EXHIBIT 99.1
[MERCANTILE(R) BANK CORPORATION LOGO]
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 ANNOUNCES SECOND QUARTER NET
INCOME OF $4.7 MILLION, UP 49.1%
Grand Rapids, MICH., July 7, 2005 -- Mercantile Bank Corporation (Nasdaq: MBWM)
reported net income for the quarter ended June 30, 2005 of $4.7 million, an
increase of 49.1 percent from the $3.1 million reported for the quarter ended
June 30, 2004. Diluted earnings per share were $0.64 compared with $0.43
reported for the prior-year second quarter, an increase of 48.8 percent.
For the first six months of 2005, Mercantile reported net income of $9.1
million, an increase of 47.9 percent from the $6.1 million reported in the
prior-year period. Diluted earnings per share were $1.23, an increase of 46.4
percent from the first six months of 2004.
Gerald R. Johnson, Jr., Chairman and CEO, commented, "Mercantile Bank continues
to expand its reach. The combination of exceptional service and commercial
lending expertise that we provide has attracted and retained a loyal West
Michigan client base. This past quarter, we announced our expansion into Lansing
and Ann Arbor, Michigan, two dynamic markets where our initiatives will be led
by experienced, local commercial lenders."
Mr. Johnson continued, "We have demonstrated our ability to achieve strong
growth in assets, revenue and bottom-line profits year over year -- as well as
quarterly -- while investing in infrastructure and staff. Growth continues at a
robust pace, with no evidence of deterioration in asset quality despite softness
in the West Michigan economy. Effective management of our balance sheet has also
enabled us to benefit consistently over the past year from the rising rate
environment. We look forward to continued growth from expansion activities as
well as from our West Michigan market."
Total revenue, comprised of net interest income and non-interest income, was
$14.8 million for the second quarter of 2005, an increase of 34.8 percent over
the $11.0 million reported for the second quarter of 2004. Net interest
income for the current quarter increased 36.1 percent over the prior-year second
quarter to $13.6 million, reflecting a combination of 24.7 percent growth in
average earning assets and a 28 basis point improvement in the net interest
margin to 3.52 percent; margin improvement from the first quarter of 2005 was
six basis points. Non-interest income was $1.2 million, a 21.7 percent increase
over last year's second quarter; the quarter reflected growth in all fee
businesses with the exception of mortgage banking, which experienced a modest
decline.
Non-interest expense for the second quarter of 2005 was $7.1 million, an
increase of 32.3 percent over the prior-year period, principally in support of
corporate growth. Salaries and benefits, up 25.5 percent, represented the
largest dollar increase in non-interest expense; the $0.9 million increase was
consistent with an increase of 54 full-time equivalent employees (up 29.5
percent) year-over-year. Occupancy, equipment, furniture and other non-interest
expense rose 45.0 percent, also in support of corporate growth, and in
particular, from the investment in the Holland full-service banking office and
the recently-opened new headquarters building. Despite Mercantile's ongoing
expansion and service quality initiatives, the efficiency ratio continues to
improve; it was 48.19 percent for the second quarter of 2005 compared with 49.09
percent for the prior-year period.
Mr. Johnson continued, "Strong asset quality has been a consistent contributor
to Mercantile's outstanding performance, and the second quarter of 2005
continues to reflect the successful execution of our credit strategies." Net
charge-offs for the second quarter of 2005 were $140,000, or 0.04 percent of
average loans on an annualized basis, compared with $255,000, or 0.09 percent
for the prior-year second quarter. Non-performing assets were $3.7 million, or
0.22 percent of total assets at June 30, 2005, compared with $5.2 million, or
0.31 percent at March 31, 2005, and $3.7 million, or 0.27 percent twelve months
ago. Loan and lease loss reserves were $18.9 million, or 1.32 percent of total
loans and leases, at June 30, 2005.
Total assets were $1.71 billion at June 30, 2005, an increase of $330.5 million,
or 24.0 percent, from last year's second quarter-end. Loan growth, virtually all
of which was commercial, was $239.1 million or 20.2 percent during the same
12-month period; the increase was primarily funded by a $275.8 million, or 26.4
percent, increase in deposits.
Shareholders' equity at June 30, 2005 was $149.2 million, a twelve-month
increase of $14.9 million, or 11.1 percent. Total shares outstanding at
quarter-end were 7,221,323. Mercantile's total risk-based capital ratio at
quarter-end was 12.58 percent. Mr. Johnson concluded, "Our move into our new
headquarters building this past quarter along with the opening of offices
outside western Michigan signals a new era for Mercantile. We are
well-positioned to carry our successful strategy to other attractive markets."
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 recently announced plans to open full-service
branches in Lansing and Ann Arbor, Michigan. 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
Second Quarter 2005 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31, JUNE 30,
2005 2004 2004
--------------- --------------- ---------------
(Unaudited) (Audited) (Unaudited)
ASSETS
Cash and due from banks $ 35,466,000 $ 20,662,000 $ 35,005,000
Short-term investments 597,000 149,000 967,000
Federal funds sold 21,400,000 0 0
--------------- --------------- ---------------
Total cash and cash equivalents 57,463,000 20,811,000 35,972,000
Securities available for sale 107,896,000 93,826,000 69,751,000
Securities held to maturity 58,851,000 52,341,000 48,466,000
Federal Home Loan Bank stock 7,425,000 6,798,000 6,644,000
Total loans and leases 1,424,463,000 1,317,124,000 1,185,363,000
Allowance for loan and lease losses (18,856,000) (17,819,000) (16,312,000)
--------------- --------------- ---------------
Total Loans and leases, net 1,405,607,000 1,299,305,000 1,169,051,000
Premises and equipment, net 29,118,000 24,572,000 18,468,000
Bank owned life insurance policies 24,669,000 23,750,000 16,796,000
Accrued interest receivable 6,550,000 5,644,000 4,257,000
Other assets 11,578,000 9,072,000 9,221,000
--------------- --------------- ---------------
Total assets $ 1,709,157,000 $ 1,536,119,000 $ 1,378,626,000
=============== =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 136,830,000 $ 101,742,000 $ 114,441,000
Interest-bearing 1,185,014,000 1,057,439,000 931,628,000
--------------- --------------- ---------------
Total deposits 1,321,844,000 1,159,181,000 1,046,069,000
Securities sold under agreement to repurchase 56,034,000 56,317,000 46,960,000
Federal funds purchased 0 15,000,000 7,000,000
Federal Home Loan Bank advances 135,000,000 120,000,000 120,000,000
Subordinated debentures 32,990,000 32,990,000 16,495,000
Other borrowed money 2,069,000 1,609,000 1,414,000
Accrued expenses and other liabilities 12,016,000 9,405,000 6,416,000
--------------- --------------- ---------------
Total liabilities 1,559,953,000 1,394,502,000 1,244,354,000
SHAREHOLDERS' EQUITY
Common stock 131,186,000 131,010,000 130,902,000
Retained earnings 18,012,000 10,475,000 4,166,000
Accumulated other comprehensive income (loss) 6,000 132,000 (796,000)
--------------- --------------- ---------------
Total shareholders' equity 149,204,000 141,617,000 134,272,000
Total liabilities and shareholders' equity $ 1,709,157,000 $ 1,536,119,000 $ 1,378,626,000
=============== =============== ===============
Mercantile Bank Corporation
Second Quarter 2005 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME
THREE MONTHS ENDED THREE MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
------------------ ------------------ ---------------- ----------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
INTEREST INCOME
Loans and leases, including fees $ 22,250,000 $ 14,722,000 $ 42,022,000 $ 28,630,000
Investment securities 2,036,000 1,400,000 3,923,000 2,826,000
Federal funds sold 56,000 8,000 100,000 27,000
Short-term investments 4,000 0 6,000 1,000
------------ ------------ ------------ ------------
Total interest income 24,346,000 16,130,000 46,051,000 31,484,000
INTEREST EXPENSE
Deposits 8,892,000 4,929,000 16,332,000 9,679,000
Short-term borrowings 375,000 186,000 713,000 356,000
Federal Home Loan Bank advances 1,006,000 597,000 1,863,000 1,126,000
Long-term borrowings 465,000 418,000 880,000 834,000
------------ ------------ ------------ ------------
Total interest expense 10,738,000 6,130,000 19,788,000 11,995,000
------------ ------------ ------------ ------------
Net interest income 13,608,000 10,000,000 26,263,000 19,489,000
Provision for loan and lease losses 900,000 1,230,000 1,625,000 2,474,000
------------ ------------ ------------ ------------
Net interest income after provision
for loan and lease losses 12,708,000 8,770,000 24,638,000 17,015,000
NON INTEREST INCOME
Service charges on accounts 341,000 312,000 679,000 611,000
Net gain on sales of securities 0 0 0 78,000
Net gain on sales of loans 28,000 40,000 28,000 40,000
Other income 849,000 649,000 1,721,000 1,311,000
------------ ------------ ------------ ------------
Total non interest income 1,218,000 1,001,000 2,428,000 2,040,000
NON INTEREST EXPENSE
Salaries and benefits 4,405,000 3,510,000 8,564,000 6,793,000
Occupancy 566,000 383,000 1,084,000 769,000
Furniture and equipment 362,000 267,000 650,000 540,000
Other expense 1,812,000 1,240,000 3,697,000 2,453,000
------------ ------------ ------------ ------------
Total non interest expense 7,145,000 5,400,000 13,995,000 10,555,000
------------ ------------ ------------ ------------
Income before federal income tax expense 6,781,000 4,371,000 13,071,000 8,500,000
Federal income tax expense 2,091,000 1,225,000 4,019,000 2,381,000
------------ ------------ ------------ ------------
Net income $ 4,690,000 $ 3,146,000 $ 9,052,000 $ 6,119,000
============ ============ ============ ============
Basic earnings per share $ 0.65 $ 0.44 $ 1.26 $ 0.85
Diluted earnings per share $ 0.64 $ 0.43 $ 1.23 $ 0.84
Average shares outstanding * 7,218,512 7,172,633 7,212,451 7,165,744
Average diluted shares outstanding * 7,353,163 7,322,474 7,368,687 7,310,298
Mercantile Bank Corporation
Second Quarter 2005 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
QUARTERLY YEAR-TO-DATE
------------------------------------------------------ ---------------------
2005 2005 2004 2004 2004
(dollars in thousands except per share data) 2ND QTR 1ST QTR 4TH QTR 3RD QTR 2ND QTR 2005 2004
---------- --------- --------- --------- --------- --------- ---------
EARNINGS
Net interest income $ 13,608 12,655 12,082 10,856 10,000 26,263 19,489
Provision for loan and lease losses $ 900 725 1,000 1,200 1,230 1,625 2,474
NonInterest income $ 1,218 1,210 1,106 1,156 1,001 2,428 2,040
NonInterest expense $ 7,145 6,850 6,228 6,415 5,400 13,995 10,555
Net income $ 4,690 4,362 4,488 3,114 3,146 9,052 6,119
Basic earnings per share $ 0.65 0.61 0.62 0.43 0.44 1.26 0.85
Diluted earnings per share $ 0.64 0.59 0.61 0.43 0.43 1.23 0.84
Average shares outstanding 7,218,512 7,206,322 7,189,575 7,176,032 7,172,633 7,212,451 7,165,744
Average diluted shares outstanding 7,353,163 7,345,543 7,350,178 7,318,345 7,322,474 7,368,687 7,310,298
PERFORMANCE RATIOS
Return on average assets 1.13% 1.11% 1.18% 0.86% 0.95% 1.12% 0.95%
Return on average common equity 12.80% 12.36% 12.74% 9.06% 9.50% 12.58% 9.30%
Net interest margin (fully tax-equivalent) 3.52% 3.46% 3.43% 3.23% 3.24% 3.49% 3.25%
Efficiency ratio 48.19% 49.41% 47.22% 53.40% 49.09% 48.78% 49.03%
Full-time equivalent employees 237 212 194 190 183 237 183
CAPITAL
Average equity to average assets 8.81% 8.99% 9.29% 9.54% 10.01% 8.90% 10.25%
Tier 1 leverage capital ratio 10.86% 11.13% 11.53% 10.75% 11.35% 10.86% 11.35%
Tier 1 risk-based capital ratio 11.40% 11.53% 11.82% 10.99% 11.50% 11.40% 11.50%
Total risk-based capital ratio 12.58% 12.71% 13.03% 12.21% 12.74% 12.58% 12.74%
Book value per share $ 20.66 20.04 19.69 19.22 18.71 20.66 18.71
Cash dividend per share $ 0.11 0.10 0.09 0.09 0.09 0.21 0.18
ASSET QUALITY
Gross loan charge-offs $ 211 493 262 581 263 704 562
Net loan charge-offs $ 140 447 226 467 255 587 541
Net loan charge-offs to average loans 0.04% 0.13% 0.07% 0.15% 0.09% 0.09% 0.10%
Allowance for loan and lease losses $ 18,856 18,097 17,819 17,045 16,312 18,856 16,312
Allowance for losses to total loans 1.32% 1.32% 1.35% 1.36% 1.38% 1.32% 1.38%
Nonperforming loans $ 2,535 4,016 2,842 2,985 3,731 2,535 3,731
Other real estate and repossessed assets $ 1,177 1,177 0 0 0 1,177 0
Nonperforming assets to total assets 0.22% 0.31% 0.19% 0.20% 0.27% 0.22% 0.27%
END OF PERIOD BALANCES
Loans and leases $1,424,463 1,374,577 1,317,124 1,253,713 1,185,363 1,424,463 1,185,363
Total earning assets (before allowance) $1,620,632 1,575,697 1,470,238 1,404,559 1,311,191 1,620,632 1,311,191
Total assets $1,709,157 1,664,876 1,536,119 1,474,949 1,378,626 1,709,157 1,378,626
Deposits $1,321,844 1,290,017 1,159,181 1,144,857 1,046,069 1,321,844 1,046,069
Shareholders' equity $ 149,204 144,501 141,617 137,935 134,272 149,204 134,272
AVERAGE BALANCES
Loans and leases $1,402,469 1,345,336 1,276,913 1,219,325 1,144,758 1,374,061 1,106,234
Total earning assets (before allowance) $1,582,453 1,511,891 1,428,121 1,361,985 1,269,300 1,547,367 1,233,118
Total assets $1,669,202 1,591,764 1,504,526 1,429,059 1,330,507 1,630,697 1,290,620
Deposits $1,281,652 1,214,890 1,150,606 1,094,166 1,004,651 1,248,455 975,606
Shareholders' equity $ 146,997 143,169 139,744 136,290 133,211 145,093 132,284