MBWM Mercantile Bank Corporation

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Michigan	000-26719	38-3360865
(State or other jurisdiction  of incorporation)	(Commission File  Number)	(IRS Employer  Identification Number)

310 Leonard Street NW, Grand Rapids, Michigan	49504
(Address of principal executive offices)	(Zip Code)
Registrant's telephone number, including area code	616-406-3000

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	MBWM	The Nasdaq Stock Market LLC

Item 2.02

Results of Operations and Financial Condition.

Item 7.01

Regulation FD Disclosure.

Item 9.01

Financial Statements and Exhibits.

99.1	Press release of Mercantile Bank Corporation dated January 21, 2025, reporting financial results and earnings for the quarter and year ended December 31, 2024.

99.2	Mercantile Bank Corporation Conference Call & Webcast Presentation dated January 21, 2025.

104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

	Mercantile Bank Corporation
	By:	/s/ Charles E. Christmas
		Charles E. Christmas
		Executive Vice President, Chief
		Financial Officer and Treasurer

99.1	Press release of Mercantile Bank Corporation dated January 21, 2025, reporting financial results and earnings for the quarter and year ended December 31, 2024.

99.2	Mercantile Bank Corporation Conference Call & Webcast Presentation dated January 21, 2025.

104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

Exhibit 99.1

 

 

Mercantile Bank Corporation Announces Robust Fourth Quarter and Full-Year 2024 Results

Strong commercial loan and local deposit growth, notable increase in noninterest income, and

ongoing strength in asset quality metrics highlight the year

 

GRAND RAPIDS, Mich., January 21, 2025 – Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $19.6 million, or $1.22 per diluted share, for the fourth quarter of 2024, compared with net income of $20.0 million, or $1.25 per diluted share, for the respective prior-year period.  For the full-year 2024, Mercantile reported net income of $79.6 million, or $4.93 per diluted share, compared with net income of $82.2 million, or $5.13 per diluted share, for the full-year 2023.

 

“We are very pleased to report another year of solid financial results,” said Ray Reitsma, President and Chief Executive Officer of Mercantile.  “Our strong operating performance was fueled by robust commercial loan and local deposit growth, ongoing strength in asset quality metrics, a healthy net interest margin, and a significant increase in noninterest income.  As evidenced by the noteworthy increases in commercial loans and local deposits, our team members remain committed to meeting the needs of existing clients and attracting new customers while building mutually beneficial relationships.  During 2024, we successfully executed several strategic initiatives, including lowering our loan-to-deposit ratio and increasing our on-balance sheet liquidity.  We believe our strong overall financial standing and commercial loan funding opportunities position us to effectively meet challenges arising from changing operating environments.” 

 

Full-year highlights include:

 

●

Significant reduction in the loan-to-deposit ratio

●

Strong local deposit growth

●

Noteworthy commercial loan portfolio expansion

●

Sustained strength in commercial loan pipeline

●

Notable increases in mortgage banking and treasury management income

●

Ongoing low levels of nonperforming assets, past due loans, and loan charge-offs

	●	Announced an increased first quarter 2025 regular cash dividend
	●	Contributed $1.7 million to The Mercantile Bank Foundation

 

Operating Results

 

Net revenue, consisting of net interest income and noninterest income, was $58.5 million during the fourth quarter of 2024, up $1.6 million, or 2.8 percent, from $56.9 million during the prior-year fourth quarter.  Net interest income during the fourth quarter of 2024 was $48.4 million, down $0.3 million, or 0.6 percent, from $48.7 million during the respective 2023 period as growth in earning assets was more than offset by a lower net interest margin.  Noninterest income totaled $10.2 million during the fourth quarter of 2024, up $1.9 million, or 22.6 percent, from $8.3 million during the fourth quarter of 2023.  The increase in noninterest income primarily reflected higher levels of mortgage banking income, treasury management fees, bank owned life insurance income, and payroll service fees.

 

 

The net interest margin was 3.41 percent in the fourth quarter of 2024, down from 3.92 percent in the prior-year fourth quarter.  The yield on average earning assets was 5.81 percent during the current-year fourth quarter, a decrease from 5.95 percent during the respective 2023 period.  The lower yield primarily resulted from a decreased yield on loans and a change in earning asset mix.  The yield on loans was 6.41 percent during the fourth quarter of 2024, down from 6.53 percent during the fourth quarter of 2023 mainly due to lower interest rates on variable-rate commercial loans resulting from the Federal Open Market Committee (“FOMC”) lowering the targeted federal funds rate.  The FOMC decreased the targeted federal funds rate by 50 basis points in September of 2024 and 25 basis points in each of November and December of 2024, during which time average variable-rate commercial loans represented approximately 73 percent of average total commercial loans.  Reflecting the success of a strategic initiative to increase on-balance sheet liquidity, higher-yielding loans represented a reduced percentage of earning assets and lower-yielding securities and interest-earning deposits accounted for an increased percentage of earning assets in the fourth quarter of 2024 compared to the fourth quarter of 2023.

 

The cost of funds was 2.40 percent in the fourth quarter of 2024, up from 2.03 percent in the fourth quarter of 2023 primarily due to higher costs of deposits and borrowed funds, reflecting the impact of the rising interest rate environment stemming from the FOMC’s actions to curb elevated inflation levels.  A change in funding mix, mainly comprising of a decline in average noninterest-bearing and lower-cost deposits and an increase in average higher-cost money market accounts and time deposits, also contributed to the higher cost of funds.  The growth in money market accounts and time deposits reflected new deposit relationships, increases in existing deposit relationships, and deposit migration.

 

Net revenue was $231 million during 2024, up $5.8 million, or 2.6 percent, from $226 million during 2023.  Net interest income during 2024 was $191 million, down $2.5 million, or 1.3 percent, from $194 million during 2023 as growth in earning assets, most notably in loans, and a higher yield on earning assets was more than offset by an increased cost of funds.  Noninterest income totaled $40.4 million during 2024, up $8.2 million, or 25.7 percent, from $32.2 million during 2023.  The increase in noninterest income primarily reflected higher levels of mortgage banking income, treasury management fees, bank owned life insurance income, and payroll service fees.

 

The net interest margin was 3.58 percent in 2024, down from 4.05 percent in 2023.  The yield on average earning assets was 6.02 percent during 2024, an increase from 5.68 percent during the prior year.  The higher yield on average earning assets mainly resulted from an increased yield on loans.  The yield on loans was 6.61 percent during 2024, up from 6.25 percent during 2023 primarily due to higher interest rates on variable-rate commercial loans stemming from the FOMC raising the targeted federal funds rate in an effort to reduce elevated inflation levels and a significant level of commercial loans being originated over the past 24 months in the higher interest rate environment.  The FOMC increased the targeted federal funds rate by 100 basis points during the period of February 2023 through July 2023, during which time average variable-rate commercial loans represented approximately 65 percent of average total commercial loans.  The positive impact of the rate hikes was partially mitigated by the FOMC’s lowering of the targeted federal funds rate by 100 basis points during the last four months of 2024.

 

The cost of funds was 2.44 percent in 2024, up from 1.63 percent in 2023 primarily due to higher costs of deposits and borrowed funds, reflecting the impact of the rising interest rate environment.  A change in funding mix, mainly consisting of a decrease in average noninterest-bearing and lower-cost deposits and an increase in average higher-cost money market accounts and time deposits, also contributed to the higher cost of funds.  The increases in money market accounts and time deposits stemmed from new deposit relationships, growth in existing deposit relationships, and deposit migration.

 

Mercantile recorded provisions for credit losses of $1.5 million and $1.8 million during the fourth quarters of 2024 and 2023, respectively.  During all of 2024 and 2023, Mercantile recorded provisions for credit losses of $7.4 million and $7.7 million, respectively.  The provision expense recorded during the current-year fourth quarter primarily reflected an increased allocation from slower prepayment speeds on residential mortgage loans, allocations necessitated by net loan growth, and environmental factor allocations, which were partially offset by a reduction in the calculated allowance resulting from the sale of residential mortgage loans previously held for investment and an improved economic forecast.  The provision expense recorded during 2024 mainly reflected allocations necessitated by net loan growth, individual allocations made for two deteriorated commercial loan relationships, changes in qualitative factors, and an increased allocation stemming from slower prepayments speeds on residential mortgage loans, which were partially offset by lower loan loss rates.  The provision expense recorded during the 2023 periods primarily reflected allocations necessitated by net loan growth, slower residential mortgage loan prepayment rates and the associated extended average life of the portfolio, and changes in environmental factors reflecting heightened inherent risk in the commercial construction loan portfolio.

 

 

Noninterest income totaled $10.2 million during the fourth quarter of 2024, up $1.9 million, or 22.6 percent, from $8.3 million during the respective 2023 period.  Noninterest income during 2024 was $40.4 million, up $8.2 million, or 25.7 percent, from $32.2 million during 2023.  The increases mainly reflected growth in mortgage banking income, treasury management fees, bank owned life insurance income, and payroll service fees.  Revenue generated from an investment in a private equity fund also contributed to the increased level of noninterest income during 2024.  The higher levels of mortgage banking income primarily resulted from increases in the percentage of loans originated with the intent to sell, which equaled approximately 83 percent and 78 percent during the current-year fourth quarter and full-year 2024, respectively, compared to approximately 67 percent and 53 percent during the respective 2023 periods, and total loan originations, which were up approximately 37 percent and 25 percent during the fourth quarter of 2024 and all of 2024, respectively, compared to the corresponding 2023 periods.  Noninterest income during 2024 included bank owned life insurance claims totaling $0.7 million.

 

Noninterest expense totaled $33.8 million during the fourth quarter of 2024, compared to $29.9 million during the prior-year fourth quarter.  Noninterest expense totaled $126 million during 2024, compared to $115 million during 2023.  The increases during the 2024 periods mainly resulted from larger salary and benefit costs, reflecting annual merit pay increases, market adjustments, higher residential mortgage lender commissions and incentives, lower residential mortgage loan deferred salary costs, increased bonus accruals, higher payroll taxes, and increased health insurance claims.  Higher levels of data processing costs, primarily reflecting increased transaction volume and software support costs, also contributed to the rises in noninterest expense during both 2024 periods.  Reduced credit reserves for unfunded loan commitments and interest rate swap collateral holding costs during the fourth quarter of 2024 and full-year 2024 compared to the respective 2023 periods partially mitigated the increases in overhead costs noted above.  Noninterest expense during 2024 and 2023 included contributions to The Mercantile Bank Foundation totaling $1.7 million and $0.7 million, respectively, while overhead costs during 2023 included a $0.4 million write-down of a former branch facility.

 

Mr. Reitsma commented, “The significant growth in mortgage banking income during the 2024 periods mainly reflected the successful execution of a strategic initiative to increase the percentage of loans originated with the intent to sell and notable growth in loan production.  We are pleased with the increases in treasury management fees and payroll services income, which primarily resulted from customers’ expanded use of products and services. Our net interest margin, although falling as anticipated due to higher costs of deposits and borrowings, a change in funding mix, and a change in earning asset mix reflecting our success in lowering the loan-to-deposit ratio and increasing on-balance sheet liquidity, remained healthy during 2024.  Growth in earning assets largely offset the negative impact of the reduced net interest margin, providing for only a slight decline in net interest income.  Overhead cost constraint remains an important priority, and we will continue our efforts to enhance operating efficiency while expanding the balance sheet and continuing to provide our customers with extraordinary service and a wide selection of market-leading products and services to meet their needs.” 

 

Balance Sheet

 

As of December 31, 2024, total assets were $6.05 billion, up $699 million from December 31, 2023.  Total loans increased $297 million, or 6.9 percent, during 2024, mainly reflecting growth in commercial loans of $292 million.  Commercial loans, which grew 8.5 percent during 2024, increased despite the full payoffs and partial paydowns of certain larger relationships, which aggregated approximately $88 million and $194 million during the fourth quarter and all of 2024, respectively.  The payoffs and paydowns primarily stemmed from customers using excess cash flows generated within their operations to make line of credit and unscheduled term loan principal paydowns, as well as from sales of assets.  Other consumer loans were up $14.8 million, and residential mortgage loans declined $9.8 million during 2024.  Interest-earning deposits and securities available for sale grew $276 million and $113 million, respectively, during 2024, with the increases in large part reflecting the success of a strategic initiative to grow the local deposit base.

 

As of December 31, 2024, unfunded commitments on commercial construction and development loans, which are expected to be funded over the next 12 to 18 months, and residential construction loans, which are expected to be largely funded over the next 12 months, totaled $245 million and $30 million, respectively.

 

 

Mr. Reitsma noted, “The solid growth in commercial loans during 2024, which occurred despite elevated levels of partial paydowns and payoffs, stemmed from a mixture of expanded existing client relationships and acquired new customer relationships.  The growth in commercial loans, local deposits, treasury management fees, and payroll services income reflects our sales team’s success in further developing current client relationships and securing the complete banking relationships of new customers.  We believe commercial loan originations will be robust in future periods based on the strength of our current pipeline and the level of credit availability on construction and development loans.  Growing the local deposit base will continue to be a key area of focus as we continue our efforts to reduce our loan-to-deposit ratio and limit the use of wholesale funds as a funding source for projected loan growth.”

 

Commercial and industrial loans and owner-occupied commercial real estate loans together represented approximately 55 percent of total commercial loans as of December 31, 2024, a level that has remained relatively consistent with prior periods and in line with our expectations.

 

Total deposits as of December 31, 2024, were $4.70 billion, up $797 million, or 20.4 percent, from December 31, 2023.  Local deposits increased $816 million during 2024, while brokered deposits decreased $18.7 million.  The growth in local deposits during 2024 provided for a reduction in the loan-to-deposit ratio from 110 percent as of December 31, 2023, to 98 percent as of year-end 2024.  The increase in local deposits during 2024, which occurred in spite of the usual level of seasonal noninterest-bearing deposit withdrawals by customers to make bonus and tax payments and partnership distributions, reflected a combination of growth in existing deposit relationships and new deposit relationships.  Wholesale funds were $537 million, or approximately 10 percent of total funds, at December 31, 2024, compared to $636 million, or approximately 14 percent of total funds, at December 31, 2023.  Noninterest-bearing checking accounts represented approximately 27 percent of total deposits as of December 31, 2024.

 

Asset Quality

 

Nonperforming assets totaled $5.7 million, or less than 0.1 percent of total assets, at December 31, 2024, compared to $9.9 million, or 0.2 percent of total assets, at September 30, 2024, and $3.6 million, or less than 0.1 percent of total assets, at December 31, 2023.  The level of past due loans remains nominal.  During the fourth quarter of 2024, loan charge-offs totaled $3.8 million while recoveries of prior period loan charge-offs equaled $0.2 million, providing for net loan charge-offs of $3.6 million, or an annualized 0.3 percent of average total loans.  During the full-year 2024, loan charge-offs totaled $3.8 million while recoveries of prior period loan charge-offs equaled $0.9 million, providing for net loan charge-offs of $2.9 million, or less than 0.1 percent of average total loans.  Loan charge-offs during the fourth quarter of 2024 and full-year 2024 almost entirely consisted of a charge-off related to a deteriorated commercial loan relationship that was placed on nonaccrual and fully reserved for during the second quarter of 2024.

 

Mr. Reitsma remarked, “Our asset quality metrics remained strong during 2024, reflecting our steadfast commitment to underwriting loans in a sound and disciplined manner, along with our commercial borrowers’ demonstrated abilities to effectively operate during periods of shifting economic and operating conditions.  Nonperforming assets, past due loans, and loan charge-offs remain at low levels.  We believe our robust loan review program and intense focus on the early identification and reporting of deteriorating commercial loan relationships will allow us to detect any emerging credit issues and constrain the impact of such on our overall financial condition.  As reflected by ongoing low delinquency and charge-off levels, our residential mortgage and consumer loan portfolios continue to perform well.”

 

 

Capital Position

 

Shareholders’ equity totaled $585 million as of December 31, 2024, up $62.4 million from December 31, 2023.  Mercantile Bank maintained “well-capitalized” positions at the end of both 2024 and 2023, with total risk-based capital ratios of 13.9 percent and 13.4 percent, respectively.  As of December 31, 2024, Mercantile Bank had approximately $214 million in excess of the 10 percent minimum regulatory threshold required to be categorized as a “well-capitalized” institution. 

 

All of Mercantile Bank’s investments are categorized as available-for-sale.  As of December 31, 2024, the net unrealized loss on these investments totaled $63.1 million, resulting in an after-tax reduction to equity capital of $49.8 million.  As of December 31, 2023, the net unrealized loss on these investments totaled $63.9 million, resulting in an after-tax reduction to equity capital of $50.5 million.  Although unrealized gains and losses on investments are excluded from regulatory capital ratio calculations, Mercantile Bank’s excess capital over the minimum regulatory requirement to be considered a “well-capitalized” institution would approximate $166 million on an adjusted basis as of December 31, 2024.

 

Mercantile reported 16,146,374 total shares outstanding at December 31, 2024.

 

Mr. Reitsma concluded, “As demonstrated by our Board of Directors’ declaration of an increased first quarter 2025 regular cash dividend, we remain committed to building shareholder value through meaningful cash returns while providing support for ongoing loan growth.  Our robust capital position and operating results, combined with expected commercial loan portfolio expansion, should enable us to effectively address any issues resulting from changing economic environments.  As evidenced by the notable increases in commercial loans and local deposits during 2024, our community banking philosophy and associated focus on fostering mutually beneficial relationships have been successful in maintaining existing customer relationships and acquiring new customer relationships.”

 

 

Investor Presentation

 

Mercantile has prepared presentation materials that management intends to use during its previously announced fourth quarter 2024 conference call on Tuesday, January 21, 2025, at 10:00 a.m. Eastern Time, and from time to time thereafter in presentations about the company’s operations and performance.  These materials, which are available for viewing in the Investor Relations section of Mercantile’s website at www.mercbank.com, have been furnished to the U.S. Securities and Exchange Commission concurrently with this press release.

 

About Mercantile Bank Corporation

 

Based in Grand Rapids, Michigan, Mercantile Bank Corporation is the bank holding company for Mercantile Bank. Mercantile provides financial products and services in a professional and personalized manner designed to make banking easier for businesses, individuals, and governmental units. Distinguished by exceptional service, knowledgeable staff, and a commitment to the communities it serves, Mercantile is one of the largest Michigan-based banks with assets of approximately $6.0 billion. Mercantile Bank Corporation's common stock is listed on the NASDAQ Global Select Market under the symbol "MBWM."  For more information about Mercantile, visit www.mercbank.com, and follow us on Facebook, Instagram, X (formerly Twitter) @MercBank, and LinkedIn @merc-bank.

 

Forward-Looking Statements

 

This news release contains statements or information that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will,” and similar references to future periods.  Any such statements 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; increasing rates of inflation and slower growth rates or recession; significant declines in the value of commercial real estate; market volatility; demand for products and services; climate impacts; labor markets; the degree of competition by traditional and nontraditional financial services companies; changes in banking regulation or actions by bank regulators; changes in tax laws and other laws and regulations applicable to us; changes in prices, levies, and assessments; the impact of technological advances; potential cyber-attacks, information security breaches and other criminal activities; litigation liabilities; governmental and regulatory policy changes; the outcomes of existing or future contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; damage to our reputation resulting from adverse publicity, regulatory actions, litigation, operational failures, and the failure to meet client expectations and other facts; the transition from LIBOR to SOFR; changes in the national and local economies; unstable political and economic environments; disease outbreaks, such as the COVID-19 pandemic or similar public health threats, and measures implemented to combat them; and other factors, including those expressed as risk factors, disclosed 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.  Investors are cautioned not to place undue reliance on any forward-looking statements contained herein.

 

FOR FURTHER INFORMATION:

 

         

Ray Reitsma	Charles Christmas
President and CEO	Executive Vice President and CFO
616-233-2349	616-726-1202
rreitsma@mercbank.com	cchristmas@mercbank.com

                 

 

Mercantile Bank Corporation

Fourth Quarter 2024 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(dollars in thousands)		DECEMBER 31,				DECEMBER 31,				DECEMBER 31,
		2024				2023				2022
ASSETS
Cash and due from banks		$	56,991			$	70,408			$	61,894
Interest-earning deposits			336,019				60,125				34,878
Total cash and cash equivalents			393,010				130,533				96,772
Securities available for sale			730,352				617,092				602,936
Federal Home Loan Bank stock			21,513				21,513				17,721
Mortgage loans held for sale			15,824				18,607				3,565
Loans			4,600,781				4,303,758				3,916,619
Allowance for credit losses			(54,454	)			(49,914	)			(42,246	)
Loans, net			4,546,327				4,253,844				3,874,373
Premises and equipment, net			53,427				50,928				51,476
Bank owned life insurance			93,839				85,668				80,727
Goodwill			49,473				49,473				49,473
Other assets			148,396				125,566				95,576
Total assets		$	6,052,161			$	5,353,224			$	4,872,619
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing		$	1,264,523			$	1,247,640			$	1,604,750
Interest-bearing			3,433,843				2,653,278				2,108,061
Total deposits			4,698,366				3,900,918				3,712,811
Securities sold under agreements to repurchase			121,521				229,734				194,340
Federal Home Loan Bank advances			387,083				467,910				308,263
Subordinated debentures			50,330				49,644				48,958
Subordinated notes			89,314				88,971				88,628
Accrued interest and other liabilities			121,021				93,902				78,211
Total liabilities			5,467,635				4,831,079				4,431,211
SHAREHOLDERS' EQUITY
Common stock			299,705				295,106				290,436
Retained earnings			334,646				277,526				216,313
Accumulated other comprehensive income/(loss)			(49,825	)			(50,487	)			(65,341	)
Total shareholders' equity			584,526				522,145				441,408
Total liabilities and shareholders' equity		$	6,052,161			$	5,353,224			$	4,872,619

 

 

Mercantile Bank Corporation

Fourth Quarter 2024 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF INCOME

(Unaudited)

 

(dollars in thousands except per share data)		THREE MONTHS ENDED				THREE MONTHS ENDED				TWELVE MONTHS ENDED				TWELVE MONTHS ENDED
		December 31, 2024				December 31, 2023				December 31, 2024				December 31, 2023
INTEREST INCOME
Loans, including fees		$	73,758			$	68,876			$	293,163			$	253,108
Investment securities			4,792				3,312				16,034				12,704
Interest-earning deposits			3,937				1,615				12,305				5,546
Total interest income			82,487				73,803				321,502				271,358
INTEREST EXPENSE
Deposits			26,874				19,015				101,395				55,444
Short-term borrowings			2,086				781				7,717				2,847
Federal Home Loan Bank advances			3,150				3,252				13,018				11,367
Other borrowed money			2,016				2,106				8,286				8,155
Total interest expense			34,126				25,154				130,416				77,813
Net interest income			48,361				48,649				191,086				193,545
Provision for credit losses			1,500				1,800				7,400				7,700
Net interest income after provision for credit losses			46,861				46,849				183,686				185,845
NONINTEREST INCOME
Service charges on accounts			1,866				1,543				6,842				4,954
Mortgage banking income			3,611				1,766				12,301				7,595
Credit and debit card income			2,177				2,197				8,821				8,914
Interest rate swap income			717				1,224				3,210				3,946
Payroll services			763				601				3,058				2,509
Earnings on bank owned life insurance			497				276				2,555				1,500
Other income			541				693				3,602				2,725
Total noninterest income			10,172				8,300				40,389				32,143
NONINTEREST EXPENSE
Salaries and benefits			21,482				18,400				77,924				68,801
Occupancy			1,989				2,521				8,643				9,150
Furniture and equipment			926				871				3,716				3,464
Data processing costs			3,630				2,537				13,772				11,618
Charitable foundation contributions			1,000				250				1,708				666
Other expense			4,779				5,361				20,026				21,590
Total noninterest expense			33,806				29,940				125,789				115,289
Income before federal income tax expense			23,227				25,209				98,286				102,699
Federal income tax expense			3,601				5,179				18,693				20,482
Net Income		$	19,626			$	20,030			$	79,593			$	82,217
Basic earnings per share		$	1.22			$	1.25			$	4.93			$	5.13
Diluted earnings per share		$	1.22			$	1.25			$	4.93			$	5.13
Average basic shares outstanding			16,142,578				16,044,223				16,130,696				16,015,678
Average diluted shares outstanding			16,142,578				16,044,223				16,130,696				16,015,678

 

 

Mercantile Bank Corporation

Fourth Quarter 2024 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

  

		Quarterly																				Year-To-Date
(dollars in thousands except per share data)		2024				2024				2024				2024				2023
		4th Qtr				3rd Qtr				2nd Qtr				1st Qtr				4th Qtr				2024				2023
EARNINGS
Net interest income		$	48,361				48,292				47,072				47,361				48,649				191,086				193,545
Provision for credit losses		$	1,500				1,100				3,500				1,300				1,800				7,400				7,700
Noninterest income		$	10,172				9,667				9,681				10,868				8,300				40,389				32,143
Noninterest expense		$	33,806				32,303				29,737				29,944				29,940				125,789				115,289
Net income before federal income
tax expense		$	23,227				24,556				23,516				26,985				25,209				98,286				102,699
Net income		$	19,626				19,618				18,786				21,562				20,030				79,593				82,217
Basic earnings per share		$	1.22				1.22				1.17				1.34				1.25				4.93				5.13
Diluted earnings per share		$	1.22				1.22				1.17				1.34				1.25				4.93				5.13
Average basic shares outstanding			16,142,578				16,138,320				16,122,813				16,118,858				16,044,223				16,130,696				16,015,678
Average diluted shares outstanding			16,142,578				16,138,320				16,122,813				16,118,858				16,044,223				16,130,696				16,015,678
PERFORMANCE RATIOS
Return on average assets			1.30	%			1.35	%			1.36	%			1.61	%			1.52	%			1.40	%			1.62	%
Return on average equity			13.36	%			13.73	%			13.93	%			16.41	%			16.04	%			14.35	%			17.24	%
Net interest margin (fully tax-equivalent)			3.41	%			3.52	%			3.63	%			3.74	%			3.92	%			3.58	%			4.05	%
Efficiency ratio			57.76	%			55.73	%			52.40	%			51.42	%			52.57	%			54.34	%			51.08	%
Full-time equivalent employees			668				653				670				642				651				668				651
YIELD ON ASSETS / COST OF FUNDS
Yield on loans			6.41	%			6.69	%			6.64	%			6.65	%			6.53	%			6.61	%			6.25	%
Yield on securities			2.62	%			2.43	%			2.30	%			2.20	%			2.18	%			2.40	%			2.06	%
Yield on interest-earning deposits			4.66	%			5.37	%			5.28	%			5.35	%			5.31	%			5.19	%			5.14	%
Yield on total earning assets			5.81	%			6.08	%			6.07	%			6.06	%			5.95	%			6.02	%			5.68	%
Yield on total assets			5.49	%			5.73	%			5.72	%			5.72	%			5.61	%			5.68	%			5.36	%
Cost of deposits			2.36	%			2.52	%			2.42	%			2.25	%			1.94	%			2.40	%			1.48	%
Cost of borrowed funds			3.73	%			3.75	%			3.56	%			3.51	%			3.15	%			3.65	%			2.90	%
Cost of interest-bearing liabilities			3.30	%			3.53	%			3.40	%			3.27	%			2.96	%			3.38	%			2.47	%
Cost of funds (total earning assets)			2.40	%			2.56	%			2.44	%			2.32	%			2.03	%			2.44	%			1.63	%
Cost of funds (total assets)			2.27	%			2.41	%			2.31	%			2.19	%			1.91	%			2.30	%			1.54	%
MORTGAGE BANKING ACTIVITY
Total mortgage loans originated		$	121,010				160,944				122,728				79,930				88,187				484,612				386,343
Purchase/construction mortgage loans originated		$	82,212				122,747				103,939				57,668				75,365				366,566				326,554
Refinance mortgage loans originated		$	38,798				38,197				18,789				22,262				12,822				118,046				59,789
Mortgage loans originated with intent to sell		$	100,628				128,678				91,490				59,280				59,135				380,076				204,078
Income on sale of mortgage loans		$	3,768				3,376				2,487				2,064				1,487				11,695				6,393
CAPITAL
Tangible equity to tangible assets			8.91	%			9.10	%			9.03	%			8.99	%			8.91	%			8.91	%			8.91	%
Tier 1 leverage capital ratio			10.60	%			10.68	%			10.85	%			10.88	%			10.84	%			10.60	%			10.84	%
Common equity risk-based capital ratio			10.66	%			10.53	%			10.46	%			10.41	%			10.07	%			10.66	%			10.07	%
Tier 1 risk-based capital ratio			11.54	%			11.42	%			11.36	%			11.33	%			10.99	%			11.54	%			10.99	%
Total risk-based capital ratio			14.17	%			14.13	%			14.10	%			14.05	%			13.69	%			14.17	%			13.69	%
Tier 1 capital		$	633,134				618,038				602,835				587,888				570,730				633,134				570,730
Tier 1 plus tier 2 capital		$	777,857				764,653				748,097				729,410				710,905				777,857				710,905
Total risk-weighted assets		$	5,487,886				5,411,628				5,306,911				5,190,106				5,192,970				5,487,886				5,192,970
Book value per common share		$	36.20				36.14				34.15				33.29				32.38				36.20				32.38
Tangible book value per common share		$	33.14				33.07				31.09				30.22				29.31				33.14				29.31
Cash dividend per common share		$	0.36				0.36				0.35				0.35				0.34				1.42				1.34
ASSET QUALITY
Gross loan charge-offs		$	3,787				10				26				15				53				3,838				863
Recoveries		$	150				92				296				439				160				977				832
Net loan charge-offs (recoveries)		$	3,637				(82	)			(270	)			(424	)			(107	)		$	2,861				31
Net loan charge-offs to average loans			0.31	%			(0.01	%)		(0.02		%)			(0.04	%)		(0.01		%)		0.06		%			< 0.01%
Allowance for credit losses		$	54,454				56,590				55,408				51,638				49,914				54,454				49,914
Allowance to loans			1.18	%			1.24	%			1.25	%			1.19	%			1.16	%			1.18	%			1.16	%
Nonperforming loans		$	5,743				9,877				9,129				6,040				3,415				5,743				3,415
Other real estate/repossessed assets		$	0				0				0				200				200				0				200
Nonperforming loans to total loans			0.12	%			0.22	%			0.21	%			0.14	%			0.08	%			0.12	%			0.08	%
Nonperforming assets to total assets			0.09	%			0.17	%			0.16	%			0.11	%			0.07	%			0.09	%			0.07	%
NONPERFORMING ASSETS - COMPOSITION
Residential real estate:
Land development		$	97				100				1				1				1				97				1
Construction		$	0				0				0				0				0				0				0
Owner occupied / rental		$	2,878				3,008				2,288				3,370				3,095				2,878				3,095
Commercial real estate:
Land development		$	0				0				0				0				0				0				0
Construction		$	0				0				0				0				0				0				0
Owner occupied		$	42				0				0				200				270				42				270
Non-owner occupied		$	0				0				0				0				0				0				0
Non-real estate:
Commercial assets		$	2,726				6,769				6,840				2,669				249				2,726				249
Consumer assets		$	0				0				0				0				0				0				0
Total nonperforming assets		$	5,743				9,877				9,129				6,240				3,615				5,743				3,615
NONPERFORMING ASSETS - RECON
Beginning balance		$	9,877				9,129				6,240				3,615				5,940				3,615				7,728
Additions		$	224				906				4,570				2,802				2,166				8,502				7,925
Return to performing status		$	(102	)			0				0				0				0				(102	)			(31	)
Principal payments		$	(515	)			(158	)			(1,481	)			(177	)			(4,402	)			(2,331	)			(10,609	)
Sale proceeds		$	0				0				(200	)			0				(51	)			(200	)			(712	)
Loan charge-offs		$	(3,741	)			0				0				0				(38	)			(3,741	)			(686	)
Valuation write-downs		$	0				0				0				0				0				0				0
Ending balance		$	5,743				9,877				9,129				6,240				3,615				5,743				3,615
LOAN PORTFOLIO COMPOSITION
Commercial:
Commercial & industrial		$	1,287,308				1,312,774				1,275,745				1,222,638				1,254,586				1,287,308				1,254,586
Land development & construction		$	66,936				66,374				76,247				75,091				74,752				66,936				74,752
Owner occupied comm'l R/E		$	748,837				746,714				732,844				719,338				717,667				748,837				717,667
Non-owner occupied comm'l R/E		$	1,128,404				1,095,988				1,059,052				1,045,614				1,035,684				1,128,404				1,035,684
Multi-family & residential rental		$	475,819				426,438				389,390				366,961				332,609				475,819				332,609
Total commercial		$	3,707,304				3,648,288				3,533,278				3,429,642				3,415,298				3,707,304				3,415,298
Retail:
1-4 family mortgages		$	827,597				844,093				849,626				840,653				837,407				827,597				837,407
Other consumer		$	65,880				60,637				55,341				51,711				51,053				65,880				51,053
Total retail		$	893,477				904,730				904,967				829,364				888,460				893,477				888,460
Total loans		$	4,600,781				4,553,018				4,438,245				4,322,006				4,303,758				4,600,781				4,303,758
END OF PERIOD BALANCES
Loans		$	4,600,781				4,553,018				4,438,245				4,322,006				4,303,758				4,600,781				4,303,758
Securities		$	751,865				724,888				669,420				630,666				638,605				751,865				638,605
Interest-earning deposits		$	336,019				240,780				135,766				184,625				60,125				336,019				60,125
Total earning assets (before allowance)		$	5,688,665				5,518,686				5,243,431				5,137,297				5,002,488				5,688,665				5,002,488
Total assets		$	6,052,161				5,917,127				5,602,388				5,465,953				5,353,224				6,052,161				5,353,224
Noninterest-bearing deposits		$	1,264,523				1,182,219				1,119,888				1,134,995				1,247,640				1,264,523				1,247,640
Interest-bearing deposits		$	3,433,843				3,273,679				3,026,686				2,872,815				2,653,278				3,433,843				2,653,278
Total deposits		$	4,698,366				4,455,898				4,146,574				4,007,810				3,900,918				4,698,366				3,900,918
Total borrowed funds		$	649,528				778,669				789,327				815,744				837,335				649,528				837,335
Total interest-bearing liabilities		$	4,083,371				4,052,348				3,816,013				3,688,559				3,490,613				4,083,371				3,490,613
Shareholders' equity		$	584,526				583,311				551,151				536,644				522,145				584,526				522,145
AVERAGE BALANCES
Loans		$	4,565,837				4,467,365				4,396,475				4,299,163				4,184,070				4,432,671				4,046,815
Securities		$	742,145				699,872				640,627				634,099				618,517				679,415				626,842
Interest-earning deposits		$	330,490				284,187				182,636				150,234				118,996				237,272				106,515
Total earning assets (before allowance)		$	5,638,472				5,451,424				5,219,738				5,083,496				4,921,583				5,349,358				4,780,172
Total assets		$	5,967,036				5,781,111				5,533,262				5,384,675				5,224,238				5,667,655				5,063,693
Noninterest-bearing deposits		$	1,188,561				1,191,642				1,139,887				1,175,884				1,281,201				1,174,082				1,372,840
Interest-bearing deposits		$	3,335,477				3,145,799				2,957,011				2,790,308				2,600,703				3,058,151				2,384,075
Total deposits		$	4,524,038				4,337,441				4,096,898				3,966,192				3,881,904				4,232,233				3,756,915
Total borrowed funds		$	770,838				796,077				800,577				816,848				773,491				796,016				771,286
Total interest-bearing liabilities		$	4,106,315				3,941,876				3,757,588				3,607,156				3,374,194				3,854,167				3,155,361
Shareholders' equity		$	582,829				566,852				540,868				527,180				495,431				554,544				477,027

 

Exhibit 99.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

v3.24.4

Document And Entity Information	Jan. 21, 2025
Document Information [Line Items]
Entity, Registrant Name	Mercantile Bank Corporation
Document, Type	8-K
Document, Period End Date	Jan. 21, 2025
Entity, Incorporation, State or Country Code	MI
Entity, File Number	000-26719
Entity, Tax Identification Number	38-3360865
Entity, Address, Address Line One	310 Leonard Street NW
Entity, Address, City or Town	Grand Rapids
Entity, Address, State or Province	MI
Entity, Address, Postal Zip Code	49504
City Area Code	616
Local Phone Number	406-3000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	MBWM
Security Exchange Name	NASDAQ
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0001042729

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