Mercantile Hikes Income 61 Percent
Basic earnings per share rose 31 percent, from 32 cents per share in 2001's third quarter to 42 cents per share in the just passed quarter.
Mercantile ended the third quarter with $870 million in assets, an increase of $223 million over the prior year's third quarter.
"To put that in perspective, $223 million is larger than a great percentage of the banks that are located in the state of Michigan," said Gerald Johnson Jr., chairman and CEO.
Asset growth was led by the bank's loan portfolio, which stood at $717 million at quarter's end, said CFO Charles Christmas.
"We have brought on some new lenders that are bringing business with them, there's no doubt about it," Johnson said.
"Secondly, the banking consolidation here in Grand Rapids has given us opportunities to attract a lot of new business that we wouldn't have had even two or three years ago. The Fifth Third acquisition of Old Kent is a good example where we now are able at least to go in and bid on new business.
"It's not Fifth Third's fault; it's just that this is a rather parochial community and people just don't feel the loyalty to an out-of-state bank that they felt to a great institution like Old Kent."
For the first nine months, net income was up 80.7 percent to $5.5 million from $3 million reported for the first nine months of 2001.
Year-to-date earnings per share were $1.06, compared with 88 cents per share in the prior nine-month period, despite a nearly 50 percent increase in the number of shares outstanding.
Thus far this year, local deposit growth is up $63 million, or 30 percent, Christmas noted. He said growth was driven by Mercantile's three main products: demand accounts, which are up 57 percent; savings deposits, which are up 34 percent; and repurchase agreements, which are up 31 percent.
Johnson said the company achieved strong loan and deposit growth during the quarter despite a soft local economy.
The majority of the growth has been in new business, he said.
Total operating revenue was $7.1 million for the third quarter, an increase of nearly 48 percent over the year-ago quarter.
Excluding gains from the sale of securities, third quarter non-interest income increased 82 percent.
According to Mercantile, primary reasons for the increase were an 87 percent increase in service charges, a 119 percent increase in mortgage referral fees, and a 152 percent increase related to the cash surrender value of bank-owned life insurance.
Johnson said that over the five years of the bank's existence Mercantile has demonstrated "a seldom replicated ability" to generate outstanding growth while maintaining exceptionally high asset quality.