CEO Reports Top Mercantile Year

July 21, 2003
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WYOMING — Mercantile Bank Corp., the bank holding company for Mercantile Bank of West Michigan, posted net income of $2.5 million for the second quarter, up 48 percent over the $1.7 million reported in 2002’s second quarter.

Earnings per share were 46 cents, reflecting an increase of more than 48 percent over the 31 cent per share earnings reported for the same period last year.

“We’ve just completed the best second quarter and the best first six months we’ve ever had,” said Chairman and CEO Gerald Johnson Jr.

“It was very much indeed a notable quarter. In May we reached and passed $1 billion in assets.

“Asset quality itself remains superior to many of our peers and other banks throughout Michigan, the Midwest and other regions of the country.”

Johnson said bank officials believe the expansion in the company’s share price multiples reflect the market’s recognition of the bank’s “ability to simultaneously and successfully grow both earnings and assets.”

Mercantile’s financial performance, combined with the dual appeal of a cash and stock dividend, he said, contributed to a 45 percent increase in stock price over the past 12 months.

“As economic and political situations improve over the coming months we believe we will have additional opportunities to grow our company,” he added.  

CFO Charles Christmas said the numbers reflect continued implementation of Mercantile’s primary strategy — the concentration on business lending, strong asset growth led by growth of the commercial loan portfolio, high asset quality, and controlled overhead costs.

Loans continue to dominate the bank’s earning asset growth, he noted. During the last 12 months, loans have increased $198 million and represent 90 percent of the total increase in earning assets, he said.

He said borrowers continue to elect variable rates over fixed rates. At June 30 variable rate loans totaled $590 million, or 68 percent of the bank’s total loan portfolio. 

During the just-passed quarter, Mercantile opened a branch at Knapp’s Corner on the East Beltline and established a mortgage loan production office in Holland, which is destined to become a full-service branch.

On July 9 the company declared its third consecutive quarterly cash dividend, and the week before was named to the list of “Fortune Small Business 100: America’s Fastest Growing Small Companies” for the second consecutive year.

Michael Price, president and chief operating officer, credited the bank’s “outstanding employees” for driving the financial results. At quarter end, Mercantile had 147 full-time equivalent bankers on staff. 

“They’ve built our assets over $1 billion and are poised to carry us over the $2 billion threshold,” Price added.

“Our year-end credit quality, our focus on dealing with well-run companies, combined with our strong credit administration and lending stance, have continued to produce phenomenal results in this difficult economy.”  

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