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Big Net Income Jump For Mercantile
WYOMING — Mercantile Bank Corp. reported record second quarter net income of $1.7 million, marking a 120 percent increase in net income over 2001’s second quarter.
Basic earnings per share were 33 cents for the quarter, up from 24 cents in the year-ago quarter, despite a 57 percent increase in average shares outstanding.
“Despite the fact that we had a dramatic increase in average shares outstanding due to the stock sales last year, we were still able to post very impressive results in our earnings per share numbers,” said Charles Christmas, chief financial officer.
Total operating revenue was $6.3 million for the quarter, up 55 percent over the $3.7 million recorded for the same period in 2001.
Leading the earnings performance was growth in the company’s net interest income. “Our overall profitability continues to be driven by the strong earning asset growth which translated into increased net interest income,” Christmas said.
Asset growth quarter to quarter was more than $164 million. Christmas said asset growth was led by growth of the bank’s loan portfolio. Total assets were $782 million at June 30.
On a year-to-date basis, net income was $3.3 million, a 96 percent increase from the $1.7 million made in the first six months of last year.
Basic earnings per share for the six-month period were 64 cents, compared to the 56 cents reported for the same year-ago period, notwithstanding a 69 percent increase in average shares outstanding.
Average shares outstanding increased from 3 million in the first half of 2001 to 5.1 million in 2002’s first half.
“We are extremely pleased with the successful evolution of our business model, as exemplified by this quarter’s stellar performance and our recognition nationally as one of America’s fastest growing, publicly held small businesses,” said Chairman and CEO Gerald Johnson Jr.
Fortune Small Business Magazine recently named Mercantile Bank Corp. one of the top 100 fastest-growing companies in the nation.
Michael Price, president and chief operating officer, said the Grand Rapids economy continues to feel the effects of the recession, perhaps more so than many other parts of the country due to the high level of manufacturing firms and the prolonged deterioration of the office furniture industry.
Net loan charge-offs for the quarter totaled $74,000, or 0.01 percent, of total loans, numbers Price called “clearly superior” in light of the current economic climate.
But he warned that somewhat higher loss could be ahead if there is not some local economic recovery soon, and certain industries slip into further distress.
As it has since the start, the bank continues to add key personnel and continues to strive for an efficiency ratio of less than 50 percent for the year, he said.
Mercantile currently has three locations, one in downtown Grand Rapids, and one each in northwest and southwest Kent County.
The company has purchased land in southeast Kent County for a fourth branch, expected to open in early December, said Robert Kaminski Jr., senior vice president.
Next spring, Mercantile also will open a new branch in northeast Kent County on the East Beltline.
Kaminski said the additional branches continue the Mercantile strategy of limiting brick and mortar to locations strategically placed in the four quadrants of the metro area.
During the past quarter, Mercantile expanded its investment banking services through association with Donnelly, Penman, French, Haggarty & Co., an investment banking firm based in Detroit.
The company introduced payroll services over the past year and expects to introduce a full line of insurance products by late third quarter or early fourth quarter this year.
Asked about Mercantile’s loan growth, Price said the bank is taking credits from some of its competitors.
“We continue to see some of the large players in town disenfranchise some people, and we’re more than happy, if they meet our quality standards, to bring them over to the Mercantile side of things.”