0001193125-13-399878.txt : 20131015 0001193125-13-399878.hdr.sgml : 20131014 20131015161306 ACCESSION NUMBER: 0001193125-13-399878 CONFORMED SUBMISSION TYPE: 425 PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20131015 DATE AS OF CHANGE: 20131015 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MERCANTILE BANK CORP CENTRAL INDEX KEY: 0001042729 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 383360865 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 SEC ACT: 1934 Act SEC FILE NUMBER: 000-26719 FILM NUMBER: 131152071 BUSINESS ADDRESS: STREET 1: 310 LEONARD STREET NW CITY: GRAND RAPIDS STATE: MI ZIP: 49504 BUSINESS PHONE: 616 406-3000 MAIL ADDRESS: STREET 1: 310 LEONARD STREET NW CITY: GRAND RAPIDS STATE: MI ZIP: 49504 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MERCANTILE BANK CORP CENTRAL INDEX KEY: 0001042729 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 383360865 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 BUSINESS ADDRESS: STREET 1: 310 LEONARD STREET NW CITY: GRAND RAPIDS STATE: MI ZIP: 49504 BUSINESS PHONE: 616 406-3000 MAIL ADDRESS: STREET 1: 310 LEONARD STREET NW CITY: GRAND RAPIDS STATE: MI ZIP: 49504 425 1 d613040d425.htm 425 425
  

Filed by Mercantile Bank Corporation

Pursuant to Rule 425 under the Securities Act of 1933

and deemed filed pursuant to Rule 14a-12

under the Securities Exchange Act of 1934

Subject Company: Mercantile Bank Corporation

Commission File No.: 000-26719

Date: October 15, 2013

 

LOGO

Mercantile Bank Corporation Reports Strong Third Quarter 2013 Results

Diluted earnings per share increased 33 percent

Asset quality continues to improve

GRAND RAPIDS, Mich., October 15, 2013 – Mercantile Bank Corporation (NASDAQ: MBWM) (“Mercantile”) reported net income attributable to common shares of $3.5 million, or $0.40 per diluted share, for the third quarter of 2013, compared with net income attributable to common shares of $2.6 million, or $0.30 per diluted share, for the prior-year period.

The third quarter was highlighted by:

 

  •   New loan originations of approximately $74 million

 

  •   Increased profitability driven by improved asset quality

 

  •   Nonperforming assets declined 66 percent from a year ago; currently represent only 0.9 percent of total assets

 

  •   No loans were in the 30- to 89-days delinquent category at quarter end

 

  •   Improved net interest margin remains well above historical average

 

  •   Announced fourth quarter cash dividend of $0.12 per common share, reflecting a current annual yield of approximately 2.3 percent

 

  •   Definitive merger agreement signed with Firstbank Corporation; after-tax merger-related costs were $0.7 million for the quarter

“Mercantile’s very strong performance continued through the third quarter of 2013 as we continued to demonstrate leadership in our markets,” said Michael Price, Chairman and CEO of Mercantile. “Mercantile delivered strong operating results, improved financial strength and continued to build momentum in an improving regional economy. We continue to be encouraged by positive trends in new business development and remain confident that our year-to-date performance is indicative of the opportunities available to us over the remainder of 2013 and into 2014.”

Operating Results

Total revenue, which consists of net interest income and noninterest income, was $13.7 million during the third quarter of 2013, up slightly from the $13.6 million generated during the prior-year third quarter. The increase in total revenue during the 2013 period resulted from higher net interest income, which more than offset lower noninterest income. Net interest income during the third quarter of 2013 was $12.0 million, up $0.4 million or 3.5 percent from the third quarter of 2012, reflecting a 0.4 percent increase in average earning assets and a 9 basis point increase in the net interest margin. The net interest margin during the third quarter of 2013 was 3.76 percent, up from 3.67 percent during the comparable 2012 period.

Noninterest income during the third quarter of 2013 was $1.7 million, down 18.2 percent from $2.1 million during the prior-year third quarter. The decrease in noninterest income during the 2013 period primarily resulted from lower rental income on foreclosed properties and residential mortgage banking fee income.

Mercantile recorded a negative $1.7 million provision for loan losses during the third quarter of 2013 compared to a negative provision of $0.4 million for the third quarter of 2012. The negative provision expense is the result of several factors, including continued progress in loan recoveries and collections, a reduced level of loan-rating downgrades and ongoing loan-rating upgrades as the quality of the loan portfolio continues to improve. Loan recoveries totaled $2.0 million during the third quarter of 2013, while loan charge-offs not specifically reserved for in prior periods amounted to only $0.1 million, resulting in a net positive impact of $1.9 million on provision expense.

Noninterest expense totaled $9.9 million during the third quarter of 2013, down $0.3 million or 2.6 percent from the prior-year third quarter. Costs associated with the administration and resolution of problem assets, including legal expenses, property tax payments, appraisal costs and write-downs on foreclosed properties, totaled $0.4 million during the third quarter of 2013, down $1.2 million or 76.3 percent from the $1.6 million expensed during the third quarter of 2012. Gains on sales of other real estate, which are netted against problem asset costs, totaled $0.3 million during the third quarter of 2013. The reduction in problem asset costs reflects the continuation of Mercantile’s aggressive approach to managing and resolving problem assets. After-tax merger-related costs totaled $0.7 million for the quarter.

Mr. Price continued: “We were particularly pleased with the financial performance of our loan portfolio. We recorded a $1.7 million negative provision during the third quarter in large part due to $2.0 million in recoveries. We continue to prune our loan portfolio while taking advantage of new business opportunities in our region. We have the ability to be flexible and opportunistic as we pursue disciplined growth for long-term performance.”

Balance Sheet

As of September 30, 2013, total assets were $1.42 billion, down $0.9 million or 0.1 percent from December 31, 2012; total loans increased $34.3 million, or 3.3 percent, to $1.08 billion over the same time period. Compared to September 30, 2012, total assets grew $33.6 million, or 2.4 percent, and total loans grew $40.2 million, or 3.9 percent. Approximately $60 million in loans to new borrowers were originated during the third quarter as continuing relationship building efforts have led to increased lending opportunities.

Commercial-related real estate loans continue to comprise a majority of Mercantile’s loan portfolio, representing approximately 67 percent of total loans as of September 30, 2013. Non-owner occupied commercial real estate (“CRE”) loans, totaling $368 million or 34.2 percent of total loans as of September 30, 2013, increased $68.4 million or 22.9 percent during the last twelve months. Owner-occupied CRE loans, totaling $259 million or 24.1 percent of total loans at the end of the current year third quarter, declined $17.4 million or 6.3 percent since September 30, 2012. Commercial and industrial loans totaled $287 million or 26.7 percent of total loans as of September 30, 2013, up from $272 million or 26.3 percent of total loans as of September 30, 2012.

LOAN COMPOSITION

 

($000s)    9/30/13      6/30/13      3/31/13      12/31/12      9/30/12  

Commercial:

               

Commercial & Industrial

    $ 286,887       $ 279,300       $ 272,890       $ 285,322       $ 271,814   

Land Development & Construction

      40,741         42,170         45,174         48,099         56,622   

Owner Occupied CRE

      258,656         253,172         253,089         259,277         276,185   

Non-Owner Occupied CRE

      368,301         357,452         327,776         324,886         299,356   

Multi-Family & Residential

               

Rental Properties

      53,178         53,522         50,035         50,922         53,434   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Commercial

      1,007,763         985,616         948,964         968,506         957,411   

Retail:

               

1-4 Family Mortgages

      31,149         35,709         35,735         33,766         38,454   

Home Equity & Other Consumer Loans

      36,575         37,337         38,257         38,917         39,423   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Retail

      67,724         73,046         73,992         72,683         77,877   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 1,075,487       $ 1,058,662       $ 1,022,956       $ 1,041,189       $ 1,035,288   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Mercantile has continued its efforts to improve liquidity by growing local deposits and reducing wholesale funding. As of September 30, 2013, total deposits were $1.12 billion, up $13.9 million from September 30, 2012. By comparison, local deposits increased $76.9 million to $904 million over the past year, representing 80.6 percent of total deposits compared to 74.7 percent at September 30, 2012. Growth in local deposits was driven primarily by new commercial relationships, the introduction of innovative new products, various deposit-gathering initiatives and enhanced advertising and branding campaigns.

Wholesale funds were $262 million, or 21.3 percent of total funds, as of September 30, 2013, compared to $305 million, or 24.7 percent of total funds, as of December 31, 2012, and $315 million, or 26.2 percent of total funds, as of September 30, 2012.

Short-term investments, consisting of federal funds sold and interest-bearing bank deposits, averaged $65.9 million during the third quarter of 2013. In addition to its short-term investments, Mercantile had approximately $147 million of borrowing capacity through various established lines of credit to meet potential funding needs, as well as approximately $38 million of unpledged U.S. Government securities as of September 30, 2013.

Asset Quality

Nonperforming assets (“NPAs”) at September 30, 2013 were $12.2 million, or 0.9 percent of total assets, compared to $25.9 million as of December 31, 2012, and $35.9 million as of September 30, 2012 (1.8 percent and 2.6 percent of total assets, respectively). This represents a reduction of $13.7 million or 53.1 percent from the end of 2012, and a decline of $23.7 million or 66.2 percent from the year-ago quarter-end.

Robert B. Kaminski, Jr., Mercantile’s Executive Vice President and Chief Operating Officer, noted: “We remain pleased with our ongoing success in improving asset quality and the dramatic decline in nonperforming assets over the past several years. The actions taken over the past several years reflect our aggressive stance to move troubled assets off our balance sheet. Nonperforming assets now represent only 0.9 percent of our total assets and our 30-to 89-day delinquent loans continue at a nominal level. We are grateful to the entire Mercantile team for all their hard work on this initiative, while staying true to our community banking roots, maintaining a steady focus on meeting the needs of our existing customers and driving the growth of new relationships in our markets. While our markets remain competitive, we believe we are benefiting from our robust sales programs and marketing initiatives and the overall value that Mercantile brings to clients as evidenced by the $74 million in loans to new borrowers we originated in the third quarter.”

Nonperforming loans (“NPLs”) totaled $8.6 million as of September 30, 2013, down $1.9 million and $16.2 million, respectively, from the linked quarter-end and the year-ago quarter-end, while foreclosed real estate and repossessed assets declined $0.4 million and $7.6 million, respectively, from the linked and year-ago quarter-ends. CRE loans represented 46.1 percent of NPLs, or $4.0 million at September 30, 2013. Investor-owned nonperforming CRE loans accounted for $3.3 million of total CRE NPLs, while owner-occupied CRE NPLs accounted for $0.7 million. Owner-occupied and rental residential NPLs totaled $2.9 million or 33.2 percent of total NPLs as of September 30, 2013.

NONPERFORMING ASSETS

 

($000s)    9/30/13      6/30/13      3/31/13      12/31/12      9/30/12  

Residential Real Estate:

               

Land Development

    $ 538       $ 936       $ 1,370       $ 2,362       $ 3,318   

Construction

      89         89         448         476         645   

Owner Occupied / Rental

      3,078         3,516         4,027         4,812         5,426   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     3,705         4,541         5,845         7,650         9,389   

Commercial Real Estate:

               

Land Development

      633         681         755         789         1,158   

Construction

      0         0         0         0         0   

Owner Occupied

      1,219         1,566         2,708         3,534         6,395   

Non-Owner Occupied

      5,490         6,898         8,722         13,232         17,613   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     7,342         9,145         12,185         17,555         25,166   

Non-Real Estate:

               

Commercial Assets

      1,111         755         869         734         1,386   

Consumer Assets

      0         1         1         1         1   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     1,111         756         870         735         1,387   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 12,158       $ 14,442       $ 18,900       $ 25,940       $ 35,942   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

During the third quarter of 2013, Mercantile added only $0.9 million of NPAs to its problem asset portfolio, while disposing of $3.2 million through a combination of principal payments and asset sales ($2.9 million), loan charge-offs ($0.1 million), and foreclosed asset valuation write-downs ($0.2 million). In total, NPAs decreased by a net $2.3 million, or 15.8 percent, during the third quarter of 2013.

NONPERFORMING ASSETS RECONCILIATION

 

($000s)    3Q 2013     2Q 2013     1Q 2013     4Q 2012     3Q 2012  

Beginning balance

    $ 14,442      $ 18,900      $ 25,940      $ 35,942      $ 40,069   

Additions

      852        495        692        3,691        158   

Returns to performing status

      0        0        0        (37 )      0   

Principal payments

      (2,362 )      (1,988 )      (3,512 )      (6,960 )      (1,245 ) 

Sale proceeds

      (528 )      (2,374 )      (1,887 )      (4,858 )      (1,190 ) 

Loan charge-offs

      (56 )      (319 )      (2,116 )      (1,202 )      (1,003 ) 

Valuation write-downs

      (190 )      (272 )      (217 )      (636 )      (847 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

    $ 12,158      $ 14,442      $ 18,900      $ 25,940      $ 35,942   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net loan recoveries were $1.9 million during the third quarter of 2013, or an annualized negative 0.7 percent of average loans, compared with net loan recoveries of $0.4 million (negative 0.2 percent annualized) and net loan charge-offs of $1.5 million (0.6 percent annualized) for the linked and prior-year quarters, respectively.

NET LOAN CHARGE-OFFS (RECOVERIES)

 

($000s)    3Q 2013     2Q 2013     1Q 2013     4Q 2012     3Q 2012  

Residential Real Estate:

           

Land Development

    $ (387 )    $ (119 )    $ 690      $ (119 )    $ 77   

Construction

      0        0        0        0        0   

Owner Occupied / Rental

      (105 )      (301 )      479        16        166   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     (492 )      (420 )      1,169        (103 )      243   

Commercial Real Estate:

           

Land Development

      0        30        (210 )      55        16   

Construction

      0        0        0        0        0   

Owner Occupied

      (74 )      (6 )      54        515        86   

Non-Owner Occupied

      (1,215 )      79        61        (112 )      1,317   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     (1,289 )      103        (95 )      458        1,419   

Non-Real Estate:

           

Commercial Assets

      (172 )      (95 )      69        (935 )      (148 ) 

Consumer Assets

      5        1        (1 )      (35 )      13   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     (167 )      (94 )      68        (970 )      (135 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

    $ (1,948 )    $ (411 )    $ 1,142      $ (615 )    $ 1,527   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Capital Position

Shareholders’ equity totaled $150 million as of September 30, 2013, an increase of $3.2 million from year-end 2012. The Bank remains “well-capitalized” with a total risk-based capital ratio of 15.3 percent as of September 30, 2013, compared to 14.7 percent at December 31, 2012. At September 30, 2013, the Bank had approximately $64 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a “well-capitalized” institution. Mercantile reported 8,707,534 total shares outstanding at September 30, 2013.

Reflecting the continued strength of Mercantile’s operating performance and capital position, on October 10, 2013, the Board of Directors declared a fourth quarter cash dividend of $0.12 per common share, which is payable on December 10, 2013 to shareholders of record on November 8, 2013.

Mr. Price concluded: “As we work to consummate our merger of equals with Firstbank Corporation, we continue to make steady progress within the current Mercantile franchise. We believe that this business combination will bring together two very strong community banks to create a major Michigan financial institution. We continue to be a premier community bank with strong customer relationships and a growing pipeline of new business opportunities. The ongoing recovery in the Michigan economy is an additional tailwind for our business. We are optimistic about our ability to create a combined business enterprise that can deliver disciplined growth and increasing value to our shareholders based on steady improvement in financial performance, a strong capital position and new market opportunities in western and central Michigan.”

About Mercantile Bank Corporation

Based in Grand Rapids, Michigan, Mercantile Bank Corporation is the bank holding company for Mercantile Bank of Michigan. Founded in 1997 to provide banking services to businesses, individuals and governmental units, the Bank differentiates itself on the basis of service quality and the expertise of its banking staff. Mercantile has seven full-service banking offices in Grand Rapids, Holland and Lansing, Michigan. Mercantile Bank Corporation’s common stock is listed on the NASDAQ Global Select Market under the symbol “MBWM.”

Forward-Looking Statements

This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and nontraditional competitors; changes in banking regulation or actions by bank regulators; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; changes in the national and local economies; and other factors, including risk factors, disclosed from time to time in filings made by Mercantile with the Securities and Exchange Commission. Mercantile undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Important Information for Investors

Communications in this press release do not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. The proposed merger and issuance of Mercantile common stock in connection with the proposed merger will be submitted to Mercantile’s shareholders for their consideration, and the proposed merger will be submitted to Firstbank’s shareholders for their consideration. On September 17, 2013 Mercantile filed with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-4 that includes a preliminary joint proxy statement to be used by Mercantile and Firstbank to solicit the required approval of their respective shareholders in connection with the proposed merger, and will constitute a prospectus of Mercantile. Mercantile and Firstbank may also file other documents with the SEC concerning the proposed merger. INVESTORS AND SECURITY HOLDERS OF MERCANTILE AND FIRSTBANK ARE URGED TO READ THE JOINT PROXY STATEMENT AND PROSPECTUS REGARDING THE PROPOSED MERGER AND OTHER RELEVANT DOCUMENTS THAT HAVE BEEN AND WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Investors and security holders may obtain a free copy of the joint proxy statement and prospectus and other documents containing important information about Mercantile and Firstbank, once such documents are filed with the SEC, through the website maintained by the SEC at www.sec.gov. Copies of the documents filed with the SEC by Mercantile will be available free of charge on Mercantile’s website at www.mercbank.com under the tab “Investor Relations.” or by contacting Charles Christmas, Chief Financial Officer, at 616-726-1202. Copies of documents filed with the SEC by Firstbank will be available free of charge on Firstbank’s website at www.firstbankmi.com under the tab “Investor Relations.” or by contacting Samuel Stone, Executive Vice President and Chief Financial Officer at (989) 466-7325.

Participants in the Transaction

Mercantile, Firstbank and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Mercantile and Firstbank in connection with the proposed transaction. Information about the directors and executive officers of Mercantile is set forth in its proxy statement for its 2013 annual meeting of shareholders, which was filed with the SEC on March 15, 2013. Information about the directors and executive officers of Firstbank is set forth in its proxy statement for its 2013 annual meeting of shareholders, which was filed with the SEC on March 15, 2013. These documents can be obtained free of charge from the sources indicated above. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement and prospectus and other relevant materials to be filed with the SEC.

FOR FURTHER INFORMATION:

AT MERCANTILE BANK CORPORATION:

 

Michael Price

   Charles Christmas

Chairman & CEO

  

Chief Financial Officer

616-726-1600

   616-726-1202

mprice@mercbank.com

   cchristmas@mercbank.com

Mercantile Bank Corporation

Third Quarter 2013 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

 

     SEPTEMBER 30,     DECEMBER 31,     SEPTEMBER 30,  
     2013     2012     2012  
     (Unaudited)     (Audited)     (Unaudited)  

ASSETS

       

Cash and due from banks

    $ 33,207,000      $ 20,302,000      $ 15,311,000   

Interest-bearing deposit balances

      6,428,000        10,822,000        10,672,000   

Federal funds sold

      86,283,000        104,879,000        78,012,000   
  

 

 

    

 

 

    

 

 

  

Total cash and cash equivalents

      125,918,000        136,003,000        103,995,000   

Securities available for sale

      123,793,000        138,314,000        135,660,000   

Federal Home Loan Bank stock

      11,961,000        11,961,000        11,961,000   

Loans

      1,075,487,000        1,041,189,000        1,035,288,000   

Allowance for loan losses

      (25,195,000 )      (28,677,000 )      (27,762,000 ) 
  

 

 

    

 

 

    

 

 

  

Loans, net

      1,050,292,000        1,012,512,000        1,007,526,000   

Premises and equipment, net

      25,159,000        25,919,000        26,100,000   

Bank owned life insurance

      51,073,000        50,048,000        49,690,000   

Accrued interest receivable

      3,777,000        3,874,000        3,939,000   

Other real estate owned and repossessed assets

      3,549,000        6,970,000        11,160,000   

Net deferred tax asset

      19,771,000        22,015,000        22,801,000   

Other assets

      6,710,000        15,310,000        15,532,000   
  

 

 

    

 

 

    

 

 

  

Total assets

    $ 1,422,003,000      $ 1,422,926,000      $ 1,388,364,000   
  

 

 

    

 

 

    

 

 

  

LIABILITIES AND SHAREHOLDERS’ EQUITY

       

Deposits:

       

Noninterest-bearing

    $ 216,055,000      $ 190,241,000      $ 166,890,000   

Interest-bearing

      905,454,000        944,963,000        940,676,000   
  

 

 

    

 

 

    

 

 

  

Total deposits

      1,121,509,000        1,135,204,000        1,107,566,000   

Securities sold under agreements to repurchase

      65,680,000        64,765,000        60,031,000   

Federal Home Loan Bank advances

      45,000,000        35,000,000        35,000,000   

Subordinated debentures

      32,990,000        32,990,000        32,990,000   

Accrued interest and other liabilities

      6,990,000        8,377,000        8,219,000   
  

 

 

    

 

 

    

 

 

  

Total liabilities

      1,272,169,000        1,276,336,000        1,243,806,000   

SHAREHOLDERS’ EQUITY

       

Common stock

      163,629,000        166,074,000        166,728,000   

Retained earnings (deficit)

      (9,264,000 )      (21,134,000 )      (24,183,000 ) 

Accumulated other comprehensive income (loss)

      (4,531,000 )      1,650,000        2,013,000   
  

 

 

    

 

 

    

 

 

  

Total shareholders’ equity

      149,834,000        146,590,000        144,558,000   
  

 

 

    

 

 

    

 

 

  

Total liabilities and shareholders’ equity

    $ 1,422,003,000      $ 1,422,926,000      $ 1,388,364,000   
  

 

 

    

 

 

    

 

 

  

Mercantile Bank Corporation

Third Quarter 2013 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF OPERATIONS

 

    THREE MONTHS ENDED
September 30, 2013		     THREE MONTHS ENDED
September 30, 2012		     NINE MONTHS ENDED
September 30, 2013		     NINE MONTHS ENDED
September 30, 2012		  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

INTEREST INCOME

        

Loans, including fees

   $ 13,411,000      $ 13,386,000      $ 38,944,000      $ 40,653,000   

Investment securities

     1,214,000        1,328,000        3,780,000        4,460,000   

Federal funds sold

     38,000        46,000        127,000        116,000   

Interest-bearing deposit balances

     4,000        8,000        17,000        22,000   
 

 

 

    

 

 

    

 

 

    

 

 

  

Total interest income

     14,667,000        14,768,000        42,868,000        45,251,000   

INTEREST EXPENSE

        

Deposits

     2,190,000        2,728,000        6,733,000        8,581,000   

Short-term borrowings

     19,000        39,000        57,000        130,000   

Federal Home Loan Bank advances

     141,000        183,000        379,000        871,000   

Other borrowed money

     323,000        234,000        938,000        705,000   
 

 

 

    

 

 

    

 

 

    

 

 

  

Total interest expense

     2,673,000        3,184,000        8,107,000        10,287,000   
 

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income

     11,994,000        11,584,000        34,761,000        34,964,000   

Provision for loan losses

     (1,700,000 )      (400,000 )      (4,700,000 )      (3,400,000 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income after provision for loan losses

     13,694,000        11,984,000        39,461,000        38,364,000   

NONINTEREST INCOME

        

Service charges on accounts

     397,000        378,000        1,155,000        1,142,000   

Other income

     1,286,000        1,679,000        4,126,000        4,789,000   
 

 

 

    

 

 

    

 

 

    

 

 

  

Total noninterest income

     1,683,000        2,057,000        5,281,000        5,931,000   

NONINTEREST EXPENSE

        

Salaries and benefits

     5,256,000        4,849,000        15,094,000        14,394,000   

Occupancy

     639,000        598,000        1,921,000        1,947,000   

Furniture and equipment

     242,000        282,000        754,000        888,000   

Nonperforming asset costs

     373,000        1,576,000        783,000        4,931,000   

FDIC insurance costs

     184,000        294,000        604,000        894,000   

Merger-related costs

     719,000        0        779,000        0   

Other expense

     2,509,000        2,586,000        7,383,000        7,389,000   
 

 

 

    

 

 

    

 

 

    

 

 

  

Total noninterest expense

     9,922,000        10,185,000        27,318,000        30,443,000   
 

 

 

    

 

 

    

 

 

    

 

 

  

Income before federal income tax expense

     5,455,000        3,856,000        17,424,000        13,852,000   

Federal income tax expense

     2,002,000        1,240,000        5,554,000        4,365,000   
 

 

 

    

 

 

    

 

 

    

 

 

  

Net income

     3,453,000        2,616,000        11,870,000        9,487,000   

Preferred stock dividends and accretion

     0        0        0        1,030,000   
 

 

 

    

 

 

    

 

 

    

 

 

  

Net income attributable to common shares

   $ 3,453,000      $ 2,616,000      $ 11,870,000      $ 8,457,000   
 

 

 

    

 

 

    

 

 

    

 

 

  

Basic earnings per share

   $ 0.40      $ 0.30      $ 1.36      $ 0.98   

Diluted earnings per share

   $ 0.40      $ 0.30      $ 1.36      $ 0.95   

Average basic shares outstanding

     8,707,038        8,622,719        8,706,133        8,612,831   

Average diluted shares outstanding

     8,725,268        8,653,751        8,719,956        8,896,728   

Mercantile Bank Corporation

Third Quarter 2013 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

 

    Quarterly     Year-To-Date  

(dollars in thousands except

per share data)

   2013     2013     2013     2012     2012              
  3rd Qtr     2nd Qtr     1st Qtr     4th Qtr     3rd Qtr     2013     2012  

EARNINGS

              

Net interest income

   $ 11,994        11,312        11,454        11,737        11,584        34,761        34,964   

Provision for loan losses

   $ (1,700 )      (1,500 )      (1,500 )      300        (400 )      (4,700 )      (3,400 ) 

Noninterest income

   $ 1,683        1,772        1,827        2,063        2,057        5,281        5,931   

Noninterest expense

   $ 9,922        8,813        8,584        9,180        10,185        27,318        30,443   

Net income before federal income tax expense

   $ 5,455        5,771        6,197        4,320        3,856        17,424        13,852   

Net income

   $ 3,453        4,016        4,400        3,049        2,616        11,870        9,487   

Net income common shares

   $ 3,453        4,016        4,400        3,049        2,616        11,870        8,457   

Basic earnings per share

   $ 0.40        0.46        0.51        0.35        0.30        1.36        0.98   

Diluted earnings per share

   $ 0.40        0.46        0.50        0.35        0.30        1.36        0.95   

Average basic shares outstanding

     8,707,038        8,705,667        8,705,677        8,662,034        8,622,719        8,706,133        8,612,831   

Average diluted shares outstanding

     8,725,268        8,718,649        8,718,601        8,674,342        8,653,751        8,719,956        8,896,728   

PERFORMANCE RATIOS

              

Return on average assets

     0.99 %      1.18 %      1.28 %      0.85 %      0.75 %      1.15 %      0.80 % 

Return on average equity

     9.15 %      10.70 %      12.07 %      8.27 %      7.19 %      10.63 %      7.24 % 

Net interest margin (fully tax-equivalent)

     3.76 %      3.66 %      3.68 %      3.62 %      3.67 %      3.69 %      3.67 % 

Efficiency ratio

     72.55 %      67.36 %      64.63 %      66.52 %      74.66 %      68.22 %      74.44 % 

Full-time equivalent employees

     239        239        231        232        230        239        230   

CAPITAL

              

Period-ending equity to assets

     10.54 %      11.23 %      10.81 %      10.30 %      10.41 %      10.54 %      10.41 % 

Tier 1 leverage capital ratio

     12.57 %      12.52 %      12.01 %      11.31 %      11.40 %      12.57 %      11.40 % 

Tier 1 risk-based capital ratio

     14.08 %      14.17 %      14.12 %      13.37 %      13.34 %      14.08 %      13.34 % 

Total risk-based capital ratio

     15.34 %      15.43 %      15.38 %      14.64 %      14.61 %      15.34 %      14.61 % 

Book value per common share

   $ 17.21        17.34        17.20        16.84        16.74        17.21        16.74   

Cash dividend per common share

   $ 0.12        0.11        0.10        0.09        0.00        0.33        0.00   

ASSET QUALITY

              

Gross loan charge-offs

   $ 85        382        2,415        1,469        1,891        2,882        11,175   

Net loan charge-offs (recoveries)

   $ (1,948 )      (411 )      1,142        (615 )      1,527        (1,217 )      5,370   

Net loan charge-offs to average loans

     (0.72 %)      (0.16 %)      0.45 %      (0.24 %)      0.58 %      (0.16 %)      0.68 % 

Allowance for loan losses

   $ 25,195        24,947        26,035        28,677        27,762        25,195        27,762   

Allowance for loan losses to total loans

     2.34 %      2.36 %      2.55 %      2.75 %      2.68 %      2.34 %      2.68 % 

Nonperforming loans

   $ 8,609        10,526        12,394        18,970        24,782        8,609        24,782   

Other real estate and repossessed assets

   $ 3,549        3,916        6,506        6,970        11,160        3,549        11,160   

Nonperforming assets to total assets

     0.86 %      1.07 %      1.36 %      1.82 %      2.59 %      0.86 %      2.59 % 

END OF PERIOD BALANCES

              

Loans

   $ 1,075,487        1,058,662        1,022,956        1,041,189        1,035,288        1,075,487        1,035,288   

Total earning assets (before allowance)

   $ 1,303,952        1,241,945        1,275,325        1,307,165        1,271,593        1,303,952        1,271,593   

Total assets

   $ 1,422,003        1,343,750        1,385,355        1,422,926        1,388,364        1,422,003        1,388,364   

Deposits

   $ 1,121,509        1,061,315        1,092,790        1,135,204        1,107,566        1,121,509        1,107,566   

Shareholders’ equity

   $ 149,834        150,938        149,692        146,590        144,558        149,834        144,558   

AVERAGE BALANCES

              

Loans

   $ 1,072,199        1,044,527        1,032,066        1,022,047        1,042,370        1,049,744        1,058,470   

Total earning assets (before allowance)

   $ 1,274,532        1,253,661        1,278,824        1,299,623        1,269,836        1,268,990        1,284,706   

Total assets

   $ 1,378,412        1,364,370        1,388,900        1,417,621        1,387,519        1,377,220        1,401,572   

Deposits

   $ 1,086,253        1,075,761        1,098,996        1,127,706        1,109,817        1,086,957        1,104,739   

Shareholders’ equity

   $ 149,785        150,478        147,783        146,244        144,251        149,356        155,634   
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