EXHIBIT 99.1
[MERCANTILE(R) 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 SECOND QUARTER EPS OF $0.46, UP 48.4 PERCENT
WYOMING, Mich., July 9 -- Mercantile Bank Corporation (Nasdaq: MBWM), a rapidly
growing community banking organization, reported second quarter 2003 net income
of $2.5 million, an increase of 48.0 percent over the $1.7 million reported in
the prior year second quarter. Diluted per share earnings were $0.46, up 48.4
percent from the $0.31 reported in the prior period.
Performance measurements continue to strengthen. Second quarter returns on
average equity and average assets were 12.36 percent and 1.02 percent,
respectively, compared to 9.32 percent and 0.90 percent for the second quarter
of 2002. Mercantile's net interest margin and efficiency ratio improved as well.
Gerald R. Johnson, Jr., Chairman and CEO, commented, "From both a growth as well
as a profitability perspective, our performance continues to be exceptional,
despite the combined impact of a weak economy and low interest-rate environment.
This past quarter, we exceeded $1 billion in total assets and year-to-date, our
return on assets is tracking at 0.99 percent. For the second year in a row,
Mercantile's performance has been recognized by Fortune Magazine in its list of
100 fastest-growing small businesses.
"We've taken steps to support continued growth. During the quarter, we opened a
fifth full-service office, rounding out our geographical presence in the Grand
Rapids market. We also opened a retail mortgage loan production office in
Holland, Michigan, a community thirty miles southwest of Grand Rapids. This
office will be replaced at a later date by a full-service branch.
"The success of our growth strategy is based on the highest level of customer
service. Our strategy continues to be validated by shareholders as well as
customers. Mercantile's financial
performance, combined with the appeal of both a cash and stock dividend,
contributed to a 45 percent increase in stock price over the past 52 weeks."
Total revenue, comprised of net interest income and non-interest income, was
$8.7 million for the second quarter of 2003, an increase of 38.9 percent over
the $6.3 million reported in the second quarter of 2002. Net interest income
increased 31.0 percent to $7.5 million, reflecting the combined impact of a 30.3
percent increase in average earning assets and a 2 basis point increase in the
net interest margin, to 3.24 percent. Mr. Johnson noted, "New business
relationships continue to drive our growth in net interest income. Through
effective asset/liability management, we have maintained our net interest margin
within a 10 basis point band over the last four quarters."
Second quarter 2003 non-interest income rose 120.1 percent above the prior year
period. Excluding one-time securities gains of $0.21 million recorded in the
2003 second quarter, non-interest income rose 82.4 percent, benefiting from
growth in new and existing business relationships, as well as increased mortgage
banking activity, further enhanced by the recent opening of the Holland retail
mortgage loan production office.
Non-interest expense increased 37.1 percent as a result of overall growth in the
company. The 41.5 percent increase in salaries and benefits reflects a 38.7
percent increase in staffing levels. Mr. Johnson commented, "Our expense levels
have been impacted by the opening of two full-service branches and a loan
production office over the last three quarters, the hiring of two experienced
commercial lenders and support staff. Nonetheless, we grew revenues at a faster
rate than expenses during the second quarter, which resulted in an improved
efficiency ratio." Mercantile's efficiency ratio was 49.9 percent in the second
quarter of 2003 compared to 50.5 percent in the second quarter of 2002.
Mr. Johnson commented, "Despite double-digit loan growth and challenging
economic conditions, we are maintaining excellent asset quality. This
achievement speaks highly of our credit management process and business
development activities." For the second quarter of 2003, past due and
non-accrual loans stand at $495,000, or 0.06 percent of total loans, and net
charge-offs remain consistently low at 0.04 percent of average loans. The loan
and lease loss reserve stands at 1.40 percent of loans and leases as of second
quarter end.
Total assets were $1,034.8 million at June 30, 2003, an increase of $252.8
million, or 32.3 percent, from the prior year quarter-end. Loans were up $198.1
million, or 29.7 percent. Total deposits grew by $199.0 million, or 30.9
percent, led by a 76.5 percent growth in non-interest bearing demand deposits.
Shareholders' equity ended the quarter at $83.5 million, a twelve-month increase
of $8.4 million, or 11.2 percent. Mercantile remains a "well-capitalized"
institution; total risk-based capital at June 30, 2003 was 11.38 percent.
Mercantile paid a cash dividend of $0.08 per share in the second quarter of this
year. At quarter-end, Mercantile had 5,422,644 shares of common stock
outstanding. Mr. Johnson concluded, "We are pleased to deliver to our
shareholders another superb quarter characterized by strong growth, excellent
asset quality, and improved earnings performance."
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
Second Quarter 2003 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31, JUNE 30,
2003 2002 2002
----- ----- ----
(Unaudited) (Audited) (Unaudited)
ASSETS
Cash and due from banks $ 34,202,000 $ 23,404,000 $ 16,357,000
Short term investments 137,000 213,000 194,000
Federal funds sold 3,000,000 4,500,000 0
--------------- --------------- ---------------
Total cash and cash equivalents 37,339,000 28,117,000 16,551,000
Securities available for sale 60,980,000 59,614,000 53,006,000
Securities held to maturity 40,587,000 36,493,000 29,751,000
Federal Home Loan Bank stock 2,250,000 786,000 786,000
Total loans and leases 866,009,000 771,554,000 667,862,000
Allowance for loan and lease losses (12,158,000) (10,890,000) (9,562,000)
--------------- --------------- ---------------
Total Loans and leases, net 853,851,000 760,664,000 658,300,000
Premises and equipment, net 14,171,000 12,174,000 10,933,000
Bank owned life insurance policies 15,581,000 14,876,000 4,082,000
Accrued interest receivable 3,461,000 3,336,000 2,965,000
Other assets 6,554,000 5,795,000 5,603,000
--------------- --------------- ---------------
Total assets $ 1,034,774,000 $ 921,855,000 $ 781,977,000
=============== =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 77,025,000 $ 62,405,000 $ 43,649,000
Interest-bearing 766,562,000 691,708,000 600,999,000
--------------- --------------- ---------------
Total deposits 843,587,000 754,113,000 644,648,000
Securities sold under agreement to repurchase 39,690,000 50,335,000 39,636,000
Federal funds purchased 0 0 1,300,000
Federal Home Loan Bank advances 45,000,000 15,000,000 0
Other borrowed money 922,000 576,000 463,000
Accrued expenses and other liabilities 6,118,000 5,997,000 4,906,000
Trust preferred securities 16,000,000 16,000,000 16,000,000
--------------- --------------- ---------------
Total liabilities 951,317,000 842,021,000 706,953,000
STOCKHOLDERS' EQUITY
Common stock 75,595,000 75,530,000 69,375,000
Retained earnings 7,157,000 3,250,000 4,969,000
Accumulated other comprehensive income 705,000 1,054,000 680,000
--------------- --------------- ---------------
Total stockholders' equity 83,457,000 79,834,000 75,024,000
Total liabilities and stockholders' equity $ 1,034,774,000 $ 921,855,000 $ 781,977,000
=============== =============== ===============
Mercantile Bank Corporation
Second Quarter 2003 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME
THREE MONTHS ENDED THREE MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
------------- ------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
INTEREST INCOME
Loans and leases, including fees $12,223,000 $10,514,000 $23,666,000 $20,421,000
Investment securities 1,186,000 1,103,000 2,402,000 2,200,000
Federal funds sold 23,000 22,000 39,000 57,000
Short-term investments 1,000 0 1,000 1,000
----------- ----------- ----------- -----------
Total interest income 13,433,000 11,639,000 26,108,000 22,679,000
INTEREST EXPENSE
Deposits 5,165,000 5,281,000 10,401,000 10,690,000
Short-term borrowings 173,000 225,000 344,000 426,000
Federal Home Loan Bank advances 183,000 0 257,000 0
Long-term borrowings 401,000 398,000 801,000 794,000
----------- ----------- ----------- -----------
Total interest expense 5,922,000 5,904,000 11,803,000 11,910,000
----------- ----------- ----------- -----------
Net interest income 7,511,000 5,735,000 14,305,000 10,769,000
Provision for loan and lease losses 845,000 682,000 1,470,000 1,142,000
----------- ----------- ----------- -----------
Net interest income after provision
for loan and lease losses 6,666,000 5,053,000 12,835,000 9,627,000
NON INTEREST INCOME
Service charges on accounts 280,000 223,000 549,000 417,000
Net gain on sales of securities 212,000 0 212,000 149,000
Other income 743,000 338,000 1,451,000 564,000
----------- ----------- ----------- -----------
Total non interest income 1,235,000 561,000 2,212,000 1,130,000
NON INTEREST EXPENSE
Salaries and benefits 2,759,000 1,950,000 5,256,000 3,628,000
Occupancy 345,000 266,000 679,000 531,000
Furniture and equipment 245,000 189,000 466,000 362,000
Other expense 1,012,000 776,000 1,989,000 1,525,000
----------- ----------- ----------- -----------
Total non interest expense 4,361,000 3,181,000 8,390,000 6,046,000
----------- ----------- ----------- -----------
Income before federal income tax expense 3,540,000 2,433,000 6,657,000 4,711,000
Federal income tax expense 1,000,000 717,000 1,884,000 1,391,000
----------- ----------- ----------- -----------
Net income $ 2,540,000 $ 1,716,000 $ 4,773,000 $ 3,320,000
=========== =========== =========== ===========
Basic earnings per share $ 0.47 $ 0.32 $ 0.88 $ 0.61
Diluted earnings per share $ 0.46 $ 0.31 $ 0.86 $ 0.60
Average shares outstanding * 5,421,120 5,405,759 5,416,844 5,405,647
Average diluted shares outstanding * 5,545,892 5,510,003 5,540,705 5,503,754
* - Adjusted for 5% stock dividend paid on February 3, 2003
Mercantile Bank Corporation
Second Quarter 2003 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
QUARTERLY YEAR-TO-DATE
------------------------------------------------------------------ ------------------------
2003 2003 2002 2002 2002
(dollars in thousands except 2ND QTR 1ST QTR 4TH QTR 3RD QTR 2ND QTR 2003 2002
per share data) ---------- ---------- ----------- ---------- ---------- ---------- ---------
EARNINGS
Net interest income $ 7,511 6,794 6,603 6,282 5,735 14,305 10,769
Provision for loan
and lease losses $ 845 625 980 880 682 1,470 1,142
NonInterest income $ 1,235 977 1,004 919 561 2,212 1,130
NonInterest expense $ 4,361 4,029 3,464 3,271 3,181 8,390 6,046
Net income $ 2,540 2,233 2,281 2,156 1,716 4,773 3,320
Basic earnings per share $ 0.47 0.41 0.42 0.40 0.32 0.88 0.61
Diluted earnings per share $ 0.46 0.40 0.41 0.39 0.31 0.86 0.60
Average shares outstanding * 5,421,120 5,412,521 5,405,759 5,405,759 5,405,759 5,416,844 5,405,647
Average diluted shares
outstanding * 5,545,892 5,535,167 5,507,165 5,500,028 5,510,003 5,540,705 5,503,754
PERFORMANCE RATIOS
Return on average assets 1.02% 0.97% 1.02% 1.04% 0.90% 0.99% 0.90%
Return on average common
equity 12.36% 11.23% 11.52% 11.20% 9.32% 11.81% 9.16%
Net interest margin
(fully tax-equivalent) 3.24% 3.17% 3.21% 3.27% 3.22% 3.21% 3.13%
Efficiency ratio 49.86% 51.85% 45.54% 45.42% 50.52% 50.80% 50.81%
Full-time equivalent employees 147 128 117 113 106 147 106
CAPITAL
Average equity to average assets 8.22% 8.59% 8.89% 9.30% 9.70% 8.40% 9.87%
Tier 1 leverage capital ratio 9.86% 10.30% 10.72% 11.26% 11.87% 9.86% 11.87%
Tier 1 risk-based capital ratio 10.13% 10.55% 10.85% 11.24% 11.91% 10.13% 11.91%
Total risk-based capital ratio 11.38% 11.79% 12.10% 12.48% 13.16% 11.38% 13.16%
Book value per share $ 15.39 15.05 14.77 14.35 13.88 15.39 13.88
Cash dividend per share $ 0.08 0.08 NA NA NA 0.16 NA
ASSET QUALITY
Gross loan charge-offs $ 297 132 287 250 76 429 169
Net loan charge-offs $ 93 109 283 249 45 202 74
Net loan charge-offs to
average loans 0.04% 0.06% 0.15% 0.14% 0.03% 0.05% 0.02%
Allowance for loan and
lease losses $ 12,158 11,406 10,890 10,193 9,562 12,158 9,562
Allowance for losses to total
loans 1.40% 1.40% 1.41% 1.42% 1.43% 1.40% 1.43%
Past due and nonaccrual loans $ 495 533 796 994 451 495 451
Past due and nonaccrual loans
to total loans 0.06% 0.07% 0.10% 0.14% 0.07% 0.06% 0.07%
Other real estate and
repossessed assets $ 0 134 100 0 0 0 0
END OF PERIOD BALANCES
Loans and leases $ 866,009 812,487 771,554 717,199 667,862 866,009 667,862
Total earning assets
(before allowance) $ 972,963 914,109 873,160 816,451 751,599 972,963 751,599
Total assets $1,034,774 967,787 921,856 870,382 781,977 1,034,774 781,977
Deposits $ 843,587 801,097 754,113 722,150 644,648 843,587 644,648
Shareholders' equity $ 83,457 81,530 79,835 77,580 75,024 83,457 75,024
AVERAGE BALANCES
Loans and leases $ 842,370 786,406 736,029 688,550 646,844 814,542 626,567
Total earning assets
(before allowance) $ 953,851 892,660 836,809 782,435 732,080 923,424 712,261
Total assets $1,002,087 938,043 883,860 821,149 761,409 970,242 740,901
Deposits $ 809,986 774,836 725,145 676,661 624,003 792,508 606,953
Shareholders' equity $ 82,410 80,606 78,590 76,350 73,826 81,513 73,105
* - Adjusted for 5% stock dividend paid on February 3, 2003