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Mercantile Bank Corporation Announces Strong Third Quarter Results

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Mercantile Bank (NASDAQ: MBWM) reported strong third quarter results for 2024. Net income was $19.6 million, or $1.22 per diluted share, compared to $20.9 million, or $1.30 per diluted share, in Q3 2023. Highlights include:

- Robust local deposit growth and strong commercial loan portfolio expansion
- Ongoing strength in commercial loan pipeline
- Noteworthy increases in several noninterest income revenue streams
- Continuing low levels of nonperforming assets, past due loans, and loan charge-offs
- Solid capital position

The net interest margin was 3.52% in Q3 2024, down from 3.98% in Q3 2023. Total assets reached $5.92 billion, up $564 million from December 31, 2023. Total loans increased by $249 million during the first nine months of 2024. The loan-to-deposit ratio improved from 110% to 102% during this period.

La Mercantile Bank (NASDAQ: MBWM) ha riportato risultati solidi per il terzo trimestre del 2024. Il reddito netto è stato di 19,6 milioni di dollari, ossia 1,22 dollari per azione diluita, rispetto ai 20,9 milioni di dollari, ovvero 1,30 dollari per azione diluita, nel Q3 2023. I punti salienti includono:

- Crescita robusta dei depositi locali e forte espansione del portafoglio di prestiti commerciali
- Continuità della solidità nel pipeline di prestiti commerciali
- Aumenti significativi in diverse fonti di reddito non da interessi
- Livelli ancora bassi di attivi non performanti, prestiti scaduti e svalutazioni dei prestiti
- Solida posizione di capitale

Il margine di interesse netto è stato del 3,52% nel Q3 2024, in calo rispetto al 3,98% nel Q3 2023. Gli attivi totali hanno raggiunto 5,92 miliardi di dollari, in aumento di 564 milioni di dollari rispetto al 31 dicembre 2023. I prestiti totali sono aumentati di 249 milioni di dollari nei primi nove mesi del 2024. Il rapporto prestiti/depositi è migliorato dal 110% al 102% durante questo periodo.

Mercantile Bank (NASDAQ: MBWM) informó sobre resultados sólidos del tercer trimestre para 2024. El ingreso neto fue de 19.6 millones de dólares, o 1.22 dólares por acción diluida, en comparación con 20.9 millones de dólares, o 1.30 dólares por acción diluida, en el tercer trimestre de 2023. Los aspectos destacados incluyen:

- Sólido crecimiento de depósitos locales y fuerte expansión de la cartera de préstamos comerciales
- Continuidad en la solidez del pipeline de préstamos comerciales
- Aumentos significativos en varias fuentes de ingresos no por intereses
- Continuación de bajos niveles de activos no productivos, préstamos vencidos y cancelaciones de préstamos
- Sólida posición de capital

El margen de interés neto fue del 3.52% en el tercer trimestre de 2024, por debajo del 3.98% en el tercer trimestre de 2023. Los activos totales alcanzaron 5.92 mil millones de dólares, un aumento de 564 millones de dólares desde el 31 de diciembre de 2023. Los préstamos totales aumentaron en 249 millones de dólares durante los primeros nueve meses de 2024. La relación préstamos/depositos mejoró del 110% al 102% durante este período.

머칸타일 뱅크 (NASDAQ: MBWM)는 2024년 3분기 강력한 실적을 보고했습니다. 순이익은 1960만 달러, 즉 희석 주당 1.22달러로, 2023년 3분기의 2090만 달러, 즉 희석 주당 1.30달러와 비교됩니다. 주요 내용은 다음과 같습니다:

- 견고한 지역 예금 성장 및 강력한 상업 대출 포트폴리오 확장
- 상업 대출 파이프라인의 지속적인 강세
- 여러 비이자 수익원에서의 주목할 만한 증가
- 부실 자산, 연체 대출 및 대출 충당금 손실의 지속적으로 낮은 수준
- 건전한 자본 위치

순이자 마진은 2024년 3분기 3.52%로, 2023년 3분기 3.98%에서 감소했습니다. 총 자산은 59억 2000만 달러에 이르렀고, 2023년 12월 31일부터 5억 6400만 달러 증가했습니다. 총 대출은 2024년 처음 아홉 달 동안 2억 4900만 달러 증가했습니다. 이 기간 동안 대출 대비 예금 비율은 110%에서 102%로 개선되었습니다.

La Mercantile Bank (NASDAQ: MBWM) a annoncé des résultats solides pour le troisième trimestre de 2024. Le revenu net s'élevait à 19,6 millions de dollars, soit 1,22 dollar par action diluée, contre 20,9 millions de dollars, soit 1,30 dollar par action diluée, au T3 2023. Les points saillants incluent :

- Croissance robuste des dépôts locaux et forte expansion du portefeuille de prêts commerciaux
- Poursuite de la solidité dans le pipeline de prêts commerciaux
- Augmentations remarquables de plusieurs sources de revenus non d'intérêts
- Niveaux continuellement bas d'actifs non performants, de prêts en retard et d'annulations de prêts
- Position de capital solide

Le marge d'intérêt nette était de 3,52 % au T3 2024, en baisse par rapport à 3,98 % au T3 2023. Les actifs totaux ont atteint 5,92 milliards de dollars, en hausse de 564 millions de dollars par rapport au 31 décembre 2023. Les prêts totaux ont augmenté de 249 millions de dollars au cours des neuf premiers mois de 2024. Le ratio prêts/dépôts s'est amélioré de 110 % à 102 % pendant cette période.

Die Mercantile Bank (NASDAQ: MBWM) hat starke Ergebnisse im dritten Quartal 2024 gemeldet. Der Nettogewinn betrug 19,6 Millionen Dollar, oder 1,22 Dollar je verwässerter Aktie, im Vergleich zu 20,9 Millionen Dollar oder 1,30 Dollar je verwässerter Aktie im Q3 2023. Zu den Höhepunkten gehören:

- Robustes Wachstum der lokalen Einlagen und starke Expansion des kommerziellen Kreditportfolios
- Anhaltende Stärke im kommerziellen Kreditpipeline
- Bedeutende Zuwächse in mehreren Einnahmequellen aus nichtverzinslichen Erträgen
- Weiterhin niedrige Niveaus an notleidenden Vermögenswerten, überfälligen Krediten und Kreditabschreibungen
- Solide Kapitalausstattung

Die Nettzinspanne lag im Q3 2024 bei 3,52%, ein Rückgang von 3,98% im Q3 2023. Die Gesamtaktiva erreichten 5,92 Milliarden Dollar, ein Anstieg um 564 Millionen Dollar seit dem 31. Dezember 2023. Die Gesamtkredite stiegen in den ersten neun Monaten 2024 um 249 Millionen Dollar. Das Verhältnis von Krediten zu Einlagen verbesserte sich in diesem Zeitraum von 110% auf 102%.

Positive
  • Net income of $19.6 million for Q3 2024
  • Strong commercial loan portfolio expansion with $115 million growth in Q3 2024
  • Local deposits increased by $339 million (33.7% annualized) in Q3 2024
  • Noninterest income grew by 4.6% to $9.7 million in Q3 2024
  • Low levels of nonperforming assets at 0.2% of total assets
  • Net loan recoveries of $0.8 million in the first nine months of 2024
Negative
  • Net income decreased from $20.9 million in Q3 2023 to $19.6 million in Q3 2024
  • Net interest margin declined from 3.98% in Q3 2023 to 3.52% in Q3 2024
  • Cost of funds increased from 1.80% in Q3 2023 to 2.56% in Q3 2024
  • Noninterest expense rose from $28.9 million in Q3 2023 to $32.3 million in Q3 2024

Insights

Mercantile Bank 's Q3 2024 results demonstrate resilience in a challenging economic environment. Key highlights include:

  • Net income of $19.6 million ($1.22 per diluted share)
  • Strong local deposit growth of 33.7% annualized in Q3
  • Commercial loan expansion of 12.9% annualized in Q3
  • Healthy net interest margin of 3.52%
  • Robust asset quality with nonperforming assets at only 0.2% of total assets

The bank's focus on relationship banking is paying off, evidenced by growth in both deposits and loans. The reduction in the loan-to-deposit ratio from 110% to 102% over nine months is a positive sign for liquidity management. However, the increased cost of funds (up to 2.56% from 1.80% YoY) is pressuring margins. The bank's strong capital position, with a total risk-based capital ratio of 13.9%, provides a solid foundation for future growth and resilience against economic uncertainties.

Mercantile Bank's Q3 results reveal several market trends worth noting:

  • The shift in deposit mix towards higher-cost accounts reflects broader market dynamics as customers seek better yields.
  • The increase in mortgage banking income (with 80% of loans originated for sale vs. 64% last year) suggests a strategic pivot to capitalize on market conditions.
  • Strong growth in treasury management and payroll service fees indicates successful cross-selling and deepening of client relationships.
  • The low level of nonperforming assets (0.2% of total assets) outperforms industry averages, showcasing strong risk management.

These trends position Mercantile well in the competitive banking landscape. The bank's ability to grow deposits and loans simultaneously, while maintaining asset quality, demonstrates a balanced approach to growth. However, investors should monitor the impact of rising interest rates on the bank's cost of funds and net interest margin in future quarters.

Robust local deposit and commercial loan growth and sustained strength in asset quality metrics highlight quarter

GRAND RAPIDS, Mich., Oct. 15, 2024 /PRNewswire/ -- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $19.6 million, or $1.22 per diluted share, for the third quarter of 2024, compared with net income of $20.9 million, or $1.30 per diluted share, for the third quarter of 2023.  Net income during the first nine months of 2024 totaled $60.0 million, or $3.72 per diluted share, compared with net income of $62.2 million, or $3.89 per diluted share, during the first nine months of 2023.

"We are very pleased to report another quarter of strong financial performance, especially when taking into consideration the challenges associated with recent economic and operating conditions," said Ray Reitsma, President and Chief Executive Officer of Mercantile.  "The notable increases in local deposits and commercial loans during the quarter depict our continuing focus on relationship banking, meeting the needs of current customers, and attracting new clients.  Our strong operating results reflect an ongoing healthy net interest margin, solid growth in several noninterest income revenue streams, and sustained strength in asset quality metrics, along with the local deposit base and commercial loan portfolio expansions.  The growth in local deposits provided for a reduction in our loan-to-deposit ratio, the lowering of which remains a key strategic initiative."  

Third quarter highlights include:

  • Robust local deposit growth
  • Strong commercial loan portfolio expansion
  • Ongoing strength in commercial loan pipeline
  • Noteworthy increases in several noninterest income revenue streams
  • Continuing low levels of nonperforming assets, past due loans, and loan charge-offs
  • Solid capital position

Operating Results

Net revenue, consisting of net interest income and noninterest income, was $58.0 million during the third quarter of 2024, compared to $58.2 million during the prior-year third quarter.  Net interest income during the current-year third quarter was $48.3 million, down $0.7 million, or 1.4 percent, from $49.0 million during the respective 2023 period as increased yields on, along with growth in, earning assets were more than offset by a higher cost of funds. Noninterest income totaled $9.7 million during the third quarter of 2024, up $0.4 million, or 4.6 percent, from $9.3 million during the third quarter of 2023.  The increase in noninterest income mainly reflected higher levels of mortgage banking income, treasury management fees, and payroll service fees.

The net interest margin was 3.52 percent in the third quarter of 2024, down from 3.98 percent in the prior-year third quarter.  The yield on average earning assets was 6.08 percent during the current-year third quarter, an increase from 5.78 percent during the respective 2023 period.  The improvement primarily resulted from an increased yield on loans.  The yield on loans was 6.69 percent during the third quarter of 2024, up from 6.37 percent during the third quarter of 2023 mainly due to higher interest rates on variable-rate commercial loans resulting from the Federal Open Market Committee ("FOMC") raising the targeted federal funds rate in an effort to curb elevated inflation levels and a significant level of commercial loans being originated over the past 15 months in the higher interest rate environment.  The FOMC increased the targeted federal funds rate by 25 basis points in July of 2023, at which time average variable-rate commercial loans represented approximately 65 percent of average total commercial loans.  The positive impact of the rate hike was partially mitigated by the FOMC's lowering of the targeted federal funds rate by 50 basis points in mid-September 2024.

The cost of funds was 2.56 percent in the third quarter of 2024, up from 1.80 percent in the third quarter of 2023 primarily due to higher costs of deposits and borrowed funds, reflecting the impact of the rising interest rate environment.  A change in funding mix, mainly consisting of a decline in noninterest-bearing and lower-cost deposits and an increase in higher-cost money market accounts and time deposits resulting from new deposit relationships, growth in existing deposit relationships, and deposit migration, also contributed to the higher cost of funds.

Mercantile recorded provisions for credit losses of $1.1 million and $3.3 million during the third quarters of 2024 and 2023, respectively.  The provision expense recorded during the current-year third quarter primarily reflected an increase in environmental factor allocations and allocations necessitated by net loan growth, which were partially offset by decreases in the calculated allowance stemming from the payoffs of two larger problem commercial lending relationships.  The provision expense recorded during the prior-year third quarter mainly reflected the establishment of a specific reserve for a distressed commercial loan relationship, a qualitative factor assessment for local economic conditions reflecting the ongoing United Auto Workers strike, and allocations necessitated by net loan growth.

Noninterest income totaled $9.7 million during the third quarter of 2024, up $0.4 million, or 4.6 percent, from $9.3 million during the respective 2023 period.  The growth primarily resulted from increases in mortgage banking income, treasury management fees, and payroll service fees.  The higher level of mortgage banking income mainly resulted from increases in the percentage of loans originated with the intent to sell, which rose from approximately 64 percent during the third quarter of 2023 to approximately 80 percent during the third quarter of 2024, and total loan originations, which were up approximately 48 percent in the current-year third quarter compared to the respective 2023 period.  The increase in treasury management fees primarily stemmed from customers' expanded use of cash management products.  Growth in bank owned life insurance income and credit and debit card income also contributed to the higher level of noninterest income.

Noninterest expense totaled $32.3 million during the third quarter of 2024, compared to $28.9 million during the prior-year third quarter.  The increase mainly resulted from larger salary costs, reflecting annual merit pay increases, market adjustments, higher residential mortgage lender commissions and incentives, an increased bonus accrual, and lower residential mortgage loan deferred salary costs.  Higher levels of data processing costs, primarily reflecting increased transaction volume and software support costs, and health insurance claims also contributed to the increase in noninterest expense.

Mr. Reitsma commented, "The notable growth in mortgage banking income in large part reflects the ongoing success of a strategic initiative to increase the percentage of loans originated with the intent to sell, along with a significant increase in loan production.  We are delighted with the increase in treasury management fees and payroll service income, which mainly stemmed from the expanded use of products and services.  Our net interest margin, while declining as expected due to an increased cost of funds, remained healthy and in line with historical levels during the third quarter.  Controlling overhead costs while meeting balance sheet growth objectives and continuing to provide our clients with exceptional service remains a top priority." 

Balance Sheet

As of September 30, 2024, total assets were $5.92 billion, up $564 million from December 31, 2023.  Total loans increased $115 million, or an annualized 10.3 percent, during the third quarter of 2024, and $249 million, or an annualized 7.7 percent, during the first nine months of 2024.  The loan portfolio expansion in both 2024 periods almost exclusively reflected growth in commercial loans, which increased $115 million, or an annualized 12.9 percent, during the current-year third quarter and $233 million, or an annualized 9.1 percent, during the first nine months of 2024.  The commercial loan portfolio growth during the first nine months of 2024 occurred despite the full payoffs and partial paydowns of certain larger relationships, which totaled approximately $106 million during the period.  The payoffs and paydowns mainly resulted from customers using excess cash flows generated within their operations to make line of credit and unscheduled term loan principal paydowns, as well as from sales of assets.  Other consumer loans and residential mortgage loans grew $9.6 million and $6.7 million, respectively, during the first nine months of 2024.  Interest-earning deposits and securities available for sale increased $181 million and $86.3 million, respectively, during the nine months ended September 30, 2024, with the growth in both asset categories largely reflecting the success of a strategic initiative to enhance on-balance sheet liquidity.

As of September 30, 2024, unfunded commitments on commercial construction and development loans, which are expected to be funded over the next 12 to 18 months, and residential construction loans, which are expected to be largely funded over the next 12 months, totaled approximately $241 million and $34 million, respectively.

Commercial and industrial loans and owner-occupied commercial real estate loans combined represented approximately 56 percent of total commercial loans as of September 30, 2024, a level that has remained relatively consistent with prior periods and in line with management's expectations.

Total deposits equaled $4.46 billion as of September 30, 2024, representing increases of $309 million, or an annualized 30.0 percent, during the third quarter of 2024, and $555 million, or an annualized 19.0 percent, during the first nine months of 2024.  Local deposits were up $339 million, or 33.7 percent annualized, during the current-year third quarter and $600 million, or 21.4 percent annualized, during the first nine months of 2024, while brokered deposits decreased $30.0 million and $45.2 million during the respective periods.  The growth in local deposits during the nine months ended September 30, 2024, provided for a reduction in the loan-to-deposit ratio from 110 percent as of December 31, 2023, to 102 percent as of September 30, 2024. The increase in local deposits during the first nine months of 2024, which occurred despite the typical level of seasonal noninterest-bearing deposit withdrawals by customers to make bonus and tax payments and partnership distributions, reflected a combination of new deposit relationships and growth in existing deposit relationships.  Wholesale funds were $540 million, or approximately 11 percent of total funds, at September 30, 2024, compared to $636 million, or approximately 14 percent of total funds, at December 31, 2023.  Noninterest-bearing checking accounts represented approximately 27 percent of total deposits as of September 30, 2024.

Mr. Reitsma noted, "The expansion of the commercial loan portfolio, reflecting a combination of an increase in established customer relationships and new client acquisition, during the third quarter and first nine months of 2024 transpired in spite of elevated levels of partial paydowns and payoffs.  As demonstrated by the growth in commercial loans and local deposits, along with the increase in treasury management fees, our sales teams have done a fantastic job of expanding existing relationships and obtaining the full banking relationships of new customers.  Based on the strength of our current commercial loan pipeline and amount of credit availability for commercial construction and development loans, we believe originations in future periods will remain solid.  Local deposit generation will remain an important strategic initiative as we continue our efforts to lower our loan-to-deposit ratio and provide funding for anticipated loan growth."

Asset Quality

Nonperforming assets totaled $9.9 million, or 0.2 percent of total assets, at September 30, 2024, compared to $9.1 million, or 0.2 percent of total assets, at June 30, 2024, and $3.6 million, or less than 0.1 percent of total assets, at December 31, 2023.  The increase in nonperforming assets during the first nine months of 2024 largely resulted from the deterioration of two commercial loan relationships which were placed on nonaccrual and fully reserved for during the period. The level of past due loans remains nominal.  During the third quarter of 2024, loan charge-offs were nominal, while recoveries of prior period loan charge-offs equaled $0.1 million, providing for net loan recoveries of $0.1 million, or an annualized 0.01 percent of average total loans.  During the first nine months of 2024, loan charge-offs totaled less than $0.1 million, while recoveries of prior period loan charge-offs equaled $0.8 million, providing for net loan recoveries of $0.8 million, or an annualized 0.02 percent of average total loans.

Mr. Reitsma remarked, "Our sustained strength in asset quality metrics reflects our unwavering commitment to underwriting loans in a prudent and disciplined manner.  Nonperforming assets, although rising during the first nine months of 2024 largely due to the deterioration of two non-real-estate-related commercial loan relationships, remain at a low level.  As reflected by ongoing low levels of past due loans, nonaccrual loans, and loan charge-offs, our commercial borrowers have continued to meet the challenges arising from shifting economic and operating environments, including higher interest rates and the related increase in debt service requirements.  We meticulously scrutinize our commercial loan portfolio for signs of systemic weakness and believe our ongoing efforts to identify credit issues and implement feasible workout plans will help constrain the impact of any such observed issues on our overall financial condition.  Our residential and consumer loan portfolios continue to perform well as evidenced by sustained low delinquency levels and the lack of any identified systemic credit weaknesses."

Capital Position

Shareholders' equity totaled $583 million as of September 30, 2024, up $61.2 million from December 31, 2023.  Mercantile Bank maintained "well-capitalized" positions at the end of the third quarter of 2024 and year-end 2023, with total risk-based capital ratios of 13.9 percent and 13.4 percent, respectively.  As of September 30, 2024, Mercantile Bank had approximately $211 million in excess of the 10 percent minimum regulatory threshold required to be categorized as a "well-capitalized" institution. 

All of Mercantile Bank's investments are categorized as available-for-sale.  As of September 30, 2024, the net unrealized loss on these investments totaled $45.7 million, resulting in an after-tax reduction to equity capital of $36.1 million. As of December 31, 2023, the net unrealized loss on these investments totaled $63.9 million, resulting in an after-tax reduction to equity capital of $50.5 million.  Although unrealized gains and losses on investments are excluded from regulatory capital ratio calculations, Mercantile Bank's excess capital over the minimum regulatory requirement to be considered a "well-capitalized" institution would approximate $174 million on an adjusted basis as of September 30, 2024.

Mercantile reported 16,142,433 total shares outstanding as of September 30, 2024.

Mr. Reitsma concluded, "We are very pleased that our sustained strength in financial performance enabled us to continue our regular cash dividend program, and we remain committed to building shareholder value through competitive dividend yields.  Our strong capital levels and operating results, coupled with anticipated commercial loan portfolio expansion, position us to effectively meet the challenges arising from the recent economic and operating environments.  As demonstrated by the increases in loans and local deposits during the first nine months of 2024, our community banking approach and focus on developing mutually beneficial relationships have been successful in retaining existing customers and attracting new clients."

Investor Presentation

Mercantile has prepared presentation materials that management intends to use during its previously announced third quarter 2024 conference call on Tuesday, October 15, 2024, at 10:00 a.m. Eastern Time, and from time to time thereafter in presentations about the company's operations and performance.  These materials, which are available for viewing in the Investor Relations section of Mercantile's website at www.mercbank.com, have been furnished to the U.S. Securities and Exchange Commission concurrently with this press release.

About Mercantile Bank Corporation

Based in Grand Rapids, Michigan, Mercantile Bank Corporation is the bank holding company for Mercantile Bank. Mercantile provides financial products and services in a professional and personalized manner designed to make banking easier for businesses, individuals, and governmental units. Distinguished by exceptional service, knowledgeable staff, and a commitment to the communities it serves, Mercantile is one of the largest Michigan-based banks with assets of approximately $5.9 billion. Mercantile Bank Corporation's common stock is listed on the NASDAQ Global Select Market under the symbol "MBWM."  For more information about Mercantile, visit www.mercbank.com, and follow us on Facebook, Instagram, X (formerly Twitter) @MercBank, and LinkedIn @merc-bank.

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 or recession; significant declines in the value of commercial real estate; market volatility; demand for products and services; climate impacts; labor markets; the degree of competition by traditional and nontraditional financial services companies; changes in banking regulation or actions by bank regulators; changes in tax laws and other laws and regulations applicable to us; 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; damage to our reputation resulting from adverse publicity, regulatory actions, litigation, operational failures, and the failure to meet client expectations and other facts; the transition from LIBOR to SOFR; changes in the national and local economies; unstable political and economic environments; disease outbreaks, such as the COVID-19 pandemic or similar public health threats, and measures implemented to combat them; 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.

Mercantile Bank Corporation







Third Quarter 2024 Results







MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)










SEPTEMBER 30,


DECEMBER 31,


SEPTEMBER 30,



2024


2023


2023

ASSETS







   Cash and due from banks

$

87,766,000

$

70,408,000

$

64,551,000

   Interest-earning deposits


240,780,000


60,125,000


201,436,000

      Total cash and cash equivalents


328,546,000


130,533,000


265,987,000








   Securities available for sale


703,375,000


617,092,000


592,305,000

   Federal Home Loan Bank stock


21,513,000


21,513,000


21,513,000

   Mortgage loans held for sale


29,260,000


18,607,000


10,171,000








   Loans


4,553,018,000


4,303,758,000


4,104,376,000

   Allowance for credit losses


(56,590,000)


(49,914,000)


(48,008,000)

      Loans, net


4,496,428,000


4,253,844,000


4,056,368,000








   Premises and equipment, net


54,230,000


50,928,000


52,231,000

   Bank owned life insurance


86,486,000


85,668,000


81,907,000

   Goodwill


49,473,000


49,473,000


49,473,000

   Other assets


147,816,000


125,566,000


121,057,000








      Total assets

$

5,917,127,000

$

5,353,224,000

$

5,251,012,000















LIABILITIES AND SHAREHOLDERS' EQUITY







   Deposits:







      Noninterest-bearing

$

1,182,219,000

$

1,247,640,000

$

1,309,672,000

      Interest-bearing


3,273,679,000


2,653,278,000


2,591,063,000

         Total deposits


4,455,898,000


3,900,918,000


3,900,735,000








   Securities sold under agreements to repurchase


220,936,000


229,734,000


164,082,000

   Federal Home Loan Bank advances


417,083,000


467,910,000


457,910,000

   Subordinated debentures


50,158,000


49,644,000


49,473,000

   Subordinated notes


89,228,000


88,971,000


88,885,000

   Accrued interest and other liabilities


100,513,000


93,902,000


106,716,000

         Total liabilities


5,333,816,000


4,831,079,000


4,767,801,000








SHAREHOLDERS' EQUITY







   Common stock


298,704,000


295,106,000


293,961,000

   Retained earnings


320,722,000


277,526,000


262,838,000

   Accumulated other comprehensive income/(loss)


(36,115,000)


(50,487,000)


(73,588,000)

      Total shareholders' equity


583,311,000


522,145,000


483,211,000








      Total liabilities and shareholders' equity

$

5,917,127,000

$

5,353,224,000

$

5,251,012,000

 

Mercantile Bank Corporation














Third Quarter 2024 Results














MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF INCOME

(Unaudited)
















THREE MONTHS ENDED


THREE MONTHS ENDED

NINE MONTHS ENDED

NINE MONTHS ENDED


September 30, 2024


September 30, 2023

September 30, 2024

September 30, 2023

INTEREST INCOME














   Loans, including fees

$

75,316,000



$

65,073,000


$

219,405,000


$

184,232,000


   Investment securities


4,196,000




3,273,000



11,242,000



9,392,000


   Interest-earning deposits


3,900,000




2,807,000



8,369,000



3,932,000


      Total interest income


83,412,000




71,153,000



239,016,000



197,556,000
















INTEREST EXPENSE














   Deposits


27,588,000




16,143,000



74,522,000



36,429,000


   Short-term borrowings


2,219,000




693,000



5,631,000



2,066,000


   Federal Home Loan Bank advances


3,218,000




3,270,000



9,868,000



8,115,000


   Other borrowed money


2,095,000




2,086,000



6,270,000



6,049,000


      Total interest expense


35,120,000




22,192,000



96,291,000



52,659,000
















      Net interest income


48,292,000




48,961,000



142,725,000



144,897,000
















Provision for credit losses


1,100,000




3,300,000



5,900,000



5,900,000
















      Net interest income after














         provision for credit losses


47,192,000




45,661,000



136,825,000



138,997,000
















NONINTEREST INCOME














   Service charges on accounts


1,753,000




1,370,000



4,976,000



3,411,000


   Mortgage banking income


3,325,000




2,779,000



8,690,000



5,829,000


   Credit and debit card income


2,257,000




2,232,000



6,644,000



6,717,000


   Interest rate swap income


389,000




937,000



2,494,000



2,722,000


   Payroll services


713,000




591,000



2,295,000



1,908,000


   Earnings on bank owned life insurance


449,000




422,000



2,058,000



1,224,000


   Other income


781,000




915,000



3,060,000



2,031,000


      Total noninterest income


9,667,000




9,246,000



30,217,000



23,842,000
















NONINTEREST EXPENSE














   Salaries and benefits


20,292,000




17,258,000



56,442,000



50,401,000


   Occupancy


2,146,000




2,241,000



6,655,000



6,629,000


   Furniture and equipment


938,000




894,000



2,790,000



2,594,000


   Data processing costs


3,437,000




3,038,000



10,142,000



9,081,000


   Charitable foundation contributions


0




404,000



707,000



416,000


   Other expense


5,490,000




5,085,000



15,247,000



16,228,000


      Total noninterest expense


32,303,000




28,920,000



91,983,000



85,349,000
















      Income before federal income














         tax expense


24,556,000




25,987,000



75,059,000



77,490,000
















Federal income tax expense


4,938,000




5,132,000



15,092,000



15,303,000
















      Net Income

$

19,618,000



$

20,855,000


$

59,967,000


$

62,187,000
















   Basic earnings per share


$1.22




$1.30



$3.72



$3.89


   Diluted earnings per share


$1.22




$1.30



$3.72



$3.89
















   Average basic shares outstanding


16,138,320




16,018,419



16,126,706



16,006,058


   Average diluted shares outstanding


16,138,320




16,018,419



16,126,706



16,006,058


 

Mercantile Bank Corporation















Third Quarter 2024 Results















MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)


















Quarterly


Year-To-Date

(dollars in thousands except per share data)


2024


2024


2024


2023


2023







3rd Qtr


2nd Qtr


1st Qtr


4th Qtr


3rd Qtr


2024


2023

EARNINGS















   Net interest income

$

48,292


47,072


47,361


48,649


48,961


142,725


144,897

   Provision for credit losses

$

1,100


3,500


1,300


1,800


3,300


5,900


5,900

   Noninterest income

$

9,667


9,681


10,868


8,300


9,246


30,217


23,842

   Noninterest expense

$

32,303


29,737


29,944


29,940


28,920


91,983


85,349

   Net income before federal income















      tax expense

$

24,556


23,516


26,985


25,209


25,987


75,059


77,490

   Net income

$

19,618


18,786


21,562


20,030


20,855


59,967


62,187

   Basic earnings per share

$

1.22


1.17


1.34


1.25


1.30


3.72


3.89

   Diluted earnings per share

$

1.22


1.17


1.34


1.25


1.30


3.72


3.89

   Average basic shares outstanding


16,138,320


16,122,813


16,118,858


16,044,223


16,018,419


16,126,706


16,006,058

   Average diluted shares outstanding


16,138,320


16,122,813


16,118,858


16,044,223


16,018,419


16,126,706


16,006,058
















PERFORMANCE RATIOS















   Return on average assets


1.35 %


1.36 %


1.61 %


1.52 %


1.60 %


1.43 %


1.66 %

   Return on average equity


13.73 %


13.93 %


16.41 %


16.04 %


17.07 %


14.66 %


17.66 %

   Net interest margin (fully tax-equivalent)


3.52 %


3.63 %


3.74 %


3.92 %


3.98 %


3.62 %


4.10 %

   Efficiency ratio


55.73 %


52.40 %


51.42 %


52.57 %


49.68 %


53.19 %


50.58 %

   Full-time equivalent employees


653


670


642


651


643


653


643
















YIELD ON ASSETS / COST OF FUNDS















   Yield on loans


6.69 %


6.64 %


6.65 %


6.53 %


6.37 %


6.66 %


6.16 %

   Yield on securities


2.43 %


2.30 %


2.20 %


2.18 %


2.13 %


2.31 %


2.03 %

   Yield on other interest-earning assets


5.37 %


5.28 %


5.35 %


5.31 %


5.26 %


5.34 %


5.07 %

   Yield on total earning assets


6.08 %


6.07 %


6.06 %


5.95 %


5.78 %


6.06 %


5.59 %

   Yield on total assets


5.73 %


5.72 %


5.72 %


5.61 %


5.45 %


5.72 %


5.28 %

   Cost of deposits


2.52 %


2.42 %


2.25 %


1.94 %


1.67 %


2.40 %


1.31 %

   Cost of borrowed funds


3.75 %


3.56 %


3.51 %


3.15 %


2.98 %


3.60 %


2.82 %

   Cost of interest-bearing liabilities


3.53 %


3.40 %


3.27 %


2.96 %


2.69 %


3.40 %


2.28 %

   Cost of funds (total earning assets)


2.56 %


2.44 %


2.32 %


2.03 %


1.80 %


2.44 %


1.49 %

   Cost of funds (total assets)


2.41 %


2.31 %


2.19 %


1.91 %


1.70 %


2.30 %


1.41 %
















MORTGAGE BANKING ACTIVITY















   Total mortgage loans originated

$

160,944


122,728


79,930


88,187


108,602


363,602


298,156

   Purchase mortgage loans originated

$

122,747


103,939


57,668


75,365


93,520


284,354


251,189

   Refinance mortgage loans originated

$

38,197


18,789


22,262


12,822


15,082


79,248


46,967

   Mortgage loans originated with intent to sell

$

128,678


91,490


59,280


59,135


69,305


279,448


144,943

   Income on sale of mortgage loans

$

3,376


2,487


2,064


1,487


2,386


7,927


4,906
















CAPITAL















   Tangible equity to tangible assets


9.10 %


9.03 %


8.99 %


8.91 %


8.33 %


9.10 %


8.33 %

   Tier 1 leverage capital ratio


10.68 %


10.85 %


10.88 %


10.84 %


10.64 %


10.68 %


10.64 %

   Common equity risk-based capital ratio


10.53 %


10.46 %


10.41 %


10.07 %


10.41 %


10.53 %


10.41 %

   Tier 1 risk-based capital ratio


11.42 %


11.36 %


11.33 %


10.99 %


11.38 %


11.42 %


11.38 %

   Total risk-based capital ratio


14.13 %


14.10 %


14.05 %


13.69 %


14.21 %


14.13 %


14.21 %

   Tier 1 capital

$

618,038


602,835


587,888


570,730


554,634


618,038


554,634

   Tier 1 plus tier 2 capital

$

764,653


748,097


729,410


710,905


692,252


764,653


692,252

   Total risk-weighted assets

$

5,411,628


5,306,911


5,190,106


5,192,970


4,872,424


5,411,628


4,872,424

   Book value per common share

$

36.14


34.15


33.29


32.38


30.16


36.14


30.16

   Tangible book value per common share

$

33.07


31.09


30.22


29.31


27.06


33.07


27.06

   Cash dividend per common share

$

0.36


0.35


0.35


0.34


0.34


1.06


1.00
















ASSET QUALITY















   Gross loan charge-offs

$

10


26


15


53


243


51


810

   Recoveries

$

92


296


439


160


230


827


672

   Net loan charge-offs (recoveries)

$

(82)


(270)


(424)


(107)


13


(776)


138

   Net loan charge-offs to average loans


(0.01 %)


(0.02 %)


(0.04 %)


(0.01 %)


< 0.01%


(0.02 %)


0.01 %

   Allowance for credit losses

$

56,590


55,408


51,638


49,914


48,006


56,590


48,008

   Allowance to loans


1.24 %


1.25 %


1.19 %


1.16 %


1.17 %


1.24 %


1.17 %

   Nonperforming loans

$

9,877


9,129


6,040


3,415


5,889


9,877


5,889

   Other real estate/repossessed assets

$

0


0


200


200


51


0


51

   Nonperforming loans to total loans


0.22 %


0.21 %


0.14 %


0.08 %


0.14 %


0.22 %


0.14 %

   Nonperforming assets to total assets


0.17 %


0.16 %


0.11 %


0.07 %


0.11 %


0.17 %


0.11 %
















NONPERFORMING ASSETS - COMPOSITION













   Residential real estate:















      Land development

$

100


1


1


1


1


100


1

      Construction

$

0


0


0


0


0


0


0

      Owner occupied / rental

$

3,008


2,288


3,370


3,095


1,913


3,008


1,913

   Commercial real estate:















      Land development

$

0


0


0


0


0


0


0

      Construction

$

0


0


0


0


0


0


0

      Owner occupied  

$

0


0


200


270


738


0


738

      Non-owner occupied

$

0


0


0


0


0


0


0

   Non-real estate:















      Commercial assets

$

6,769


6,840


2,669


249


3,288


6,769


3,288

      Consumer assets

$

0


0


0


0


0


0


0

   Total nonperforming assets

$

9,877


9,129


6,240


3,615


5,940


9,877


5,940
















NONPERFORMING ASSETS - RECON















   Beginning balance

$

9,129


6,240


3,615


5,940


2,760


3,615


7,728

   Additions

$

906


4,570


2,802


2,166


4,163


8,278


5,759

   Return to performing status

$

0


0


0


0


0


0


(31)

   Principal payments

$

(158)


(1,481)


(177)


(4,402)


(166)


(1,816)


(6,207)

   Sale proceeds

$

0


(200)


0


(51)


(661)


(200)


(661)

   Loan charge-offs

$

0


0


0


(38)


(156)


0


(648)

   Valuation write-downs

$

0


0


0


0


0


0


0

   Ending balance

$

9,877


9,129


6,240


3,615


5,940


9,877


5,940
















LOAN PORTFOLIO COMPOSITION















   Commercial:















      Commercial & industrial

$

1,312,774


1,275,745


1,222,638


1,254,586


1,184,993


1,312,774


1,184,993

      Land development & construction

$

66,374


76,247


75,091


74,752


72,921


66,374


72,921

      Owner occupied comm'l R/E

$

746,714


732,844


719,338


717,667


671,083


746,714


671,083

      Non-owner occupied comm'l R/E

$

1,095,988


1,059,052


1,045,614


1,035,684


1,000,411


1,095,988


1,000,411

      Multi-family & residential rental

$

426,438


389,390


366,961


332,609


308,229


426,438


308,229

         Total commercial

$

3,648,288


3,533,278


3,429,642


3,415,298


3,237,637


3,648,288


3,237,637

   Retail:















      1-4 family mortgages & home equity

$

844,093


849,626


840,653


837,407


816,849


844,093


816,849

      Other consumer

$

60,637


55,341


51,711


51,053


49,890


60,637


49,890

         Total retail

$

904,730


904,967


892,364


888,460


866,739


904,730


866,739

         Total loans

$

4,553,018


4,438,245


4,322,006


4,303,758


4,104,376


4,553,018


4,104,376
















END OF PERIOD BALANCES















   Loans

$

4,553,018


4,438,245


4,322,006


4,303,758


4,104,376


4,553,018


4,104,376

   Securities

$

724,888


669,420


630,666


638,605


613,818


724,888


613,818

   Interest-earning deposits

$

240,780


135,766


184,625


60,125


201,436


240,780


201,436

   Total earning assets (before allowance)

$

5,518,686


5,243,431


5,137,297


5,002,488


4,919,630


5,518,686


4,919,630

   Total assets

$

5,917,127


5,602,388


5,465,953


5,353,224


5,251,012


5,917,127


5,251,012

   Noninterest-bearing deposits

$

1,182,219


1,119,888


1,134,995


1,247,640


1,309,672


1,182,219


1,309,672

   Interest-bearing deposits

$

3,273,679


3,026,686


2,872,815


2,653,278


2,591,063


3,273,679


2,591,063

   Total deposits

$

4,455,898


4,146,574


4,007,810


3,900,918


3,900,735


4,455,898


3,900,735

   Total borrowed funds

$

778,669


789,327


815,744


837,335


761,431


778,669


761,431

   Total interest-bearing liabilities

$

4,052,348


3,816,013


3,688,559


3,490,613


3,352,494


4,052,348


3,352,494

   Shareholders' equity

$

583,311


551,151


536,644


522,145


483,211


583,311


483,211
















AVERAGE BALANCES















   Loans

$

4,467,365


4,396,475


4,299,163


4,184,070


4,054,279


4,387,958


4,000,561

   Securities

$

699,872


640,627


634,099


618,517


626,714


658,352


629,646

   Interest-earning deposits

$

284,187


182,636


150,234


118,996


208,932


205,972


102,309

   Total earning assets (before allowance)

$

5,451,424


5,219,738


5,083,496


4,921,583


4,889,925


5,252,282


4,732,516

   Total assets

$

5,781,111


5,533,262


5,384,675


5,224,238


5,180,847


5,567,133


5,009,590

   Noninterest-bearing deposits

$

1,191,642


1,139,887


1,175,884


1,281,201


1,359,238


1,169,220


1,403,721

   Interest-bearing deposits

$

3,145,799


2,957,011


2,790,308


2,600,703


2,466,834


2,965,035


2,311,073

   Total deposits

$

4,337,441


4,096,898


3,966,192


3,881,904


3,826,072


4,134,255


3,714,794

   Total borrowed funds

$

796,077


800,577


816,848


773,491


806,376


804,470


770,543

   Total interest-bearing liabilities

$

3,941,876


3,757,588


3,607,156


3,374,194


3,273,210


3,769,505


3,081,616

   Shareholders' equity

$

566,852


540,868


527,180


495,431


484,624


545,046


470,824

 

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SOURCE Mercantile Bank Corporation

FAQ

What was Mercantile Bank 's (MBWM) net income for Q3 2024?

Mercantile Bank (MBWM) reported net income of $19.6 million, or $1.22 per diluted share, for the third quarter of 2024.

How much did MBWM's local deposits grow in Q3 2024?

MBWM's local deposits grew by $339 million, or 33.7% annualized, during the third quarter of 2024.

What was the net interest margin for MBWM in Q3 2024?

The net interest margin for MBWM was 3.52% in the third quarter of 2024, down from 3.98% in the prior-year third quarter.

How much did MBWM's total assets increase in the first nine months of 2024?

MBWM's total assets increased by $564 million, reaching $5.92 billion as of September 30, 2024.

What was MBWM's loan-to-deposit ratio as of September 30, 2024?

MBWM's loan-to-deposit ratio improved to 102% as of September 30, 2024, down from 110% as of December 31, 2023.

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