EXHIBIT 99.1
[MERCANTILE BANK CORPORATION LOGO]
FOR FURTHER INFORMATION:
AT MERCANTILE BANK CORPORATION: FOR MEDIA:
Gerald R. Johnson, Jr. Charles Christmas Linda Margolin
Chairman & CEO Chief Financial Officer Margolin & Associates, Inc.
616-406-3700 616-406-3750 216-765-0953
gjohnson@mercbank.com cchristmas@mercbank.com lmm@margolinIR.com
MERCANTILE BANK CORPORATION REPORTS THIRD QUARTER EPS OF $0.39
LOANS UP $106.2 MILLION, OR 12.3%, FOR THE QUARTER
WYOMING, Mich., October 7 -- Mercantile Bank Corporation (Nasdaq: MBWM), a
rapidly growing community banking organization, reported third quarter 2003 net
income of $2.23 million, an increase of 3.3 percent over the $2.16 million
reported in the prior year third quarter. Diluted earnings per share were $0.39,
unchanged from the prior year third quarter. Nine months year-to-date net income
of $7.0 million increased 27.8 percent over the $5.5 million reported for the
first nine months of 2002. Diluted per share earnings were $1.25, a 25.0 percent
increase over the $1.00 from the prior year-to-date period.
Third quarter 2003 earnings per share were impacted by the sale of approximately
1.2 million shares of common stock on September 19, which increased average
diluted shares outstanding by 3.0 percent. In addition, there was a 56.8 percent
increase in the loan loss provision to $1.4 million to reflect loan growth of
$106.2 million, or 12.3 percent sequentially, during the third quarter. Asset
quality continues to be strong.
Gerald R. Johnson, Jr., Chairman and CEO, commented, "We are pleased to report
our largest growth quarter since the inception of the Company. Our continued
strong growth this quarter underscores our continued investment in people and
infrastructure, enabling us to deliver quality banking services to the Grand
Rapids and Holland communities. Our focus has been, and continues to be,
sustainable long-term earnings growth, and our investments support this
strategy. Our strong commercial origination volumes were primarily market
share-driven and resulted from the successful efforts of our quality lenders and
support staff, including new lenders hired during the year to meet the strong
demand for our services.
"Substantial loan growth has historically had a short-term impact on our
earnings during the quarter, and this quarter is no different due to the
additional loan loss provision
required to support this growth. We are now positioned to take advantage of the
results of this significant growth during future periods."
Total revenue, comprised of net interest income and non-interest income, was
$9.1 million for the third quarter of 2003, an increase of 26.6 percent over the
$7.2 million reported in the third quarter of 2002. Net interest income
increased 28.3 percent to $8.1 million, primarily resulting from a 31.5 percent
increase in average earning assets. Mr. Johnson noted, "Our growth in net
interest income reflects the addition of new business relationships as well as
the success of our asset/liability management; we have maintained our net
interest margin within a 10-basis point range over the last four quarters."
For the third quarter of 2003, non-interest income rose 15.2 percent above the
prior year third quarter. Excluding securities gains recorded in both quarters,
non-interest income rose 25.3 percent to $1.0 million this quarter. New and
existing business relationships continue to drive growth in fee income, while
mortgage activity has moderated somewhat.
Non-interest expense for the third quarter of this year increased 45.6 percent
from the year-ago quarter, again reflecting overall growth in the company.
During the last twelve months, Mercantile opened two full-service branches, and
a loan production office. Salaries and benefits increased 50.0 percent as FTE
employees grew 38.1 percent to 156. The Company's efficiency ratio was 52.3
percent in the third quarter of 2003 compared to 45.4 percent in the third
quarter of 2002.
Total assets were $1.15 billion at September 30, 2003, an increase of $283.5
million, or 32.6 percent, from the prior year quarter-end. Loans were up $255.0
million, or 35.6 percent. Total deposits, including repurchase agreements, grew
by $167.6 million, or 21.8 percent. Over the past year, $70.0 million in FHLB
advances were added to the funding base.
Asset quality continues to be strong. Net charge-offs declined throughout 2003,
and were 0.02 percent of average loans for the third quarter, down from 0.04
percent for the second quarter of 2003 and from 0.14 percent for the third
quarter of 2002. For the fifth straight quarter, past due and non-accrual loans
declined, and at September 30, 2003, totaled $287,000, or 0.03 percent of total
loans. The ratio of loan loss reserves to total loans was 1.39% at quarter-end.
Shareholders' equity ended the quarter at $122.2 million, a twelve-month
increase of $44.6 million, or 57.5 percent. On September 19, 2003, Mercantile
sold 1,195,310 shares of common stock in an underwritten public offering at a
per share price of $33.26. Net proceeds were $37.4 million. The offering further
strengthens Mercantile's well-capitalized status; its risk-based capital ratio
at September 30, 2003 totaled 13.9 percent. At quarter-end, Mercantile had
6,624,868 shares of common stock outstanding, an increase of 22.2 percent from
June 30, 2003. The company paid a cash dividend of $0.08 per share in the third
quarter of this year.
About Mercantile Bank Corporation
Mercantile Bank Corporation is the bank holding company for Mercantile Bank of
West Michigan. The Bank's primary service area is the Kent and Ottawa County
area of West Michigan, which includes the City of Grand Rapids, the
second-largest city in the State of Michigan. The Bank, through its main office
and four full-service branches in greater Grand Rapids, provides a wide variety
of commercial banking services primarily to businesses, individuals and
governmental units. In addition, a retail mortgage loan production office is
located in Holland, Michigan, a community located thirty miles southwest of
Grand Rapids. Mercantile Bank Corporation's common stock is listed on the Nasdaq
National Market under the symbol "MBWM."
Forward-Looking Statements
This news release contains comments or information that constitute
forward-looking statements (within the meaning of the Private Securities
Litigation Reform Act of 1995) that are based on current expectations that
involve a number of risks and uncertainties. Actual results may differ
materially from the results expressed in forward-looking statements. Factors
that might cause such a difference include changes in interest rates and
interest rate relationships; demand for products and services; the degree of
competition by traditional and non-traditional competitors; changes in banking
regulation; changes in tax laws; changes in prices, levies, and assessments; the
impact of technological advances; governmental and regulatory policy changes;
the outcomes of contingencies; trends in customer behavior as well as their
ability to repay loans; changes in the national and local economy; and other
factors, including risk factors, referred to from time to time in filings made
by Mercantile with the Securities and Exchange Commission. Mercantile undertakes
no obligation to update or clarify forward-looking statements, whether as a
result of new information, future events or otherwise.
Mercantile Bank Corporation
Third Quarter 2003 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
2003 2002 2002
---- ---- ----
(Unaudited) (Audited) (Unaudited)
ASSETS
Cash and due from banks $ 32,600,000 $ 23,404,000 $ 29,429,000
Short term investments 230,000 213,000 207,000
Federal funds sold 11,800,000 4,500,000 12,000,000
--------------- --------------- ---------------
Total cash and cash equivalents 44,630,000 28,117,000 41,636,000
Securities available for sale 61,579,000 59,614,000 55,119,000
Securities held to maturity 42,444,000 36,493,000 31,140,000
Federal Home Loan Bank stock 3,927,000 786,000 786,000
Total loans and leases 972,191,000 771,554,000 717,199,000
Allowance for loan and lease losses (13,482,000) (10,890,000) (10,193,000)
--------------- --------------- ---------------
Total Loans and leases, net 958,709,000 760,664,000 707,006,000
Premises and equipment, net 15,229,000 12,174,000 11,328,000
Bank owned life insurance policies 16,013,000 14,876,000 14,673,000
Accrued interest receivable 4,142,000 3,336,000 3,444,000
Other assets 7,210,000 5,795,000 5,250,000
--------------- --------------- ---------------
Total assets $ 1,153,883,000 $ 921,855,000 $ 870,382,000
=============== =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 77,448,000 $ 62,405,000 $ 67,831,000
Interest-bearing 812,133,000 691,708,000 654,319,000
--------------- --------------- ---------------
Total deposits 889,581,000 754,113,000 722,150,000
Securities sold under agreement to repurchase 48,310,000 50,335,000 48,135,000
Federal Home Loan Bank advances 70,000,000 15,000,000 0
Other borrowed money 1,012,000 576,000 516,000
Accrued expenses and other liabilities 6,823,000 5,997,000 6,001,000
Trust preferred securities 16,000,000 16,000,000 16,000,000
--------------- --------------- ---------------
Total liabilities 1,031,726,000 842,021,000 792,802,000
STOCKHOLDERS' EQUITY
Common stock 113,118,000 75,530,000 69,375,000
Retained earnings 8,951,000 3,250,000 7,125,000
Accumulated other comprehensive income 88,000 1,054,000 1,080,000
--------------- --------------- ---------------
Total stockholders' equity 122,157,000 79,834,000 77,580,000
Total liabilities and stockholders' equity $ 1,153,883,000 $ 921,855,000 $ 870,382,000
=============== =============== ===============
Mercantile Bank Corporation
Third Quarter 2003 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME
THREE MONTHS ENDED THREE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED
September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002
------------------ ------------------ ------------------ ------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
INTEREST INCOME
Loans and leases, including fees $12,679,000 $11,132,000 $36,345,000 $31,553,000
Investment securities 1,164,000 1,144,000 3,566,000 3,344,000
Federal funds sold 11,000 41,000 50,000 98,000
Short-term investments 0 1,000 1,000 2,000
----------- ----------- ----------- -----------
Total interest income 13,854,000 12,318,000 39,962,000 34,997,000
INTEREST EXPENSE
Deposits 4,952,000 5,396,000 15,353,000 16,086,000
Short-term borrowings 168,000 242,000 512,000 668,000
Federal Home Loan Bank advances 274,000 0 531,000 0
Long-term borrowings 403,000 398,000 1,204,000 1,192,000
----------- ----------- ----------- -----------
Total interest expense 5,797,000 6,036,000 17,600,000 17,946,000
----------- ----------- ----------- -----------
Net interest income 8,057,000 6,282,000 22,362,000 17,051,000
Provision for loan and lease losses 1,380,000 880,000 2,850,000 2,022,000
----------- ----------- ----------- -----------
Net interest income after provision
for loan and lease losses 6,677,000 5,402,000 19,512,000 15,029,000
NON INTEREST INCOME
Service charges on accounts 303,000 243,000 852,000 660,000
Net gain on sales of securities 59,000 121,000 271,000 270,000
Other income 697,000 555,000 2,148,000 1,119,000
----------- ----------- ----------- -----------
Total non interest income 1,059,000 919,000 3,271,000 2,049,000
NON INTEREST EXPENSE
Salaries and benefits 3,029,000 2,020,000 8,285,000 5,648,000
Occupancy 353,000 265,000 1,032,000 796,000
Furniture and equipment 272,000 183,000 738,000 545,000
Other expense 1,110,000 803,000 3,099,000 2,328,000
----------- ----------- ----------- -----------
Total non interest expense 4,764,000 3,271,000 13,154,000 9,317,000
----------- ----------- ----------- -----------
Income before federal income tax expense 2,972,000 3,050,000 9,629,000 7,761,000
Federal income tax expense 744,000 894,000 2,628,000 2,285,000
----------- ----------- ----------- -----------
Net income $ 2,228,000 $ 2,156,000 $ 7,001,000 $ 5,476,000
=========== =========== =========== ===========
Basic earnings per share $ 0.40 $ 0.40 $ 1.28 $ 1.01
Diluted earnings per share $ 0.39 $ 0.39 $ 1.25 $ 1.00
Average shares outstanding * 5,516,702 5,405,759 5,450,496 5,405,685
Average diluted shares outstanding * 5,662,342 5,500,028 5,583,471 5,502,697
* - Adjusted for 5% stock dividend paid on February 3, 2003
Mercantile Bank Corporation
Third Quarter 2003 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
QUARTERLY
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2003 2003 2003 2002 2002
(dollars in thousands except per share data) 3RD QTR 2ND QTR 1ST QTR 4TH QTR 3RD QTR
----------- ------------ ------------- ------------ ------------
EARNINGS
Net interest income $ 8,057 7,511 6,794 6,603 6,282
Provision for loan and lease losses $ 1,380 845 625 980 880
NonInterest income $ 1,059 1,235 977 1,004 919
NonInterest expense $ 4,764 4,361 4,029 3,464 3,271
Net income $ 2,228 2,540 2,233 2,281 2,156
Basic earnings per share $ 0.40 0.47 0.41 0.42 0.40
Diluted earnings per share $ 0.39 0.46 0.40 0.41 0.39
Average shares outstanding * 5,516,702 5,421,120 5,412,521 5,405,759 5,405,759
Average diluted shares outstanding * 5,662,342 5,545,892 5,535,167 5,507,165 5,500,028
PERFORMANCE RATIOS
Return on average assets 0.82% 1.02% 0.97% 1.02% 1.04%
Return on average common equity 10.22% 12.36% 11.23% 11.52% 11.20%
Net interest margin (fully tax-equivalent) 3.19% 3.24% 3.17% 3.21% 3.27%
Efficiency ratio 52.26% 49.86% 51.85% 45.54% 45.42%
Full-time equivalent employees 156 147 128 117 113
CAPITAL
Average equity to average assets 7.99% 8.22% 8.59% 8.89% 9.30%
Tier 1 leverage capital ratio 12.75% 9.86% 10.30% 10.72% 11.26%
Tier 1 risk-based capital ratio 12.69% 10.13% 10.55% 10.85% 11.24%
Total risk-based capital ratio 13.93% 11.38% 11.79% 12.10% 12.48%
Book value per share $ 18.44 15.39 15.05 14.77 14.35
Cash dividend per share $ 0.08 0.08 0.08 NA NA
ASSET QUALITY
Gross loan charge-offs $ 95 297 132 287 250
Net loan charge-offs $ 56 93 109 283 249
Net loan charge-offs to average loans 0.02% 0.04% 0.06% 0.15% 0.14%
Allowance for loan and lease losses $ 13,482 12,158 11,406 10,890 10,193
Allowance for losses to total loans 1.39% 1.40% 1.40% 1.41% 1.42%
Past due and nonaccrual loans $ 287 495 533 796 994
Past due and nonaccrual loans to total loans 0.03% 0.06% 0.07% 0.10% 0.14%
Other real estate and repossessed assets$ 0 0 134 100 0
END OF PERIOD BALANCES
Loans and leases $ 972,191 866,009 812,487 771,554 717,199
Total earning assets (before allowance) $ 1,092,171 972,963 914,109 873,160 816,451
Total assets $ 1,153,883 1,034,774 967,787 921,856 870,382
Deposits $ 889,581 843,587 801,097 754,113 722,150
Shareholders' equity $ 122,157 83,457 81,530 79,835 77,580
AVERAGE BALANCES
Loans and leases $ 918,966 842,370 786,406 736,029 688,550
Total earning assets (before allowance) $ 1,029,203 953,851 892,660 836,809 782,435
Total assets $ 1,082,826 1,002,087 938,043 883,860 821,149
Deposits $ 867,291 809,986 774,836 725,145 676,661
Shareholders' equity $ 86,510 82,410 80,606 78,590 76,350
YEAR-TO-DATE
--------------------------
(dollars in thousands except per share data) 2003 2002
----------- ------------
EARNINGS
Net interest income 22,362 17,051
Provision for loan and lease losses 2,850 2,022
NonInterest income 3,271 2,049
NonInterest expense 13,154 9,317
Net income 7,001 5,476
Basic earnings per share 1.28 1.01
Diluted earnings per share 1.25 1.00
Average shares outstanding * 5,450,496 5,405,685
Average diluted shares outstanding * 5,583,471 5,502,697
PERFORMANCE RATIOS
Return on average assets 0.93% 0.95%
Return on average common equity 11.25% 9.87%
Net interest margin (fully tax-equivalent) 3.20% 3.18%
Efficiency ratio 51.32% 48.80%
Full-time equivalent employees 156 113
CAPITAL
Average equity to average assets 8.25% 9.66%
Tier 1 leverage capital ratio 12.75% 11.26%
Tier 1 risk-based capital ratio 12.69% 11.24%
Total risk-based capital ratio 13.93% 12.48%
Book value per share 18.44 14.35
Cash dividend per share 0.24 NA
ASSET QUALITY
Gross loan charge-offs 524 419
Net loan charge-offs 258 323
Net loan charge-offs to average loans 0.04% 0.07%
Allowance for loan and lease losses 13,482 10,193
Allowance for losses to total loans 1.39% 1.42%
Past due and nonaccrual loans 287 994
Past due and nonaccrual loans to total loans 0.03% 0.14%
Other real estate and repossessed assets$ 0 0
END OF PERIOD BALANCES
Loans and leases 972,191 717,199
Total earning assets (before allowance) $ 1,092,171 816,451
Total assets 1,153,883 870,382
Deposits 889,581 722,150
Shareholders' equity 122,157 77,580
AVERAGE BALANCES
Loans and leases 849,733 647,455
Total earning assets (before allowance) $ 959,072 735,909
Total assets 1,008,182 767,944
Deposits 817,709 630,444
Shareholders' equity 83,197 74,198
* - Adjusted for 5% stock dividend paid on February 3, 2003