EX-99.1 2 ex_265036.htm EXHIBIT 99.1 ex_265036.htm

Exhibit 99.1

 

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Mercantile Bank Corporation Reports Strong Second Quarter 2021 Results

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
  rkaminski@mercbank.com    cchristmas@mercbank.com

     

 

 

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