The company announced last week it was expanding into the Holland/Lakeshore area with the opening of a retail mortgage loan production office during the second quarter that will later be replaced by a full-service branch, the bank’s sixth in the West Michigan market.
The full-service community bank cut the ribbon on its fourth branch, at 4860 Broadmoor SE in Kentwood, last December and will open a fifth branch in the Knapp’s Corner area on the East Beltline May 12.
In early 2005, the company also will reestablish its headquarters in the downtown Grand Rapids area, moving administrative offices from Wyoming into a new 60,000-square-foot, four-story building on 2.75 acres at Leonard Street and US-131.
The facility will serve as the new location for the bank’s main office, currently leased at 216 North Division Ave.
“We don’t have all the records for the community banks in the United States, but when you look at organic growth after five years, we’re not sure there’s been another bank that’s been able to achieve what the employees of Mercantile Bank have achieved,” said President and COO Michael Price at the company’s 6th annual shareholders meeting Thursday.
“We’re really trying to position ourselves as a high growth company and one that also has strong earnings momentum.”
Earlier this month, the company reported first quarter 2003 net income of $2.2 million, up 39 percent over the $1.6 million posted for the same period a year ago. Diluted per share earnings were 40 cents, up 38 percent from 29 cents per share in 2002’s first quarter.
Total revenue was $7.8 million for the quarter, compared with $5.6 million for the year-ago quarter. The company’s total assets were $968 million at March 31.
“It’s important to know that whenever you look at a bank that’s growing at a rate of pace that Mercantile is growing, there’s a very strong underpinning of credit culture in that bank,” Price told shareholders. Commercial loans represent 92 percent of its current loan portfolio.
Local deposits grew by 37 percent in 2002, noted CFO Charles Christmas. The bank has experienced annual asset growth of 15 to 20 percent a year and earnings per share growth of more than 20 percent annually.
Christmas said shareholders who invested in the company when it started in 1997 would have close to a 157 percent return on their investment to date. Earlier this year, the company initiated a cash dividend in addition to its 5 percent stock dividend.
In the last few years the bank has formed five new business ventures to increase fee income, including payroll, trust and brokerage, equipment lease financing and investment services, as well as merchant banking activities and insurance products.
Asked by a shareholder last week what were the chances that Mercantile could be purchased by a large bank, Chairman and CEO Gerald Johnson Jr. seemed to indicate the chances were slim. He said the company feels it can bring the best value to shareholders by remaining independent.
“When we started the bank we felt there was a real need in the community for a community type bank,” he said. “The one overriding thing that’s makes us successful is service and caring about our customers. To fulfill that mission, we think it would be very difficult to do so as an affiliate of a larger organization.
“We’re not seeking an acquirer by any stretch of the imagination. It would have to be a price that you as shareholders would say, ‘We think you should take it.’”
Come May, Mercantile will have only five locations in Kent County and a future sixth in Holland, and that is not the kind of footprint that is going to appeal to a Wells Fargo or a U.S. Bancorp, Johnson said.