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Mercantile Sees 72 Percent Increase In 3Q Net Income
GRAND RAPIDS — During the third quarter that ended Sept. 30, Mercantile Bank Corp. issued 1.6 million new shares that raised more than $25 million, opened a new administrative facility and branch banking center in Wyoming, expanded its product service offerings and experienced a 72 percent increase in net income over the third quarter of last year.
Chairman Gerald Johnson Jr. reported the company’s assets are up 36 percent to $646 million and loans are up 35 percent to $532,762. Total revenues increased 18 percent to $12 million over last year’s third quarter.
CFO Charles Christmas said third quarter net income was $1.3 million compared to $800,000 for the same period the year before. Net income for the first nine months of the year was up 58 percent to $3 million.
Third quarter earnings per share were 33 cents versus 30 cents in 2000’s third quarter. For the first nine months, total earnings per share increased from 74 cents to 91 cents.
Assets were up about $29 million for the third quarter and up about $134 million year to date. Christmas attributed the number gains to earning asset growth driven by the bank’s loan growth. Total earning assets increased from $462 million in third quarter 2000 to $617 million in the third quarter 2001, with 90 percent of the increase directly attributable to increase in total loans.
“Certainly the big wild card that’s out there still is the fed funds rate and what the Federal Reserve does with that,” Christmas noted. “Obviously that has a direct impact on the prime rate and we do have about $240 million in loans tied to prime.”
With the slowdown in the economy, the amount of loans going to existing customers has significantly fallen off, but Mercantile “continues to be very successful in taking business away from competitor banks,” said President and CEO Michael Price.
“We’re an equal opportunity ‘stealer,’” he quipped. “We’re out there with a pretty aggressive sales effort and have taken advantage of the opportunities the market has given us. Clearly, Fifth Third has been an opportunity for us. We probably have gotten as much on the deposit side with that particular merger as we have on the loan side.”
Price said prior to Sept. 11 nearly everyone was feeling good about the first quarter of 2002. The events of Sept. 11 have “thrown some new wrinkles into things,” he said.
“Obviously, in Grand Rapids office furniture plays a big role in what drives the economy, and we haven’t had a clear indication from that group as to when they expect a turnaround. We’re still out there trying to get a handle on when that is going to happen.”
Mercantile opened a new branch in Wyoming in September and will move into its new operations center in Wyoming within two weeks. Operations were formerly housed at Mercantile’s office and branch in downtown Grand Rapids. That facility is currently being renovated to house the bank’s retail loan department and will remain its commercial loan center.
Mercantile also announced last week the formation of a subsidiary, Mercantile Capital, through which it will offer customers additional financing options and services, such as equipment lease financing, asset based loans and junior debt facilities.
Mercantile has filed a license application with the Michigan Office of Financial and Insurance Services to run the new subsidiary as a Business and Industrial Development Company (BIDCO), which is a non-depository financial institution with operating guidelines similar to Small Business Investment Companies licensed by the federal Small Business Administration.
The corporation also announced that Mercantile Bank of West Michigan is now offering a payroll service to its business customers. Both the new financing options and services will become available during the fourth quarter, Johnson said.