MBWM Mercantile Bank Corporation

---

---

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 October 15, 2024, reporting financial results and earnings for the quarter ended September 30, 2024.

99.2	Mercantile Bank Corporation Conference Call & Webcast Presentation dated October 15, 2024.

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 October 15, 2024, reporting financial results and earnings for the quarter ended September 30, 2024.

99.2	Mercantile Bank Corporation Conference Call & Webcast Presentation dated October 15, 2024.

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

Exhibit 99.1

 

 

Mercantile Bank Corporation Announces Strong Third Quarter Results

Robust local deposit and commercial loan growth and sustained strength in

asset quality metrics highlight quarter

 

GRAND RAPIDS, Mich., October 15, 2024 – Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $19.6 million, or $1.22 per diluted share, for the third quarter of 2024, compared with net income of $20.9 million, or $1.30 per diluted share, for the third quarter of 2023.  Net income during the first nine months of 2024 totaled $60.0 million, or $3.72 per diluted share, compared with net income of $62.2 million, or $3.89 per diluted share, during the first nine months of 2023.

 

“We are very pleased to report another quarter of strong financial performance, especially when taking into consideration the challenges associated with recent economic and operating conditions,” said Ray Reitsma, President and Chief Executive Officer of Mercantile.  “The notable increases in local deposits and commercial loans during the quarter depict our continuing focus on relationship banking, meeting the needs of current customers, and attracting new clients.  Our strong operating results reflect an ongoing healthy net interest margin, solid growth in several noninterest income revenue streams, and sustained strength in asset quality metrics, along with the local deposit base and commercial loan portfolio expansions.  The growth in local deposits provided for a reduction in our loan-to-deposit ratio, the lowering of which remains a key strategic initiative.”  

 

Third quarter highlights include:

 

●

Robust local deposit growth

●

Strong commercial loan portfolio expansion

●

Ongoing strength in commercial loan pipeline

●

Noteworthy increases in several noninterest income revenue streams

●

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

●

Solid capital position

 

 

Operating Results

 

Net revenue, consisting of net interest income and noninterest income, was $58.0 million during the third quarter of 2024, compared to $58.2 million during the prior-year third quarter.  Net interest income during the current-year third quarter was $48.3 million, down $0.7 million, or 1.4 percent, from $49.0 million during the respective 2023 period as increased yields on, along with growth in, earning assets were more than offset by a higher cost of funds. Noninterest income totaled $9.7 million during the third quarter of 2024, up $0.4 million, or 4.6 percent, from $9.3 million during the third quarter of 2023.  The increase in noninterest income mainly reflected higher levels of mortgage banking income, treasury management fees, and payroll service fees.

 

The net interest margin was 3.52 percent in the third quarter of 2024, down from 3.98 percent in the prior-year third quarter.  The yield on average earning assets was 6.08 percent during the current-year third quarter, an increase from 5.78 percent during the respective 2023 period.  The improvement primarily resulted from an increased yield on loans.  The yield on loans was 6.69 percent during the third quarter of 2024, up from 6.37 percent during the third quarter of 2023 mainly due to higher interest rates on variable-rate commercial loans resulting from the Federal Open Market Committee (“FOMC”) raising the targeted federal funds rate in an effort to curb elevated inflation levels and a significant level of commercial loans being originated over the past 15 months in the higher interest rate environment.  The FOMC increased the targeted federal funds rate by 25 basis points in July of 2023, at which time average variable-rate commercial loans represented approximately 65 percent of average total commercial loans.  The positive impact of the rate hike was partially mitigated by the FOMC’s lowering of the targeted federal funds rate by 50 basis points in mid-September 2024.

 

The cost of funds was 2.56 percent in the third quarter of 2024, up from 1.80 percent in the third quarter of 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 decline in noninterest-bearing and lower-cost deposits and an increase in higher-cost money market accounts and time deposits resulting from new deposit relationships, growth in existing deposit relationships, and deposit migration, also contributed to the higher cost of funds.

 

Mercantile recorded provisions for credit losses of $1.1 million and $3.3 million during the third quarters of 2024 and 2023, respectively.  The provision expense recorded during the current-year third quarter primarily reflected an increase in environmental factor allocations and allocations necessitated by net loan growth, which were partially offset by decreases in the calculated allowance stemming from the payoffs of two larger problem commercial lending relationships.  The provision expense recorded during the prior-year third quarter mainly reflected the establishment of a specific reserve for a distressed commercial loan relationship, a qualitative factor assessment for local economic conditions reflecting the ongoing United Auto Workers strike, and allocations necessitated by net loan growth.

 

 

Noninterest income totaled $9.7 million during the third quarter of 2024, up $0.4 million, or 4.6 percent, from $9.3 million during the respective 2023 period.  The growth primarily resulted from increases in mortgage banking income, treasury management fees, and payroll service fees.  The higher level of mortgage banking income mainly resulted from increases in the percentage of loans originated with the intent to sell, which rose from approximately 64 percent during the third quarter of 2023 to approximately 80 percent during the third quarter of 2024, and total loan originations, which were up approximately 48 percent in the current-year third quarter compared to the respective 2023 period.  The increase in treasury management fees primarily stemmed from customers’ expanded use of cash management products.  Growth in bank owned life insurance income and credit and debit card income also contributed to the higher level of noninterest income.

 

Noninterest expense totaled $32.3 million during the third quarter of 2024, compared to $28.9 million during the prior-year third quarter.  The increase mainly resulted from larger salary costs, reflecting annual merit pay increases, market adjustments, higher residential mortgage lender commissions and incentives, an increased bonus accrual, and lower residential mortgage loan deferred salary costs.  Higher levels of data processing costs, primarily reflecting increased transaction volume and software support costs, and health insurance claims also contributed to the increase in noninterest expense.

 

Mr. Reitsma commented, “The notable growth in mortgage banking income in large part reflects the ongoing success of a strategic initiative to increase the percentage of loans originated with the intent to sell, along with a significant increase in loan production.  We are delighted with the increase in treasury management fees and payroll service income, which mainly stemmed from the expanded use of products and services.  Our net interest margin, while declining as expected due to an increased cost of funds, remained healthy and in line with historical levels during the third quarter.  Controlling overhead costs while meeting balance sheet growth objectives and continuing to provide our clients with exceptional service remains a top priority.”

 

 

Balance Sheet

 

As of September 30, 2024, total assets were $5.92 billion, up $564 million from December 31, 2023.  Total loans increased $115 million, or an annualized 10.3 percent, during the third quarter of 2024, and $249 million, or an annualized 7.7 percent, during the first nine months of 2024.  The loan portfolio expansion in both 2024 periods almost exclusively reflected growth in commercial loans, which increased $115 million, or an annualized 12.9 percent, during the current-year third quarter and $233 million, or an annualized 9.1 percent, during the first nine months of 2024.  The commercial loan portfolio growth during the first nine months of 2024 occurred despite the full payoffs and partial paydowns of certain larger relationships, which totaled approximately $106 million during the period.  The payoffs and paydowns mainly resulted 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 and residential mortgage loans grew $9.6 million and $6.7 million, respectively, during the first nine months of 2024.  Interest-earning deposits and securities available for sale increased $181 million and $86.3 million, respectively, during the nine months ended September 30, 2024, with the growth in both asset categories largely reflecting the success of a strategic initiative to enhance on-balance sheet liquidity.

 

As of September 30, 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 approximately $241 million and $34 million, respectively.

 

Commercial and industrial loans and owner-occupied commercial real estate loans combined represented approximately 56 percent of total commercial loans as of September 30, 2024, a level that has remained relatively consistent with prior periods and in line with management’s expectations.

 

 

Total deposits equaled $4.46 billion as of September 30, 2024, representing increases of $309 million, or an annualized 30.0 percent, during the third quarter of 2024, and $555 million, or an annualized 19.0 percent, during the first nine months of 2024.  Local deposits were up $339 million, or 33.7 percent annualized, during the current-year third quarter and $600 million, or 21.4 percent annualized, during the first nine months of 2024, while brokered deposits decreased $30.0 million and $45.2 million during the respective periods.  The growth in local deposits during the nine months ended September 30, 2024, provided for a reduction in the loan-to-deposit ratio from 110 percent as of December 31, 2023, to 102 percent as of September 30, 2024. The increase in local deposits during the first nine months of 2024, which occurred despite the typical level of seasonal noninterest-bearing deposit withdrawals by customers to make bonus and tax payments and partnership distributions, reflected a combination of new deposit relationships and growth in existing deposit relationships.  Wholesale funds were $540 million, or approximately 11 percent of total funds, at September 30, 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 September 30, 2024.

 

Mr. Reitsma noted, “The expansion of the commercial loan portfolio, reflecting a combination of an increase in established customer relationships and new client acquisition, during the third quarter and first nine months of 2024 transpired in spite of elevated levels of partial paydowns and payoffs.  As demonstrated by the growth in commercial loans and local deposits, along with the increase in treasury management fees, our sales teams have done a fantastic job of expanding existing relationships and obtaining the full banking relationships of new customers.  Based on the strength of our current commercial loan pipeline and amount of credit availability for commercial construction and development loans, we believe originations in future periods will remain solid.  Local deposit generation will remain an important strategic initiative as we continue our efforts to lower our loan-to-deposit ratio and provide funding for anticipated loan growth.”

 

Asset Quality

 

Nonperforming assets totaled $9.9 million, or 0.2 percent of total assets, at September 30, 2024, compared to $9.1 million, or 0.2 percent of total assets, at June 30, 2024, and $3.6 million, or less than 0.1 percent of total assets, at December 31, 2023.  The increase in nonperforming assets during the first nine months of 2024 largely resulted from the deterioration of two commercial loan relationships which were placed on nonaccrual and fully reserved for during the period. The level of past due loans remains nominal.  During the third quarter of 2024, loan charge-offs were nominal, while recoveries of prior period loan charge-offs equaled $0.1 million, providing for net loan recoveries of $0.1 million, or an annualized 0.01 percent of average total loans.  During the first nine months of 2024, loan charge-offs totaled less than $0.1 million, while recoveries of prior period loan charge-offs equaled $0.8 million, providing for net loan recoveries of $0.8 million, or an annualized 0.02 percent of average total loans.

 

Mr. Reitsma remarked, “Our sustained strength in asset quality metrics reflects our unwavering commitment to underwriting loans in a prudent and disciplined manner.  Nonperforming assets, although rising during the first nine months of 2024 largely due to the deterioration of two non-real-estate-related commercial loan relationships, remain at a low level.  As reflected by ongoing low levels of past due loans, nonaccrual loans, and loan charge-offs, our commercial borrowers have continued to meet the challenges arising from shifting economic and operating environments, including higher interest rates and the related increase in debt service requirements.  We meticulously scrutinize our commercial loan portfolio for signs of systemic weakness and believe our ongoing efforts to identify credit issues and implement feasible workout plans will help constrain the impact of any such observed issues on our overall financial condition.  Our residential and consumer loan portfolios continue to perform well as evidenced by sustained low delinquency levels and the lack of any identified systemic credit weaknesses.”

 

Capital Position

 

Shareholders’ equity totaled $583 million as of September 30, 2024, up $61.2 million from December 31, 2023.  Mercantile Bank maintained “well-capitalized” positions at the end of the third quarter of 2024 and year-end 2023, with total risk-based capital ratios of 13.9 percent and 13.4 percent, respectively.  As of September 30, 2024, Mercantile Bank had approximately $211 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 September 30, 2024, the net unrealized loss on these investments totaled $45.7 million, resulting in an after-tax reduction to equity capital of $36.1 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 $174 million on an adjusted basis as of September 30, 2024.

 

Mercantile reported 16,142,433 total shares outstanding as of September 30, 2024.

 

 

Mr. Reitsma concluded, “We are very pleased that our sustained strength in financial performance enabled us to continue our regular cash dividend program, and we remain committed to building shareholder value through competitive dividend yields.  Our strong capital levels and operating results, coupled with anticipated commercial loan portfolio expansion, position us to effectively meet the challenges arising from the recent economic and operating environments.  As demonstrated by the increases in loans and local deposits during the first nine months of 2024, our community banking approach and focus on developing mutually beneficial relationships have been successful in retaining existing customers and attracting new clients.”

 

Investor Presentation

 

Mercantile has prepared presentation materials that management intends to use during its previously announced third quarter 2024 conference call on Tuesday, October 15, 2024, 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, a knowledgeable staff, and a commitment to the communities it serves, Mercantile is one of the largest Michigan-based banks with assets of approximately $5.9 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

Third Quarter 2024 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(dollars in thousands)		SEPTEMBER 30,				DECEMBER 31,				SEPTEMBER 30,
		2024				2023				2023
ASSETS
Cash and due from banks		$	87,766			$	70,408			$	64,551
Interest-earning deposits			240,780				60,125				201,436
Total cash and cash equivalents			328,546				130,533				265,987
Securities available for sale			703,375				617,092				592,305
Federal Home Loan Bank stock			21,513				21,513				21,513
Mortgage loans held for sale			29,260				18,607				10,171
Loans			4,553,018				4,303,758				4,104,376
Allowance for credit losses			(56,590	)			(49,914	)			(48,008	)
Loans, net			4,496,428				4,253,844				4,056,368
Premises and equipment, net			54,230				50,928				52,231
Bank owned life insurance			86,486				85,668				81,907
Goodwill			49,473				49,473				49,473
Other assets			147,816				125,566				121,057
Total assets		$	5,917,127			$	5,353,224			$	5,251,012
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing		$	1,182,219			$	1,247,640			$	1,309,672
Interest-bearing			3,273,679				2,653,278				2,591,063
Total deposits			4,455,898				3,900,918				3,900,735
Securities sold under agreements to repurchase			220,936				229,734				164,082
Federal Home Loan Bank advances			417,083				467,910				457,910
Subordinated debentures			50,158				49,644				49,473
Subordinated notes			89,228				88,971				88,885
Accrued interest and other liabilities			100,513				93,902				106,716
Total liabilities			5,333,816				4,831,079				4,767,801
SHAREHOLDERS' EQUITY
Common stock			298,704				295,106				293,961
Retained earnings			320,722				277,526				262,838
Accumulated other comprehensive income/(loss)			(36,115	)			(50,487	)			(73,588	)
Total shareholders' equity			583,311				522,145				483,211
Total liabilities and shareholders' equity		$	5,917,127			$	5,353,224			$	5,251,012

 

 

Mercantile Bank Corporation

Third Quarter 2024 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF INCOME

(Unaudited)

 

(dollars in thousands except per share data)		THREE MONTHS ENDED				THREE MONTHS ENDED				NINE MONTHS ENDED				NINE MONTHS ENDED
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
INTEREST INCOME
Loans, including fees		$	75,316			$	65,073			$	219,405			$	184,232
Investment securities			4,196				3,273				11,242				9,392
Interest-earning deposits			3,900				2,807				8,369				3,932
Total interest income			83,412				71,153				239,016				197,556
INTEREST EXPENSE
Deposits			27,588				16,143				74,522				36,429
Short-term borrowings			2,219				693				5,631				2,066
Federal Home Loan Bank advances			3,218				3,270				9,868				8,115
Other borrowed money			2,095				2,086				6,270				6,049
Total interest expense			35,120				22,192				96,291				52,659
Net interest income			48,292				48,961				142,725				144,897
Provision for credit losses			1,100				3,300				5,900				5,900
Net interest income after provision for credit losses			47,192				45,661				136,825				138,997
NONINTEREST INCOME
Service charges on accounts			1,753				1,370				4,976				3,411
Mortgage banking income			3,325				2,779				8,690				5,829
Credit and debit card income			2,257				2,232				6,644				6,717
Interest rate swap income			389				937				2,494				2,722
Payroll services			713				591				2,295				1,908
Earnings on bank owned life insurance			449				422				2,058				1,224
Other income			781				915				3,060				2,031
Total noninterest income			9,667				9,246				30,217				23,842
NONINTEREST EXPENSE
Salaries and benefits			20,292				17,258				56,442				50,401
Occupancy			2,146				2,241				6,655				6,629
Furniture and equipment			938				894				2,790				2,594
Data processing costs			3,437				3,038				10,142				9,081
Charitable foundation contributions			0				404				707				416
Other expense			5,490				5,085				15,247				16,228
Total noninterest expense			32,303				28,920				91,983				85,349
Income before federal income tax expense			24,556				25,987				75,059				77,490
Federal income tax expense			4,938				5,132				15,092				15,303
Net Income		$	19,618			$	20,855			$	59,967			$	62,187
Basic earnings per share		$	1.22			$	1.30			$	3.72			$	3.89
Diluted earnings per share		$	1.22			$	1.30			$	3.72			$	3.89
Average basic shares outstanding			16,138,320				16,018,419				16,126,706				16,006,058
Average diluted shares outstanding			16,138,320				16,018,419				16,126,706				16,006,058

 

 

Mercantile Bank Corporation

Third Quarter 2024 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

  

		Quarterly																				Year-To-Date
(dollars in thousands except per share data)		2024				2024				2024				2023				2023
		3rd Qtr				2nd Qtr				1st Qtr				4th Qtr				3rd Qtr				2024				2023
EARNINGS
Net interest income		$	48,292				47,072				47,361				48,649				48,961				142,725				144,897
Provision for credit losses		$	1,100				3,500				1,300				1,800				3,300				5,900				5,900
Noninterest income		$	9,667				9,681				10,868				8,300				9,246				30,217				23,842
Noninterest expense		$	32,303				29,737				29,944				29,940				28,920				91,983				85,349
Net income before federal income
tax expense		$	24,556				23,516				26,985				25,209				25,987				75,059				77,490
Net income		$	19,618				18,786				21,562				20,030				20,855				59,967				62,187
Basic earnings per share		$	1.22				1.17				1.34				1.25				1.30				3.72				3.89
Diluted earnings per share		$	1.22				1.17				1.34				1.25				1.30				3.72				3.89
Average basic shares outstanding			16,138,320				16,122,813				16,118,858				16,044,223				16,018,419				16,126,706				16,006,058
Average diluted shares outstanding			16,138,320				16,122,813				16,118,858				16,044,223				16,018,419				16,126,706				16,006,058
PERFORMANCE RATIOS
Return on average assets			1.35	%			1.36	%			1.61	%			1.52	%			1.60	%			1.43	%			1.66	%
Return on average equity			13.73	%			13.93	%			16.41	%			16.04	%			17.07	%			14.66	%			17.66	%
Net interest margin (fully tax-equivalent)			3.52	%			3.63	%			3.74	%			3.92	%			3.98	%			3.62	%			4.10	%
Efficiency ratio			55.73	%			52.40	%			51.42	%			52.57	%			49.68	%			53.19	%			50.58	%
Full-time equivalent employees			653				670				642				651				643				653				643
YIELD ON ASSETS / COST OF FUNDS
Yield on loans			6.69	%			6.64	%			6.65	%			6.53	%			6.37	%			6.66	%			6.16	%
Yield on securities			2.43	%			2.30	%			2.20	%			2.18	%			2.13	%			2.31	%			2.03	%
Yield on interest-earning deposits			5.37	%			5.28	%			5.35	%			5.31	%			5.26	%			5.34	%			5.07	%
Yield on total earning assets			6.08	%			6.07	%			6.06	%			5.95	%			5.78	%			6.06	%			5.59	%
Yield on total assets			5.73	%			5.72	%			5.72	%			5.61	%			5.45	%			5.72	%			5.28	%
Cost of deposits			2.52	%			2.42	%			2.25	%			1.94	%			1.67	%			2.40	%			1.31	%
Cost of borrowed funds			3.75	%			3.56	%			3.51	%			3.15	%			2.98	%			3.60	%			2.82	%
Cost of interest-bearing liabilities			3.53	%			3.40	%			3.27	%			2.96	%			2.69	%			3.40	%			2.28	%
Cost of funds (total earning assets)			2.56	%			2.44	%			2.32	%			2.03	%			1.80	%			2.44	%			1.49	%
Cost of funds (total assets)			2.41	%			2.31	%			2.19	%			1.91	%			1.70	%			2.30	%			1.41	%
MORTGAGE BANKING ACTIVITY
Total mortgage loans originated		$	160,944				122,728				79,930				88,187				108,602				363,602				298,156
Purchase/construction mortgage loans originated		$	122,747				103,939				57,668				75,365				93,520				284,354				251,189
Refinance mortgage loans originated		$	38,197				18,789				22,262				12,822				15,082				79,248				46,967
Mortgage loans originated with intent to sell		$	128,678				91,490				59,280				59,135				69,305				279,448				144,943
Income on sale of mortgage loans		$	3,376				2,487				2,064				1,487				2,386				7,927				4,906
CAPITAL
Tangible equity to tangible assets			9.10	%			9.03	%			8.99	%			8.91	%			8.33	%			9.10	%			8.33	%
Tier 1 leverage capital ratio			10.68	%			10.85	%			10.88	%			10.84	%			10.64	%			10.68	%			10.64	%
Common equity risk-based capital ratio			10.53	%			10.46	%			10.41	%			10.07	%			10.41	%			10.53	%			10.41	%
Tier 1 risk-based capital ratio			11.42	%			11.36	%			11.33	%			10.99	%			11.38	%			11.42	%			11.38	%
Total risk-based capital ratio			14.13	%			14.10	%			14.05	%			13.69	%			14.21	%			14.13	%			14.21	%
Tier 1 capital		$	618,038				602,835				587,888				570,730				554,634				618,038				554,634
Tier 1 plus tier 2 capital		$	764,653				748,097				729,410				710,905				692,252				764,653				692,252
Total risk-weighted assets		$	5,411,628				5,306,911				5,190,106				5,192,970				4,872,424				5,411,628				4,872,424
Book value per common share		$	36.14				34.15				33.29				32.38				30.16				36.14				30.16
Tangible book value per common share		$	33.07				31.09				30.22				29.31				27.06				33.07				27.06
Cash dividend per common share		$	0.36				0.35				0.35				0.34				0.34				1.06				1.00
ASSET QUALITY
Gross loan charge-offs		$	10				26				15				53				243				51				810
Recoveries		$	92				296				439				160				230				827				672
Net loan charge-offs (recoveries)		$	(82	)			(270	)			(424	)			(107	)			13			$	(776	)			138
Net loan charge-offs to average loans			(0.01	%)			(0.02	%)		(0.04		%)			(0.01	%)		< 0.01%				(0.02		%)			0.01	%
Allowance for credit losses		$	56,590				55,408				51,638				49,914				48,008				56,590				48,008
Allowance to loans			1.24	%			1.25	%			1.19	%			1.16	%			1.17	%			1.24	%			1.17	%
Nonperforming loans		$	9,877				9,129				6,040				3,415				5,889				9,877				5,889
Other real estate/repossessed assets		$	0				0				200				200				51				0				51
Nonperforming loans to total loans			0.22	%			0.21	%			0.14	%			0.08	%			0.14	%			0.22	%			0.14	%
Nonperforming assets to total assets			0.17	%			0.16	%			0.11	%			0.07	%			0.11	%			0.17	%			0.11	%
NONPERFORMING ASSETS - COMPOSITION
Residential real estate:
Land development		$	100				1				1				1				1				100				1
Construction		$	0				0				0				0				0				0				0
Owner occupied / rental		$	3,008				2,288				3,370				3,095				1,913				3,008				1,913
Commercial real estate:
Land development		$	0				0				0				0				0				0				0
Construction		$	0				0				0				0				0				0				0
Owner occupied		$	0				0				200				270				738				0				738
Non-owner occupied		$	0				0				0				0				0				0				0
Non-real estate:
Commercial assets		$	6,769				6,840				2,669				249				3,288				6,769				3,288
Consumer assets		$	0				0				0				0				0				0				0
Total nonperforming assets		$	9,877				9,129				6,240				3,615				5,940				9,877				5,940
NONPERFORMING ASSETS - RECON
Beginning balance		$	9,129				6,240				3,615				5,940				2,760				3,615				7,728
Additions		$	906				4,570				2,802				2,166				4,163				8,278				5,759
Return to performing status		$	0				0				0				0				0				0				(31	)
Principal payments		$	(158	)			(1,481	)			(177	)			(4,402	)			(166	)			(1,816	)			(6,207	)
Sale proceeds		$	0				(200	)			0				(51	)			(661	)			(200	)			(661	)
Loan charge-offs		$	0				0				0				(38	)			(156	)			0				(648	)
Valuation write-downs		$	0				0				0				0				0				0				0
Ending balance		$	9,877				9,129				6,240				3,615				5,940				9,877				5,940
LOAN PORTFOLIO COMPOSITION
Commercial:
Commercial & industrial		$	1,312,774				1,275,745				1,222,638				1,254,586				1,184,993				1,312,774				1,184,993
Land development & construction		$	66,374				76,247				75,091				74,752				72,921				66,374				72,921
Owner occupied comm'l R/E		$	746,714				732,844				719,338				717,667				671,083				746,714				671,083
Non-owner occupied comm'l R/E		$	1,095,988				1,059,052				1,045,614				1,035,684				1,000,411				1,095,988				1,000,411
Multi-family & residential rental		$	426,438				389,390				366,961				332,609				308,229				426,438				308,229
Total commercial		$	3,648,288				3,533,278				3,429,642				3,415,298				3,237,637				3,648,288				3,237,637
Retail:
1-4 family mortgages		$	844,093				849,626				840,653				837,407				816,849				844,093				816,849
Other consumer		$	60,637				55,341				51,711				51,053				49,890				60,637				49,890
Total retail		$	904,730				904,967				829,364				888,460				866,739				904,730				866,739
Total loans		$	4,553,018				4,438,245				4,322,006				4,303,758				4,104,376				4,553,018				4,104,376
END OF PERIOD BALANCES
Loans		$	4,553,018				4,438,245				4,322,006				4,303,758				4,104,376				4,553,018				4,104,376
Securities		$	724,888				669,420				630,666				638,605				613,818				724,888				613,818
Interest-earning deposits		$	240,780				135,766				184,625				60,125				201,436				240,780				201,436
Total earning assets (before allowance)		$	5,518,686				5,243,431				5,137,297				5,002,488				4,919,630				5,518,686				4,919,630
Total assets		$	5,917,127				5,602,388				5,465,953				5,353,224				5,251,012				5,917,127				5,251,012
Noninterest-bearing deposits		$	1,182,219				1,119,888				1,134,995				1,247,640				1,309,672				1,182,219				1,309,672
Interest-bearing deposits		$	3,273,679				3,026,686				2,872,815				2,653,278				2,591,063				3,273,679				2,591,063
Total deposits		$	4,455,898				4,146,574				4,007,810				3,900,918				3,900,735				4,455,898				3,900,735
Total borrowed funds		$	778,669				789,327				815,744				837,335				761,431				778,669				761,431
Total interest-bearing liabilities		$	4,052,348				3,816,013				3,688,559				3,490,613				3,352,494				4,052,348				3,352,494
Shareholders' equity		$	583,311				551,151				536,644				522,145				483,211				583,311				483,211
AVERAGE BALANCES
Loans		$	4,467,365				4,396,475				4,299,163				4,184,070				4,054,279				4,387,958				4,000,561
Securities		$	699,872				640,627				634,099				618,517				626,714				658,352				629,646
Interest-earning deposits		$	284,187				182,636				150,234				118,996				208,932				205,972				102,309
Total earning assets (before allowance)		$	5,451,424				5,219,738				5,083,496				4,921,583				4,889,925				5,252,282				4,732,516
Total assets		$	5,781,111				5,533,262				5,384,675				5,224,238				5,180,847				5,567,133				5,009,590
Noninterest-bearing deposits		$	1,191,642				1,139,887				1,175,884				1,281,201				1,359,238				1,169,220				1,403,721
Interest-bearing deposits		$	3,145,799				2,957,011				2,790,308				2,600,703				2,466,834				2,965,035				2,311,073
Total deposits		$	4,337,441				4,096,898				3,966,192				3,881,904				3,826,072				4,134,255				3,714,794
Total borrowed funds		$	796,077				800,577				816,848				773,491				806,376				804,470				770,543
Total interest-bearing liabilities		$	3,941,876				3,757,588				3,607,156				3,374,194				3,273,210				3,769,505				3,081,616
Shareholders' equity		$	566,852				540,868				527,180				495,431				484,624				545,046				470,824

 

 Exhibit 99.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

v3.24.3

Document And Entity Information	Oct. 15, 2024
Document Information [Line Items]
Entity, Registrant Name	Mercantile Bank Corporation
Document, Type	8-K
Document, Period End Date	Oct. 15, 2024
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

---