Mercantile Bank Corp.

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Mercantile Bank Corporation Reports Strong Fourth Quarter and Full Year 2012 Results

GRAND RAPIDS, Mich., Jan. 15, 2013 /PRNewswire/ -- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income attributable to common shares of $3.0 million, or $0.35 per diluted share, for the fourth quarter of 2012, compared with net income attributable to common shares of $30.0 million, or $3.37 per diluted share, for the prior-year period.  For the full year 2012, Mercantile reported net income attributable to common shares of $11.5 million, or $1.30 per diluted share, compared with net income attributable to common shares of $36.1 million, or $4.07 per diluted share, for the full year 2011.

During the fourth quarter of 2011, net income attributable to common shares was positively impacted by the reversal of the previously established net deferred tax asset valuation allowance resulting in a federal income tax benefit of $27.4 million.  On a pre-tax basis, 2012 income was $4.3 million in the fourth quarter and $18.2 million for the full year, compared to 2011 income of $3.0 million in the fourth quarter and $10.1 million for the full year. 

2012 was highlighted by:

  • Improved asset quality and pre-tax earnings performance
  • Nonperforming assets declined 57 percent from a year ago; currently less than 2 percent of total assets
  • Level of loans in the 30- to 89-days delinquent category were virtually zero throughout 2012
  • New loan originations of approximately $64 million during the fourth quarter and $176 million during the full year
  • Net interest margin remained relatively steady and well above historical average level
  • Regulatory capital ratios remained significantly above minimum requirements for "well-capitalized" institutions
  • Reinstatement of a quarterly cash dividend in the fourth quarter
  • Exit from the TARP Program with the repurchase of preferred stock and common stock warrant

"2012 marked the 15th anniversary of Mercantile Bank, and we are very pleased to recognize this milestone during a year filled with many successes and accomplishments," said Michael Price, Chairman and CEO of Mercantile.  "Throughout the year, we remained focused on improving asset quality, increasing core profitability, protecting our net interest margin and further strengthening our balance sheet. Because of our success in all these areas, we exited the TARP Program by repurchasing our preferred stock and common stock warrant entirely with internally-generated funds, and reinstated our quarterly cash dividend. As a result of our strengthened position, we feel very confident about the opportunities available to us in the coming year."

Operating Results

Total revenue, which consists of net interest income and noninterest income, was $13.8 million during the fourth quarter of 2012, down $0.6 million or 3.9 percent from the $14.4 million generated during the prior-year fourth quarter.  Total revenue was $54.7 million during the full year 2012, down $3.8 million or 6.5 percent from the $58.5 million generated during 2011.  The declines in total revenue during the 2012 periods compared to the 2011 periods resulted from decreased net interest income.  Net interest income during the fourth quarter of 2012 was $11.7 million, down $0.6 million or 4.8 percent from the fourth quarter of 2011, reflecting a 4.3 percent decrease in average earning assets and a slight decline in the net interest margin.  Net interest income was $46.7 million in 2012, down $4.5 million or 8.9 percent from the $51.2 million earned in the prior year, reflecting a 10.7 percent decrease in average earning assets, which was partially offset by an increased net interest margin.  The reduction in average earning assets in the 2012 periods compared to the respective 2011 periods primarily resulted from the continuation of management's strategic initiative to reduce commercial real estate exposure and migrate certain high risk loans out of the loan portfolio.  The net interest margin during 2012 was 3.67 percent, up from 3.60 percent during 2011 and well above the historical average level.

Noninterest income during the fourth quarter of 2012 was $2.1 million, up slightly from $2.0 million during the prior-year fourth quarter.  Noninterest income for 2012 was $8.0 million, up $0.7 million or 9.8 percent from 2011.  The increase in noninterest income during the 2012 periods compared to the respective 2011 periods primarily resulted from higher residential mortgage banking fee income and rental income on foreclosed properties.

Provision expense was $0.3 million in the fourth quarter of 2012 compared to $1.9 million in the fourth quarter of 2011.  Mercantile recorded a negative $3.1 million provision for loan losses during 2012 compared to a provision expense of $6.9 million for 2011.  The negative provision expense is the result of several factors, including continued progress towards loan recoveries and collections as well as a reduced level of loan-rating downgrades and ongoing loan-rating upgrades.

Noninterest expense totaled $9.2 million during the fourth quarter of 2012, down $0.3 million or 3.3 percent from the prior-year fourth quarter.  Noninterest expense for 2012 was $39.6 million, down $1.9 million or 4.5 percent from 2011.  Salaries and benefits totaled $5.0 million during the fourth quarter of 2012 and $19.4 million during 2012, up $0.5 million and $1.5 million from the respective 2011 periods.  The increased salary and benefit costs primarily reflect expense associated with reinstating certain employee benefit programs that had been suspended or reduced in prior years.  Costs associated with the administration and resolution of problem assets, including legal expenses, property tax payments, appraisal costs and write-downs on foreclosed properties, totaled $0.9 million during the fourth quarter of 2012, down $0.7 million or 43.7 percent from the $1.6 million expensed during the fourth quarter of 2011, and $5.9 million during 2012, down $2.4 million or 29.3 percent from the $8.3 million expensed during 2011.  The reduction in nonperforming asset costs reflects the continuation of Mercantile's aggressive approach to managing and resolving problem assets.  Federal Deposit Insurance Corporation ("FDIC") insurance premiums were $0.3 million during the current-year fourth quarter, down $0.3 million or 46.2 percent from the 2011 fourth quarter, and $1.2 million in 2012, down $1.6 million or 57.8 percent from 2011.   The decreased FDIC insurance premiums primarily resulted from a lower assessment rate that reflects Mercantile's improved financial condition and operating performance.

Mr. Price continued: "Our fourth quarter financial results cap another full year of impressive performance for Mercantile, and provide strong momentum for 2013.  Our improved financial condition and strong capital position have added to our ability to be flexible and opportunistic as we pursue disciplined growth for long-term performance." 

Balance Sheet

As of December 31, 2012, total assets were $1.42 billion, down $10.3 million or 0.7 percent from December 31, 2011; total loans decreased $31.2 million, or 2.9 percent, to $1.04 billion over the same period.  While efforts to reduce certain segments of the commercial real estate portfolio continue, total loans increased $5.9 million during the fourth quarter of 2012.  Continued relationship building efforts have led to increased lending opportunities, and despite competitive pressures, $63.8 million in loans to existing and new borrowers were originated in the fourth quarter of 2012 and $176 million were originated during the full year of 2012.   

Real estate loans comprise a majority of Mercantile's loan portfolio. At December 31, 2012, real estate loans, excluding residential mortgage loans representing permanent financing of owner-occupied dwellings and home equity lines of credit, were $677 million or approximately 65 percent of total loans, representing a decline of $45.9 million, or 6.3 percent, from $723 million, or 67.4 percent of total loans, at December 31, 2011.

Non-owner-occupied commercial real estate ("CRE") loans totaled $354 million as of December 31, 2012 (34.0 percent of total loans), a decline of $22.7 million over the past 12 months. Owner-occupied CRE loans were $262 million at the end of 2012, a decrease of $6.4 million from a year ago. Vacant land, land development and construction ("C&D") loans, including both residential and commercial projects, totaled $55.2 million at December 31, 2012, down $15.3 million from a year ago. The commercial and industrial ("C&I") segment of the loan portfolio was $285 million at December 31, 2012, an increase of approximately $18 million since year-end 2011. The average balance of commercial lines of credit has remained relatively stable since early 2011.

LOANS SECURED BY REAL ESTATE












($000s)


12/31/12


9/30/12


6/30/12


3/31/12


12/31/11

Residential-Related:











   Vacant Land

$

5,517

$

6,042

$

5,435

$

5,591

$

5,679

   Land Development


12,496


14,639


15,256


16,173


17,007

   Construction


3,440


4,031


4,055


4,318


4,923



21,453


24,712


24,746


26,082


27,609












Comm'l Non-Owner Occupied:











   Vacant Land


7,903


8,793


8,827


9,255


10,555

   Land Development


13,153


13,798


14,355


14,418


14,486

   Construction


7,723


9,877


15,424


16,936


13,615

   Commercial Buildings


354,061


333,407


350,762


357,128


376,805



382,840


365,875


389,368


397,737


415,461












Comm'l Owner Occupied:











   Construction


4,939


5,316


3,751


6,198


4,213

   Other


6,040


6,617


6,811


7,246


7,445

   Commercial Buildings


262,045


271,364


281,519


273,376


268,479



273,024


283,297


292,081


286,820


280,137












      Total

$

677,317

$

673,884

$

706,195

$

710,639

$

723,207























Note --- Excludes residential mortgage loans representing permanent financing of owner occupied dwellings and home

                equity lines of credit.











Since December 2008, Mercantile has focused on improving liquidity by reducing wholesale funding and growing local deposits, especially interest-bearing checking and money market deposit accounts. As of December 31, 2012, total deposits were $1.14 billion, a decline of $464 million since year-end 2008. By comparison, local deposits increased $395 million to $866 million since year-end 2008, representing 76.2 percent of total deposits compared to 29.4 percent at December 31, 2008. Approximately 65 percent, or $258 million, of local deposit growth since year-end 2008 occurred in the interest-bearing checking and money market deposit account categories, while DDA checking accounted for $79.5 million, or about 20 percent of total growth.  Growth in local deposits was driven primarily by the introduction of innovative new products, various deposit-gathering initiatives, enhanced advertising and branding campaigns, and transfers from maturing time deposit accounts.

Wholesale funds were $305 million, or 24.7 percent of total funds, as of December 31, 2012, compared to $1.41 billion, or 71.5 percent of total funds, as of December 31, 2008. The $1.11 billion decline in wholesale funding since the end of 2008 reflects both the shift toward local deposits, as well as an $816 million decline in total loans. This strategy has allowed Mercantile to reduce brokered deposits and Federal Home Loan Bank advances as they matured since year-end 2008.

Short-term investments, consisting of federal funds sold and interest-bearing bank deposits, averaged $129 million during the fourth quarter of 2012. In addition to its short-term investments, Mercantile had approximately $155 million of borrowing capacity through various established lines of credit to meet potential funding needs, as well as about $37 million of U.S. Government securities available to sell, as of December 31, 2012.

Asset Quality

Nonperforming assets ("NPAs") at December 31, 2012 were $25.9 million, or 1.8 percent of total assets, compared to $60.4 million as of December 31, 2011, or 4.2 percent of total assets.  This represents a decline of $34.5 million or 57.0 percent from the end of 2011.

Robert B. Kaminski, Jr., Mercantile's Executive Vice President and Chief Operating Officer, noted: "We are very pleased with our efforts to improve asset quality and believe the actions taken throughout 2012 and especially during the fourth quarter, continue to reflect our aggressive stance to move troubled assets off our balance sheet.  Our nonperforming assets now represent less than two percent of our total assets – a level we haven't witnessed since early 2008, and our 30-to 89-day delinquent loans remain virtually at zero. We believe our results compare favorably when judged against those of other recovering Midwest and Michigan banks.  While there remains work yet to be done, we feel strongly that many of the challenges from the past several years are now behind us.   We continue to be grateful to the entire Mercantile team for all their hard work on this initiative, while staying true to our community banking roots and maintaining a steady focus on meeting the needs of our existing customers and driving the growth of new relationships in our market.  Mercantile is well-positioned for growth, and while the market remains competitive, we are benefiting from our robust sales programs and marketing initiatives as evidenced by the $64 million in new loans we originated in the fourth quarter and the $176 million originated during all of 2012." 

Nonperforming loans ("NPLs") totaled $19.0 million as of December 31, 2012, down $26.1 million from a year ago, while foreclosed real estate and repossessed assets declined $8.3 million from December 31, 2011.  CRE loans represented 61.5 percent of NPLs, or $11.7 million at December 31, 2012.  Investor-owned nonperforming CRE loans accounted for $9.1 million of total CRE nonperforming loans (2.6 percent of $354 million investor-owned CRE loans), while owner-occupied CRE nonperforming loans accounted for $2.6 million (1.0 percent of $262 million owner-occupied CRE loans).

Nonperforming C&D loans were $2.2 million as of December 31, 2012, a decrease of $1.7 million from a year ago. Nonperforming C&I loans were $0.7 million as of December 31, 2012, a decline of $2.3 million since December 31, 2011. Owner-occupied and rental residential NPLs were $4.3 million as of December 31, 2012, down $1.7 million since year-end 2011.

NONPERFORMING ASSETS












($000s)


12/31/12


9/30/12


6/30/12


3/31/12


12/31/11

Residential Real Estate:











   Land Development

$

2,362

$

3,318

$

3,946

$

3,762

$

5,479

   Construction


476


645


965


1,242


1,397

   Owner Occupied / Rental


4,812


5,426


5,982


6,437


7,138



7,650


9,389


10,893


11,441


14,014












Commercial Real Estate:











   Land Development


789


1,158


1,174


1,531


2,111

   Construction


0


0


0


403


409

   Owner Occupied 


3,534


6,395


6,850


7,687


10,642

   Non-Owner Occupied


13,232


17,613


19,386


28,954


30,106



17,555


25,166


27,410


38,575


43,268












Non-Real Estate:











   Commercial Assets


734


1,386


1,765


2,144


3,060

   Consumer Assets


1


1


1


14


14



735


1,387


1,766


2,158


3,074












      Total

$

25,940

$

35,942

$

40,069

$

52,174

$

60,356

During the fourth quarter of 2012, Mercantile added $3.7 million of NPAs to its problem asset portfolio, while disposing of $13.7 million through a combination of principal payments, asset sales and returns to performing status ($11.9 million), loan charge-offs ($1.2 million), and foreclosed asset valuation write-downs ($0.6 million). In total, NPAs decreased by a net $10.0 million during the fourth quarter of 2012.

Improvement in asset quality is also apparent on a full-year basis. During the 12-month period ended December 31, 2012, Mercantile added $16.8 million of problem assets to its NPA portfolio, successfully disposed of $42.8 million, and charged off or wrote down an additional $8.4 million.  In total, NPAs declined by a net $34.4 million since December 31, 2011.

NONPERFORMING ASSETS RECONCILIATION












($000s)


4Q 2012


3Q 2012


2Q 2012


1Q 2012


4Q 2011












Beginning balance

$

35,942

$

40,069

$

52,174

$

60,356

$

56,827

Additions


3,691


158


3,306


9,651


10,188

Returns to performing











   status


(37)


0


0


(737)


0

Principal payments


(6,960)


(1,245)


(11,357)


(5,533)


(2,115)

Sale proceeds


(4,858)


(1,190)


(1,586)


(9,282)


(3,038)

Loan charge-offs


(1,202)


(1,003)


(1,337)


(1,691)


(890)

Valuation write-downs


(636)


(847)


(1,131)


(590)


(616)












      Total

$

25,940

$

35,942

$

40,069

$

52,174

$

60,356

Net loan recoveries were $0.6 million during the fourth quarter of 2012, or an annualized negative 0.2 percent of average loans, compared with net loan charge-offs of $1.5 million (0.6 percent annualized) and net loan charge-offs of $4.7 million (1.8 percent annualized) for the linked and prior-year quarters, respectively. 

NET LOAN CHARGE-OFFS (RECOVERIES)












($000s)


4Q 2012


3Q 2012


2Q 2012


1Q 2012


4Q 2011

Residential Real Estate:











   Land Development

$

(119)

$

77

$

(110)

$

38

$

15

   Construction


0


0


10


0


(90)

   Owner Occupied / Rental


16


166


50


237


1,176



(103)


243


(50)


275


1,101












Commercial Real Estate:











   Land Development


55


16


(7)


103


(75)

   Construction


0


0


0


0


0

   Owner Occupied 


515


86


(164)


793


68

   Non-Owner Occupied


(112)


1,317


(1,525)


4,341


4,060



458


1,419


(1,696)


5,237


4,053












Non-Real Estate:











   Commercial Assets


(935)


(148)


(14)


81


(435)

   Consumer Assets


(35)


13


14


(4)


0



(970)


(135)


0


77


(435)












      Total

$

(615)

$

1,527

$

(1,746)

$

5,589

$

4,719

Capital Position

Shareholders' equity totaled $147 million as of December 31, 2012, a decrease of $18.4 million from December 31, 2011. During the second quarter of 2012, Mercantile repurchased the entire $21.0 million of preferred stock that was sold to the U.S. Department of the Treasury on May 15, 2009.  On July 3, 2012 Mercantile repurchased, for $7.5 million, the warrant it sold to the U.S. Department of the Treasury on May 15, 2009.  The warrant provided for the purchase of 616,438 shares of Mercantile common stock at a price of $5.11 per share. To fund the repurchases, the Bank paid cash dividends to the Company in approximately the same amounts. The Bank remains "well-capitalized" with a total risk-based capital ratio of 14.7 percent as of December 31, 2012, compared to 15.5 percent at December 31, 2011.  At December 31, 2012, the Bank had approximately $55.5 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a "well-capitalized" institution.  Mercantile reported 8,706,251 total shares outstanding at December 31, 2012.

With the continued strength of Mercantile's operating performance and capital position, on January 10, 2013, the Board of Directors declared a cash dividend of $0.10 per common share, which is payable in the first quarter of 2013.  The $0.10 cash dividend represents an increase of 11 percent from the $0.09 cash dividend paid to common shareholders during the fourth quarter of 2012.

Mr. Price concluded: "We have come a long way on our 15-year journey, and we have grown steadily through lessons learned along the way.   We have emerged from the Great Recession a stronger and more efficient organization.  Armed with improved financial performance, a strong capital position and sustained earnings momentum, we are optimistic about the next stage on our Company's path towards disciplined growth and increasing value for our shareholders."     

About Mercantile Bank Corporation

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

Forward-Looking Statements

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

Mercantile Bank Corporation

Fourth Quarter 2012 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS










DECEMBER 31,


DECEMBER 31,


DECEMBER 31,



2012


2011


2010



(Unaudited)


(Audited)


(Audited)

ASSETS







   Cash and due from banks

$

20,302,000

$

12,402,000

$

6,674,000

   Interest-bearing deposit balances


10,822,000


9,641,000


9,600,000

   Federal funds sold


104,879,000


54,329,000


47,924,000

      Total cash and cash equivalents


136,003,000


76,372,000


64,198,000








   Securities available for sale


138,314,000


172,992,000


220,830,000

   Federal Home Loan Bank stock


11,961,000


11,961,000


14,345,000








   Loans


1,041,189,000


1,072,422,000


1,262,630,000

   Allowance for loan losses


(28,677,000)


(36,532,000)


(45,368,000)

      Loans, net


1,012,512,000


1,035,890,000


1,217,262,000








   Premises and equipment, net


25,919,000


26,802,000


27,873,000

   Bank owned life insurance


50,048,000


48,520,000


46,743,000

   Accrued interest receivable


3,874,000


4,403,000


5,942,000

   Other real estate owned and repossessed assets


6,970,000


15,282,000


16,675,000

   Deferred tax asset


22,015,000


26,013,000


0

   Other assets


15,310,000


14,994,000


18,553,000








      Total assets

$

1,422,926,000

$

1,433,229,000

$

1,632,421,000















LIABILITIES AND SHAREHOLDERS' EQUITY







   Deposits:







      Noninterest-bearing

$

190,241,000

$

147,031,000

$

112,944,000

      Interest-bearing


944,963,000


965,044,000


1,160,888,000

         Total deposits


1,135,204,000


1,112,075,000


1,273,832,000








   Securities sold under agreements to repurchase


64,765,000


72,569,000


116,979,000

   Federal Home Loan Bank advances


35,000,000


45,000,000


65,000,000

   Subordinated debentures


32,990,000


32,990,000


32,990,000

   Other borrowed money


1,444,000


1,434,000


11,804,000

   Accrued interest and other liabilities


6,933,000


4,162,000


5,880,000

         Total liabilities


1,276,336,000


1,268,230,000


1,506,485,000








SHAREHOLDERS' EQUITY







   Preferred stock, net of discount


0


20,331,000


20,077,000

   Common stock


166,074,000


173,979,000


173,815,000

   Retained earnings (deficit)


(21,134,000)


(32,639,000)


(68,781,000)

   Accumulated other comprehensive income (loss)


1,650,000


3,328,000


825,000

      Total shareholders' equity


146,590,000


164,999,000


125,936,000








      Total liabilities and shareholders' equity

$

1,422,926,000

$

1,433,229,000

$

1,632,421,000








 

Mercantile Bank Corporation

Fourth Quarter 2012 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF OPERATIONS















THREE MONTHS ENDED

THREE MONTHS ENDED

TWELVE MONTHS ENDED

TWELVE MONTHS ENDED


December 31, 2012

December 31, 2011

December 31, 2012

December 31, 2011


(Unaudited)


(Unaudited)



(Unaudited)



(Audited)


Interest income













   Loans, including fees

$

13,245,000


$

14,502,000


$

53,898,000


$

62,356,000


   Investment securities


1,338,000



1,837,000



5,798,000



8,490,000


   Federal funds sold


76,000



61,000



192,000



199,000


   Interest-bearing deposit balances


7,000



6,000



29,000



24,000


      Total interest income


14,666,000



16,406,000



59,917,000



71,069,000















Interest expense













   Deposits


2,556,000



3,377,000



11,137,000



16,384,000


   Short-term borrowings


27,000



55,000



157,000



405,000


   Federal Home Loan Bank advances


122,000



410,000



993,000



2,033,000


   Other borrowed money


224,000



229,000



929,000



1,010,000


      Total interest expense


2,929,000



4,071,000



13,216,000



19,832,000















      Net interest income


11,737,000



12,335,000



46,701,000



51,237,000















Provision for loan losses


300,000



1,900,000



(3,100,000)



6,900,000















      Net interest income after













         provision for loan losses


11,437,000



10,435,000



49,801,000



44,337,000















Noninterest income













   Service charges on accounts


381,000



411,000



1,523,000



1,640,000


   Other income


1,682,000



1,612,000



6,471,000



5,642,000


      Total noninterest income


2,063,000



2,023,000



7,994,000



7,282,000















Noninterest expense













   Salaries and benefits


4,973,000



4,520,000



19,367,000



17,891,000


   Occupancy


554,000



664,000



2,501,000



2,780,000


   Furniture and equipment


288,000



294,000



1,176,000



1,206,000


   Nonperforming asset costs


931,000



1,654,000



5,862,000



8,290,000


   FDIC insurance costs


306,000



569,000



1,200,000



2,843,000


   Other expense


2,128,000



1,796,000



9,518,000



8,485,000


      Total noninterest expense


9,180,000



9,497,000



39,624,000



41,495,000















      Income before federal income













         tax expense (benefit)


4,320,000



2,961,000



18,171,000



10,124,000















Federal income tax expense (benefit)


1,271,000



(27,361,000)



5,636,000



(27,361,000)















      Net income


3,049,000



30,322,000



12,535,000



37,485,000















Preferred stock dividends and accretion


0



331,000



1,030,000



1,343,000















      Net income attributable to













         common shares

$

3,049,000


$

29,991,000


$

11,505,000


$

36,142,000















   Basic earnings per share


$0.35



$3.49



$1.33



$4.20


   Diluted earnings per share


$0.35



$3.37



$1.30



$4.07















   Average basic shares outstanding


8,662,034



8,604,240



8,625,198



8,602,845


   Average diluted shares outstanding


8,674,342



8,888,900



8,849,627



8,878,180















Mercantile Bank Corporation

Fourth Quarter 2012 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)


















Quarterly


Year-To-Date



2012


2012


2012


2012


2011





(dollars in thousands except per share data)

4th Qtr


3rd Qtr


2nd Qtr


1st Qtr


4th Qtr


2012


2011
















EARNINGS















   Net interest income

$

11,737


11,584


11,511


11,869


12,335


46,701


51,237

   Provision for loan losses

$

300


(400)


(3,000)


0


1,900


(3,100)


6,900

   Noninterest income

$

2,063


2,057


1,940


1,934


2,023


7,994


7,282

   Noninterest expense

$

9,180


10,185


10,604


9,654


9,497


39,624


41,495

   Net income before federal income















      tax expense (benefit)

$

4,320


3,856


5,847


4,149


2,961


18,171


10,124

   Net income

$

3,049


2,616


3,991


2,880


30,322


12,535


37,485

   Net income common shares

$

3,049


2,616


3,288


2,552


29,991


11,505


36,142

   Basic earnings per share

$

0.35


0.30


0.38


0.30


3.49


1.33


4.20

   Diluted earnings per share

$

0.35


0.30


0.36


0.28


3.37


1.30


4.07

   Average basic shares outstanding


8,662,034


8,622,719


8,610,181


8,605,484


8,604,240


8,625,198


8,602,845

   Average diluted shares outstanding


8,674,342


8,653,751


9,043,791


8,991,422


8,888,900


8,849,627


8,878,180
















PERFORMANCE RATIOS















   Return on average assets


0.85%


0.75%


0.94%


0.73%


8.22%


0.82%


2.36%

   Return on average common equity


8.27%


7.19%


8.46%


6.14%


85.19%


7.51%


27.28%

   Net interest margin (fully tax-equivalent)


3.62%


3.67%


3.63%


3.73%


3.65%


3.67%


3.60%

   Efficiency ratio


66.52%


74.66%


78.83%


69.94%


66.14%


72.45%


70.91%

   Full-time equivalent employees


232


230


231


225


232


232


232
















CAPITAL















   Period-ending equity to assets


10.30%


10.41%


10.80%


11.92%


11.51%


10.30%


11.51%

   Tier 1 leverage capital ratio


11.31%


11.40%


11.42%


12.66%


12.09%


11.31%


12.09%

   Tier 1 risk-based capital ratio


13.37%


13.34%


13.33%


14.87%


14.19%


13.37%


14.19%

   Total risk-based capital ratio


14.64%


14.61%


14.59%


16.14%


15.46%


14.64%


15.46%

   Book value per common share

$

16.84


16.74


17.38


16.97


16.73


16.84


16.73

   Cash dividend per common share

$

0.09


0.00


0.00


0.00


0.00


0.09


0.00
















ASSET QUALITY















   Gross loan charge-offs

$

1,469


1,891


1,708


7,576


5,791


12,644


19,897

   Net loan charge-offs

$

(615)


1,527


(1,746)


5,589


4,719


4,755


15,736

   Net loan charge-offs to average loans


(0.24%)


0.58%


(0.66%)


2.10%


1.75%


0.45%


1.37%

   Allowance for loan losses

$

28,677


27,762


29,689


30,943


36,532


28,677


36,532

   Allowance for loan losses to total loans


2.75%


2.68%


2.80%


2.94%


3.41%


2.75%


3.41%

   Nonperforming loans

$

18,970


24,782


28,524


38,668


45,074


18,970


45,074

   Other real estate and repossessed assets

$

6,970


11,160


11,545


13,506


15,282


6,970


15,282

   Nonperforming assets to total assets


1.82%


2.59%


2.89%


3.72%


4.21%


1.82%


4.21%
















END OF PERIOD BALANCES















   Loans

$

1,041,189


1,035,288


1,060,996


1,051,674


1,072,422


1,041,189


1,072,422

   Total earning assets (before allowance)

$

1,307,165


1,271,593


1,264,609


1,284,982


1,321,345


1,307,165


1,321,345

   Total assets

$

1,422,926


1,388,364


1,385,245


1,401,596


1,433,229


1,422,926


1,433,229

   Deposits

$

1,135,204


1,107,566


1,105,630


1,093,434


1,112,075


1,135,204


1,112,075

   Shareholders' equity

$

146,590


144,558


149,662


167,084


164,999


146,590


164,999
















AVERAGE BALANCES















   Loans

$

1,022,047


1,042,370


1,067,933


1,065,285


1,072,851


1,049,315


1,148,671

   Total earning assets (before allowance)

$

1,299,623


1,269,836


1,290,066


1,294,380


1,358,585


1,288,456


1,443,485

   Total assets

$

1,417,621


1,387,519


1,407,400


1,409,953


1,448,000


1,405,606


1,530,031

   Deposits

$

1,127,706


1,109,817


1,109,160


1,095,147


1,152,001


1,110,512


1,219,094

   Shareholders' equity

$

146,244


144,251


155,931


166,846


139,676


153,274


132,463
















 

SOURCE Mercantile Bank Corporation

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