Mercantile Bank Corporation · NASDAQ:MBWM
Mercantile Bank — Q2 2020 Earnings Presentation
26 slides from Mercantile Bank's earnings presentation, Jul 21, 2020
Slide 1: Second Quarter 2020 Earnings Call Presentation
SECOND QUARTER 2020 EARNINGS CALL PRESENTATION
Slide 2: Forward-Looking Statements
AMercantile | Forward-Looking Statements Bank Corporation 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 @ n
Slide 3: Locations: Forty Banking Offices
AMercantile Locations Bank Corporation | Forty Banking Offices Michigan’s © Fut sone Branch @ encing contr © Lending Corer! Live ATM Benker
Slide 4: COVID-19 Activities & Timeline
AMercantile Bank Corporation 75-80% remotely from Monitoring | COVID-19 Activities & Timeline of staff working CARES Act signed into DPDBDDDDDPDDD? PPP Phased applications retum of approved by Planningfor employees. the State's tothe i workplace initial Reports Health & Commencement All Significant
Slide 5: Credit Administration
Mercantile | Credit Administration Bank Corporation Mercantile remains in close contact with its customers to monitor the impact of COVID-19 on their status and financial condition. Mercantile has worked continuously since the end of the Great Recession to place itself in a position of strength duri
Slide 6: Payment Relief Assistance
AMercantile payment Relief Assistance — Bank Corporation CC CIP Interest Only Amendments Payment Deferrals By Loan Type Total Principal Balance Type of Loan $22,100,000 | Portfolio Mortgage Payment Deferrals | ConsumerIHELOC | $1,700,000 $23,800,000 Grand Total $298,000,000 Curent as of 71772020
Slide 7: Payment Relief Assistance
AMercantile | payment Relief Assistance — * CC CIF 2ETAI Interest Only Amendments Payment Deferrals By Loan Type # Total $ Total $30,000,000 tal Principal Balance Portfolio Mortgage $1,800,000 Consumer/HELOC $100,000 Grand Total $1,900,000 $100,000,000 Curent as of 71772020
Slide 8: Paycheck Protection Program (PPP)
AMercantile | Paycheck Protection Program (PPP) Bank Corporation Round 1 Round 2 Totals # of Applications # of Applications # of Applications $ Funded $ Funded $ Funded
Slide 9: 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 10: NAICS Composition
A Mercantile | NAICS Composition* Bank Corporation COVID-19 Impacted Industries Motor Vehicle and Parts Dealers Hotels/Motels/Lodging Nursing & Assisted Living Restaurants Movie Theaters/Entertainment Other Retail Miscellaneous Food & Beverage Stores Gas Stations $118,000,000 $106,000,000 $105,000,0
Slide 11: Commercial Credit Risk Grades
AMercantile | Commercial Bank Corporation Credit risk profiled by internal credit risk grades: Commercial vacant Land, 4 Development & Industri esidential Construction Grades 1-4 '$1,008,010,000 ‘$21,500,000 $308,221,000 '$545,764,000 $73,394,000 Grades 5:7 '$289,242,000 $30,914,000 253,695,000 294,
Slide 12: Past Due
A™ercantile Past Due* Bank Corporation “As of June, 30, 2020. Excludes current non-accrual foane. 59Days 60-89Days > 89 Day PastDue -PastDue —Past Due eS CET Commer SO ntl e000 38.000. 1.307.417.000.1.307. 455,000 Wecert ie (are Ceveinronit s 0 22000-18600 »—«—«220.000 © s2764.000 52,584,000 ° Real
Slide 13: Past Due
A™ercantile Past $4,000,000 30-89 Days 90 Days & Over Total ‘M Over 89 Days & Accruing $3,500 000 $3,000,000 $2,500,000 $2,000,000 ‘$1,500,000 $1,000,000 ¢s00,p00 $0 s re Ss oe » & »
Slide 14: Consolidated Reports of Income
A™ercantile Consolidated Reports of Income Bank Corporation Un Net Income $ 8,698,000 $ 11,715,000 $ 19,370,000 $23,539,000 Basic earnings per share $0.54 $0.71 $1.19 $1.43 Diluted earings per share $0.54 $0.71 $1.19 $1.43 Average basic shares outstanding 16,212,500 16,428,187 16,281,391 16,428,875
Slide 15: Consolidated Reports of Income
A™ercantile Consolidated Reports of Income Bank Corporation Un INTEREST INCOME Loans, including fees 34,322,000 $96,765,000 $67,764,000 $72,555,000 Investment securities 2,749,000 2,485,000 6,766,000 4,926,000 Other interest-eaming assets 93,000 569,000 568,000 976,000 Total interest income 37,164,0
Slide 16: Consolidated Reports of Income
A™ercantile Consolidated Reports of Income Bank Corporation Un Three Months hree Months Six Months Six Months Ended Ended Ended Ended 2 June 30,2020 June 30, 2019 NONINTEREST INCOME Service charges on accounts 1,045,000 4,143,000 2,267,000 2,220,000 Mortgage banking income 7,640,000 1,345,000 10,267
Slide 17: Consolidated Reports of Income
A™ercantile Consolidated Reports of Income Bank Corporation Un NONINTEREST EXPENSE Salaries and benefits 14,126,000 19,286,000 27,654,000 26,302,000 Occupancy 1,862,000 1,629,000 3,921,000 3,391,000 Fumiture and equipment 851,000 621,000 1,629,000 1,257,000 Data processing costs 2,633,000 2,295,000
Slide 18: Consolidated Financial Highlights
A™ercantile Consolidated Financial Highlights Bank Corporation Unaudited 2020 2020 2019 2019 2ndQtr __istQtr_ 4th Qtr Sd Qtr_2nd Qtr YIELD ON ASSETS / COST OF FUNDS. Yield on loans 4.18% 469% = 5.01%» 5.08% «= 5.18% Yield on securities 337% 4.73% «= «2.90% ©=— 2.98% 2.85% Yield on other interest-ear
Slide 19: Consolidated Financial Highlights: Mortgage Banking Activity
A Bank Corporation Unaudited Mercantile | Consolidated Financial Highlights (tars in thousands) 2020 2020 2019 2019 2019 2ndQtr __1stQtr_ ath Qtr ard Qtr__ 2nd te MORTGAGE BANKING ACTIVITY Total mortgage loans originated $ 275,486 132,859 110,611 132,852 80,205 Purchase mortgage loans originated S 5
Slide 20: Non-Interest Income Strategic Initiatives: Mortgage Pipeline
AMercantile | Non-Interest Income Strategic Initiatives Bank Corporation | Mortgage Pipeline Trend Year-Over-Year Comparison m 2019 m 2020 Applications 8
Slide 21: Non-Interest Income Strategic Initiatives: Mortgage Production
A Volume Mercantile Bank Corporation $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 § s Non-Interest Income Strategic Initiatives Mortgage Production Year-Over-Year Comparison 112019 Volume 12020 Volume 2019 Units 2020 Units
Slide 22: Consolidated Financial Highlights: Asset Quality
Mercantile | Consolidated Financial Highlights Bank Corporation Unaudited A (dollars in thousane 2020 2020 2019 2019 2019 2nd Qtr 4st Qtr 4th Qtr 3rd Qtr 2nd Qtr ASSET QUALITY Gross loan charge-offs $ 335 40 112 519 78 Recoveries s 153 229 287 180 96 Net loan charge-offs (recoveries) s 182 (189) (17
Slide 23: Nonperforming Assets Reconciliation
Mercantile | Consolidated Financial Highlights Bank Corporation Unaudited A Quarterly (dollars in thousands) 2020 2020 2019 2019 2019 2nd Qtr _istQtr___4thQtr__ 3rd Qtr_2nd Qtr NONPERFORMING ASSETS - RECONCILIATION Beginning balance 3,740 2,736 2,887 3,951 4,534 Additions 220 1,344 30 339 26 Other a
Slide 24: Consolidated Financial Highlights: Capital
A™ercantile Consolidated Financial Highlights Bank Corporation Unaudited arterly (dollars in thousands except per share data) 2020 2020 2019 2019 2019 2nd Q ist Qtr 4th Qtr Sd Qtr__2nd Qtr CAPITAL Tangible equity to tangible assets, 874% 10.14% 10.15% 9.67% © 9.82% Tier 1 leverage capital ratio 10.2
Slide 25: 2020 Outlook
AMercantile | 2020 Bank Corporation NET INTEREST PROVISION INCOME EXPENSE OVERHEAD EXPENSE @ Net Loan Growth © Loan Collection Costs @ Volume of Loan Downgrades @ Volume of New Nonacerual Loans @ Reserve Environmental Allocation Changes
Slide 26: Thank You For Your Interest In Our Company
EE — THANK YO FOR YOUR INTEREST IN OUR COMPANY NASDAQ Global Select Market Symbol: MBWWM 310 Leonard Street NW, Grand Rapids, Mi 49504 #5