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 $4.4 MILLION, UP 46.7%
WYOMING, MICH., April 7, 2005 -- Mercantile Bank Corporation (Nasdaq: MBWM)
reported net income for the first quarter ended March 31, 2005 of $4.4 million,
an increase of 46.7 percent from the $3.0 million reported for the first quarter
ended March 31, 2004. Diluted earnings per share were $0.59 compared with $0.41
reported for the prior-year first quarter period, an increase of 43.9 percent.
Gerald R. Johnson, Jr., Chairman and CEO, commented, "Our strong commercial loan
pipeline continues to be the key to our outstanding performance. The western
Michigan business community recognizes Mercantile's extraordinary lending
expertise and high service levels, which contribute to loan growth that has
consistently ranked in the top quartile of bank performance. The rising interest
rate environment favorably impacted the level of interest income generated by
our commercial loan portfolio. These factors have led to yet another quarter of
robust revenue growth.
"Outstanding loan growth is not enough. We manage our company to maximize growth
without compromising service, customer convenience or asset quality. Revenue
growth is balanced with continued investment in infrastructure and employees.
Our full-service Holland office was opened during the fourth quarter of 2004,
and we have been adding staff continuously to accommodate the exceptional growth
of our company. We are also looking forward to the May 2005 completion of our
new headquarters building. Together, these investments position Mercantile for
continued growth as well as the opportunity to enhance its already strong
reputation for service, product delivery and lending expertise."
Total revenue, comprised of net interest income and non-interest income, was
$13.9 million for the first quarter of 2005, an increase of 31.7 percent over
the $10.5 million of revenue realized during the first quarter of 2004. Net
interest income for the current
quarter increased 33.4 percent over the prior-year quarter to $12.7 million,
reflecting a combination of 26.3 percent growth in average earning assets and a
20 basis point improvement in the net interest margin to 3.46 percent. Added Mr.
Johnson, "We continue to expand our margin and gained an additional three basis
points compared with the fourth quarter of 2004." Non-interest income was $1.2
million, a 16.5 percent increase over last year's first quarter; the quarter
reflected growth in all fee businesses with the exception of mortgage banking,
which experienced a modest decrease.
Non-interest expense for the first quarter of 2005 was $6.9 million, an increase
of 32.9 percent over the prior-year period, principally in support of corporate
growth. Salaries and benefits, up 26.7 percent, represent the largest dollar
increase in non-interest expense; the increase was consistent with a 26.9
percent year-over-year increase in full-time equivalent employees. Occupancy,
equipment and furniture expense rose 22.3 percent from the investment in the
Holland full-service banking office as well as the ongoing increase in staff.
Other non-interest expense rose $672,000 or 55.3 percent; the current quarter
includes a $300,000 accrual for the estimated loss related to a letter of credit
commitment in which the customer has shown signs of financial distress. This
letter of credit has not yet been drawn upon. Mercantile's efficiency ratio
remains low -- 49.41 percent for the first quarter of 2005 compared with 48.96
percent for the prior-year period.
Asset quality, a hallmark of Mercantile's outstanding performance, remains
strong. Net charge-offs for the first quarter of 2005 were $447,000, or 0.13
percent of average loans on an annualized basis, compared with $286,000, or 0.11
percent for the prior-year first quarter. Non-performing assets were $5.2
million, or 0.31 percent of total assets at March 31, 2005, compared with $3.1
million or 0.24 percent at March 31, 2004. Loan and lease loss reserves were
$18.1 million, or 1.32 percent of total loans and leases, at March 31, 2005.
Total assets were $1.66 billion at March 31, 2005, an increase of $370.9
million, or 28.7 percent, from last year's first quarter-end. Loan growth,
virtually all of which was commercial, was $263.4 million or 23.7 percent during
the same 12-month period; the increase was primarily funded by a $294.7 million,
or 29.6 percent, increase in deposits.
Shareholders' equity at March 31, 2005 was $144.5 million, a twelve-month
increase of $11.4 million, or 8.6 percent. Total shares outstanding at
quarter-end were 7,212,268. Mercantile's total risk-based capital ratio at
quarter-end was 12.71 percent. Mr. Johnson concluded, "As we expand, we continue
to follow the same business model that has served Mercantile and our clients
successfully since the Company's inception. We look forward to sustained growth
and enhanced profitability from the recent investments that will allow us to
serve our local businesses more effectively."
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 2005 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31, MARCH 31,
2005 2004 2004
--------------- --------------- ---------------
(Unaudited) (Audited) (Unaudited)
ASSETS
Cash and due from banks $ 39,255,000 $ 20,662,000 $ 29,952,000
Short-term investments 942,000 149,000 717,000
Federal funds sold 33,400,000 0 5,000,000
--------------- --------------- ---------------
Total cash and cash equivalents 73,597,000 20,811,000 35,669,000
Securities available for sale 102,733,000 93,826,000 64,974,000
Securities held to maturity 57,023,000 52,341,000 46,531,000
Federal Home Loan Bank stock 7,022,000 6,798,000 5,784,000
Total loans and leases 1,374,577,000 1,317,124,000 1,111,152,000
Allowance for loan and lease losses (18,097,000) (17,819,000) (15,337,000)
--------------- --------------- ---------------
Total loans and leases, net 1,356,480,000 1,299,305,000 1,095,815,000
Premises and equipment, net 26,576,000 24,572,000 16,580,000
Bank owned life insurance policies 23,986,000 23,750,000 16,618,000
Accrued interest receivable 6,883,000 5,644,000 4,824,000
Other assets 10,576,000 9,072,000 7,140,000
--------------- --------------- ---------------
Total assets $ 1,664,876,000 $ 1,536,119,000 $ 1,293,935,000
=============== =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 135,544,000 $ 101,742,000 $ 85,900,000
Interest-bearing 1,154,473,000 1,057,439,000 909,434,000
--------------- --------------- ---------------
Total deposits 1,290,017,000 1,159,181,000 995,334,000
Securities sold under agreements to repurchase 60,208,000 56,317,000 41,613,000
Federal funds purchased 0 15,000,000 0
Federal Home Loan Bank advances 125,000,000 120,000,000 100,000,000
Subordinated debentures 32,990,000 32,990,000 16,495,000
Other borrowed money 1,916,000 1,609,000 1,361,000
Accrued expenses and other liabilities 10,244,000 9,405,000 6,057,000
--------------- --------------- ---------------
Total liabilities 1,520,375,000 1,394,502,000 1,160,860,000
SHAREHOLDERS' EQUITY
Common stock 131,113,000 131,010,000 118,684,000
Retained earnings 14,116,000 10,475,000 13,781,000
Accumulated other comprehensive income (loss) (728,000) 132,000 610,000
--------------- --------------- ---------------
Total shareholders' equity 144,501,000 141,617,000 133,075,000
Total liabilities and shareholders' equity $ 1,664,876,000 $ 1,536,119,000 $ 1,293,935,000
=============== =============== ===============
Mercantile Bank Corporation
First Quarter 2005 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME
THREE MONTHS ENDED THREE MONTHS ENDED
March 31, 2005 March 31, 2004
-------------- --------------
(Unaudited) (Unaudited)
INTEREST INCOME
Loans and leases, including fees $19,772,000 $13,908,000
Investment securities 1,887,000 1,426,000
Federal funds sold 44,000 19,000
Short-term investments 2,000 1,000
----------- -----------
Total interest income 21,705,000 15,354,000
INTEREST EXPENSE
Deposits 7,440,000 4,750,000
Short-term borrowings 338,000 170,000
Federal Home Loan Bank advances 857,000 529,000
Long-term borrowings 415,000 416,000
----------- -----------
Total interest expense 9,050,000 5,865,000
----------- -----------
Net interest income 12,655,000 9,489,000
Provision for loan and lease losses 725,000 1,244,000
----------- -----------
Net interest income after provision
for loan and lease losses 11,930,000 8,245,000
NON INTEREST INCOME
Service charges on accounts 338,000 299,000
Net gain on sales of securities 0 78,000
Other income 872,000 662,000
----------- -----------
Total non interest income 1,210,000 1,039,000
NON INTEREST EXPENSE
Salaries and benefits 4,159,000 3,283,000
Occupancy 518,000 386,000
Furniture and equipment 288,000 273,000
Other expense 1,885,000 1,213,000
----------- -----------
Total non interest expense 6,850,000 5,155,000
----------- -----------
Income before federal income tax 6,290,000 4,129,000
Federal income tax expense 1,928,000 1,156,000
----------- -----------
Net income $ 4,362,000 $ 2,973,000
=========== ===========
Basic earnings per share $ 0.61 $ 0.42
Diluted earnings per share $ 0.59 $ 0.41
Average shares outstanding 7,206,322 7,158,970
Average diluted shares outstanding 7,345,543 7,314,126
Mercantile Bank Corporation
First Quarter 2005 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) 2005 2004 2004 2004 2004
---------- --------- --------- --------- ---------
EARNINGS
Net interest income $ 12,655 12,082 10,856 10,000 9,489
Provision for loan and lease losses $ 725 1,000 1,200 1,230 1,244
NonInterest income $ 1,210 1,106 1,156 1,001 1,039
NonInterest expense $ 6,850 6,228 6,415 5,400 5,155
Net income $ 4,362 4,488 3,114 3,146 2,973
Basic earnings per share $ 0.61 0.62 0.43 0.44 0.42
Diluted earnings per share $ 0.59 0.61 0.43 0.43 0.41
Average shares outstanding 7,206,322 7,189,575 7,176,032 7,172,633 7,158,970
Average diluted shares outstanding 7,345,543 7,350,178 7,318,345 7,322,474 7,314,126
PERFORMANCE RATIOS
Return on average assets 1.11% 1.18% 0.86% 0.95% 0.96%
Return on average common equity 12.36% 12.74% 9.06% 9.50% 9.10%
Net interest margin (fully
tax-equivalent) 3.46% 3.43% 3.23% 3.24% 3.26%
Efficiency ratio 49.41% 47.22% 53.40% 49.09% 48.96%
Full-time equivalent employees 212 194 190 183 167
CAPITAL
Average equity to average assets 8.99% 9.29% 9.54% 10.01% 10.50%
Tier 1 leverage capital ratio 11.13% 11.53% 10.75% 11.35% 11.87%
Tier 1 risk-based capital ratio 11.53% 11.82% 10.99% 11.50% 11.99%
Total risk-based capital ratio 12.71% 13.03% 12.21% 12.74% 13.23%
Book value per share $ 20.04 19.69 19.22 18.71 18.52
Cash dividend per share $ 0.10 0.09 0.09 0.09 0.09
ASSET QUALITY
Gross loan charge-offs $ 493 262 581 263 299
Net loan charge-offs $ 447 226 467 255 286
Net loan charge-offs to average loans 0.13% 0.07% 0.15% 0.09% 0.11%
Allowance for loan and lease losses $ 18,097 17,819 17,045 16,312 15,337
Allowance for loan losses to total
loans 1.32% 1.35% 1.36% 1.38% 1.38%
Nonperforming loans $ 4,016 2,842 2,985 3,731 3,122
Other real estate and repossessed
assets $ 1,177 0 0 0 0
Nonperforming assets to total assets 0.31% 0.19% 0.20% 0.27% 0.24%
END OF PERIOD BALANCES
Loans and leases $1,374,577 1,317,124 1,253,713 1,185,363 1,111,152
Total earning assets (before allowance) $1,575,697 1,470,238 1,404,559 1,311,191 1,234,158
Total assets $1,664,876 1,536,119 1,474,949 1,378,626 1,293,935
Deposits $1,290,017 1,159,181 1,144,857 1,046,069 995,334
Shareholder's equity $ 144,501 141,617 137,935 134,272 133,075
AVERAGE BALANCES
Loans and leases $1,345,336 1,276,913 1,219,325 1,144,758 1,067,710
Total earning assets (before allowance) $1,511,891 1,428,121 1,361,985 1,269,300 1,196,936
Total assets $1,591,764 1,504,526 1,429,059 1,330,507 1,250,733
Deposits $1,214,890 1,150,606 1,094,166 1,004,651 946,562
Shareholder's equity $ 143,169 139,744 136,290 133,211 131,361