down $16.0 million during the same time period.  The growth in local deposits, which occurred despite typical and expected seasonal business deposit withdrawals used for bonus and tax payments, primarily reflected federal government stimulus payments and reduced business and consumer investing and spending, along with Paycheck Protection Program loan proceeds being deposited into customers' accounts at the time the loans were originated and remaining on deposit as of June 30, 2021.  Wholesale funds were $425 million, or approximately 10 percent of total funds, as of June 30, 2021, compared to $441 million, or approximately 11 percent of total funds, as of December 31, 2020.

Asset Quality

Nonperforming assets totaled $3.2 million, $4.1 million, and $3.4 million at June 30, 2021, December 31, 2020, and June 30, 2020, respectively, with each dollar amount representing 0.1 percent of total assets as of the respective dates.  During the second quarter of 2021, loan charge-offs totaled $0.1 million, while recoveries of prior period loan charge-offs equaled $0.4 million, providing for net loan recoveries of $0.3 million, or an annualized 0.04 percent of average total loans.

Mr. Reitsma commented, "Our asset quality metrics have remained strong during the COVID-19 pandemic.  The ongoing low levels of past due loans and nonperforming assets are a testament of our commitment to underwriting loans in a sound manner and the abilities of our commercial borrowers' management teams to effectively guide their entities through pandemic-related challenges."

Capital Position

Shareholders' equity totaled $452 million as of June 30, 2021, an increase of $10.3 million from year-end 2020.  Mercantile Bank of Michigan's capital position remains above "well-capitalized" with a total risk-based capital ratio of 13.0 percent as of June 30, 2021, compared to 13.5 percent at December 31, 2020.  At June 30, 2021, Mercantile Bank of Michigan had approximately $110 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a "well-capitalized" institution.  Mercantile reported 16,007,185 total shares outstanding at June 30, 2021.

As part of $20.0 million common stock repurchase programs announced in May of 2019 and 2021, respectively, Mercantile repurchased approximately 229,000 shares for $7.3 million, or a weighted average all-in cost per share of $31.99, during the second quarter of 2021 and approximately 347,000 shares for $10.9 million, or a weighted average all-in cost per share of $31.28, during the first six months of 2021.  The 2021 program replaced the 2019 program, which was nearing exhaustion.

Mr. Kaminski concluded, "Although the challenges associated with the COVID-19 pandemic appear to have diminished, we will closely monitor any new developments and adjust our response plan as deemed necessary.  Our enduring strong operating performance and overall financial position have enabled us to continue the cash dividend program and provide shareholders with a cash return on their investment.  We were pleased to announce earlier today that our Board of Directors declared an increased third quarter 2021 regular cash dividend.  We are focused on remaining a steady high performer that provides consistent and profitable growth and believe we are well positioned to produce solid operating results during the last six months of 2021 and beyond."

Investor Presentation

Mercantile has prepared presentation materials that management intends to use during its previously announced second quarter 2021 conference call on Tuesday, July 20, 2021, at 10:00 a.m. Eastern Time, and from time to time thereafter in presentations about the Company's operations and performance.  The Investor Presentation also contains information relating to Mercantile's COVID-19 pandemic response plan.  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 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 $4.7 billion and operates 43 banking offices.  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 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; 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; 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 market and other economic activity caused by the COVID-19 pandemic; 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:
	Robert B. Kaminski, Jr.	Charles Christmas
	President & CEO	Executive Vice President & CFO
	616-726-1502	616-726-1202
	[e-mail]	[e-mail]

 

Mercantile Bank Corporation
Second Quarter 2021 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
		JUNE 30,		DECEMBER 31,		JUNE 30,
		2021		2020		2020
ASSETS
Cash and due from banks	$	75,893,000	$	62,832,000	$	84,516,000
Interest-earning deposits		683,638,000		563,174,000		386,711,000
Total cash and cash equivalents		759,531,000		626,006,000		471,227,000
Securities available for sale		506,125,000		387,347,000		307,661,000
Federal Home Loan Bank stock		18,002,000		18,002,000		18,002,000
Loans		3,248,841,000		3,193,470,000		3,291,919,000
Allowance for loan losses		(35,913,000)		(37,967,000)		(32,246,000)
Loans, net		3,212,928,000		3,155,503,000		3,259,673,000
Premises and equipment, net		58,250,000		58,959,000		59,155,000
Bank owned life insurance		72,679,000		72,131,000		70,900,000
Goodwill		49,473,000		49,473,000		49,473,000
Core deposit intangible, net		1,827,000		2,436,000		3,072,000
Mortgage loans held for sale		27,720,000		22,888,000		41,137,000
Other assets		50,879,000		44,599,000		34,079,000
Total assets	$	4,757,414,000	$	4,437,344,000	$	4,314,379,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	1,620,829,000	$	1,433,403,000	$	1,445,620,000
Interest-bearing		2,050,442,000		1,978,150,000		1,816,660,000
Total deposits		3,671,271,000		3,411,553,000		3,262,280,000
Securities sold under agreements to repurchase		169,737,000		118,365,000		167,527,000
Federal Home Loan Bank advances		394,000,000		394,000,000		394,000,000
Subordinated debentures		47,904,000		47,563,000		47,222,000
Accrued interest and other liabilities		22,614,000		24,309,000		18,129,000
Total liabilities		4,305,526,000		3,995,790,000		3,889,158,000
SHAREHOLDERS' EQUITY
Common stock		293,232,000		302,029,000		300,897,000
Retained earnings		157,150,000		134,039,000		118,239,000
Accumulated other comprehensive income/(loss)		1,506,000		5,486,000		6,085,000
Total shareholders' equity		451,888,000		441,554,000		425,221,000
Total liabilities and shareholders' equity	$	4,757,414,000	$	4,437,344,000	$	4,314,379,000

 

Mercantile Bank Corporation
Second Quarter 2021 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME
(Unaudited)
	THREE MONTHS ENDED				THREE MONTHS ENDED			SIX MONTHS ENDED			SIX MONTHS ENDED
	June 30, 2021				June 30, 2020			June 30, 2021			June 30, 2020
INTEREST INCOME
Loans, including fees	$	33,789,000			$	34,322,000		$	66,774,000		$	67,764,000
Investment securities		1,802,000				2,749,000			3,434,000			6,766,000
Other interest-earning assets		183,000				93,000			351,000			568,000
Total interest income		35,774,000				37,164,000			70,559,000			75,098,000
INTEREST EXPENSE
Deposits		2,346,000				3,700,000			5,063,000			8,342,000
Short-term borrowings		40,000				55,000			76,000			94,000
Federal Home Loan Bank advances		2,050,000				2,214,000			4,077,000			4,427,000
Other borrowed money		467,000				624,000			939,000			1,348,000
Total interest expense		4,903,000				6,593,000			10,155,000			14,211,000
Net interest income		30,871,000				30,571,000			60,404,000			60,887,000
Provision for loan losses		(3,100,000)				7,600,000			(2,800,000)			8,350,000
Net interest income after
provision for loan losses		33,971,000				22,971,000			63,204,000			52,537,000
NONINTEREST INCOME
Service charges on accounts		1,209,000				1,045,000			2,363,000			2,267,000
Mortgage banking income		7,695,000				7,640,000			16,495,000			10,267,000
Credit and debit card income		1,920,000				1,374,000			3,598,000			2,735,000
Interest rate swap income		1,495,000				0			2,148,000			0
Payroll services		405,000				370,000			962,000			947,000
Earnings on bank owned life insurance		297,000				307,000			574,000			643,000
Gain on sale of branch		1,058,000				0			1,058,000			0
Other income		477,000				248,000			821,000			675,000
Total noninterest income		14,556,000				10,984,000			28,019,000			17,534,000
NONINTEREST EXPENSE
Salaries and benefits		16,194,000				14,126,000			31,279,000			27,654,000
Occupancy		1,977,000				1,862,000			3,991,000			3,921,000
Furniture and equipment		902,000				851,000			1,791,000			1,629,000
Data processing costs		2,775,000				2,633,000			5,392,000			5,117,000
Other expense		4,344,000				3,744,000			8,856,000			7,835,000
Total noninterest expense		26,192,000				23,216,000			51,309,000			46,156,000
Income before federal income
tax expense		22,335,000				10,739,000			39,914,000			23,915,000
Federal income tax expense		4,244,000				2,041,000			7,583,000			4,545,000
Net Income	$	18,091,000			$	8,698,000		$	32,331,000		$	19,370,000
Basic earnings per share		$1.12				$0.54			$2.00			$1.19
Diluted earnings per share		$1.12				$0.54			$2.00			$1.19
Average basic shares outstanding		16,116,070				16,212,500			16,199,096			16,281,391
Average diluted shares outstanding		16,116,666				16,213,264			16,199,620			16,282,341

 

Mercantile Bank Corporation
Second Quarter 2021 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
		Quarterly										Year-To-Date
(dollars in thousands except per share data)		2021		2021		2020		2020		2020
		2nd Qtr		1st Qtr		4th Qtr		3rd Qtr		2nd Qtr		2021		2020
EARNINGS
Net interest income	$	30,871		29,533		31,849		29,509		30,571		60,404		60,887
Provision for loan losses	$	(3,100)		300		2,500		3,200		7,600		(2,800)		8,350
Noninterest income	$	14,556		13,463		14,333		13,307		10,984		28,019		17,534
Noninterest expense	$	26,192		25,117		25,941		26,423		23,216		51,309		46,156
Net income before federal income
tax expense	$	22,335		17,579		17,741		13,193		10,739		39,914		23,915
Net income	$	18,091		14,239		14,082		10,686		8,698		32,331		19,370
Basic earnings per share	$	1.12		0.87		0.87		0.66		0.54		2.00		1.19
Diluted earnings per share	$	1.12		0.87		0.87		0.66		0.54		2.00		1.19
Average basic shares outstanding		16,116,070		16,283,044		16,279,052		16,233,196		16,212,500		16,199,096		16,281,391
Average diluted shares outstanding		16,116,666		16,283,490		16,279,243		16,233,666		16,213,264		16,199,620		16,282,341
PERFORMANCE RATIOS
Return on average assets		1.53%		1.26%		1.25%		0.98%		0.85%		1.40%		1.01%
Return on average equity		16.27%		13.02%		12.75%		9.86%		8.26%		14.66%		9.23%
Net interest margin (fully tax-equivalent)		2.76%		2.77%		3.00%		2.86%		3.17%		2.76%		3.38%
Efficiency ratio		57.66%		58.42%		56.17%		61.71%		55.87%		58.03%		58.86%
Full-time equivalent employees		634		621		621		618		637		634		637
YIELD ON ASSETS / COST OF FUNDS
Yield on loans		3.99%		4.03%		4.34%		4.03%		4.18%		4.01%		4.42%
Yield on securities		1.54%		1.61%		1.69%		2.26%		3.37%		1.57%		4.06%
Yield on other interest-earning assets		0.12%		0.11%		0.12%		0.12%		0.15%		0.12%		0.55%
Yield on total earning assets		3.20%		3.26%		3.55%		3.45%		3.85%		3.23%		4.17%
Yield on total assets		3.02%		3.09%		3.35%		3.25%		3.62%		3.05%		3.91%
Cost of deposits		0.25%		0.31%		0.37%		0.41%		0.48%		0.28%		0.58%
Cost of borrowed funds		1.73%		1.78%		1.75%		1.78%		1.91%		1.75%		2.09%
Cost of interest-bearing liabilities		0.74%		0.82%		0.91%		0.99%		1.11%		0.78%		1.23%
Cost of funds (total earning assets)		0.44%		0.49%		0.55%		0.59%		0.68%		0.46%		0.79%
Cost of funds (total assets)		0.41%		0.47%		0.51%		0.56%		0.64%		0.44%		0.74%
PURCHASE ACCOUNTING ADJUSTMENTS
Loan portfolio - increase interest income	$	54		51		158		332		169		105		454
Trust preferred - increase interest expense	$	171		171		171		171		171		342		342
Core deposit intangible - increase overhead	$	291		318		318		318		371		609		768
MORTGAGE BANKING ACTIVITY
Total mortgage loans originated	$	237,299		245,200		218,904		237,195		275,486		482,499		408,345
Purchase mortgage loans originated	$	144,476		81,529		99,490		93,068		58,015		226,005		104,553
Refinance mortgage loans originated	$	92,823		163,671		119,414		144,127		217,471		256,494		303,792
Total saleable mortgage loans	$	140,497		195,655		159,942		191,318		225,665		336,152		320,992
Income on sale of mortgage loans	$	7,690		9,182		9,476		10,199		7,760		16,872		9,846
CAPITAL
Tangible equity to tangible assets		8.51%		8.36%		8.89%		8.69%		8.74%		8.51%		8.74%
Tier 1 leverage capital ratio		9.47%		9.67%		9.77%		9.80%		10.21%		9.47%		10.21%
Common equity risk-based capital ratio		10.87%		11.11%		11.34%		11.37%		11.34%		10.87%		11.34%
Tier 1 risk-based capital ratio		12.11%		12.41%		12.68%		12.74%		12.74%		12.11%		12.74%
Total risk-based capital ratio		13.09%		13.51%		13.80%		13.82%		13.73%		13.09%		13.73%
Tier 1 capital	$	445,410		437,567		430,146		420,225		412,526		445,410		412,526
Tier 1 plus tier 2 capital	$	481,324		476,462		468,113		455,797		444,772		481,324		444,772
Total risk-weighted assets	$	3,677,180		3,526,161		3,391,563		3,298,047		3,238,444		3,677,180		3,238,444
Book value per common share	$	28.23		27.21		27.04		26.59		26.20		28.23		26.20
Tangible book value per common share	$	25.03		24.02		23.86		23.37		22.96		25.03		22.96
Cash dividend per common share	$	0.29		0.29		0.28		0.28		0.28		0.58		0.56
ASSET QUALITY
Gross loan charge-offs	$	68		53		340		124		335		121		375
Recoveries	$	386		481		234		250		153		867		382
Net loan charge-offs (recoveries)	$	(318)		(428)		106		(126)		182		(746)		(7)
Net loan charge-offs to average loans		(0.04%)		(0.05%)		0.01%		(0.02%)		0.02%		(0.05%)		< (0.01%)
Allowance for loan losses	$	35,913		38,695		37,967		35,572		32,246		35,913		32,246
Allowance to loans		1.11%		1.15%		1.19%		1.07%		0.98%		1.11%		0.98%
Allowance to loans excluding PPP loans		1.20%		1.33%		1.33%		1.27%		1.16%		1.20%		1.16%
Nonperforming loans	$	2,746		2,793		3,384		4,141		3,212		2,746		3,212
Other real estate/repossessed assets	$	404		374		701		512		198		404		198
Nonperforming loans to total loans		0.08%		0.08%		0.11%		0.12%		0.10%		0.08%		0.10%
Nonperforming assets to total assets		0.07%		0.07%		0.09%		0.11%		0.08%		0.07%		0.08%
NONPERFORMING ASSETS - COMPOSITION
Residential real estate:
Land development	$	34		34		35		36		36		34		36
Construction	$	0		0		0		198		198		0		198
Owner occupied / rental	$	2,137		2,305		2,607		2,597		2,750		2,137		2,750
Commercial real estate:
Land development	$	0		0		0		0		0		0		0
Construction	$	0		0		0		0		0		0		0
Owner occupied	$	363		646		1,232		1,576		275		363		275
Non-owner occupied	$	0		0		22		23		25		0		25
Non-real estate:
Commercial assets	$	606		169		172		198		98		606		98
Consumer assets	$	10		13		17		25		28		10		28
Total nonperforming assets		3,150		3,167		4,085		4,653		3,410		3,150		3,410
NONPERFORMING ASSETS - RECON
Beginning balance	$	3,167		4,085		4,653		3,410		3,740		4,085		2,736
Additions	$	522		116		972		1,615		220		638		1,533
Return to performing status	$	0		(115)		0		(72)		(26)		(115)		(33)
Principal payments	$	(484)		(559)		(1,064)		(249)		(278)		(1,043)		(388)
Sale proceeds	$	0		(77)		(245)		0		(49)		(77)		(241)
Loan charge-offs	$	(55)		(33)		(231)		(51)		(173)		(88)		(173)
Valuation write-downs	$	0		(250)		0		0		(24)		(250)		(24)
Ending balance	$	3,150		3,167		4,085		4,653		3,410		3,150		3,410
LOAN PORTFOLIO COMPOSITION
Commercial:
Commercial & industrial	$	1,103,807		1,284,507		1,145,423		1,321,419		1,307,456		1,103,807		1,307,456
Land development & construction	$	43,111		58,738		55,055		50,941		52,984		43,111		52,984
Owner occupied comm'l R/E	$	550,504		544,342		529,953		549,364		567,621		550,504		567,621
Non-owner occupied comm'l R/E	$	950,993		932,334		917,436		878,897		841,145		950,993		841,145
Multi-family & residential rental	$	161,894		147,294		146,095		137,740		132,047		161,894		132,047
Total commercial	$	2,810,309		2,967,215		2,793,962		2,938,361		2,901,253		2,810,309		2,901,253
Retail:
1-4 family mortgages	$	380,292		337,844		337,888		322,118		325,923		380,292		325,923
Home equity & other consumer	$	58,240		59,311		61,620		63,723		64,743		58,240		64,743
Total retail	$	438,532		397,155		399,508		385,841		390,666		438,532		390,666
Total loans	$	3,248,841		3,364,370		3,193,470		3,324,202		3,291,919		3,248,841		3,291,919
END OF PERIOD BALANCES
Loans	$	3,248,841		3,364,370		3,193,470		3,324,202		3,291,919		3,248,841		3,291,919
Securities	$	524,127		452,259		405,349		330,426		325,663		524,127		325,663
Other interest-earning assets	$	683,638		596,855		563,174		495,308		386,711		683,638		386,711
Total earning assets (before allowance)	$	4,456,606		4,413,484		4,161,993		4,149,936		4,004,293		4,456,606		4,004,293
Total assets	$	4,757,414		4,713,023		4,437,344		4,420,610		4,314,379		4,757,414		4,314,379
Noninterest-bearing deposits	$	1,620,829		1,605,471		1,433,403		1,449,879		1,445,620		1,620,829		1,445,620
Interest-bearing deposits	$	2,050,442		2,039,491		1,978,150		1,922,155		1,816,660		2,050,442		1,816,660
Total deposits	$	3,671,271		3,644,962		3,411,553		3,372,034		3,262,280		3,671,271		3,262,280
Total borrowed funds	$	613,205		584,672		562,360		600,892		611,298		613,205		611,298
Total interest-bearing liabilities	$	2,663,647		2,624,163		2,540,510		2,523,047		2,427,958		2,663,647		2,427,958
Shareholders' equity	$	451,888		441,243		441,554		431,900		425,221		451,888		425,221
AVERAGE BALANCES
Loans	$	3,365,686		3,318,281		3,268,866		3,292,025		3,254,985		3,324,006		3,052,441
Securities	$	483,805		419,514		365,631		327,668		333,843		451,837		339,374
Other interest-earning assets	$	619,358		591,617		559,593		457,598		251,833		605,564		202,735
Total earning assets (before allowance)	$	4,468,849		4,329,412		4,194,090		4,077,291		3,840,661		4,381,407		3,594,550
Total assets	$	4,752,858		4,578,887		4,459,370		4,346,624		4,119,573		4,666,372		3,861,179
Noninterest-bearing deposits	$	1,619,976		1,510,334		1,478,616		1,454,887		1,304,986		1,565,458		1,114,406
Interest-bearing deposits	$	2,074,759		2,026,896		1,936,069		1,863,302		1,767,985		2,050,959		1,746,008
Total deposits	$	3,694,735		3,537,230		3,414,685		3,318,189		3,072,971		3,616,417		2,860,414
Total borrowed funds	$	594,199		576,645		588,100		583,994		607,074		585,471		562,518
Total interest-bearing liabilities	$	2,668,958		2,603,541		2,524,169		2,447,296		2,375,059		2,636,430		2,308,526
Shareholders' equity	$	445,930		443,548		438,171		429,865		422,230		444,761		420,921

 

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SOURCE Mercantile Bank Corporation