Mercantile Bank Corporation · NASDAQ:MBWM
Mercantile Bank — Q4 2020 Earnings Presentation
28 slides from Mercantile Bank's earnings presentation, Jan 19, 2021
Slide 1: Conference Call and Webcast Presentation
A Mercantile Sa Gomeraton CONFERENCE CALL AND WEBCAST PRESENTATION
Slide 2: Forward-Looking Statements
Forward-Looking Statements Mercantil le 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 number of risks and
Slide 3: Mercantile Bank Corporation: A commitment to excellence
Bank » Mercantile Acommitment to excellence BA Bank Corporation A transformational merger of equals in 2014 A 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 execute
Slide 4: Strategic Initiatives
Strategic Initiatives Aer cantile LEVERAGE DIGITAL PEOPLE & INVESTMENTS, DELIVERY CULTURE . or: stom * Rectuit and retain tor 2 p sin boar t i * Formalize a : or fai nvitonment 5 * Continue d me . . tin-clat f communi ‘ i artnerships an olunt Ivemen
Slide 5: Non-Interest Income Strategic Initiatives: Mortgage Pipeline
Non- interest Income Strategic Initiatives AMercantile Mortgage Pipeline Trend Year-Over-Year Comparison ‘Bank Corporation 1200 ais 7, 8 of & m2019Apes 2020 Apps Applications:
Slide 6: Non-Interest Income Strategic Initiatives: Mortgage Volume
_ Non-Interest Income Strategic Initiatives AMercantile Mortgage Pipeline Trend Year-Over-Year Comparison ‘Bank Corporation HE 2019Volume fH 2020Volume == 2019Units = 2020 Units — = es 8 0000000 es Hono 0 2 5 $ sc000009 0 ‘ ° PPPoE OG OS fo :
Slide 7: Leveraging Opportunities
Leveraging Opportunities Mercantil le Branch Optimization lonia Downtown: $300,000 in annual salary & benefits + $300,000 in overhead expenses = $600, 000 branches, Alma Downtown: $275,000 in ry ++ $225,000 = $500,000 * Shift to drive-thru Lakeview Downtown: $130,000 in annual salary & benefits + $7
Slide 8: Customer Experience
Customer Experience Mercantile | Ink Corporation Eee 2020 Growth Consumer Accounts Opened Online Up 209% Upcoming Projects for 2021 * Online mobile appointment scheduling software + Further expansion of Live ATM fleet with 7 4 upgrades planned in 2021 + Online account opening vendor chan: pI and i b
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 administration practices has been an integral part of that work. Loan portfolio metrics h
Slide 10: COVID-19 Activities & Timeline
COV'D-19 Activities & Timeline * Monitoring initial reports of COVID-19 = Pandemic plan activated to ensure the health nd safety of our employees and customers * Branches open by appointment only (3/18) = Commencement of Mercantile's payment relief assistance programs for commercial and retail loan
Slide 11: Payment Relief Assistance
Payment Relief Assistance Mercantile Currently Outstanding sank Corporation COMMERCIAL. Interest Only Amendments INDUSTRY BREAKDOWN. Interest Only Amendments $14,000,000 Construction $2,000,000 ee $2,000,000 COMMERCIAL Restaurants $1,000,000 Payment Deferrals een poe Other $2,000,000
Slide 12: Paycheck Protection Program (PPP)
__ Paycheck Protection Program (PPP) AMercantile Forgiveness Activity (4s of 114/21) LOAN BALANCE SEGMENT —#f $ # $ # $ Under $50,000 945, $20500,000 480 $10;700,000 465, $9,800,000 $50,000 - $150,000 s98 $53,500,000 302 $27,100,000 296 $26,400,000 $150,000 - $ 382 $104,500, 200 $55,900,000 182 $48,
Slide 13: COVID-19 Impacted Industries
COV|D-19 Impacted Industries NAICS Composition* Mercantile ‘Bank Corporation COVID-19 Impacted Industries Nursing & Assisted Living Hotels / Motels / Lodging Restaurants* Movie Theaters / Entertainment $125,000,000 $106,000.00 $82,000,000 $71,000,000 516 * Excludes PPP Io # Significant portion are l
Slide 14: Commercial Loan Portfolio Composition
| Commercial Loan Portfolio Composition Mercantile Loan Type I Commercial & Industrial I Commercial Vacant Land Land Development & Residential Construction 1 Commercial Real Estate - Owner Occupied i Commercial Real Estate - Non-Owner Occupied I Commercial Real Estate - Multi-Family & Residential Re
Slide 15: Commercial Credit Exposure
Commercial Credit Exposure Mercantil le —EEoEoEoEoEoEoEoEEEEESESE SS =_=__= Credit risk profile by internal credit risk grades. Grades 1-4 $828:706,000 $22547,000 $315,134,000 __$396,700,000 $91,711,000 Grades §-7 $306,614,000 $32,398,000 $185541000 _-$520,395,000 $54,m,000 Grades 8-9 $10,103,000 $1
Slide 16: Past Due Loans
| Past Due Loans* Mercantile ‘Commercial: Commercial & industria $ 261000 172.000 © 433000 144990.000 1145423000 ° Vacant Land, Land Development, Moco Lard Cane Dos 3 ° ° © © 55085000 —_55)085000 ° Real Estate-Owner Occupied $ © 197,000 421,000 618,000 529,335,000, ‘529,953,000 ° Real Estate-Nor-Owm
Slide 17: Past Due Loans
Past Due Loans Mercantile ‘Bank Corporation $3500,000 $3000.00 $2,500.00 $200,000 $1500.00 $1,000,000 $500,000 = 30-89Days 90Days& Over Total ml Over 89 Days & Accruing
Slide 18: Consolidated Reports of Income
Consolidated Reports of Income | Unaudited Mercantile ‘Bank Corporation Net Income: Basic earnings per share Diluted earnings per share Average basic shares outstanding Average diluted ares outstanding $ $ December 31,2020 14,082,000 16279,052 16279243 $ December 31, 2019, 18317,000 16373458 1637574
Slide 19: Consolidated Reports of Income
Consolidated Reports of Income Mercantile | Unaudited Beck corporat, December 31,2020 December 31,2019 December 31,2020 December 31,2019 INTEREST INCOME (oone rehding fos $ ssgmo00 s—se257000 $ —7S8000 § ©—_us.BIE000 inert secithie 1484000 255000 10038000 v61s0000 Other interest-earning assets 165,0
Slide 20: Consolidated Reports of Income
Consolidated Reports of Income Mercantile | Unaudited Bonk corporation December31,2020 December31,2019December31,2020 December 2019 NONINTEREST INCOME Service charges on accounts $ 177,000 $ 178,000 $ 4578000 $ 4584000 Mortgage banking income 9,600,000 3194,000 29346000 8,485,000 Credit and debit ca
Slide 21: Consolidated Reports of Income
Consolidated Reports of Income Mercantile | Unaudited Beck corporat, December31,2020 December 31,2019 Decernber31,2020 December 31,2019 NONINTEREST EXPENSE Salaries and benefits $ 15411000 $ 15851000 $ 59799000 $ 53,833,000 (Occupancy 2,006,000 1972,000 7,950,000 7,061,000 Fumiture and equipment 850
Slide 22: Consolidated Financial Highlights
Consolidated Financial Highlights Mercantile | Unaudited eho) YIELD ON ASSETS / COST OF FUNDS, Yield on loans 434% 4.03% 418% 469% 5.01% Yield on securities 1.69% 226% 337% 473% 290% Yield on other interest-earning assets, 012% 012% 0.199% 122% 165% Yield on total earning assets 3.55% 3.45% 3.85% 48
Slide 23: Consolidated Financial Highlights
Consolidated Financial Highlights Mercantile | Unaudited Denk corporation PQ SQ QQ Qtr MORTGAGE BANKING ACTIVITY Total mortgage loans originated $ 218904 237195 275.486 «= 132859 Non Purchase mortgage loans originated $ 99490 95068 5801S, 46538 «49,407 Refinance mortgage loans originated $ m4 = asiz
Slide 24: Consolidated Financial Highlights
Consolidated Financial Highlights Mercantile | Unaudited Beck corporat, ASSET QUALITY Gross loan charge-offs, $ 340 124 335 40 m2 Recoveries $ Bs 250 183 Fo) 287 Net loan charge-offs (recoveries) $ 106 (126) 182 (089) 075) Net loan charge-offs to average loans, 0.01% — (0.02%) 0.02% (0.03%) (0.02%)
Slide 25: Consolidated Financial Highlights
Consolidated Financial Highlights Mercantile | Unaudited Bonk commorston NONPERFORMING ASSETS - RECONCILIATION Beginning balance $4658 Bao 3740 2736-2887 Additions $ on 181s 20 1344 30 Other activity $ ° ° ° en 15 Return to performing status $ o (72) (26) a o Principal payments $ — ho64) (249) (278)
Slide 26: Consolidated Financial Highlights
Consolidated Financial Highlights Mercantile | Unaudited eho) 2020 2020 2020 2020 2019 4Qr S8Qur QQ tr CAPITAL Tangible equity to tangible assets 889% 86% 874% 104% TIS Tier I leverage capital ratio 977% 980% 102% = 47% = 28% ‘Common equity risk-based capital ratio 134% = «137% = 134% = 10.92% += 10
Slide 27: 2021 Forecast Considerations
202) Forecast Considerations ik Corporation lercantile A" NET INTEREST PROVISION FEE INCOME EXPENSE INCOME . on z Jortgag ng ard Interchan
Slide 28: Thank You For Your Interest In Our Company
A Mercantile Sa Gomeraton THANK YOU FOR YOUR INTEREST IN OUR COMPANY