Mercantile Bank Corporation · NASDAQ:MBWM
Mercantile Bank — Q3 2020 Earnings Presentation
25 slides from Mercantile Bank's earnings presentation, Oct 20, 2020
Slide 1: Conference Call & Webcast Presentation Third Quarter 2020
CONFERENCE CALL & WEBCAST PRESENTATION THIRD QUARTER 2020
Slide 2: Forward-Looking Statements
Bank Corporation Mercantile | Forward-Looking Statements This presentation contains comments or information that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such comments are based on current expectations that involve a nu
Slide 3: Locations: Forty Banking Offices
AMercantile Locations Bank Corporation | Forty Banking Offices Michigan's O Fatseniee Branch @ Lencina center © Lending contr /tve ATM Banker
Slide 4: COVID-19 Activities & Timeline
AMercantile Bank Corporation | CoviD-19 Activities & Timeline mencement of Mercantile's PPP focus now 25% reduction payment elie Significant shiftstothe fi Health& assistance Portion of planning and employee Monitoring _safetyof___programs fc staff fully implementation attendance initial" employees
Slide 5: Credit Administration
ANercantile | Credit Administration Bank Corporation Mercantile has worked continuously since the end of the Great Recession to place itself in a position of strength during times of economic weakness. The maintenance of strong credit administration practices has been an integral part of that work.
Slide 6: Payment Relief Assistance — Currently Outstanding
AMercantile | Payment Relief Assistance — Currently Outstanding Bank Corporation COMMERCIAL INDUSTRY BREAKDOWN Interest Only Payment Deferrals By Industry % $9,000,000 Commercial Real Estate $10,000,000 Hotels $1,000,000 $1,000,000 Payment Deferrals 1 $3,000,000 Other
Slide 7: Paycheck Protection Program (PPP)
AMercantile | Paycheck Protection Program (PP?) Bank Corporation Round 1 Round 2 Totals From 4/3/2020 ~ 4/20/2020 From 4/27/2020 ~ 8/14/2020 # of Applications # of Applications # of Applications $ Funded $ Funded $ Funded
Slide 8: Commercial Loan Portfolio Composition
AMercantile | Commercial Loan Portfolio Composition Bank Corporation Commercial Loan Portfolio by Loan Type = Commercial & Industrial = Commercial Vacant Land, Land Development, & Residential Construction = Commercial Real Estate - Owner Occupied = Commercial Real Estate - Non-Owner Occupied ™ Comme
Slide 9: NAICS Composition: COVID-19 Impacted Industries
A Mercantile | NAICS Composition* Bank Corporation COVID-19 Impacted Industries Motor Vehicle and Parts Dealers Nursing & Assisted Living Hotels/Motels/Lodging Restaurants Movie Theaters/Entertainment $123,000,000 $12,000,000 $108,000,000 $89,000,000 $76,000,000 5.1% 5.1% 4.5% 3.8% 3.2%
Slide 10: Commercial Credit Risk Grades
AMercantile Commercial Bank Corporation Credit risk profiled by internal credit risk grades: Grades $1.0066 1890000 $267,000 a rad 6. 1 si98s ss10.9000 8 Grades 89 700,000 6 s302 $1,000 sa Total Commercial $51,000,000 549,400,000 $878.200,000
Slide 11: Past Due Loans
AMercantile Past lank Corporation ‘Commercial: ymmercial& Industral acant Land, Land Development. s dential Construction ‘Occupied s f on-Own é tate ~ MultiFamily & dential Rental 8 Total Commercial $ Retail ‘ome Equity & Other Family Mortgage s TotalRetail $ Total PastDueLoans §
Slide 12: Past Due Loans Chart
AMercantile | past jank Corporatior 30-89 Days m90 Days & Over mTotal m Over 89 Days & Accruing $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 Ye VP > ye
Slide 13: Consolidated Reports of Income
AMercantile Consolidated Reports of Income Bank Corporation Unaudited Net income § 10,686,000 $ 12,600,000 § 30,056000 $ 36139000 $0.66 $0.77 $1.85 $220 $0.66 S077 $1.85 $2.20 16233.196 16,390,203 16233,666 16393078
Slide 14: Consolidated Reports of Income: Interest Income and Expense
orporation Un AMercantile | Consolidated Reports of In INTEREST INCOME Loans, including fees $ 33664000 $ 37,005000 $ 107,428000 $ 109,559,000 Investment securities 1,788,000 2,660,000 8,654,000 7,587,000 Other interest-earning assets 142.000 651,000 11,000 1,627,000 Total interest income 35594000 4
Slide 15: Consolidated Reports of Income: Noninterest Income
AMercantile Consolidated Reports of Income lank Corporation Unaudited NONINTEREST INCOME Service charges on accounts 1,185,000 3,401,000 3,406,000 Mortgage banking income 9,479,000 2,889,000 19,746,000 5,291,000 Credit and debit card income 1,636,000 1,547,000 399,000 367,000 290,000 30,000 933,000
Slide 16: Consolidated Reports of Income: Noninterest Expense
AMercantile | Consolidated Reports of Inc Bank Corporation Unaud NONINTEREST EXPENSE Salaries and benefits 16,734,000 13,680,000 44,388,000 39,982,000 ¢ 1,697,000 5,944,000 5,089.00 pancy Furniture and equipment 629,000 2,500,000 1,885,000 Data processing costs 2,676,000 2,342,000 7,793,000 5,854,00
Slide 17: Consolidated Financial Highlights: Yield on Assets / Cost of Funds
AMercantile Consolidated Financial Highlights Bank Corporation Unaudited YIELD ON ASSETS / COST OF FUNDS
Slide 18: Consolidated Financial Highlights: Mortgage Banking Activity
AMercantile Consolidated Financial Highlights Bank Corporation Unaudited MORTGAGE BANKING ACTIVITY Total mortgage riginated $ 237.195 275,486 Purchase m« nortgage loans 1318 225,665 $10,199 7.760
Slide 19: Mortgage Pipeline Trend Year-Over-Year Comparison
Bank Corporation | Mortgage Pipeline Trend Year-Over-Year Comparison AMercantile | Non-Interest Income Strategic |nitiatives 3300 TH 2019 Volume ——_-2020-Volume
Slide 20: Mortgage Production Year-Over-Year Comparison
AMercantile Non-Interest Income Strategic Initiatives Bank Corporation || Mortgage Production Year-Over-Year Comparison [H 2019Volume MH 2020Volume + =— 2019Units — 2020Units $120,000,000.00 $100,000,000.00 $80,000,000.00 5 $60,000,000.00 8 $40,000,000.00 eee i J | | s s N a s Ss se £ SF SF ¥ SF o
Slide 21: Consolidated Financial Highlights: Asset Quality
AMercantile Consolidated Financial Highlights lank Corporation Unaudited ASSET QUALITY Gross loan charge-offs $ 24 40 12 519 Recoveries s 250 229 287 180 Net loan charge-offs (recoveries) 126) 182 (189) 5) 339 Net loan charge-offs to average loar (0.02%) 0.02% (0.08%) (0.02%) 0.08 Provision for loan
Slide 22: Nonperforming Assets Reconciliation
AMercantile Consolidated Financial Highlights Bank Corporation Unaudited NONPERFORMING ASSETS- RECONCILIATION Beginning b s 40, 736 887 3951 1,61 0 1,344 30 $ Cy) fe @) 13% 8 110) s 192) Valuation v s ° f @ Ending balanc s 7 6 288:
Slide 23: Consolidated Financial Highlights: Capital
A” lercantile | Consolidated Financial Highlights lank Corporation Unaudited CAPITAL an ble equity to tangible as: Common equity risk-based capital ratio ler 1 risk-based capital ratio. Total risk-based capital ratio tier 2 capital Total risk weighted assets Book value per common share Tangible book
Slide 24: Net Interest Income, Provision, Fee Income and Overhead Expense Outlook
A Mercantile 2927 Bank Corporation NET INTEREST INCOME PROVISION EXPENSE Net Loan Growth Loan Risk Rating Changes: Volume of New Nonaccrval Loans Reserve Economic Environmental Allocation Changes FEE: INCOME OVERHEAD EXPENSE © Operating Efficiency Opportunities @ oan Collection Costs
Slide 25: Thank You For Your Interest In Our Company
2 reERK YO FOR YOUR INTEREST IN OUR COMPANY NASDAQ Global Select Market Symbol: MBWM 310 Leonard Street NW, Grand Rapids, Mi 49504