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Section 1: 8-K (FORM 8-K)

mbwm20170417_8k.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (date of earliest event reported): April 18, 2017

 


 

Mercantile Bank Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Michigan

000-26719

38-3360865

(State or other jurisdiction

(Commission File

(IRS Employer

of incorporation)

Number)

Identification Number)

 

 

 

310 Leonard Street NW, Grand Rapids, Michigan

49504

(Address of principal executive offices)

(Zip Code)

 

 

Registrant's telephone number, including area code 616-406-3000

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 

 

 

Item 2.02

Results of Operations and Financial Condition.

 

Earnings Release

 

On April 18, 2017, Mercantile Bank Corporation issued a press release announcing earnings and other financial results for the quarter ended March 31, 2017. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated here by reference.

 

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

 

Item 9.01

Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit Number

Description

   
99.1 Press release of Mercantile Bank Corporation dated April 18,  2017, reporting financial results and earnings for the quarter ended March 31, 2017.

 

 

 

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Mercantile Bank Corporation

 

 

 

 

 

 

By:

/s/ Charles E. Christmas

 

    Charles E. Christmas  
    Executive Vice President, Chief  
    Financial Officer and Treasurer  

 

Date: April 18, 2017

 

 

 

 

Exhibit Index

 

 

Exhibit Number

Description

   
99.1 Press release of Mercantile Bank Corporation dated April 18, 2017, reporting financial results and earnings for the quarter ended March 31, 2017.

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

ex99-1.htm

Exhibit 99.1

 

 

Mercantile Bank Corporation Reports Strong First Quarter 2017 Results

Continued strength in profitability and loan originations highlight quarter

 

GRAND RAPIDS, Mich., April 18, 2017 – Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $7.6 million, or $0.46 per diluted share, for the first quarter of 2017, compared with net income of $8.5 million, or $0.52 per diluted share, for the respective prior-year period. A bank owned life insurance claim during the first quarter of 2017 increased reported net income by approximately $1.1 million, or $0.06 per diluted share, while the repurchase of $11.0 million in trust preferred securities at a 27 percent discount during the first quarter of 2016 increased reported net income by approximately $1.8 million, or $0.11 per diluted share.

 

The first quarter was highlighted by:

 

 

Robust earnings performance and strong capital position

 

Solid net interest margin

 

Growth in fee income, most notably mortgage banking activity income

 

Lower overhead costs

 

Strong asset quality, as depicted by low levels of nonperforming assets and loans in the 30- to 89-days delinquent category

 

Annualized loan growth of approximately 11 percent

 

New commercial term loan originations of approximately $130 million

 

Sustained strength in the commercial loan pipeline

 

Expansion of operating area into Southeast Michigan

 

“We are very excited to begin 2017 with a healthy quarter that reflects sustained strength in profitability and loan originations,” said Robert B. Kaminski, Jr., President and Chief Executive Officer of Mercantile. “Our strong financial performance reflects a sound net interest margin, increased fee income, and reduced overhead costs. We are pleased with the net loan growth that was achieved during the quarter, and based on our current commercial loan pipeline, we are confident that solid loan growth can be realized in future periods.”

 

Operating Results

 

Total revenue, which consists of net interest income and noninterest income, was $31.4 million during the first quarter of 2017. Net interest income during the first quarter of 2017 was $25.5 million, down $0.4 million or 1.4 percent from the first quarter of 2016, primarily reflecting a decreased net interest margin and the first quarter of 2017 having one less calendar day than the previous year’s first quarter, which more than offset a higher level of earning assets.

 

 
 

 

 

The net interest margin was 3.73 percent in the first quarter of 2017, up slightly from 3.72 percent in the fourth quarter of 2016 and down from 3.92 percent in the prior-year first quarter. The net interest margin during the current-year first quarter and the linked quarter were virtually the same in light of a relatively stable yield on average earning assets and cost of funds. The yield on average earning assets during the first quarter of 2017 was negatively impacted by a decreased yield on loans, reflecting the ongoing low interest rate environment, competitive pressures, and a lower level of purchased loan discount accretion; however, the negative impact of the lower loan yield was substantially offset by the positive impact of a change in earning asset mix, resulting in the relatively steady yield on average earning assets. The change in earning asset mix primarily reflects loan growth and a reduction in interest-earning deposit balances. Higher-yielding average loans represented 85.6 percent of average earning assets during the first quarter of 2017, up from 83.6 percent during the linked quarter, while lower-yielding average interest-earning deposit balances represented 2.2 percent of average earning assets during the current-year first quarter, down from 4.5 percent during the linked quarter. The decline in the net interest margin in the first quarter of 2017 compared to the respective 2016 period primarily resulted from a decreased yield on loans, reflecting the aforementioned factors. The negative impact of these factors was somewhat mitigated by increased rates on certain variable-rate loans stemming from the Federal Open Market Committee (“FOMC”) raising the targeted federal funds rate by 25 basis points in December of 2016 and again in March of 2017.

 

Net interest income and the net interest margin during the first quarter of 2017 and the prior-year first quarter were affected by purchase accounting accretion and amortization entries associated with the fair value measurements recorded effective June 1, 2014. Increases in interest income on loans totaling $0.8 million and $1.3 million were recorded during the first quarters of 2017 and 2016, respectively. An increase in interest expense on subordinated debentures totaling $0.2 million was recorded during both the current-year first quarter and prior-year first quarter. Purchased loan accretion amounts vary from period to period as a result of periodic cash flow re-estimations, loan payoffs, and payment performance.

 

Mercantile recorded a $0.6 million provision for loan losses during both the first quarter of 2017 and the first quarter of 2016. The provision expense recorded during the periods primarily reflects ongoing loan growth.

 

Noninterest income during the first quarter of 2017 was $5.9 million. Noninterest income during the first quarter of 2017 included a bank owned life insurance claim of $1.4 million, while noninterest income during the first quarter of 2016 included a $2.9 million gain associated with a trust preferred securities repurchase transaction; excluding these transactions, noninterest income increased $0.3 million or 6.3 percent in the current-year first quarter compared to the prior-year first quarter. The increase in core noninterest income primarily reflects higher mortgage banking income resulting from the positive impact of strategic initiatives that were implemented in the latter half of 2016, including the hiring of additional loan originators, introduction of new and enhanced products, loan programs, and increased marketing efforts.

 

 
 

 

 

Noninterest expense totaled $19.8 million during the first quarter of 2017, down $0.1 million or 0.5 percent from the respective 2016 period primarily due to cost savings associated with the cost efficiency program that was announced in the latter part of 2015 and lower Federal Deposit Insurance Corporation (“FDIC”) premiums, which more than offset higher salary and benefit costs. The quarterly cost savings related to the cost efficiency program, which saves us approximately $2.7 million per year on a pre-tax basis, were fully realized starting in the second quarter of 2016. FDIC insurance premiums totaled $0.2 million during the first quarter of 2017, down $0.2 million or 46.4 percent from the prior-year first quarter mainly due to changes to the deposit insurance assessment calculation that became effective in the third quarter of 2016. Salary and benefit costs totaled $11.3 million during the current-year first quarter, up $0.3 million or 2.5 percent from the prior-year first quarter primarily due to employee merit pay increases and higher stock-based compensation expense.

 

Mr. Kaminski continued: “We are pleased with the stability and level of our net interest margin. Although our loan yield continues to be negatively impacted by the ongoing low interest rate environment and competitive pressures, we have remained steadfast in our efforts to price loans properly to ensure an appropriate balance between risk and yield. Our net interest income benefitted from the FOMC’s rate hikes in December of 2016 and March of 2017, and based on the positioning of our balance sheet, we expect any additional rate hikes to further enhance our net interest income. We are also delighted to report increased fee income and lower overhead costs, reflecting the successful implementation of strategic initiatives. Mortgage banking activity income during the first quarter of 2017 nearly doubled compared to the respective prior-year period as a result of our efforts to increase our market presence through product revamping, the hiring of additional originators, and enhanced marketing.”

 

Balance Sheet

 

As of March 31, 2017, total assets were $3.02 billion, down $63.7 million or 2.1 percent from December 31, 2016. Interest-earning deposit balances decreased $121 million or 90.5 percent, while total loans increased $62.7 million or 2.6 percent, over the same time period. Interest-earning deposit balances declined as a result of these funds being used to meet loan funding requirements, as well as deposit withdrawals stemming from certain commercial customers making tax payments. A majority of the loan growth occurred during the last few weeks of the quarter. During the twelve months ended March 31, 2017, total loans were up nearly $146 million or 6.3 percent. Approximately $130 million in commercial term loans to new and existing borrowers were originated during the first quarter of 2017, as ongoing sales and relationship building efforts resulted in increased lending opportunities. As of March 31, 2017, unfunded commitments on commercial construction and development loans totaled approximately $83 million, which are expected to be largely funded over the next 12 to 18 months.

 

Raymond Reitsma, President of Mercantile Bank, noted: “We are very happy with the net loan growth and level of commercial term loan originations achieved during the first quarter of 2017. Commercial term loan originations of $130 million during the quarter were up in comparison to originations in the linked quarter and prior-year first quarter as our lenders continue to foster new relationships and meet the credit needs of existing customers in our markets. In addition, we are pleased with the loan prospects arising from our recent expansion into Southeast Michigan. Based on our current commercial loan pipeline, we are confident that loan originations will remain strong in future periods. We also realized nearly $11 million of growth in the residential mortgage loan portfolio during the quarter, reflecting the success of recently-implemented strategic initiatives that were designed to increase our market penetration.”

 

 
 

 

 

Commercial-related real estate loans continue to comprise a majority of Mercantile’s loan portfolio, representing approximately 56 percent of total loans as of March 31, 2017.  Non-owner occupied commercial real estate (“CRE”) loans and owner-occupied CRE loans equaled 31 percent and 19 percent of total loans, respectively, as of March 31, 2017.  Commercial and industrial loans represented 31 percent of total loans as of March 31, 2017. 

 

As of March 31, 2017, total deposits were $2.28 billion, down $97.0 million from December 31, 2016, and up $12.9 million from March 31, 2016. Local deposits were down $65.8 million since year-end 2016, but up $71.5 million over the past twelve months. The reduction in local deposits was mainly due to certain commercial customers making tax payments, while the growth in deposits was primarily driven by new commercial loan relationships. Wholesale funds were $250 million, or approximately 10 percent of total funds, as of March 31, 2017, compared to $251 million as of December 31, 2016 and $202 million as of March 31, 2016.

 

Asset Quality

 

Nonperforming assets at March 31, 2017 were $7.8 million, or 0.3 percent of total assets, compared to $6.4 million, or 0.2 percent of total assets, as of December 31, 2016. The level of past due loans remains nominal, and loan relationships on the internal watch list have generally remained steady. Net loan charge-offs were $0.3 million during the first quarter of 2017 compared with net loan charge-offs of $0.2 million and less than $0.1 million in the linked and prior-year first quarters, respectively.

 

Capital Position

 

Shareholders’ equity totaled $348 million as of March 31, 2017, an increase of $7.2 million from year-end 2016. The Bank’s capital position remains above “well-capitalized” with a total risk-based capital ratio of 13.0 percent as of March 31, 2017, compared to 13.1 percent at December 31, 2016. At March 31, 2017, the Bank had approximately $81 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a “well-capitalized” institution. Mercantile reported 16,469,108 total shares outstanding at March 31, 2017.

 

No shares were repurchased during the first quarter of 2017 as part of the $20 million stock repurchase program that was announced in January of 2015. Since the program’s inception, Mercantile has repurchased approximately 956,000 shares, or nearly 6 percent of total shares outstanding at year-end 2014, for $19.5 million, or a weighted average all-in cost per share of $20.38. Future share repurchases totaling $15.5 million can be made under the program, which was expanded by $15 million in early 2016.

 

Mr. Kaminski concluded: “Based on our first quarter results, we are confident that Mercantile is poised to deliver strong financial performance during 2017 and beyond. Our strong balance sheet and capital base position us to meet growth objectives and enhance shareholder value. We continue to gain new customers in our market areas by focusing on building and developing value-added relationships and delivering a wide array of products and services. We are excited about the opportunities that await us in Southeast Michigan as we employ the same community banking philosophy that has been successful in our other markets. Our ongoing cash dividend program, which has consistently provided shareholders with a competitive dividend yield, exemplifies our commitment to increasing shareholder value.”

 

 
 

 

 

About Mercantile Bank Corporation

 

Based in Grand Rapids, Michigan, Mercantile Bank Corporation is the bank holding company for Mercantile Bank of Michigan.  Mercantile provides banking services to businesses, individuals and governmental units, and differentiates itself on the basis of service quality and the expertise of its banking staff. Mercantile has assets of approximately $3.0 billion and operates 49 banking offices. Mercantile Bank Corporation’s common stock is listed on the NASDAQ Global Select Market under the symbol “MBWM.”

 

 

Forward-Looking Statements

 

This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and nontraditional competitors; changes in banking regulation or actions by bank regulators; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; changes in the national and local economies; and other factors, including risk factors, disclosed from time to time in filings made by Mercantile with the Securities and Exchange Commission. Mercantile undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

 

FOR FURTHER INFORMATION:

 

Robert B. Kaminski, Jr.

Charles Christmas

President & CEO

Executive Vice President & CFO

616-726-1502

616-726-1202

rkaminski@mercbank.com

cchristmas@mercbank.com

 

 
 

 

 

Mercantile Bank Corporation

First Quarter 2017 Results

 

MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

   

MARCH 31,

   

DECEMBER 31,

   

MARCH 31,

 
   

2017

   

2016

   

2016

 
                         

ASSETS

                       

Cash and due from banks

  $ 40,313,000     $ 50,200,000     $ 38,367,000  

Interest-earning deposits

    12,663,000       133,396,000       62,814,000  

Total cash and cash equivalents

    52,976,000       183,596,000       101,181,000  
                         

Securities available for sale

    332,441,000       328,060,000       343,805,000  

Federal Home Loan Bank stock

    9,236,000       8,026,000       7,567,000  
                         

Loans

    2,441,314,000       2,378,620,000       2,295,668,000  

Allowance for loan losses

    (18,276,000 )     (17,961,000 )     (16,262,000 )

Loans, net

    2,423,038,000       2,360,659,000       2,279,406,000  
                         

Premises and equipment, net

    45,848,000       45,456,000       45,963,000  

Bank owned life insurance

    66,211,000       67,198,000       59,248,000  

Goodwill

    49,473,000       49,473,000       49,473,000  

Core deposit intangible

    9,321,000       9,957,000       11,916,000  

Other assets

    30,375,000       30,146,000       27,497,000  
                         

Total assets

  $ 3,018,919,000     $ 3,082,571,000     $ 2,926,056,000  
                         
                         

LIABILITIES AND SHAREHOLDERS' EQUITY

                       

Deposits:

                       

Noninterest-bearing

  $ 757,706,000     $ 810,600,000     $ 678,100,000  

Interest-bearing

    1,520,310,000       1,564,385,000       1,587,022,000  

Total deposits

    2,278,016,000       2,374,985,000       2,265,122,000  
                         

Securities sold under agreements to repurchase

    126,679,000       131,710,000       162,312,000  

Federal Home Loan Bank advances

    205,000,000       175,000,000       98,000,000  

Subordinated debentures

    45,006,000       44,835,000       44,324,000  

Accrued interest and other liabilities

    16,168,000       15,230,000       17,745,000  

Total liabilities

    2,670,869,000       2,741,760,000       2,587,503,000  
                         

SHAREHOLDERS' EQUITY

                       

Common stock

    307,371,000       305,488,000       302,360,000  

Retained earnings

    45,596,000       40,904,000       33,697,000  

Accumulated other comprehensive income/(loss)

    (4,917,000 )     (5,581,000 )     2,496,000  

Total shareholders' equity

    348,050,000       340,811,000       338,553,000  
                         

Total liabilities and shareholders' equity

  $ 3,018,919,000     $ 3,082,571,000     $ 2,926,056,000  

 

 
 

 

 

Mercantile Bank Corporation

First Quarter 2017 Results

 

MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF INCOME

(Unaudited)

 

   

THREE MONTHS ENDED

   

THREE MONTHS ENDED

 
   

March 31, 2017

   

March 31, 2016

 
                 

INTEREST INCOME

               

Loans, including fees

  $ 26,733,000     $ 26,779,000  

Investment securities

    1,828,000       2,053,000  

Other interest-earning assets

    143,000       57,000  

Total interest income

    28,704,000       28,889,000  
                 

INTEREST EXPENSE

               

Deposits

    1,868,000       1,866,000  

Short-term borrowings

    51,000       44,000  

Federal Home Loan Bank advances

    655,000       350,000  

Other borrowed money

    621,000       747,000  

Total interest expense

    3,195,000       3,007,000  
                 

Net interest income

    25,509,000       25,882,000  
                 

Provision for loan losses

    600,000       600,000  
                 

Net interest income after provision for loan losses

    24,909,000       25,282,000  
                 

NONINTEREST INCOME

               

Service charges on accounts

    1,018,000       948,000  

Credit and debit card income

    1,106,000       1,015,000  

Mortgage banking income

    1,123,000       598,000  

Earnings on bank owned life insurance

    1,738,000       286,000  

Other income

    866,000       4,239,000  

Total noninterest income

    5,851,000       7,086,000  
                 

NONINTEREST EXPENSE

               

Salaries and benefits

    11,272,000       10,995,000  

Occupancy

    1,554,000       1,604,000  

Furniture and equipment

    535,000       525,000  

Data processing costs

    2,011,000       1,992,000  

FDIC insurance costs

    210,000       392,000  

Other expense

    4,194,000       4,360,000  

Total noninterest expense

    19,776,000       19,868,000  
                 

Income before federal income tax expense

    10,984,000       12,500,000  
                 

Federal income tax expense

    3,369,000       3,951,000  
                 

Net Income

  $ 7,615,000     $ 8,549,000  
                 

Basic earnings per share

  $ 0.46     $ 0.52  

Diluted earnings per share

  $ 0.46     $ 0.52  
                 

Average basic shares outstanding

    16,434,647       16,291,654  

Average diluted shares outstanding

    16,449,210       16,325,475  

 

 
 

 

 

Mercantile Bank Corporation

First Quarter 2017 Results

 

MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

 

   

Quarterly

 

(dollars in thousands except per share data)

 

2017

   

2016

   

2016

   

2016

   

2016

 
   

1st Qtr

   

4th Qtr

   

3rd Qtr

   

2nd Qtr

   

1st Qtr

 

EARNINGS

                                       

Net interest income

  $ 25,509       26,435       26,450       27,100       25,882  

Provision for loan losses

  $ 600       600       600       1,100       600  

Noninterest income

  $ 5,851       4,604       5,284       4,064       7,086  

Noninterest expense

  $ 19,776       18,394       19,663       19,193       19,868  

Net income before federal income tax expense

  $ 10,984       12,045       11,471       10,871       12,500  

Net income

  $ 7,615       8,085       7,845       7,434       8,549  

Basic earnings per share

  $ 0.46       0.49       0.48       0.46       0.52  

Diluted earnings per share

  $ 0.46       0.49       0.48       0.46       0.52  

Average basic shares outstanding

    16,434,647       16,352,359       16,282,804       16,240,966       16,291,654  

Average diluted shares outstanding

    16,449,210       16,374,117       16,307,350       16,268,839       16,325,475  
                                         

PERFORMANCE RATIOS

                                       

Return on average assets

    1.02 %     1.05 %     1.02 %     1.01 %     1.19 %

Return on average equity

    8.99 %     9.35 %     9.00 %     8.79 %     10.18 %

Net interest margin (fully tax-equivalent)

    3.73 %     3.72 %     3.76 %     4.01 %     3.92 %

Efficiency ratio

    63.06 %     59.26 %     61.96 %     61.59 %     60.26 %

Full-time equivalent employees

    617       616       612       633       612  
                                         

YIELD ON ASSETS / COST OF FUNDS

                                       

Yield on loans

    4.54 %     4.65 %     4.57 %     4.60 %     4.72 %

Yield on securities

    2.35 %     2.27 %     2.71 %     3.99 %     2.52 %

Yield on other interest-earning assets

    0.81 %     0.51 %     0.51 %     0.51 %     0.54 %

Yield on total earning assets

    4.20 %     4.18 %     4.22 %     4.45 %     4.37 %

Yield on total assets

    3.88 %     3.87 %     3.90 %     4.12 %     4.03 %

Cost of deposits

    0.33 %     0.33 %     0.33 %     0.32 %     0.33 %

Cost of borrowed funds

    1.53 %     1.45 %     1.41 %     1.42 %     1.53 %

Cost of interest-bearing liabilities

    0.68 %     0.68 %     0.66 %     0.64 %     0.64 %

Cost of funds (total earning assets)

    0.47 %     0.46 %     0.46 %     0.44 %     0.45 %

Cost of funds (total assets)

    0.43 %     0.42 %     0.42 %     0.41 %     0.42 %
                                         

PURCHASE ACCOUNTING ADJUSTMENTS

                                       

Loan portfolio - increase interest income

  $ 832       1,672       1,002       935       1,316  

Trust preferred - increase interest expense

  $ 171       171       171       171       171  

Core deposit intangible - increase overhead

  $ 636       636       636       688       715  
                                         

MORTGAGE BANKING ACTIVITY

                                       

Total mortgage loans originated

  $ 38,365       46,727       52,340       39,559       24,446  

Purchase mortgage loans originated

  $ 21,523       21,962       25,542       21,995       8,752  

Refinance mortgage loans originated

  $ 16,842       24,765       26,798       17,564       15,694  

Total mortgage loans sold

  $ 18,463       30,081       35,826       26,229       18,922  

Net gain on sale of mortgage loans

  $ 867       1,236       1,173       746       543  
                                         

CAPITAL

                                       

Tangible equity to tangible assets

    9.77 %     9.31 %     9.63 %     9.66 %     9.68 %

Tier 1 leverage capital ratio

    11.53 %     11.17 %     11.28 %     11.41 %     11.43 %

Common equity risk-based capital ratio

    10.83 %     10.88 %     10.83 %     10.73 %     10.86 %

Tier 1 risk-based capital ratio

    12.39 %     12.47 %     12.40 %     12.31 %     12.49 %

Total risk-based capital ratio

    13.05 %     13.13 %     13.05 %     12.95 %     13.12 %

Tier 1 capital

  $ 341,708       336,316       337,054       330,710       324,296  

Tier 1 plus tier 2 capital

  $ 359,984       354,278       354,580       347,819       340,557  

Total risk-weighted assets

  $ 2,757,616       2,697,727       2,718,012       2,685,823       2,596,517  

Book value per common share

  $ 21.13       20.76       21.44       21.18       20.86  

Tangible book value per common share

  $ 17.56       17.14       17.76       17.45       17.07  

Cash dividend per common share

  $ 0.18       0.67       0.17       0.16       0.16  
                                         

ASSET QUALITY

                                       

Gross loan charge-offs

  $ 456       970       363       397       475  

Recoveries

  $ 171       805       179       145       456  

Net loan charge-offs (recoveries)

  $ 285       165       184       252       19  

Net loan charge-offs (recoveries) to average loans

    0.05 %     0.03 %     0.03 %     0.04 %  

< 0.01%

 

Allowance for loan losses

  $ 18,276       17,961       17,526       17,110       16,262  

Allowance to originated loans

    0.92 %     0.95 %     0.93 %     0.94 %     0.94 %

Nonperforming loans

  $ 7,292       5,939       4,669       5,168       4,842  

Other real estate/repossessed assets

  $ 495       469       790       815       1,478  

Nonperforming loans to total loans

    0.30 %     0.25 %     0.19 %     0.22 %     0.21 %

Nonperforming assets to total assets

    0.26 %     0.21 %     0.18 %     0.20 %     0.22 %
                                         

NONPERFORMING ASSETS - COMPOSITION

                                       

Residential real estate:

                                       

Land development

  $ 0       16       23       42       30  

Construction

  $ 0       0       0       319       0  

Owner occupied / rental

  $ 2,972       2,883       2,945       2,893       2,955  

Commercial real estate:

                                       

Land development

  $ 80       95       110       125       140  

Construction

  $ 0       0       0       0       0  

Owner occupied

  $ 1,221       610       1,597       2,263       2,877  

Non-owner occupied

  $ 421       488       691       134       151  

Non-real estate:

                                       

Commercial assets

  $ 3,076       2,293       65       165       137  

Consumer assets

  $ 17       23       28       42       30  

Total nonperforming assets

  $ 7,787       6,408       5,459       5,983       6,320  
                                         

NONPERFORMING ASSETS - RECON

                                       

Beginning balance

  $ 6,408       5,459       5,983       6,320       6,737  

Additions - originated loans & former branches

  $ 2,987       2,953       1,172       1,096       1,123  

Merger-related activity

  $ 0       33       0       0       0  

Return to performing status

  $ (113 )     (13 )     0       0       0  

Principal payments

  $ (1,289 )     (1,386 )     (1,509 )     (495 )     (774 )

Sale proceeds

  $ (56 )     (308 )     (76 )     (642 )     (402 )

Loan charge-offs

  $ (135 )     (263 )     (101 )     (261 )     (356 )

Valuation write-downs

  $ (15 )     (67 )     (10 )     (35 )     (8 )

Ending balance

  $ 7,787       6,408       5,459       5,983       6,320  
                                         

LOAN PORTFOLIO COMPOSITION

                                       

Commercial:

                                       

Commercial & industrial

  $ 757,219       713,903       750,330       750,136       714,612  

Land development & construction

  $ 31,924       34,828       37,455       40,529       39,630  

Owner occupied comm'l R/E

  $ 452,382       450,464       440,705       438,798       441,662  

Non-owner occupied comm'l R/E

  $ 768,565       748,269       741,443       716,930       666,013  

Multi-family & residential rental

  $ 113,257       117,883       118,103       113,361       112,533  

Total commercial

  $ 2,123,347       2,065,347       2,088,036       2,059,754       1,974,450  

Retail:

                                       

1-4 family mortgages

  $ 205,850       195,226       190,715       189,119       185,535  

Home equity & other consumer

  $ 112,117       118,047       127,626       131,067       135,683  

Total retail

  $ 317,967       313,273       318,341       320,186       321,218  

Total loans

  $ 2,441,314       2,378,620       2,406,377       2,379,940       2,295,668  
                                         

END OF PERIOD BALANCES

                                       

Loans

  $ 2,441,314       2,378,620       2,406,377       2,379,940       2,295,668  

Securities

  $ 341,677       336,086       333,469       331,478       351,372  

Other interest-earning assets

  $ 12,663       133,396       85,848       46,896       62,814  

Total earning assets (before allowance)

  $ 2,795,654       2,848,102       2,825,694       2,758,314       2,709,854  

Total assets

  $ 3,018,919       3,082,571       3,063,964       2,999,936       2,926,056  

Noninterest-bearing deposits

  $ 757,706       810,600       731,663       733,573       678,100  

Interest-bearing deposits

  $ 1,520,310       1,564,385       1,597,774       1,546,145       1,587,022  

Total deposits

  $ 2,278,016       2,374,985       2,329,437       2,279,718       2,265,122  

Total borrowed funds

  $ 380,009       354,902       372,917       362,665       308,148  

Total interest-bearing liabilities

  $ 1,900,319       1,919,287       1,970,691       1,908,810       1,895,170  

Shareholders' equity

  $ 348,050       340,811       349,471       344,577       338,553  
                                         

AVERAGE BALANCES

                                       

Loans

  $ 2,390,030       2,372,510       2,391,620       2,342,333       2,273,960  

Securities

  $ 339,537       336,493       328,993       340,866       354,499  

Other interest-earning assets

  $ 61,376       127,790       91,590       49,365       42,008  

Total earning assets (before allowance)

  $ 2,790,943       2,836,793       2,812,203       2,732,564       2,670,467  

Total assets

  $ 3,016,871       3,064,974       3,040,324       2,952,184       2,892,229  

Noninterest-bearing deposits

  $ 766,031       773,137       733,600       702,293       652,338  

Interest-bearing deposits

  $ 1,542,078       1,561,539       1,572,424       1,548,509       1,588,930  

Total deposits

  $ 2,308,109       2,334,676       2,306,024       2,250,802       2,241,268  

Total borrowed funds

  $ 352,614       366,905       373,973       347,191       299,956  

Total interest-bearing liabilities

  $ 1,894,692       1,928,444       1,946,397       1,895,700       1,888,886  

Shareholders' equity

  $ 343,344       343,122       345,944       339,357       336,870  

 

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