Published in Finance

Mercantile Bank posts strong earnings and loan growth for fourth quarter

BY Wednesday, January 23, 2019 10:36am

GRAND RAPIDS — Mercantile Bank Corp. recorded strong earnings and loan growth to end 2018, a trend executives expect should continue this year.

The Grand Rapids-based Mercantile Bank (Nasdaq: MBWM) on Tuesday reported fourth quarter net income of $11.5 million, or 70 cents per diluted share. That compares to net income of $7.9 million, or 48 cents per diluted share, in the fourth quarter of 2017.

Full-year net income totaled $42 million, or $2.53 per diluted share, versus $31.2 million, or $1.90 per diluted share, in the prior year.

The bank’s “sustained strength and core profitability” and a “healthy” commercial loan pipeline combined to “properly position us to enter 2019 in a strong fashion and to take advantage of future growth opportunities in the coming year and beyond,” President and CEO Robert Kaminski said during a conference call with brokerage analysts to discuss results.

Mercantile Bank originated $136 million in commercial term loans during the fourth quarter and $508 million for all of 2018. That drove total annual loan growth of 7.5 percent, or $195 million, during the year to total loans of $2.75 billion.

Total commercial loans grew more than $54 million in the fourth quarter. For the full year, Mercantile reported commercial loans grew by 7 percent, or $157 million, to $2.36 billion.

At the end of 2018, Mercantile Bank had about $170 million in unfunded commitments for commercial construction and development loans that it expects to fund largely within the next 12 to 18 months.

Commercial and industrial loan growth was consistent with what the bank has seen in recent quarters and came with “great diversity,” Kaminski said.

“They are coming in from a variety of industries within our market and that’s encouraging because it shows the breadth of our client efforts (and) the breadth that our loan officers are engaging clients to develop relationships,” he said.

Mercantile Bank has 47 offices across the Lower Peninsula and $3.63 billion in total assets as of Dec. 31.

Kaminski told analysts that the direction of Michigan’s economy for now “remains positive even as rising interest rates and a tightening job market and housing market are increasingly evident."

“Employment in our primary market continued to grow and overall real estate conditions remain healthy,” he said. “Overall, our client base remains positive on the economic outlook for 2019 in our markets and seeks to appropriately assess and leverage opportunities to expand their businesses.”

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