Mercantile Bank Corporation · NASDAQ:MBWM
Mercantile Bank — Q2 2021 Earnings Presentation
28 slides from Mercantile Bank's earnings presentation, Jul 20, 2021
Slide 1: Conference Call and Webcast Presentation Second Quarter 2021
CONFERENCE CALL AND WEBCAST PRESENTATION SECOND QUARTER 2021
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains statements or information that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward- looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “
Slide 3: Mercantile Bank: A commitment to excellence
Mercantile Bank A commitment to excellence • Transformational merger of equals in 2014 • History of solid organic loan growth • Strong asset quality • Performance built on a culture dedicated to mutually beneficial relationships with customers and communities, cultivated and executed by a talented,
Slide 4: Strategic Initiatives
Strategic Initiatives LEVERAGE DIGITAL PEOPLE & RISK & INVESTMENTS DELIVERY CULTURE PROCESS • Expand usage of • Expand customer • Recruit and retain top • Support customers Treasury Management utilization of digital talent during times of products and services banking services economic uncertainty •
Slide 5: Forward Progress
Forward Progress DIVERSITY CORPORATE ENVIRONMENTAL, EQUITY & INCLUSION SOCIAL RESPONSIBILITY SOCIAL, GOVERNANCE • Providing access to enriching • Promote energy efficiencies in all • Formation of an ESG Committee learning and growth Bank locations. and issuance of the Bank’s first opportunities via
Slide 6: Mortgage Pipeline Trend: Applications
Non-Interest Income Strategic Initiatives Mortgage Pipeline Trend Year-Over-Year Comparison 2020 Apps 2021 Apps 1,200 1,000 800 APPLICATIONS 600 400 200 0 6
Slide 7: Mortgage Pipeline Trend: Volume
Non-Interest Income Strategic Initiatives Mortgage Pipeline Trend Year-Over-Year Comparison 2021 Volume 2020 Volume 2021 Units 2020 Units $120,000,000 600 $100,000,000 500 $80,000,000 400 Volume Units $60,000,000 300 $40,000,000 200 $20,000,000 100 $- 0 7
Slide 8: Product Offerings
Product Offerings Best In Class PEER PRODUCT MBWM BAC JPM FITB CMA Integrated Payables Integrated Receivables Autobooks for Small Business with Electronic Invoicing & Collection Credit Card Rewards 8
Slide 9: Strong Credit Administration
Strong Credit Administration 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 underwriting and administration practices have been an integral part of that work. Loan p
Slide 10: COVID-19 Activities & Timeline
COVID-19 Activities & Timeline JANUARY 2020 SEPTEMBER 2020 Monitoring initial reports of COVID-19 25% reduction of in-person employee attendance in densely occupied offices FEBRUARY 2020 Pandemic plan activated to ensure the health and NOVEMBER 2020 safety of our employees and customers All
Slide 11: Payment Relief Assistance
Payment Relief Assistance Currently Outstanding COMMERCIAL LOANS Payment Deferrals # Total $ Total 0 $0 MORTGAGE LOANS Payment Deferrals # Total $ Total 6 $500,000 11
Slide 12: Paycheck Protection Program (PPP)
Paycheck Protection Program (PPP) (As of 6/30/21) ORIGINAL FORGIVEN REMAINING LOAN BALANCE SEGMENT # $ # $ # $ PPP Round One 2,171 $553,100,000 (1,934) ($487,200,000) 237 $65,900,000 PPP Round Two 1,216 $208,500,000 (194) ($28,700,000) 1,022 $179,800,000 Totals 3,387 $761,600,000 (2,128) ($515,900,0
Slide 13: COVID-19 Impacted Industries
COVID-19 Impacted Industries NAICS Composition* COVID-19 Impacted Industries % of Total Industry June 30, 2021 Commercial Loans Nursing & Assisted Living $128,000,000 5.0% Hotels / Motels / Lodging $101,000,000 3.9% Restaurants# $77,000,000 3.0% Movie Theaters / Entertainment $72,000,000 2.8% * Excl
Slide 14: Core Commercial Loan Growth
Core Commercial Loan Growth 12/31/20 6/30/21 CHANGE 11% Growth Rate Annualized Core Loans $ 2,429,000,000 $ 2,564,000,000 $ +135,000,000 PPP Loans $ 365,000,000 $ 246,000,000 $ -119,000,000 Total $ 2,794,000,000 $ 2,810,000,000 $ +16,000,000 14
Slide 15: Commercial Loan Portfolio Composition
Commercial Loan Portfolio Composition Loan Type 6% Commercial & Industrial Commercial Vacant Land 33% Land Development & Residential Construction Commercial Real Estate 37% - Owner Occupied Commercial Real Estate - Non-Owner Occupied 2% Commercial Real Estate 22% - Multi-Family & Residential Rental
Slide 16: Commercial Credit Exposure
Commercial Credit Exposure Credit risk profile by internal credit risk grades* Commercial Commercial Vacant Land, Commercial Commercial Real Estate – Internal Credit Risk Commercial & Land Real Estate – Real Estate – Multi-Family & Grade Groupings Industrial Development, Non-Owner Owner Occupied Res
Slide 17: Past Due Loans
Past Due Loans* Recorded 30 – 59 60 – 89 > 89 Total Past Balance > Days Days Past Days Current Total Loans Due 89 Days & Past Due Due Past Due Accruing Commercial: Commercial & Industrial $ 0 500,000 600,000 1,100,000 1,102,700,000 1,103,800,000 0 Vacant Land, Land Development, Residential $ 0 0 0 0
Slide 18: Past Due Loans
Past Due Loans $3,500,000 30-89 Days 90 Days & Over Total Over 89 Days & Accruing $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 18
Slide 19: Consolidated Reports of Income
Consolidated Reports of Income Unaudited Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Net Income: $ 18,091,000 $ 8,698,000 $ 32,331,000 $ 19,370,000 Basic earnings per share 1.12 0.54 2.00 1.19 Diluted earnings per sh
Slide 20: Consolidated Reports of Income
Consolidated Reports of Income Unaudited Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 INTEREST INCOME Loans, including fees $ 33,789,000 $ 34,322,000 $ 66,774,000 $ 67,764,000 Investment securities 1,802,000 2,749,000
Slide 21: Consolidated Reports of Income
Consolidated Reports of Income Unaudited Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 NONINTEREST INCOME Service charges on accounts $ 1,209,000 $ 1,045,000 $ 2,363,000 $ 2,267,000 Mortgage banking income 7,695,000 7,
Slide 22: Consolidated Reports of Income
Consolidated Reports of Income Unaudited Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 NONINTEREST EXPENSE Salaries and benefits $ 16,194,000 $ 14,126,000 $ 31,279,000 $ 27,654,000 Occupancy 1,977,000 1,862,000 3,991,0
Slide 23: Consolidated Financial Highlights
Consolidated Financial Highlights Unaudited Quarterly 2021 2021 2020 2020 2020 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr YIELD ON ASSETS / COST OF FUNDS Yield on loans 3.99% 4.03% 4.34% 4.03% 4.18% Yield on securities 1.54% 1.61% 1.69% 2.26% 3.37% Yield on other interest-earning assets 0.12% 0.11% 0.1
Slide 24: Consolidated Financial Highlights: Mortgage Banking Activity
Consolidated Financial Highlights Unaudited (dollars in thousands) Quarterly 2021 2021 2020 2020 2020 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr MORTGAGE BANKING ACTIVITY Total mortgage loans originated $ 237,300 245,200 218,900 237,200 275,500 Purchase mortgage loans originated $ 144,500 81,500 99,500
Slide 25: Consolidated Financial Highlights: Asset Quality
Consolidated Financial Highlights Unaudited (dollars in thousands) Quarterly 2021 2021 2020 2020 2020 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr ASSET QUALITY Gross loan charge-offs $ 68 53 340 124 335 Recoveries $ 386 481 234 250 153 Net loan charge-offs (recoveries) $ (318) (428) 106 (126) 182 Net lo
Slide 26: Consolidated Financial Highlights: Nonperforming Assets
Consolidated Financial Highlights Unaudited (dollars in thousands) Quarterly 2021 2021 2020 2020 2020 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr NONPERFORMING ASSETS - RECONCILIATION Beginning balance $ 3,200 4,100 4,700 3,400 3,700 Additions $ 500 100 1,000 1,600 200 Return to performing status $ 0 (1
Slide 27: Consolidated Financial Highlights: Capital
Consolidated Financial Highlights Unaudited (dollars in thousands) Quarterly 2021 2021 2020 2020 2020 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr CAPITAL Tangible equity to tangible assets 8.51% 8.36% 8.89% 8.69% 8.74% Tier 1 leverage capital ratio 9.47% 9.67% 9.77% 9.80% 10.21% Common equity risk-based
Slide 28: Thank You For Your Interest In Our Company
THANK YOU FOR YOUR INTEREST IN OUR COMPANY NASDAQ Global Select Market Symbol: MBWM 310 Leonard Street NW, Grand Rapids, MI 49504 616.406.3000 or 800.453.8700 www.mercbank.com