Mercantiles Net Is Up 24 Percent

    WYOMING — Mercantile Bank Corp. reported net income of $3.1 million for 2004’s second quarter, up nearly 24 percent from the second quarter of 2003. For the first six months, net income was $6.1 million, a 28 percent increase over net income for the same period last year.

    Diluted earnings per share were 43 cents compared with 44 cents for the year-ago quarter. According to the company, earnings per share reflected the combined impact of strong loan growth and the common stock offering completed in the fourth quarter of 2003, which increased average shares outstanding by 1.5 million.

    Total revenue was $11 million for the second quarter, compared with $8.7 million earned during the same period a year ago. Chairman and CEO Gerald Johnson Jr. attributed the revenue increase to strong loan growth and a stable net interest margin.

    He noted that loan growth exceeded internal projections.

    Loans rose by nearly 37 percent to $319.4 million, funded primarily by $202.5 million in deposits, $75 million in advances from the Federal Home Loan Bank, and $42.8 million in net proceeds from the sale of common stock.

    “I would add that this significant loan growth — which is certainly not industry wide — was achieved without compromising our historically excellent asset quality,” Johnson remarked.

    “We have almost $600 million in loans that are re-pricing upwards every time the Fed raises interest rates, and that is significant for us.”

    Borrowers continued to elect variable rates over fixed rates in most cases, said CFO Charles Christmas. At June’s end, variable rate loans totaled $925 million, or about 78 percent of the bank’s loan portfolio. Three and a half years ago variable loans constituted 35 percent of its loan portfolio, he pointed out.

    Total assets were $1.4 billion at June 30, an increase of $343 million, or 33.2 percent, from the prior year’s second quarter.

    Christmas said Mercantile saw very strong local deposit growth in the first six months, with local deposits up $62 million, or 20 percent. Demand accounts are up by $37 million and savings deposits up by $27 million.

    “As in the past, the main issues continue to be loan yields, action or inaction by the Federal Reserve and how the market reacts to those, as well as our wholesale funding rates,” Christmas said.

    President Michael Price said most of the bank’s growth in loans and deposits continues to come from new relationships with the bank.

    The company’s new payroll product has been drawing customers, as well, said Executive Vice President Robert Kaminski Jr. Mercantile now has more than 61 payroll customers, 20 of which were added this year alone, he said.

    “Though the revenue from payroll customers is not significant enough at this point in time, it does provide yet another value-added service to the total banking relationship for Mercantile Bank.”

    Kaminski also noted that construction on Mercantile’s full-service banking center in Holland and corporate headquarters in downtown Grand Rapids continue on schedule, with estimated completion dates of October 2004 and spring 2005, respectively.           

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