Mercantile Bank Corporation Announces First Quarter 2001 Results

Continued Growth as Mercantile Becomes the Largest Locally Chartered Bank In

Grand Rapids



Apr 12, 2001, 01:00 ET from Mercantile Bank Corporation

    GRAND RAPIDS, Mich., April 12 /PRNewswire/ -- Mercantile Bank Corporation,
 (Nasdaq: MBWM), one of the nation's fastest growing community banking
 organizations, today announced results for the first quarter ended March 31,
 2001.
 
                        Summary of Financial Highlights
      (unaudited; dollars in thousands except share and per share amounts)
 
                                       First Quarter Ended
                                 March 31, 2001  March 31, 2000      Change
 
      Net Loans                     $452,963        $342,768           32%
      Total Assets                  $560,402        $409,739           37%
      Net Interest Income Before
       Loan Loss Provision            $3,462          $2,797           24%
      Provision for Loan Loss           $450            $585           (23%)
      Non Interest Income               $409            $223           83%
      Non Interest Expense            $2,073          $1,710           21%
      Income Before Taxes             $1,348            $725           86%
      Income Tax Expense                $433            $225           92%
      Net Income                        $915            $500           83%
      Net Income Per Diluted Share     $0.34           $0.19           79%
      Wtd. Avg. Shares
       Outstanding*                2,676,058       2,596,102            --
 
      * Adjusted for stock dividend paid on February 1, 2001
 
     KEY DEVELOPMENTS - FIRST QUARTER 2001
      -- Loan growth remains strong with net loans increasing by $29.5 million,
         or 7%.
      -- Completed two private equity offerings raising $6.7 million in
         additional capital.
      -- Credit quality remains strong as loan portfolio continues rapid
         growth.
      -- Mercantile is now the largest locally chartered bank in Grand Rapids.
 
     "We are very pleased with the asset and earnings growth generated in the
 first quarter of 2001.  Our net operating income of $915,451, representing an
 83 percent increase over our results from the first quarter of 2000,
 demonstrates the continued success of our business strategy.  In three years
 since opening for business Mercantile has become the largest locally chartered
 bank in Grand Rapids.  We believe this distinction will continue to attract
 new customers who expect a level of personal service that can only be
 delivered through a local lender."
                                          -- Gerald Johnson, Jr., Chairman
 
     First Quarter 2001 Results
     Net interest income before loan loss provision increased by 23.8 percent
 over the prior year comparable quarter to $3.5 million.  This increase was due
 to Mercantile's continued strong asset growth during the past twelve months.
 Total earning assets increased from $396.5 million for the comparative quarter
 last year to $542.7 million in the first quarter this year, with 76.6 percent
 of the increase directly attributable to the increase in total loans.  Total
 revenues increased to $11.3 million in the first quarter of 2001, up
 39.5 percent over last year.  This improvement includes a higher level of
 interest income attributable to the growth in earning assets and non-interest
 revenues.  Non-interest revenue increased to $409,000, an increase of
 83 percent over the prior year comparable quarter.  The increase reflects
 continued efforts in building fee-based revenue and includes a net gain of
 $99,594 from the sale of investment securities.  The purchase or sale of
 investment securities is an ongoing strategy used by the Bank in managing net
 interest margin.
     The provision for loan losses was $450,000 for the first quarter of 2001,
 a decrease of $135,000 over the prior year comparable quarter.  Although total
 loans increased by $29.5 million, or 7.0 percent, during the quarter, the
 volume of loan growth was less than that of the first quarter last year,
 resulting in a smaller provision expense.  Credit quality remained strong
 during the first quarter of 2001.  Loan charge-offs totaled $20,000, but with
 recoveries of prior loan charge-offs of $33,226 a net recovery was recorded
 during the quarter.  At March 31, 2001, past due loans were 0.04 percent of
 total loans.
     Mercantile's efficiency ratio was 53.5 percent for the first quarter of
 2001, which compares favorably to the 56.6 percent recorded during the
 comparable quarter in 2000.  Non interest expense as a percentage of average
 assets also continues its decline and was 1.57 percent during the quarter
 compared to a respectable 1.74 percent level during the first quarter of 2000.
 Net non-interest expense (non-interest expense minus non-interest income) grew
 at an 11.9 percent rate, whereas total assets increased by 36.8 percent,
 further demonstrating the success of Mercantile's strategy of limiting the
 increase in overhead costs while continuing to grow the asset base of the
 company.
 
     Mercantile Bank Corporation Management Comments
     Mercantile Bank Corporation Chairman Gerald Johnson, Jr., said: "We are
 very pleased with the asset and earnings growth generated in the first quarter
 of 2001.  Our net income of $915,451, representing an 83 percent increase over
 our results from the first quarter of 2000, demonstrates the continued success
 of our business strategy.  In three years since opening for business
 Mercantile has become the largest locally chartered bank in Grand Rapids.  We
 believe this distinction will continue to attract new customers who expect a
 level of personal service that can only be delivered through a local lender.
 We recently completed two private equity offerings to further support our
 capital structure and were especially pleased that we were able to complete
 these transactions during a period of high volatility in the general stock
 market.  These private placements will provide additional capital to fund our
 growth with only minor dilution to our current shareholders.  We expect any
 minor dilution will be offset by the benefits of allowing the Bank to continue
 its growth, and thus take advantage of its position as the largest locally
 chartered bank in Grand Rapids.  The fact that we were able to deliver another
 strong quarter in earnings per share on higher average shares outstanding
 demonstrates the success of our business strategy."
     "This was yet another strong quarter for Mercantile.  The economic
 strength of Western Michigan combined with recent changes in the banking
 landscape present Mercantile with outstanding growth opportunities.  Our goal
 for 2001 is to continue our growth while never losing sight of the principles
 that have led to our success.  We continue to add high quality loans to our
 portfolio while limiting growth of non-interest expenses.  In the first
 quarter we booked over $29 million in new loans while further reducing our
 overhead expenses as a percentage of total assets.  As we continue with our
 proven strategy, we expect retained earnings will continue to grow as
 evidenced by our record net income for the first quarter," commented Michael
 Price, President.
 
     Conference Call
     Mercantile Bank Corporation will hold its first quarter conference call
 this morning at 10:00 AM EST.  Persons who wish to access the call can do so
 via the World Wide Web at www.mercbank.com or www.vcall.com .
 
     About the Company
     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, through its main
 office and its combined branch and operations center, provides a wide variety
 of commercial banking services primarily to businesses, individuals and
 governmental units.  Mercantile Bank Corporation's common shares are 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
                      CONDENSED CONSOLIDATED REPORTS OF INCOME
 
                                               THREE MONTHS       THREE MONTHS
                                                   ENDED              ENDED
                                              March 31, 2001    March 31, 2000
                                                (Unaudited)       (Unaudited)
     INTEREST INCOME
        Loans, including fees                     $9,575,628        $7,050,132
        Investment securities                      1,060,140           686,889
        Federal funds sold                           218,444           124,488
        Short term investments                         1,204             2,672
           Total interest income                  10,855,416         7,864,181
 
     INTEREST EXPENSE
        Deposits                                   6,664,541         4,412,279
        Short term borrowings                        335,621           261,874
        Long term borrowings                         393,511           392,614
           Total interest expense                  7,393,673         5,066,767
 
           Net interest income                     3,461,743         2,797,414
 
        Provision for loan losses                    450,000           585,000
 
           Net interest income after
            provision for loan losses              3,011,743         2,212,414
 
     NON INTEREST INCOME
        Service charges on accounts                  102,486            75,226
        Net gain on sales of securities               99,594                 0
        Other income                                 207,257           148,132
           Total non interest income                 409,337           223,358
 
     NON INTEREST EXPENSE
        Salaries and benefits                      1,243,788           938,424
        Occupancy                                    127,800           126,080
        Furniture and equipment                      106,852           105,011
        Other expense                                594,189           540,965
           Total non interest expense              2,072,629         1,710,480
 
           Income before federal income tax        1,348,451           725,292
 
        Federal income tax expense                   433,000           225,000
 
           Net income                                915,451           500,292
 
 
        Basic income per share*                        $0.34             $0.19
 
        Diluted income per share*                      $0.34             $0.19
 
        Average shares outstanding *               2,676,058         2,596,102
 
     * - Adjusted for stock dividend paid on February 1, 2001
 
 
                            MERCANTILE BANK CORPORATION
                       CONDENSED CONSOLIDATED BALANCE SHEETS
 
                                        MARCH 31,    DECEMBER 31,   MARCH 31,
                                          2001          2000          2000
                                       (Unaudited)    (Audited)    (Unaudited)
 
     ASSETS
        Cash and due from banks       $ 12,769,843  $ 11,692,825   $ 8,607,433
        Short term investments             125,443       108,846        57,171
        Federal funds sold              20,500,000     6,300,000     2,000,000
           Total cash and cash
            equivalents                 33,395,286    18,101,671    10,664,604
 
        Securities available for sale   46,059,876    45,147,493    37,392,204
        Securities held to maturity     15,621,562    14,524,341     8,409,139
        Federal Home Loan Bank stock       784,900       784,900       784,900
 
        Loans                          459,728,059   429,804,105   347,955,620
        Allowance for loan losses       (6,765,031)   (6,301,805)   (5,187,888)
           Total loans, net            452,963,028   423,502,300   342,767,732
 
        Premises and equipment, net      4,757,974     4,119,385     3,429,632
        Accrued interest receivable      2,929,030     2,758,054     2,235,478
        Other assets                     3,890,446     3,808,218     4,055,299
 
           Total assets              $ 560,402,102 $ 512,746,362 $ 409,738,988
 
 
     LIABILITIES AND STOCKHOLDERS'
      EQUITY
        Deposits:
           Non interest bearing       $ 35,399,078  $ 27,368,257  $ 21,991,918
           Interest bearing            431,693,981   398,372,056   312,456,847
              Total deposits           467,093,059   425,740,313   334,448,765
 
        Securities sold under
         agreement to repurchase        30,052,599    32,151,391    27,170,687
        Other borrowed money                94,657        56,510        13,991
        Accrued expenses and other
         liabilities                     7,331,719     6,944,262     3,720,002
 
        Guaranteed preferred
         beneficial interests in the
          Corporation's subordinated
           debentures                   16,000,000    16,000,000    16,000,000
              Total liabilities        520,572,034   480,892,476   381,353,445
 
     STOCKHOLDERS' EQUITY
        Common stock                    36,774,913    29,935,401    28,181,798
        Retained Earnings                2,543,728     1,628,277     1,087,931
        Accumulated other
         comprehensive income (loss)       511,427       290,208      (884,186)
           Total shareholders' equity   39,830,068    31,853,886    28,385,543
 
           Total liabilities and
            shareholders' equity     $ 560,402,102 $ 512,746,362 $ 409,738,988
 
     Supplemental Information:
        Quarterly Average Assets     $ 536,987,000 $ 490,022,000 $ 395,561,000
        Quarterly Average Earning
         Assets (before allowance)     521,475,000   475,376,000   383,554,000
 
 

SOURCE Mercantile Bank Corporation
    GRAND RAPIDS, Mich., April 12 /PRNewswire/ -- Mercantile Bank Corporation,
 (Nasdaq: MBWM), one of the nation's fastest growing community banking
 organizations, today announced results for the first quarter ended March 31,
 2001.
 
                        Summary of Financial Highlights
      (unaudited; dollars in thousands except share and per share amounts)
 
                                       First Quarter Ended
                                 March 31, 2001  March 31, 2000      Change
 
      Net Loans                     $452,963        $342,768           32%
      Total Assets                  $560,402        $409,739           37%
      Net Interest Income Before
       Loan Loss Provision            $3,462          $2,797           24%
      Provision for Loan Loss           $450            $585           (23%)
      Non Interest Income               $409            $223           83%
      Non Interest Expense            $2,073          $1,710           21%
      Income Before Taxes             $1,348            $725           86%
      Income Tax Expense                $433            $225           92%
      Net Income                        $915            $500           83%
      Net Income Per Diluted Share     $0.34           $0.19           79%
      Wtd. Avg. Shares
       Outstanding*                2,676,058       2,596,102            --
 
      * Adjusted for stock dividend paid on February 1, 2001
 
     KEY DEVELOPMENTS - FIRST QUARTER 2001
      -- Loan growth remains strong with net loans increasing by $29.5 million,
         or 7%.
      -- Completed two private equity offerings raising $6.7 million in
         additional capital.
      -- Credit quality remains strong as loan portfolio continues rapid
         growth.
      -- Mercantile is now the largest locally chartered bank in Grand Rapids.
 
     "We are very pleased with the asset and earnings growth generated in the
 first quarter of 2001.  Our net operating income of $915,451, representing an
 83 percent increase over our results from the first quarter of 2000,
 demonstrates the continued success of our business strategy.  In three years
 since opening for business Mercantile has become the largest locally chartered
 bank in Grand Rapids.  We believe this distinction will continue to attract
 new customers who expect a level of personal service that can only be
 delivered through a local lender."
                                          -- Gerald Johnson, Jr., Chairman
 
     First Quarter 2001 Results
     Net interest income before loan loss provision increased by 23.8 percent
 over the prior year comparable quarter to $3.5 million.  This increase was due
 to Mercantile's continued strong asset growth during the past twelve months.
 Total earning assets increased from $396.5 million for the comparative quarter
 last year to $542.7 million in the first quarter this year, with 76.6 percent
 of the increase directly attributable to the increase in total loans.  Total
 revenues increased to $11.3 million in the first quarter of 2001, up
 39.5 percent over last year.  This improvement includes a higher level of
 interest income attributable to the growth in earning assets and non-interest
 revenues.  Non-interest revenue increased to $409,000, an increase of
 83 percent over the prior year comparable quarter.  The increase reflects
 continued efforts in building fee-based revenue and includes a net gain of
 $99,594 from the sale of investment securities.  The purchase or sale of
 investment securities is an ongoing strategy used by the Bank in managing net
 interest margin.
     The provision for loan losses was $450,000 for the first quarter of 2001,
 a decrease of $135,000 over the prior year comparable quarter.  Although total
 loans increased by $29.5 million, or 7.0 percent, during the quarter, the
 volume of loan growth was less than that of the first quarter last year,
 resulting in a smaller provision expense.  Credit quality remained strong
 during the first quarter of 2001.  Loan charge-offs totaled $20,000, but with
 recoveries of prior loan charge-offs of $33,226 a net recovery was recorded
 during the quarter.  At March 31, 2001, past due loans were 0.04 percent of
 total loans.
     Mercantile's efficiency ratio was 53.5 percent for the first quarter of
 2001, which compares favorably to the 56.6 percent recorded during the
 comparable quarter in 2000.  Non interest expense as a percentage of average
 assets also continues its decline and was 1.57 percent during the quarter
 compared to a respectable 1.74 percent level during the first quarter of 2000.
 Net non-interest expense (non-interest expense minus non-interest income) grew
 at an 11.9 percent rate, whereas total assets increased by 36.8 percent,
 further demonstrating the success of Mercantile's strategy of limiting the
 increase in overhead costs while continuing to grow the asset base of the
 company.
 
     Mercantile Bank Corporation Management Comments
     Mercantile Bank Corporation Chairman Gerald Johnson, Jr., said: "We are
 very pleased with the asset and earnings growth generated in the first quarter
 of 2001.  Our net income of $915,451, representing an 83 percent increase over
 our results from the first quarter of 2000, demonstrates the continued success
 of our business strategy.  In three years since opening for business
 Mercantile has become the largest locally chartered bank in Grand Rapids.  We
 believe this distinction will continue to attract new customers who expect a
 level of personal service that can only be delivered through a local lender.
 We recently completed two private equity offerings to further support our
 capital structure and were especially pleased that we were able to complete
 these transactions during a period of high volatility in the general stock
 market.  These private placements will provide additional capital to fund our
 growth with only minor dilution to our current shareholders.  We expect any
 minor dilution will be offset by the benefits of allowing the Bank to continue
 its growth, and thus take advantage of its position as the largest locally
 chartered bank in Grand Rapids.  The fact that we were able to deliver another
 strong quarter in earnings per share on higher average shares outstanding
 demonstrates the success of our business strategy."
     "This was yet another strong quarter for Mercantile.  The economic
 strength of Western Michigan combined with recent changes in the banking
 landscape present Mercantile with outstanding growth opportunities.  Our goal
 for 2001 is to continue our growth while never losing sight of the principles
 that have led to our success.  We continue to add high quality loans to our
 portfolio while limiting growth of non-interest expenses.  In the first
 quarter we booked over $29 million in new loans while further reducing our
 overhead expenses as a percentage of total assets.  As we continue with our
 proven strategy, we expect retained earnings will continue to grow as
 evidenced by our record net income for the first quarter," commented Michael
 Price, President.
 
     Conference Call
     Mercantile Bank Corporation will hold its first quarter conference call
 this morning at 10:00 AM EST.  Persons who wish to access the call can do so
 via the World Wide Web at www.mercbank.com or www.vcall.com .
 
     About the Company
     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, through its main
 office and its combined branch and operations center, provides a wide variety
 of commercial banking services primarily to businesses, individuals and
 governmental units.  Mercantile Bank Corporation's common shares are 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
                      CONDENSED CONSOLIDATED REPORTS OF INCOME
 
                                               THREE MONTHS       THREE MONTHS
                                                   ENDED              ENDED
                                              March 31, 2001    March 31, 2000
                                                (Unaudited)       (Unaudited)
     INTEREST INCOME
        Loans, including fees                     $9,575,628        $7,050,132
        Investment securities                      1,060,140           686,889
        Federal funds sold                           218,444           124,488
        Short term investments                         1,204             2,672
           Total interest income                  10,855,416         7,864,181
 
     INTEREST EXPENSE
        Deposits                                   6,664,541         4,412,279
        Short term borrowings                        335,621           261,874
        Long term borrowings                         393,511           392,614
           Total interest expense                  7,393,673         5,066,767
 
           Net interest income                     3,461,743         2,797,414
 
        Provision for loan losses                    450,000           585,000
 
           Net interest income after
            provision for loan losses              3,011,743         2,212,414
 
     NON INTEREST INCOME
        Service charges on accounts                  102,486            75,226
        Net gain on sales of securities               99,594                 0
        Other income                                 207,257           148,132
           Total non interest income                 409,337           223,358
 
     NON INTEREST EXPENSE
        Salaries and benefits                      1,243,788           938,424
        Occupancy                                    127,800           126,080
        Furniture and equipment                      106,852           105,011
        Other expense                                594,189           540,965
           Total non interest expense              2,072,629         1,710,480
 
           Income before federal income tax        1,348,451           725,292
 
        Federal income tax expense                   433,000           225,000
 
           Net income                                915,451           500,292
 
 
        Basic income per share*                        $0.34             $0.19
 
        Diluted income per share*                      $0.34             $0.19
 
        Average shares outstanding *               2,676,058         2,596,102
 
     * - Adjusted for stock dividend paid on February 1, 2001
 
 
                            MERCANTILE BANK CORPORATION
                       CONDENSED CONSOLIDATED BALANCE SHEETS
 
                                        MARCH 31,    DECEMBER 31,   MARCH 31,
                                          2001          2000          2000
                                       (Unaudited)    (Audited)    (Unaudited)
 
     ASSETS
        Cash and due from banks       $ 12,769,843  $ 11,692,825   $ 8,607,433
        Short term investments             125,443       108,846        57,171
        Federal funds sold              20,500,000     6,300,000     2,000,000
           Total cash and cash
            equivalents                 33,395,286    18,101,671    10,664,604
 
        Securities available for sale   46,059,876    45,147,493    37,392,204
        Securities held to maturity     15,621,562    14,524,341     8,409,139
        Federal Home Loan Bank stock       784,900       784,900       784,900
 
        Loans                          459,728,059   429,804,105   347,955,620
        Allowance for loan losses       (6,765,031)   (6,301,805)   (5,187,888)
           Total loans, net            452,963,028   423,502,300   342,767,732
 
        Premises and equipment, net      4,757,974     4,119,385     3,429,632
        Accrued interest receivable      2,929,030     2,758,054     2,235,478
        Other assets                     3,890,446     3,808,218     4,055,299
 
           Total assets              $ 560,402,102 $ 512,746,362 $ 409,738,988
 
 
     LIABILITIES AND STOCKHOLDERS'
      EQUITY
        Deposits:
           Non interest bearing       $ 35,399,078  $ 27,368,257  $ 21,991,918
           Interest bearing            431,693,981   398,372,056   312,456,847
              Total deposits           467,093,059   425,740,313   334,448,765
 
        Securities sold under
         agreement to repurchase        30,052,599    32,151,391    27,170,687
        Other borrowed money                94,657        56,510        13,991
        Accrued expenses and other
         liabilities                     7,331,719     6,944,262     3,720,002
 
        Guaranteed preferred
         beneficial interests in the
          Corporation's subordinated
           debentures                   16,000,000    16,000,000    16,000,000
              Total liabilities        520,572,034   480,892,476   381,353,445
 
     STOCKHOLDERS' EQUITY
        Common stock                    36,774,913    29,935,401    28,181,798
        Retained Earnings                2,543,728     1,628,277     1,087,931
        Accumulated other
         comprehensive income (loss)       511,427       290,208      (884,186)
           Total shareholders' equity   39,830,068    31,853,886    28,385,543
 
           Total liabilities and
            shareholders' equity     $ 560,402,102 $ 512,746,362 $ 409,738,988
 
     Supplemental Information:
        Quarterly Average Assets     $ 536,987,000 $ 490,022,000 $ 395,561,000
        Quarterly Average Earning
         Assets (before allowance)     521,475,000   475,376,000   383,554,000
 
 SOURCE  Mercantile Bank Corporation