Mercantile Bank : Solid core commercial loan growth, sustained strength in mortgage banking income, and ongoing sound asset quality metrics highlight quarter (Form 8-K)

Solid core commercial loan growth, sustained strength in mortgage banking income, and ongoing sound asset quality metrics highlight quarter

GRAND RAPIDS, Mich., July 20, 2021 - 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