Mercantile Net Income Up 75 Percent In 1Q

April 12, 2002
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GRAND RAPIDS — Mercantile Bank Corp. posted record first quarter 2002 net income of $1.6 million, up 75.3 percent from the $900,000 in net income reported for 2001’s first quarter.

President and COO Michael Price said basic earnings per share of 31 cents for the first quarter compared well with 33 cents in the prior year’s first quarter given the 83 percent increase in number of shares outstanding, from 2.8 million in first quarter 2001 to 5.1 million in the current quarter.

According to Charles Christmas, chief financial officer, the company’s overall profitability continues to be driven by strong-earning asset growth, which translates into increased net interest income.

For the first quarter net interest income totaled $5 million, an increase of $1.5 million over last year’s first quarter. During the past 12 months, earning assets increased $167 million and totaled $700 million at March 31, 2002, Christmas said.

Total assets were $728 million at quarter end on March 31, an increase of more than $167 million over total assets at March 31, 2001. With its focus on business-to-business banking, about 92 percent of Mercantile’s loans are to small and medium-sized businesses.

Total loans over the past 12 months increased by more than $161 million and led earning assets growth, Christmas added. Securities were up $15 million for the 12-month period.

“Despite the challenges presented by national and local economies, Mercantile was able to grow its loan portfolio at a very strong pace during the first quarter,” said Senior Vice President Robert Kaminski Jr., adding that actual dollar growth over the previous quarter was $34 million. “This growth in the first quarter was driven primarily by the business relationships being brought into the bank.”

On the asset side, variable rate loans at March 31 totaled about 55 percent of Mercantile’s loan portfolio, whereas at year-end 2000, variable rate loans totaled only 35 percent of its loan portfolio, Christmas pointed out.

“So we’ve had a significant increase in the composition of our loan portfolio with regards to prime versus floating rate loans,” he said. “Certainly from the possibility of the Fed moving sometime this summer or thereafter to increase rates, the loan portfolio sits well in regard to that.”

Expenses increased 25 percent, or by $200,000, which Christmas attributed primarily to the opening last fall of Mercantile’s new administration building and a third bank branch.

Kaminski added that the Wyoming branch is doing well in terms of new account activity and business has been strong since its opening last October.

Mercantile will begin construction on a new branch in southeast Kent County in May or June, with projected opening late this year or early next year. It’s also pursuing a branch location in northeast Kent County, with anticipated opening around year-end 2003.

“This continues Mercantile’s strategy of limited bricks and mortar, with locations strategically placed in the four quadrants of the Grand Rapids metro area,” he said.

The new branches will, in part, accommodate customer services added in 2001, according to Mercantile executives. New services include Mercantile Bank Payroll Services for business payroll processing; Mercantile BIDCO Inc., a subsidiary that offers equipment lease financing, asset-based loans and merchant banking services; and the Mercantile Investment Center, which offers financial planning services under a marketing agreement with Raymond James Financial Services.

The bank plans to introduce insurance services in the second quarter, Kaminski said.           

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