Mercantile 4Q Income Up 49 Percent

January 14, 2005
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GRAND RAPIDS — Mercantile Bank Corp. reported fourth quarter net income of $4.5 million, a 48.9 percent jump in income over the $3 million posted in the fourth quarter of last year.

Diluted earning per share for the quarter were 61 cents, compared with 42 cents in the year-ago period. Total revenue for the quarter was $13.2 million, up from $10 million the year before.

Mercantile passed the $1.5 billion mark in assets during the quarter.

Net income of the fiscal year ended Dec. 31 was $13.7 million, or 37 percent higher than total net income for fiscal 2003.

Excluding a one-time charge of $845,000, earnings were $14.3 million, representing a 42.5 percent increase over the year before. Diluted earnings per share were $1.87, compared with $1.61 in the prior fiscal year.

“We’re pleased to report exceptional results and earnings, earnings growth, asset growth, asset quality — and all of this organic by our successful move into a new market in Holland last year,” said Chairman and CEO Gerald R. Johnson Jr. Mercantile opened a 30,000-square-foot banking center there in November.

“2004 was actually a watershed year for us. Our growth continued and continues relatively unabated. We’ve positioned ourselves extremely well for the ongoing increases in interest rates, a strategy that served us well in 2004 and also has a very positive impact on our operating performance in 2005.”

As the economy in West Michigan slowly improves, the bank is seeing increased borrowing and deposit activities among current customers, he said.

Once again, loan growth was the primary driver of Mercantile’s revenue growth. Variable rate loans totaled more than $1 billion at year’s end, or 78 percent of total loans, said CFO Charles Christmas.

He noted that the level of variable rate loans has been steadily decreasing with interest rate increases over the past six months. With the most recent Federal Reserve increase on Dec. 15 that total has declined to just 5 percent of total loans and should continue to decline with future increases in the wholesale federal fund rate.

Mercantile saw increases in all non-mortgage related activities in 2004, which Christmas said offset the $545,000 decline in residential mortgage fees compared to the prior year.

Total revenue was $46.7 million for the fiscal year, or 31 percent higher than fiscal 2003 earnings.

President Michael Price referred to the just passed quarter as “tremendous” for Mercantile and said new banking relationships added during the quarter and the year contributed to the company’s “robust growth.” He said Mercantile’s presence and visibility in the Lakeshore area “continues to expand at a rapid pace.”

Mercantile will move into its new headquarters on Leonard Street in downtown Grand Rapids in late spring, said Executive Vice President Robert Kaminski Jr.    

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