Total revenue was $9.1 million for the third quarter, an increase of more than 26 percent over 2002’s third quarter.
“Although we’re having another great earnings year — year-to-date earnings are up almost 28 percent from a year ago — the real story for this quarter has been our growth,” said Chairman and CEO Gerald Johnson Jr.
“We have just completed the best growth quarter in the company’s history, and we are in the midst of the best growth year that we’ve ever had.
“For the quarter we’re up almost $120 million sequentially, and year-over-year we’re up almost $284 million — and this is in a tough economy.”
Mercantile’s growth has been primarily driven by market share, he said. He pointed out that there are currently 179 banks in the state and of those, 140, or 78 percent, are less than $283 million in assets.
“I think that kind of says it all,” Johnson remarked.
CFO Charles Christmas said that current quarter financial results reflect a significant provision expense the company had to take during the quarter due to the “tremendous” loan growth it experienced.
The company’s loan loss provision increased 57 percent to $1.4 million as loan volume grew during the quarter.
Third quarter earnings also were affected by the sale of approximately 1.2 million shares of common stock on Sept. 19.
Assets increased by about $120 million for the quarter, with loans accounting for $106 million of the increase.
“The exciting element of this loan growth is that it is almost all market share gain as the slow economy has tempered requests from our existing customers,” said President and COO Michael Price.
“I think this bodes well for future demand as the economy recovers and our existing customer base has expansionary needs.”
Christmas said borrowers continue to elect variable rates over fixed rates. Variable rate loans at the end of the third quarter totaled about $700 million, or about 73 percent of Mercantile’s portfolio.
New and existing business continues to boost fee income. Mercantile earned $1 million in fee income for the third quarter, compared with $800,000 for the year-ago quarter.
Net income for the first nine months was $7 million and earnings per share were $1.25, reflecting an increase of 28 percent and 25 percent, respectively, over last year.
Total deposits, including repurchase agreements, grew by $167.6 million, or 22 percent, year over year.
Mercantile also recorded $70 million in Federal Home Loan Bank advances over the past year. Institutions regulated by the Office of Thrift Supervision use FHLB advances to fund a large portion of their portfolios.
Senior Vice President Robert Kaminski Jr. said Mercantile’s philosophy hasn’t changed since the bank opened six years ago.
“Mercantile’s philosophy is to continually evaluate its products and services in order to exceed the customers’ expectations — whether it is traditional banking products, Internet banking, funeral services investment or courier service — we listen to what our customers want and tailor our product offerings with a focus on that feedback.”
Kaminski said the bank’s third quarter growth reflects the implementation of that strategy in the Grand Rapids-Kent County market, as well as the beginning of Mercantile’s penetration in the Holland market and West Michigan shoreline area.