EX-99.1 2 k94034exv99w1.txt PRESS RELEASE EXHIBIT 99.1 [MERCANTILE BANK CORPORATION LOGO] FOR FURTHER INFORMATION: AT MERCANTILE BANK CORPORATION: FOR MEDIA: Gerald R. Johnson, Jr. Charles Christmas Linda Margolin Chairman & CEO Chief Financial Officer Margolin & Associates, Inc. 616-406-3700 616-406-3750 216-765-0953 gjohnson@mercbank.com cchristmas@mercbank.com lmm@margolinIR.com MERCANTILE BANK CORPORATION ANNOUNCES FIRST QUARTER NET INCOME OF $4.4 MILLION, UP 46.7% WYOMING, MICH., April 7, 2005 -- Mercantile Bank Corporation (Nasdaq: MBWM) reported net income for the first quarter ended March 31, 2005 of $4.4 million, an increase of 46.7 percent from the $3.0 million reported for the first quarter ended March 31, 2004. Diluted earnings per share were $0.59 compared with $0.41 reported for the prior-year first quarter period, an increase of 43.9 percent. Gerald R. Johnson, Jr., Chairman and CEO, commented, "Our strong commercial loan pipeline continues to be the key to our outstanding performance. The western Michigan business community recognizes Mercantile's extraordinary lending expertise and high service levels, which contribute to loan growth that has consistently ranked in the top quartile of bank performance. The rising interest rate environment favorably impacted the level of interest income generated by our commercial loan portfolio. These factors have led to yet another quarter of robust revenue growth. "Outstanding loan growth is not enough. We manage our company to maximize growth without compromising service, customer convenience or asset quality. Revenue growth is balanced with continued investment in infrastructure and employees. Our full-service Holland office was opened during the fourth quarter of 2004, and we have been adding staff continuously to accommodate the exceptional growth of our company. We are also looking forward to the May 2005 completion of our new headquarters building. Together, these investments position Mercantile for continued growth as well as the opportunity to enhance its already strong reputation for service, product delivery and lending expertise." Total revenue, comprised of net interest income and non-interest income, was $13.9 million for the first quarter of 2005, an increase of 31.7 percent over the $10.5 million of revenue realized during the first quarter of 2004. Net interest income for the current quarter increased 33.4 percent over the prior-year quarter to $12.7 million, reflecting a combination of 26.3 percent growth in average earning assets and a 20 basis point improvement in the net interest margin to 3.46 percent. Added Mr. Johnson, "We continue to expand our margin and gained an additional three basis points compared with the fourth quarter of 2004." Non-interest income was $1.2 million, a 16.5 percent increase over last year's first quarter; the quarter reflected growth in all fee businesses with the exception of mortgage banking, which experienced a modest decrease. Non-interest expense for the first quarter of 2005 was $6.9 million, an increase of 32.9 percent over the prior-year period, principally in support of corporate growth. Salaries and benefits, up 26.7 percent, represent the largest dollar increase in non-interest expense; the increase was consistent with a 26.9 percent year-over-year increase in full-time equivalent employees. Occupancy, equipment and furniture expense rose 22.3 percent from the investment in the Holland full-service banking office as well as the ongoing increase in staff. Other non-interest expense rose $672,000 or 55.3 percent; the current quarter includes a $300,000 accrual for the estimated loss related to a letter of credit commitment in which the customer has shown signs of financial distress. This letter of credit has not yet been drawn upon. Mercantile's efficiency ratio remains low -- 49.41 percent for the first quarter of 2005 compared with 48.96 percent for the prior-year period. Asset quality, a hallmark of Mercantile's outstanding performance, remains strong. Net charge-offs for the first quarter of 2005 were $447,000, or 0.13 percent of average loans on an annualized basis, compared with $286,000, or 0.11 percent for the prior-year first quarter. Non-performing assets were $5.2 million, or 0.31 percent of total assets at March 31, 2005, compared with $3.1 million or 0.24 percent at March 31, 2004. Loan and lease loss reserves were $18.1 million, or 1.32 percent of total loans and leases, at March 31, 2005. Total assets were $1.66 billion at March 31, 2005, an increase of $370.9 million, or 28.7 percent, from last year's first quarter-end. Loan growth, virtually all of which was commercial, was $263.4 million or 23.7 percent during the same 12-month period; the increase was primarily funded by a $294.7 million, or 29.6 percent, increase in deposits. Shareholders' equity at March 31, 2005 was $144.5 million, a twelve-month increase of $11.4 million, or 8.6 percent. Total shares outstanding at quarter-end were 7,212,268. Mercantile's total risk-based capital ratio at quarter-end was 12.71 percent. Mr. Johnson concluded, "As we expand, we continue to follow the same business model that has served Mercantile and our clients successfully since the Company's inception. We look forward to sustained growth and enhanced profitability from the recent investments that will allow us to serve our local businesses more effectively." About Mercantile Bank Corporation Mercantile Bank Corporation is the bank holding company for Mercantile Bank of West Michigan. The Bank's primary service area is the Kent and Ottawa County area of West Michigan, which includes the City of Grand Rapids, the second-largest city in the State of Michigan. The Bank provides a wide variety of commercial banking services primarily to businesses, individuals, and governmental units through its five full-service offices in greater Grand Rapids, and its Holland, Michigan office located thirty miles southwest of Grand Rapids. Mercantile Bank Corporation's common stock is listed on the Nasdaq National Market under the symbol "MBWM." Forward-Looking Statements This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors, referred to from time to time in filings made by Mercantile with the Securities and Exchange Commission. Mercantile undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise. Mercantile Bank Corporation First Quarter 2005 Results MERCANTILE BANK CORPORATION CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31, MARCH 31, 2005 2004 2004 --------------- --------------- --------------- (Unaudited) (Audited) (Unaudited) ASSETS Cash and due from banks $ 39,255,000 $ 20,662,000 $ 29,952,000 Short-term investments 942,000 149,000 717,000 Federal funds sold 33,400,000 0 5,000,000 --------------- --------------- --------------- Total cash and cash equivalents 73,597,000 20,811,000 35,669,000 Securities available for sale 102,733,000 93,826,000 64,974,000 Securities held to maturity 57,023,000 52,341,000 46,531,000 Federal Home Loan Bank stock 7,022,000 6,798,000 5,784,000 Total loans and leases 1,374,577,000 1,317,124,000 1,111,152,000 Allowance for loan and lease losses (18,097,000) (17,819,000) (15,337,000) --------------- --------------- --------------- Total loans and leases, net 1,356,480,000 1,299,305,000 1,095,815,000 Premises and equipment, net 26,576,000 24,572,000 16,580,000 Bank owned life insurance policies 23,986,000 23,750,000 16,618,000 Accrued interest receivable 6,883,000 5,644,000 4,824,000 Other assets 10,576,000 9,072,000 7,140,000 --------------- --------------- --------------- Total assets $ 1,664,876,000 $ 1,536,119,000 $ 1,293,935,000 =============== =============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-bearing $ 135,544,000 $ 101,742,000 $ 85,900,000 Interest-bearing 1,154,473,000 1,057,439,000 909,434,000 --------------- --------------- --------------- Total deposits 1,290,017,000 1,159,181,000 995,334,000 Securities sold under agreements to repurchase 60,208,000 56,317,000 41,613,000 Federal funds purchased 0 15,000,000 0 Federal Home Loan Bank advances 125,000,000 120,000,000 100,000,000 Subordinated debentures 32,990,000 32,990,000 16,495,000 Other borrowed money 1,916,000 1,609,000 1,361,000 Accrued expenses and other liabilities 10,244,000 9,405,000 6,057,000 --------------- --------------- --------------- Total liabilities 1,520,375,000 1,394,502,000 1,160,860,000 SHAREHOLDERS' EQUITY Common stock 131,113,000 131,010,000 118,684,000 Retained earnings 14,116,000 10,475,000 13,781,000 Accumulated other comprehensive income (loss) (728,000) 132,000 610,000 --------------- --------------- --------------- Total shareholders' equity 144,501,000 141,617,000 133,075,000 Total liabilities and shareholders' equity $ 1,664,876,000 $ 1,536,119,000 $ 1,293,935,000 =============== =============== ===============
Mercantile Bank Corporation First Quarter 2005 Results MERCANTILE BANK CORPORATION CONSOLIDATED REPORTS OF INCOME
THREE MONTHS ENDED THREE MONTHS ENDED March 31, 2005 March 31, 2004 -------------- -------------- (Unaudited) (Unaudited) INTEREST INCOME Loans and leases, including fees $19,772,000 $13,908,000 Investment securities 1,887,000 1,426,000 Federal funds sold 44,000 19,000 Short-term investments 2,000 1,000 ----------- ----------- Total interest income 21,705,000 15,354,000 INTEREST EXPENSE Deposits 7,440,000 4,750,000 Short-term borrowings 338,000 170,000 Federal Home Loan Bank advances 857,000 529,000 Long-term borrowings 415,000 416,000 ----------- ----------- Total interest expense 9,050,000 5,865,000 ----------- ----------- Net interest income 12,655,000 9,489,000 Provision for loan and lease losses 725,000 1,244,000 ----------- ----------- Net interest income after provision for loan and lease losses 11,930,000 8,245,000 NON INTEREST INCOME Service charges on accounts 338,000 299,000 Net gain on sales of securities 0 78,000 Other income 872,000 662,000 ----------- ----------- Total non interest income 1,210,000 1,039,000 NON INTEREST EXPENSE Salaries and benefits 4,159,000 3,283,000 Occupancy 518,000 386,000 Furniture and equipment 288,000 273,000 Other expense 1,885,000 1,213,000 ----------- ----------- Total non interest expense 6,850,000 5,155,000 ----------- ----------- Income before federal income tax 6,290,000 4,129,000 Federal income tax expense 1,928,000 1,156,000 ----------- ----------- Net income $ 4,362,000 $ 2,973,000 =========== =========== Basic earnings per share $ 0.61 $ 0.42 Diluted earnings per share $ 0.59 $ 0.41 Average shares outstanding 7,206,322 7,158,970 Average diluted shares outstanding 7,345,543 7,314,126
Mercantile Bank Corporation First Quarter 2005 Results MERCANTILE BANK CORPORATION CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
QUARTERLY -------------------------------------------------------------- 1ST QTR 4TH QTR 3RD QTR 2ND QTR 1ST QTR (dollars in thousands except per share data) 2005 2004 2004 2004 2004 ---------- --------- --------- --------- --------- EARNINGS Net interest income $ 12,655 12,082 10,856 10,000 9,489 Provision for loan and lease losses $ 725 1,000 1,200 1,230 1,244 NonInterest income $ 1,210 1,106 1,156 1,001 1,039 NonInterest expense $ 6,850 6,228 6,415 5,400 5,155 Net income $ 4,362 4,488 3,114 3,146 2,973 Basic earnings per share $ 0.61 0.62 0.43 0.44 0.42 Diluted earnings per share $ 0.59 0.61 0.43 0.43 0.41 Average shares outstanding 7,206,322 7,189,575 7,176,032 7,172,633 7,158,970 Average diluted shares outstanding 7,345,543 7,350,178 7,318,345 7,322,474 7,314,126 PERFORMANCE RATIOS Return on average assets 1.11% 1.18% 0.86% 0.95% 0.96% Return on average common equity 12.36% 12.74% 9.06% 9.50% 9.10% Net interest margin (fully tax-equivalent) 3.46% 3.43% 3.23% 3.24% 3.26% Efficiency ratio 49.41% 47.22% 53.40% 49.09% 48.96% Full-time equivalent employees 212 194 190 183 167 CAPITAL Average equity to average assets 8.99% 9.29% 9.54% 10.01% 10.50% Tier 1 leverage capital ratio 11.13% 11.53% 10.75% 11.35% 11.87% Tier 1 risk-based capital ratio 11.53% 11.82% 10.99% 11.50% 11.99% Total risk-based capital ratio 12.71% 13.03% 12.21% 12.74% 13.23% Book value per share $ 20.04 19.69 19.22 18.71 18.52 Cash dividend per share $ 0.10 0.09 0.09 0.09 0.09 ASSET QUALITY Gross loan charge-offs $ 493 262 581 263 299 Net loan charge-offs $ 447 226 467 255 286 Net loan charge-offs to average loans 0.13% 0.07% 0.15% 0.09% 0.11% Allowance for loan and lease losses $ 18,097 17,819 17,045 16,312 15,337 Allowance for loan losses to total loans 1.32% 1.35% 1.36% 1.38% 1.38% Nonperforming loans $ 4,016 2,842 2,985 3,731 3,122 Other real estate and repossessed assets $ 1,177 0 0 0 0 Nonperforming assets to total assets 0.31% 0.19% 0.20% 0.27% 0.24% END OF PERIOD BALANCES Loans and leases $1,374,577 1,317,124 1,253,713 1,185,363 1,111,152 Total earning assets (before allowance) $1,575,697 1,470,238 1,404,559 1,311,191 1,234,158 Total assets $1,664,876 1,536,119 1,474,949 1,378,626 1,293,935 Deposits $1,290,017 1,159,181 1,144,857 1,046,069 995,334 Shareholder's equity $ 144,501 141,617 137,935 134,272 133,075 AVERAGE BALANCES Loans and leases $1,345,336 1,276,913 1,219,325 1,144,758 1,067,710 Total earning assets (before allowance) $1,511,891 1,428,121 1,361,985 1,269,300 1,196,936 Total assets $1,591,764 1,504,526 1,429,059 1,330,507 1,250,733 Deposits $1,214,890 1,150,606 1,094,166 1,004,651 946,562 Shareholder's equity $ 143,169 139,744 136,290 133,211 131,361