Exhibit 99.1
FOR FURTHER INFORMATION:
AT MERCANTILE BANK CORPORATION:
| Gerald R. Johnson, Jr. | Charles Christmas | |||||
| Chairman & CEO | Chief Financial Officer | |||||
| 616-726-1200 | 616-726-1202 | |||||
| gjohnson@mercbank.com | cchristmas@mercbank.com |
MERCANTILE BANK CORPORATION REPORTS
FIRST QUARTER EARNINGS
FIRST QUARTER EARNINGS
Grand Rapids, MI – April 11, 2007 – Mercantile Bank Corporation (Nasdaq: MBWM) reported net income for the first quarter of 2007 of $4.3 million, a decrease of 13.1 percent from the $4.9 million reported for the first quarter of 2006. Diluted earnings per share were $0.53 compared with $0.61 reported for the year-ago quarter, a decrease of 13.1 percent. Net interest margin pressures and slower asset growth continue to impact earnings.
Gerald R. Johnson, Jr., Mercantile’s Chairman and CEO, stated, “The new year presents us – and the banking industry as a whole – with a continuation of the same challenges that we experienced in 2006. The difficult interest rate environment remains unchanged, and the economy is showing increasing signs of stress in our markets. Our goal is to maintain the loyalty of our banking relationships in the face of an increasingly competitive lending environment. We prefer to slow our growth, strengthen our infrastructure, and focus on fewer, but higher quality, opportunities where our combination of lending expertise and outstanding service are valued.”
Total revenue, comprised of net interest income and non-interest income, was $15.9 million for the first quarter of 2007, a decrease of 2.8 percent from the $16.3 million reported for the prior-year first quarter. Net interest income decreased 4.1 percent compared with the year-ago quarter, to $14.5 million, reflecting 9.8 percent growth in
average earning assets offset by a 44 basis point decline in the net interest margin to 3.07 percent. Non-interest income for the first quarter of 2007 was $1.4 million, a 13.3 percent increase over the first quarter of 2006.
Operating expenses continue to be well-controlled. Non-interest expense was $8.7 million for the first quarter of 2007, up $733,000 or 9.2 percent over the prior-year period. Salaries and benefits grew $619,000 or 13.0 percent over the year-ago period, primarily due to the addition of twenty employees over the past twelve months, as well as merit raises for officers and a partial bonus accrual re-implemented this quarter after a one-year hiatus. Occupancy, equipment and furniture expense decreased by $92,000, or 6.8 percent year-over-year. The efficiency ratio was 55.0 percent for the current quarter compared with 49.0 percent reported for the year-ago quarter, primarily reflecting the decline in the net interest margin and increased operating costs. Mr. Johnson explained, “In the absence of net interest income growth, we have been successful controlling our operating expenses, which have modestly declined year-over-year as a percent of total assets.”
Net loan charge-offs for the first quarter were $777,000, or 0.18 percent of average loans (annualized), relatively unchanged from the year-ago first quarter net loan charge-offs of $756,000, or 0.19 percent annualized, but significantly improved from the fourth quarter of 2006, where Mercantile charged off $2.2 million, or 0.51 percent of average loans (annualized). Mr. Johnson commented, “The majority of our loans are supported by real property, but valuations are changing, and the collection process has been protracted. We are seeing a higher level of recoveries, which is a positive sign reflecting our proactive management of problem credits.” Non-performing assets, including $2.5 million of foreclosed real estate, totaled $12.6 million, or 0.60 percent of total assets, at March 31, 2007, compared with $9.6 million, or 0.46 percent of total assets, at December 31, 2006, and $8.8 million, or 0.46 percent of total assets, at March 31, 2006. Loan and lease loss reserves were $21.7 million, or 1.24 percent of total loans and leases at March 31, 2007.
Total assets reached $2.09 billion at March 31, 2007, an increase of $192.6 million, or 10.2 percent, from March 31, 2006; first quarter 2007 asset growth was $22.3 million, or 1.1 percent. “We continue to be selective in a highly competitive market environment.” Loans grew $136.5 million, or 8.5 percent, year-over-year, but increased only $3.4 million since year-end 2006. Asset growth over the past twelve months was primarily funded by a $203.9 million, or 13.8 percent, increase in deposits.
Shareholders’ equity at March 31, 2007 was $175.5 million, a twelve-month increase of $16.6 million, or 10.5 percent. Total shares outstanding at quarter-end were 8,053,067. Mercantile’s total risk-based capital ratio was 11.5 percent at quarter-end.
About Mercantile Bank Corporation
Mercantile Bank Corporation is the bank holding company for Mercantile Bank of Michigan. Headquartered in Grand Rapids, the Bank provides a wide variety of commercial banking services through its five full-service banking offices in greater
Grand Rapids, and its full-service banking offices in Holland, Lansing, and Ann Arbor, 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 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, 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.
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Mercantile Bank Corporation
First Quarter 2007 Results
First Quarter 2007 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS
| MARCH 31, | DECEMBER 31, | MARCH 31, | ||||||||||
| 2007 | 2006 | 2006 | ||||||||||
| (Unaudited) | (Audited) | (Unaudited) | ||||||||||
ASSETS | ||||||||||||
| Cash and due from banks | $ | 52,102,000 | $ | 51,098,000 | $ | 38,251,000 | ||||||
| Short-term investments | 268,000 | 282,000 | 389,000 | |||||||||
| Federal funds sold | 13,400,000 | 0 | 0 | |||||||||
| Total cash and cash equivalents | 65,770,000 | 51,380,000 | 38,640,000 | |||||||||
| Securities available for sale | 133,346,000 | 130,967,000 | 118,103,000 | |||||||||
| Securities held to maturity | 64,372,000 | 63,943,000 | 62,179,000 | |||||||||
| Federal Home Loan Bank stock | 7,509,000 | 7,509,000 | 7,887,000 | |||||||||
| Total loans and leases | 1,748,838,000 | 1,745,478,000 | 1,612,351,000 | |||||||||
| Allowance for loan and lease losses | (21,654,000 | ) | (21,411,000 | ) | (20,995,000 | ) | ||||||
| Total loans and leases, net | 1,727,184,000 | 1,724,067,000 | 1,591,356,000 | |||||||||
| Premises and equipment, net | 34,294,000 | 33,539,000 | 29,885,000 | |||||||||
| Bank owned life insurance policies | 31,155,000 | 30,858,000 | 28,360,000 | |||||||||
| Accrued interest receivable | 10,997,000 | 10,287,000 | 9,374,000 | |||||||||
| Other assets | 14,954,000 | 14,718,000 | 11,194,000 | |||||||||
| Total assets | $ | 2,089,581,000 | $ | 2,067,268,000 | $ | 1,896,978,000 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Deposits: | ||||||||||||
| Noninterest-bearing | $ | 130,857,000 | $ | 133,197,000 | $ | 114,880,000 | ||||||
| Interest-bearing | 1,555,300,000 | 1,513,706,000 | 1,367,339,000 | |||||||||
| Total deposits | 1,686,157,000 | 1,646,903,000 | 1,482,219,000 | |||||||||
| Securities sold under agreements to repurchase | 78,045,000 | 85,472,000 | 67,956,000 | |||||||||
| Federal funds purchased | 0 | 9,800,000 | 6,600,000 | |||||||||
| Federal Home Loan Bank advances | 90,000,000 | 95,000,000 | 130,000,000 | |||||||||
| Subordinated debentures | 32,990,000 | 32,990,000 | 32,990,000 | |||||||||
| Other borrowed money | 3,480,000 | 3,316,000 | 2,791,000 | |||||||||
| Accrued expenses and other liabilities | 23,428,000 | 21,872,000 | 15,559,000 | |||||||||
| Total liabilities | 1,914,100,000 | 1,895,353,000 | 1,738,115,000 | |||||||||
SHAREHOLDERS’ EQUITY | ||||||||||||
| Common stock | 161,384,000 | 161,223,000 | 148,583,000 | |||||||||
| Retained earnings | 14,952,000 | 11,794,000 | 12,018,000 | |||||||||
| Accumulated other comprehensive income (loss) | (855,000 | ) | (1,102,000 | ) | (1,738,000 | ) | ||||||
| Total shareholders’ equity | 175,481,000 | 171,915,000 | 158,863,000 | |||||||||
| Total liabilities and shareholders’ equity | $ | 2,089,581,000 | $ | 2,067,268,000 | $ | 1,896,978,000 | ||||||
Mercantile Bank Corporation
First Quarter 2007 Results
First Quarter 2007 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME
CONSOLIDATED REPORTS OF INCOME
| THREE MONTHS ENDED | THREE MONTHS ENDED | |||||||
| March 31, 2007 | March 31, 2006 | |||||||
| (Unaudited) | (Unaudited) | |||||||
INTEREST INCOME | ||||||||
| Loans and leases, including fees | $ | 33,422,000 | $ | 28,727,000 | ||||
| Investment securities | 2,506,000 | 2,237,000 | ||||||
| Federal funds sold | 93,000 | 132,000 | ||||||
| Short-term investments | 4,000 | 3,000 | ||||||
| Total interest income | 36,025,000 | 31,099,000 | ||||||
INTEREST EXPENSE | ||||||||
| Deposits | 18,825,000 | 13,485,000 | ||||||
| Short-term borrowings | 832,000 | 601,000 | ||||||
| Federal Home Loan Bank advances | 1,194,000 | 1,315,000 | ||||||
| Long-term borrowings | 690,000 | 599,000 | ||||||
| Total interest expense | 21,541,000 | 16,000,000 | ||||||
| Net interest income | 14,484,000 | 15,099,000 | ||||||
| Provision for loan and lease losses | 1,020,000 | 1,225,000 | ||||||
| Net interest income after provision for loan and lease losses | 13,464,000 | 13,874,000 | ||||||
NON INTEREST INCOME | ||||||||
| Service charges on accounts | 389,000 | 316,000 | ||||||
| Net gain on sales of commercial loans | 0 | 29,000 | ||||||
| Other income | 1,019,000 | 898,000 | ||||||
| Total non interest income | 1,408,000 | 1,243,000 | ||||||
NON INTEREST EXPENSE | ||||||||
| Salaries and benefits | 5,384,000 | 4,765,000 | ||||||
| Occupancy | 767,000 | 830,000 | ||||||
| Furniture and equipment | 493,000 | 522,000 | ||||||
| Other expense | 2,095,000 | 1,889,000 | ||||||
| Total non interest expense | 8,739,000 | 8,006,000 | ||||||
| Income before federal income tax | 6,133,000 | 7,111,000 | ||||||
| Federal income tax expense | 1,850,000 | 2,182,000 | ||||||
| Net income | $ | 4,283,000 | $ | 4,929,000 | ||||
| Basic earnings per share | $ | 0.53 | $ | 0.62 | ||||
| Diluted earnings per share | $ | 0.53 | $ | 0.61 | ||||
| Average shares outstanding | 8,035,175 | 7,974,180 | ||||||
| Average diluted shares outstanding | 8,113,135 | 8,102,052 | ||||||
Mercantile Bank Corporation
First Quarter 2007 Results
First Quarter 2007 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
| Quarterly | ||||||||||||||||||||
| 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | ||||||||||||||||
| (dollars in thousands except per share data) | 2007 | 2006 | 2006 | 2006 | 2006 | |||||||||||||||
EARNINGS | ||||||||||||||||||||
| Net interest income | $ | 14,484 | 15,295 | 15,547 | 15,646 | 15,099 | ||||||||||||||
| Provision for loan and lease losses | $ | 1,020 | 1,700 | 1,350 | 1,500 | 1,225 | ||||||||||||||
| NonInterest income | $ | 1,408 | 1,381 | 1,362 | 1,275 | 1,243 | ||||||||||||||
| NonInterest expense | $ | 8,739 | 8,197 | 8,028 | 8,031 | 8,006 | ||||||||||||||
| Net income | $ | 4,283 | 4,605 | 5,202 | 5,111 | 4,929 | ||||||||||||||
| Basic earnings per share | $ | 0.53 | 0.57 | 0.65 | 0.64 | 0.62 | ||||||||||||||
| Diluted earnings per share | $ | 0.53 | 0.57 | 0.64 | 0.63 | 0.61 | ||||||||||||||
| Average shares outstanding | 8,035,175 | 8,020,303 | 8,016,016 | 8,000,998 | 7,974,180 | |||||||||||||||
| Average diluted shares outstanding | 8,113,135 | 8,117,442 | 8,118,206 | 8,119,820 | 8,102,052 | |||||||||||||||
PERFORMANCE RATIOS | ||||||||||||||||||||
| Return on average assets | 0.84 | % | 0.89 | % | 1.04 | % | 1.06 | % | 1.07 | % | ||||||||||
| Return on average common equity | 10.04 | % | 10.78 | % | 12.54 | % | 12.81 | % | 12.74 | % | ||||||||||
Net interest margin(fully tax-equivalent) | 3.07 | % | 3.19 | % | 3.34 | % | 3.47 | % | 3.51 | % | ||||||||||
| Efficiency ratio | 54.99 | % | 49.15 | % | 47.48 | % | 47.46 | % | 48.99 | % | ||||||||||
| Full-time equivalent employees | 295 | 291 | 284 | 277 | 275 | |||||||||||||||
CAPITAL | ||||||||||||||||||||
| Period-ending equity to assets | 8.40 | % | 8.32 | % | 8.27 | % | 8.21 | % | 8.37 | % | ||||||||||
| Tier 1 leverage capital ratio | 10.12 | % | 10.04 | % | 10.14 | % | 10.15 | % | 10.29 | % | ||||||||||
| Tier 1 risk-based capital ratio | 10.44 | % | 10.37 | % | 10.47 | % | 10.52 | % | 10.74 | % | ||||||||||
| Total risk-based capital ratio | 11.52 | % | 11.45 | % | 11.61 | % | 11.66 | % | 11.91 | % | ||||||||||
| Book value per share | $ | 21.79 | 21.43 | 20.89 | 20.17 | 19.86 | ||||||||||||||
| Cash dividend per share | $ | 0.14 | 0.13 | 0.13 | 0.13 | 0.12 | ||||||||||||||
ASSET QUALITY | ||||||||||||||||||||
| Gross loan charge-offs | $ | 1,134 | 2,276 | 1,250 | 1,083 | 780 | ||||||||||||||
| Net loan charge-offs | $ | 777 | 2,227 | 920 | 988 | 756 | ||||||||||||||
| Net loan charge-offs to average loans | 0.18 | % | 0.51 | % | 0.22 | % | 0.24 | % | 0.19 | % | ||||||||||
| Allowance for loan and lease losses | $ | 21,654 | 21,411 | 21,938 | 21,507 | 20,995 | ||||||||||||||
| Allowance for loan losses to total loans | 1.24 | % | 1.23 | % | 1.28 | % | 1.29 | % | 1.30 | % | ||||||||||
| Nonperforming loans | $ | 10,018 | 8,571 | 9,017 | 8,530 | 8,791 | ||||||||||||||
| Other real estate and repossessed assets | $ | 2,540 | 986 | 421 | 150 | 0 | ||||||||||||||
| Nonperforming assets to total assets | 0.60 | % | 0.46 | % | 0.47 | % | 0.44 | % | 0.46 | % | ||||||||||
END OF PERIOD BALANCES | ||||||||||||||||||||
| Loans and leases | $ | 1,748,838 | 1,745,478 | 1,710,268 | 1,670,471 | 1,612,351 | ||||||||||||||
Total earning assets(before allowance) | $ | 1,967,733 | 1,948,179 | 1,922,051 | 1,859,411 | 1,800,909 | ||||||||||||||
| Total assets | $ | 2,089,581 | 2,067,268 | 2,026,834 | 1,969,429 | 1,896,974 | ||||||||||||||
| Deposits | $ | 1,686,157 | 1,646,903 | 1,614,703 | 1,547,912 | 1,482,219 | ||||||||||||||
| Shareholder’s equity | $ | 175,481 | 171,915 | 167,548 | 161,660 | 158,910 | ||||||||||||||
AVERAGE BALANCES | ||||||||||||||||||||
| Loans and leases | $ | 1,741,531 | 1,729,899 | 1,684,700 | 1,643,022 | 1,581,617 | ||||||||||||||
Total earning assets(before allowance) | $ | 1,953,416 | 1,938,499 | 1,881,873 | 1,841,666 | 1,778,694 | ||||||||||||||
| Total assets | $ | 2,058,718 | 2,042,037 | 1,984,199 | 1,939,413 | 1,871,945 | ||||||||||||||
| Deposits | $ | 1,647,000 | 1,628,233 | 1,569,614 | 1,521,037 | 1,459,266 | ||||||||||||||
| Shareholder’s equity | $ | 173,028 | 169,452 | 164,560 | 160,039 | 156,901 | ||||||||||||||