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 ANNOUNCES
FIRST QUARTER NET INCOME OF $3.0 MILLION, UP 33.1%
First Quarter Loan Growth of $75.2 Million, Up 29% Annualized
WYOMING, MICH., April 8, 2004 -- Mercantile Bank Corporation (Nasdaq: MBWM), a
rapidly growing community banking organization, reported net income for the
first quarter of 2004 of $3.0 million, up 33.1 percent from the $2.2 million
reported in the first quarter of 2003. Diluted earnings per share were $0.43, an
increase of 7.5 percent over the $0.40 reported for the prior-year period,
reflecting the impact of a common stock offering completed in the fourth quarter
of 2003, which increased average shares outstanding by 1.4 million, or 25.8
percent.
Gerald R. Johnson, Jr., Chairman and CEO, commented, "This was an excellent
quarter for Mercantile. We continue to report solid balance sheet and income
growth. Despite weakness in our local economy, loan growth has been
exceptionally strong, reflecting the high demand for our quality services; loans
rose $75 million for the quarter, or 29% on an annualized basis. The strong loan
growth required us to add substantially to reserves to maintain our reserve
posture, thereby reducing the bottom line for this reporting period. However,
current loan growth will contribute to high performance and sustain our profit
stream into future quarters. We are extremely proud of Mercantile's organic
growth rate; without acquisitions, we have reached $1.3 billion in assets since
our inception in December of 1997.
"The success of our strategy is based on a combination of high service, high
credit quality and low overhead. We are pleased to maintain our strong expense
discipline while building infrastructure at a rapid pace. Over the past year,
our investment in premises and equipment has increased by one-third to keep up
with the strong demand for our services. We now operate a full-service banking
facility in Holland, and expect our new 30,000
square foot full-service banking center under construction there to be completed
in late 2004. Construction of our new 60,000 square foot corporate headquarters
in downtown Grand Rapids is progressing on schedule, with an estimated
completion date of mid-2005. Despite these investments and the expense
associated with facility openings over the last twelve months, we are operating
with an efficiency ratio under 50 percent."
Total revenue, comprised of net interest income and non-interest income, was
$10.5 million in the first quarter of 2004, an increase of 35.5 percent over the
$7.8 million earned during the prior-year period. Mr. Johnson noted, "Revenue
growth continues to be the primary driver of our bottom line. Loan growth and
margin expansion both contributed to the high level of revenue growth we
experienced this quarter." Net interest income increased 39.9 percent to $9.5
million, reflecting a combination of 34.1 percent growth in average earning
assets and a 9 basis point increase in the net interest margin, to 3.26 percent.
Non-interest income, net of securities gains, declined 2.6 percent; growth in
deposit service charges was offset by a decline in fees from the lower level of
residential mortgage loan refinancings.
Non-interest expense increased 27.9 percent to support Mercantile's growth above
first quarter 2003. Primarily reflecting asset growth of 33.6 percent and an
increase in FTE employees of 30.5 percent, salaries and benefits rose 31.5
percent for the same period. Occupancy and equipment expense also increased,
largely as a result of the opening of the Holland banking office and Knapp
Street branch in May, 2003. Mercantile's efficiency ratio improved to 49.0
percent for the first quarter of 2004 from 51.9 percent for last year's first
quarter.
Regarding Mercantile's asset quality, Mr. Johnson stated, "Net charge-offs
remain modest compared to our peers. While we identified one new non-performing
loan this quarter, our total non-performings remain at a low level."
Non-performing loans were 0.28 percent of total loans at March 31, 2004,
compared to 0.07 percent last year. Annualized net charge-offs for the quarter
were 0.11 percent of average loans, compared to 0.06 percent for the prior-year
period. The loan and lease loss provision was $1.2 million for the first quarter
of 2004, an increase of 99.0 percent over the prior-year period, reflecting
growth in the loan portfolio and the aforementioned charge-offs. The level of
the allowance for loan and lease losses was $15.3 million, or 1.38 percent of
total loans and leases at March 31, 2004.
Total assets were $1.3 billion at March 31, 2004, an increase of $325.6 million,
or 33.6 percent from the prior-year quarter. Loans rose $298.7 million, or 36.8
percent during the same time period, primarily funded by $194.2 million in
deposits, $85.0 million in advances from the Federal Home Loan Bank, and $42.8
million in net proceeds from the sale of common stock.
Shareholders' equity at March 31, 2004 was $133.1 million, a twelve-month
increase of $51.5 million, or 63.2 percent. Mercantile's total risk-based
capital ratio at quarter end was 13.2 percent. Mr. Johnson concluded, "We still
see exceptional growth opportunities
ahead, even as we await the eventual economic recovery in West Michigan. Our
business model has been tested and successfully implemented by our experienced
lending team, enabling us to be the lender of choice to an increasing number of
small and mid-sized businesses in our market."
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 provides a wide variety
of commercial banking services primarily to businesses, individuals, and
governmental units through its five full-service offices in greater Grand
Rapids, and its Holland, Michigan office 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
First Quarter 2004 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31, MARCH 31,
2004 2003 2003
---- ---- ----
(Unaudited) (Audited) (Unaudited)
ASSETS
Cash and due from banks $ 29,952,000 $ 16,309,000 $ 28,091,000
Short-term investments 717,000 255,000 203,000
Federal funds sold 5,000,000 0 0
--------------- --------------- ---------------
Total cash and cash equivalents 35,669,000 16,564,000 28,294,000
Securities available for sale 64,974,000 71,421,000 61,465,000
Securities held to maturity 46,531,000 45,112,000 39,168,000
Federal Home Loan Bank stock 5,784,000 4,977,000 786,000
Total loans and leases 1,111,152,000 1,035,963,000 812,487,000
Allowance for loan and lease losses (15,337,000) (14,379,000) (11,406,000)
--------------- --------------- ---------------
Total loans and leases, net 1,095,815,000 1,021,584,000 801,081,000
Premises and equipment, net 16,580,000 15,305,000 12,459,000
Bank owned life insurance policies 16,618,000 16,441,000 15,384,000
Accrued interest receivable 4,824,000 4,098,000 3,860,000
Other assets 7,140,000 7,835,000 5,795,000
--------------- --------------- ---------------
Total assets $ 1,293,935,000 $ 1,203,337,000 $ 968,292,000
=============== =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 85,900,000 $ 76,579,000 $ 68,858,000
Interest-bearing 909,434,000 826,313,000 732,239,000
--------------- --------------- ---------------
Total deposits 995,334,000 902,892,000 801,097,000
Securities sold under agreements to repurchase 41,613,000 49,545,000 45,238,000
Federal funds purchased 0 6,000,000 2,000,000
Federal Home Loan Bank advances 100,000,000 90,000,000 15,000,000
Subordinated debentures 16,495,000 16,495,000 16,495,000
Other borrowed money 1,361,000 1,114,000 839,000
Accrued expenses and other liabilities 6,057,000 7,090,000 6,093,000
--------------- --------------- ---------------
Total liabilities 1,160,860,000 1,073,136,000 886,762,000
SHAREHOLDERS' EQUITY
Common stock 118,684,000 118,560,000 75,560,000
Retained earnings 13,781,000 11,421,000 5,050,000
Accumulated other comprehensive income 610,000 220,000 920,000
--------------- --------------- ---------------
Total shareholders' equity 133,075,000 130,201,000 81,530,000
Total liabilities and shareholders' equity $ 1,293,935,000 $ 1,203,337,000 $ 968,292,000
=============== =============== ===============
Mercantile Bank Corporation
First Quarter 2004 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME
THREE MONTHS ENDED THREE MONTHS ENDED
March 31, 2004 March 31, 2003
-------------- --------------
(Unaudited) (Unaudited)
INTEREST INCOME
Loans and leases, including fees $ 13,908,000 $ 11,443,000
Investment securities 1,426,000 1,216,000
Federal funds sold 19,000 16,000
Short-term investments 1,000 0
--------------- ---------------
Total interest income 15,354,000 12,675,000
INTEREST EXPENSE
Deposits 4,750,000 5,236,000
Short-term borrowings 170,000 171,000
Federal Home Loan Bank advances 529,000 74,000
Long-term borrowings 416,000 410,000
--------------- ---------------
Total interest expense 5,865,000 5,891,000
--------------- ---------------
Net interest income 9,489,000 6,784,000
Provision for loan and lease losses 1,244,000 625,000
--------------- ---------------
Net interest income after provision
for loan and lease losses 8,245,000 6,159,000
NON INTEREST INCOME
Service charges on accounts 299,000 269,000
Net gain on sales of securities 78,000 0
Other income 662,000 718,000
--------------- ---------------
Total non interest income 1,039,000 987,000
NON INTEREST EXPENSE
Salaries and benefits 3,283,000 2,497,000
Occupancy 386,000 334,000
Furniture and equipment 273,000 221,000
Other expense 1,213,000 977,000
--------------- ---------------
Total non interest expense 5,155,000 4,029,000
--------------- ---------------
Income before federal income tax .. 4,129,000 3,117,000
Federal income tax expense 1,156,000 884,000
--------------- ---------------
Net income $ 2,973,000 $ 2,233,000
=============== ===============
Basic earnings per share $ 0.44 $ 0.41
Diluted earnings per share $ 0.43 $ 0.40
Average shares outstanding 6,818,067 5,412,521
Average diluted shares outstanding 6,965,835 5,535,167
Mercantile Bank Corporation
First Quarter 2004 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
QUARTERLY
----------------------------------------------------------------------
1ST QTR 4TH QTR 3RD QTR 2ND QTR 1ST QTR
(dollars in thousands except per share data) 2004 2003 2003 2003 2003
---------- ---------- ---------- ---------- ----------
EARNINGS
Net interest income $ 9,489 8,939 8,047 7,501 6,784
Provision for loan and lease losses $ 1,244 950 1,380 845 625
NonInterest income $ 1,039 1,100 1,069 1,245 987
NonInterest expense $ 5,155 4,917 4,764 4,361 4,029
Net income $ 2,973 3,015 2,228 2,540 2,233
Basic earnings per share $ 0.44 0.45 0.40 0.47 0.41
Diluted earnings per share $ 0.43 0.44 0.39 0.46 0.40
Average shares outstanding 6,818,067 6,763,997 5,516,702 5,421,120 5,412,521
Average diluted shares outstanding 6,965,835 6,914,441 5,662,342 5,545,892 5,535,167
PERFORMANCE RATIOS
Return on average assets 0.96% 1.02% 0.82% 1.02% 0.97%
Return on average common equity 9.10% 9.38% 10.22% 12.36% 11.23%
Net interest margin (fully tax-equivalent) 3.26% 3.26% 3.19% 3.24% 3.17%
Efficiency ratio 48.96% 48.98% 52.26% 49.86% 51.85%
Full-time equivalent employees 167 161 156 147 128
CAPITAL
Average equity to average assets 10.50% 10.91% 7.99% 8.22% 8.59%
Tier 1 leverage capital ratio 11.87% 12.49% 12.75% 9.86% 10.30%
Tier 1 risk-based capital ratio 11.99% 12.60% 12.69% 10.13% 10.55%
Total risk-based capital ratio 13.23% 13.84% 13.93% 11.38% 11.79%
Book value per share $ 19.49 19.13 18.44 15.39 15.05
Cash dividend per share $ 0.09 0.08 0.08 0.08 0.08
ASSET QUALITY
Gross loan charge-offs $ 299 72 95 297 132
Net loan charge-offs $ 286 53 56 93 109
Net loan charge-offs to average loans 0.11% 0.02% 0.02% 0.04% 0.06%
Allowance for loan and lease losses $ 15,337 14,379 13,482 12,158 11,406
Allowance for loan losses to total loans 1.38% 1.39% 1.39% 1.40% 1.40%
Past due and nonaccrual loans and leases $ 3,122 1,785 287 495 533
Past due and nonaccrual loans to total loans 0.28% 0.17% 0.03% 0.06% 0.07%
Other real estate and repossessed assets $ 0 0 0 0 134
END OF PERIOD BALANCES
Loans and leases $1,111,152 1,035,963 972,191 866,009 812,487
Total earning assets (before allowance) $1,234,158 1,157,728 1,092,171 972,963 914,190
Total assets $1,293,935 1,203,337 1,154,388 1,035,279 968,292
Deposits $ 995,334 902,892 889,581 843,587 801,097
Shareholder's equity $ 133,075 130,201 122,157 83,457 81,530
AVERAGE BALANCES
Loans and leases $1,067,710 999,618 918,966 842,370 786,406
Total earning assets (before allowance) $1,196,936 1,115,960 1,029,203 953,851 892,660
Total assets $1,250,733 1,169,521 1,083,389 1,002,714 938,632
Deposits $ 946,562 886,299 867,291 809,986 774,836
Shareholder's equity $ 131,361 127,511 86,510 82,410 80,606