Mercantile Posts 21 Percent
Increase In Net Income
GRAND RAPIDS — Mercantile Bank Corp. posted third quarter net income of $5.2 million, up 21 percent from the $4.3 million reported for the third quarter of 2005. Diluted earnings per share were up 20.8 percent to 64 cents, versus 53 cents for 2005’s third quarter.
Chairman and CEO Gerald Johnson Jr. said the increase in earnings over third quarter 2005 is especially significant because the costs associated with Mercantile’s expansion into the Lansing and Ann Arbor markets are reflected in the results of both periods.
For the first nine months of this year, net income was $15.2 million, compared with $13.4 million for the same period last year. Diluted earnings per share for the nine-month period were $1.88, an increase of 14.6 percent from the first nine months of 2005.
Total revenue was $16.9 million for the third quarter, reflecting a 9.8 percent increase over the third quarter of 2005. “I believe the entire Mercantile Bank Corp. team has demonstrated its ability to produce superior results in a difficult operating environment,” Johnson said. “More recently, our growth has moderated somewhat as our competition has demonstrated an increasing willingness to compromise on loan structure and pricing to retain market share, compromises which we have found unacceptable to the extent that we have declined a number of credit requests which we would have otherwise approved under normal circumstances.”
As of Sept. 30, Mercantile’s total assets equaled $2.03 billion, up $230.1 million from a year ago. For the quarter, assets increased $45 million and loans were up about $40 million, said CFO Chuck Christmas.
On the deposit side, the company continues to experience very rapid deposit growth in the local market, Christmas noted. During the first nine months of 2006, local deposits and funds are up $116 million, or almost 30 percent, on an annualized basis.
President Michael Price said expense control for the quarter was “outstanding,” particularly in light of the fact that both salary and benefit expense and total non-interest expense was less than the third quarter of last year, despite a 13 percent increase in assets and adding 21 full-time employees during the intervening 12 months.
“Growth continues to be very strong, even with the Michigan economy and a difficult situation with very thin pricing and structuring by our competitors,” Price remarked.
COO Robert Kaminski Jr. had announced at the end of the second quarter that Mercantile had developed several initiatives to enhance deposit growth. He said Mercantile continues to see some “very nice activity” in health savings accounts, including a significant relationship with one of the largest employers in this area. He said health savings accounts will be a growing emphasis in the months to come.
“Mercantile continues to develop some good local deposit growth, especially in some of our newer markets,” Kaminski observed.
Operationally, Mercantile is on track for a late fourth quarter 2006 or early first quarter 2007 roll out of its next generation Internet banking product, Kaminski said, and discussion continues on Mercantile’s new Lansing banking facility slated to open late first quarter or early second quarter 2007.
The directors of Mercantile Bank Corp. declared a fourth quarter cash dividend of 13 cents per share on the company’s common stock.
The dividend is payable Dec. 8 to shareholders of record as of the close of business on Nov. 10.