EXHIBIT 99.1
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 FIRST QUARTER EPS OF $0.40, UP 37.9 PERCENT
WYOMING, Mich., April 9 -- Mercantile Bank Corporation (Nasdaq: MBWM), a rapidly
growing community banking organization, reported first quarter 2003 net income
of $2.2 million, an increase of 39.2 percent over the $1.6 million reported in
the prior year first quarter. Diluted per share earnings were $0.40, up 37.9
percent from the $0.29 reported in the prior period.
Mercantile also reported improved overall profitability. For the first quarter
of 2003, the Company achieved a return on average assets and return on average
common equity of 0.97 percent and 11.23 percent, respectively, compared to 0.90
percent and 8.99 percent, respectively, for the first quarter of 2002.
Gerald R. Johnson, Jr., Chairman and CEO, commented, "We take great pride in our
company's financial results amidst a very difficult economic and global
environment. We attribute our continued success to our talented and
entrepreneurial employees. Their enthusiastic dedication to building Mercantile
into Grand Rapids' most customer-responsive community bank has enabled us to
maintain strong earnings and balance sheet growth, along with excellent asset
quality.
"Along with our strong financial performance, Mercantile's shareholder value is
further enhanced by the cash dividend we implemented for the first time earlier
this year, as well as our recent five percent stock dividend."
Total revenue, comprised of net interest income and non-interest income, was
$7.8 million for the first quarter of 2003, an increase of 38.7 percent over the
$5.6 million reported in the first quarter of 2002. Net interest income
increased 35.0 percent to $6.8 million, reflecting the combined impact of a 29.0
percent increase in average earning assets and a 14 basis point increase in the
net interest margin, to 3.17 percent. Mr. Johnson noted, "Our net interest
income was predominantly driven by new business relationships which generated
strong loan and deposit growth. In addition, effective asset/liability
management allowed us to mitigate the negative impact of a declining rate
environment on net interest income."
First quarter 2003 non-interest income rose 71.7 percent above the prior year
period. Excluding one-time securities gains of $0.15 million recorded in the
2002 first quarter, non-interest income rose 132.6 percent, benefiting from
growth in loan and deposit relationships, mortgage loan refinancings, bank-owned
life insurance, internet banking, and credit and debit card usage.
Non-interest expense increased 40.6 percent, reflecting overall growth in the
company. The 48.8 percent increase in salaries relates to increased staffing
levels, merit salary increases, and an expanded bonus program. Mr. Johnson
commented, "Expense levels were also affected by the recent opening of our
fourth banking location during the fourth quarter of 2002. In combination with
the upcoming opening of our fifth location this spring and anticipated
additional staff hirings throughout the year, we may see some continued pressure
on expenses. Given our demonstrated expertise at controlling costs, however, we
view this pressure as a temporary phenomenon; Mercantile has a proven expertise
in growing its revenues faster than its expenses. Mercantile's efficiency ratio
was 51.8 percent in the first quarter of 2003 compared to 51.1 percent in the
first quarter of 2002.
Mr. Johnson commented, "We are especially gratified with our success at
maintaining excellent asset quality. Our knowledgeable lenders, highly
diversified business loan mix, and strong internal loan review process have
enabled us to build a quality loan portfolio that minimizes credit quality costs
and further enhances our growing profitability." Past due and non-accrual loans
declined for the second quarter in a row and now stand at 0.07 percent of loans.
Mr. Johnson added, "We continue to maintain a prudent posture toward future
uncertainties; at quarter-end, our loan and lease loss reserve was 1.40 percent
of loans and leases." The ratio of annualized net charge-offs to average loans
was 0.06 percent for the first quarter of 2003, down from 0.15 percent for the
fourth quarter of 2002 and up slightly from 0.02 percent for the first quarter
of 2002.
Total assets were $967.8 million at March 31, 2003, an increase of $239.7
million, or 32.9 percent, from the prior quarter-end. Loans were up $191.2
million, or 30.8 percent. Local deposits, including repurchase agreements, grew
by $95.7 million, or 44.6 percent, led by a 73.1 percent growth in non-interest
bearing demand deposits.
Shareholders' equity ended the quarter at $81.5 million, a twelve-month increase
of $8.8 million, or 12.0 percent. Mercantile remains a "well-capitalized"
institution; total risk-based capital at March 31, 2003 was 11.79 percent.
Mercantile initiated a cash dividend of $0.08 per share in the first quarter of
this year, in addition to the five percent stock dividend that was also paid. At
quarter-end, Mercantile had 5,418,259 shares of common stock outstanding. Mr.
Johnson concluded, "Mercantile continues its superb performance through a
variety of economic and interest-rate cycles. This reflects favorably on our
market, our people and our strategy."
About the Company
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 three full-service branches, provides a wide variety of commercial banking
services primarily to businesses, individuals and governmental units. 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 2003 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31, MARCH 31,
2003 2002 2002
---- ---- ----
(Unaudited) (Audited) (Unaudited)
ASSETS
Cash and due from banks $ 28,091,000 $ 23,404,000 $ 15,305,000
Short term investments 203,000 213,000 183,000
Federal funds sold 0 4,500,000 1,500,000
----------- ----------- -----------
Total cash and cash equivalents 28,294,000 28,117,000 16,988,000
Securities available for sale 61,465,000 59,614,000 48,067,000
Securities held to maturity 39,168,000 36,493,000 28,049,000
Federal Home Loan Bank stock 786,000 786,000 785,000
Loans 812,487,000 771,554,000 621,301,000
Allowance for loan and lease losses (11,406,000) (10,890,000) (8,925,000)
----------- ----------- -----------
Total loans, net 801,081,000 760,664,000 612,376,000
Premises and equipment, net 12,459,000 12,174,000 9,967,000
Accrued interest receivable 3,860,000 3,336,000 3,171,000
Bank owned life insurance policies 15,384,000 14,876,000 4,036,000
Other assets 5,290,000 5,795,000 4,617,000
----------- ----------- -----------
Total assets $ 967,787,000 $ 921,855,000 $ 728,056,000
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 68,858,000 $ 62,405,000 $ 39,771,000
Interest-bearing 732,239,000 691,708,000 556,205,000
----------- ----------- -----------
Total deposits 801,097,000 754,113,000 595,976,000
Securities sold under agreements to repurchase 45,238,000 50,335,000 37,273,000
Federal funds purchased 2,000,000 0 0
Federal Home Loan Bank advances 15,000,000 15,000,000 0
Other borrowed money 839,000 576,000 406,000
Accrued expenses and other liabilities 6,083,000 5,997,000 5,630,000
Trust preferred securities 16,000,000 16,000,000 16,000,000
----------- ----------- -----------
Total liabilities 886,257,000 842,021,000 655,285,000
STOCKHOLDERS' EQUITY
Common stock 75,560,000 75,530,000 69,397,000
Retained earnings 5,050,000 3,250,000 3,253,000
Accumulated other comprehensive income 920,000 1,054,000 121,000
----------- ----------- -----------
Total shareholders' equity 81,530,000 79,834,000 72,771,000
Total liabilities and shareholders' equity $ 967,787,000 $ 921,855,000 $ 728,056,000
=========== =========== ===========
Mercantile Bank Corporation
First Quarter 2003 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME
THREE MONTHS ENDED THREE MONTHS ENDED
March 31, 2003 March 31, 2002
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(Unaudited) (Unaudited)
INTEREST INCOME
Loans, including fees $11,443,000 $ 9,907,000
Investment securities 1,216,000 1,097,000
Federal funds sold 16,000 35,000
Short term investments 0 1,000
--------- ---------
Total interest income 12,675,000 11,040,000
INTEREST EXPENSE
Deposits 5,236,000 5,409,000
Short term borrowings 171,000 201,000
Federal Home Loan Bank advances 74,000 0
Long term borrowings 400,000 396,000
--------- ---------
Total interest expense 5,881,000 6,006,000
--------- ---------
Net interest income 6,794,000 5,034,000
Provision for loan and lease losses 625,000 460,000
--------- ---------
Net interest income after provision
for loan and lease losses 6,169,000 4,574,000
NON INTEREST INCOME
Service charges on accounts 269,000 194,000
Net gain on sales of securities 0 149,000
Other income 708,000 226,000
--------- ---------
Total non interest income 977,000 569,000
NON INTEREST EXPENSE
Salaries and benefits 2,497,000 1,678,000
Occupancy 334,000 265,000
Furniture and equipment 221,000 173,000
Other expense 977,000 749,000
--------- ---------
Total non interest expense 4,029,000 2,865,000
--------- ---------
Income before federal income tax 3,117,000 2,278,000
Federal income tax expense 884,000 674,000
--------- ---------
Net income $ 2,233,000 $ 1,604,000
========= =========
Basic earnings per share $ 0.41 $ 0.30
Diluted earnings per share $ 0.40 $ 0.29
Average shares outstanding * 5,412,521 5,405,534
Average diluted shares outstanding * 5,535,167 5,495,835
* - Adjusted for 5% stock dividend paid on February 3, 2003
Mercantile Bank Corporation
First Quarter 2003 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) 2003 2002 2002 2002 2002
--------- --------- --------- --------- ---------
EARNINGS
Net interest income $ 6,794 6,603 6,282 5,735 5,034
Provision for loan loss $ 625 980 880 682 460
NonInterest income $ 977 1,004 919 561 569
NonInterest expense $ 4,029 3,464 3,271 3,181 2,865
Net income $ 2,233 2,281 2,156 1,716 1,604
Basic earnings per share $ 0.41 0.42 0.40 0.32 0.30
Diluted earnings per share $ 0.40 0.41 0.39 0.31 0.29
Average shares outstanding * 5,412,521 5,405,759 5,405,759 5,405,759 5,405,534
Average diluted shares outstanding * 5,535,167 5,507,165 5,500,028 5,510,003 5,495,835
PERFORMANCE RATIOS
Return on average assets 0.97% 1.02% 1.04% 0.90% 0.90%
Return on average common equity 11.23% 11.52% 11.20% 9.32% 8.99%
Net interest margin (fully tax-equivalent) 3.17% 3.21% 3.27% 3.22% 3.03%
Efficiency ratio 51.85% 45.54% 45.42% 50.52% 51.13%
Full-time equivalent employees 128 117 113 106 101
CAPITAL
Average equity to average assets 8.59% 8.89% 9.30% 9.70% 10.05%
Tier 1 leverage capital ratio 10.30% 10.72% 11.26% 11.87% 12.31%
Tier 1 risk-based capital ratio 10.55% 10.85% 11.24% 11.91% 12.56%
Total risk-based capital ratio 11.79% 12.10% 12.48% 13.16% 13.81%
Book value per share $ 15.05 14.77 14.35 13.88 13.46
ASSET QUALITY
Gross loan charge-offs $ 132 287 250 76 93
Net loan charge-offs $ 109 283 249 45 29
Net loan charge-offs to average loans 0.06% 0.15% 0.14% 0.03% 0.02%
Allowance for loan losses $ 11,406 10,890 10,193 9,562 8,925
Allowance for loan losses to total loans 1.40% 1.41% 1.42% 1.43% 1.44%
Past due and nonaccrual loans $ 533 796 994 451 646
Past due and nonaccrual loans to total loans 0.07% 0.10% 0.14% 0.07% 0.10%
Other real estate and repossessed assets $ 134 100 0 0 0
END OF PERIOD BALANCES
Loans $ 812,487 771,554 717,199 667,862 621,301
Total earning assets (before allowance) $ 914,109 873,160 816,451 751,599 699,885
Total assets $ 967,787 921,856 870,382 781,977 728,056
Deposits $ 801,097 754,113 722,150 644,648 595,976
Shareholder's equity $ 81,530 79,835 77,580 75,024 72,771
AVERAGE BALANCES
Loans $ 786,406 736,029 688,550 646,844 606,065
Total earning assets (before allowance) $ 892,660 836,809 782,435 732,080 692,221
Total assets $ 938,043 883,860 821,149 761,409 720,166
Deposits $ 774,836 725,145 676,661 624,003 589,714
Shareholder's equity $ 80,606 78,590 76,350 73,826 72,375
* - Adjusted for 5% stock dividend paid on February 3, 2003