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

mbwm20180416_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 17, 2018

____________________

 

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))

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐                 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      ☐

 

 

 

 

Item 2.02         Results of Operations and Financial Condition.

 

Earnings Release

 

On April 17, 2018, Mercantile Bank Corporation issued a press release announcing earnings and other financial results for the quarter ended March 31, 2018. 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 17, 2018, reporting financial results and earnings for the quarter ended March 31, 2018.

                   

2

 

 

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 17, 2018

 

3

 

 

Exhibit Index

 

 

Exhibit Number   Description
     
99.1   Press release of Mercantile Bank Corporation dated April 17, 2018, reporting financial results and earnings for the quarter ended March 31, 2018.

                   

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

ex_110428.htm

Exhibit 99.1

 

 

Mercantile Bank Corporation Reports Strong First Quarter 2018 Results

Continued strength in core profitability and loan originations highlight quarter

 

GRAND RAPIDS, Mich., April 17, 2018 – Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $10.9 million, or $0.66 per diluted share, for the first quarter of 2018, compared with net income of $7.6 million, or $0.46 per diluted share, for the respective prior-year period. The successful collection of certain problem commercial loan relationships during the first quarter of 2018 increased reported net income by approximately $1.7 million, or $0.10 per diluted share, while 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; excluding the impacts of these transactions, diluted earnings per share increased $0.16, or 40.0 percent, during the current-year first quarter compared to the prior-year first quarter.

 

Net income during the first three months of 2018 also benefited from a reduction in the corporate federal income tax rate, which was lowered from 35 percent to 21 percent on January 1, 2018 as a result of the enactment of the Tax Cuts and Jobs Act. Mercantile’s effective tax rate during the first quarter of 2018 was 19.0 percent, down from 30.7 percent during the prior-year first quarter.

 

“We are very pleased with our first quarter 2018 financial results, which reflect the continued success of various strategic initiatives,” said Robert B. Kaminski, Jr., President and Chief Executive Officer of Mercantile. “Our strong financial performance reflects a robust net interest margin, controlled overhead costs, and sound asset quality. In light of our current loan pipelines and healthy financial position, we are confident that the strong operating performance achieved during the first three months of the year will continue during future periods.”

 

First quarter highlights include:

 

 

Strong earnings performance and capital position

 

Robust net interest margin

 

Controlled overhead costs

 

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

 

New commercial term loan originations of approximately $111 million

 

Continued strength in commercial and residential loan pipelines

 

Increased cash dividend

 

 

 

 

Operating Results

 

Total revenue, which consists of net interest income and noninterest income, was $34.6 million during the first quarter of 2018, up $3.2 million, or 10.3 percent, from the prior-year first quarter. Net interest income during the first quarter of 2018 was $30.2 million, up $4.7 million, or 18.4 percent, from the first quarter of 2017, reflecting an increased net interest margin and a higher level of earning assets.

 

The net interest margin was 4.06 percent in the first quarter of 2018, up from 3.73 percent in the prior-year first quarter. The increase primarily resulted from a higher yield on commercial loans, mainly reflecting the positive impact of higher interest rates on variable-rate commercial loans stemming from the Federal Open Market Committee raising the targeted federal funds rate by 25 basis points in March, June, and December of 2017 and March of 2018, and successful collection efforts. The collection of interest on certain nonperforming commercial loans that paid in full positively impacted the yield on earning assets during the first quarter of 2018 by approximately 29 basis points, while a higher-than-desired level of interest-earning deposits negatively impacted the yield by approximately 8 basis points. Excluding the impacts of these factors, the net interest margin equaled approximately 3.85 percent during the first quarter of 2018. The cost of funds equaled 0.64 percent during the first quarter of 2018, up from 0.47 percent during the respective 2017 period, mainly due to increased costs of certain money market deposit accounts, time deposits, and borrowed funds.

 

Net interest income and the net interest margin during the first quarter of 2018 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 $2.3 million and $0.8 million were recorded during the first quarters of 2018 and 2017, 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 no provision expense during the first quarter of 2018, compared to a provision expense of $0.6 million during the respective 2017 period. No provision expense was made during the current-year first quarter in light of net loan recoveries being recorded and the lack of net loan growth. The provision expense recorded during the prior-year first quarter primarily reflected ongoing net loan growth.

 

Noninterest income during the first quarter of 2018 was $4.4 million, compared to $5.9 million during the prior-year first quarter. Noninterest income during the first quarter of 2017 included a bank owned life insurance claim of $1.4 million. Excluding the impact of this transaction, noninterest income declined $0.1 million during the current-year first quarter compared to the respective 2017 period. The decline in noninterest income primarily reflected a lower level of mortgage banking activity income, which more than offset increased credit and debit card income, service charges on accounts, and payroll processing fees. Mortgage banking activity income during the first three months of 2018 was negatively impacted by a shortage of housing inventory in Mercantile’s markets, most notably in West Michigan, and rising residential mortgage loan interest rates.

 

 

 

 

Noninterest expense totaled $21.1 million during the first quarter of 2018, up $1.4 million, or 6.9 percent, from the prior-year first quarter. The higher level of expense primarily resulted from increased salary costs, mainly reflecting annual employee merit pay increases, the hiring of additional staff, a larger bonus accrual, and higher stock-based compensation expense. Increased occupancy costs, mainly stemming from expansion initiatives and higher maintenance expenses, also contributed to the increased level of noninterest expense.

 

Mr. Kaminski continued, “Our core net interest margin remained strong during the first quarter of 2018, reflecting our ongoing focus on margin maintenance through prudent loan pricing and underwriting. Successful collection efforts regarding certain problem commercial loan relationships positively impacted our first quarter net interest margin by approximately 29 basis points, while an elevated level of interest-earning deposit balances negatively impacted our first quarter margin by about 8 basis points, indicating a core margin of 3.85 percent. Our net interest income benefited from the Federal Open Market Committee’s three rate hikes during 2017 and the rate hike in March 2018, and based on our current balance sheet structure, we believe any additional rate increases will further enhance our net interest income. Mortgage banking activity income during the first quarter was hampered by the low level of housing inventory in our markets and the increasing rate environment; however, based on our current pipeline and record level of loan pre-qualifications, we believe that future purchase activity from increased turnover and the addition of new housing stock in our markets will more than offset lower refinance activity stemming from the rising interest rate environment, resulting in mortgage banking activity income growth in future periods.”   

 

Balance Sheet

 

As of March 31, 2018, total assets were $3.29 billion, up $7.2 million, or 0.2 percent, from December 31, 2017. Interest-earning deposit balances increased $18.9 million, while total loans decreased $7.3 million over the same time period. During the twelve months ended March 31, 2018, total loans were up nearly $110 million, or 4.5 percent. Approximately $111 million in commercial term loans to new and existing borrowers were originated during the first quarter of 2018, as ongoing sales and relationship-building efforts resulted in increased lending opportunities. As of March 31, 2018, unfunded commitments on commercial construction and development loans totaled approximately $133 million, which are expected to be largely funded over the next 12 to 18 months.

 

Raymond Reitsma, President of Mercantile Bank of Michigan, noted, “We are pleased with the volume of new commercial term loan originations during the first quarter of 2018, which were comparable to the level of quarterly originations over the past several years. The commercial loan portfolio declined slightly during the first quarter, primarily reflecting an abnormally high level of payoffs; approximately $21 million in watch list credits paid off, along with about $21 million in loans in which the borrowers sold the underlying collateral or the businesses. We once again reported growth in our residential mortgage portfolio, reflecting the continuing success of strategic initiatives that were designed to increase our market presence. In light of our current loan pipelines, we believe that the commercial and residential portfolios will expand in future periods.”

 

As of March 31, 2018, commercial and industrial loans and owner-occupied commercial real estate (“CRE”) loans combined represented approximately 58 percent of total commercial loans, while non-owner occupied CRE loans equaled about 36 percent of total commercial loans.

 

 

 

 

Total deposits at March 31, 2018 were $2.54 billion, up $17.7 million and $262 million from December 31, 2017 and March 31, 2017, respectively; local deposits were up $17.9 million and $205 million during the respective time periods. The growth in local deposits was mainly driven by new commercial loan relationships and the success of various deposit account initiatives. Wholesale funds were $322 million, or approximately 11 percent of total funds, as of March 31, 2018, compared to $323 million and $250 million as of December 31, 2017 and March 31, 2017, respectively.

 

Asset Quality

 

Nonperforming assets at March 31, 2018 were $8.1 million, or 0.3 percent of total assets, compared to $9.4 million, or 0.3 percent of total assets, at December 31, 2017, and $7.8 million, or 0.3 percent of total assets, at March 31, 2017. Bank-owned parcels of real estate, which are no longer being used or being considered for use as bank facilities, represented approximately 26 percent of total nonperforming assets as of March 31, 2018; the parcels of real estate are expected to be sold within the next two quarters. The level of past due loans remains nominal, and loan relationships on the internal watch list have remained relatively consistent in number and dollar volume.

 

Net loan recoveries were $0.5 million during the first quarter of 2018, or an annualized negative 0.08 percent of average loans, compared with net loan charge-offs of $0.3 million, or an annualized 0.05 percent of average loans, in both the linked quarter and prior-year first quarter.

 

Capital Position

 

Shareholders’ equity totaled $368 million as of March 31, 2018, an increase of $2.5 million from year-end 2017. The Bank’s capital position remains above “well-capitalized” with a total risk-based capital ratio of 12.9 percent as of March 31, 2018, compared to 12.6 percent at December 31, 2017. At March 31, 2018, the Bank had approximately $86 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a “well-capitalized” institution. Mercantile reported 16,598,466 total shares outstanding at March 31, 2018.

 

No shares were repurchased during the first quarter of 2018 as part of the $20 million stock repurchase program that was announced in January of 2015. 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, “We are well-positioned to further enrich shareholder value and meet growth goals in light of our ongoing financial strength. Our sustained cash dividend program and associated competitive dividend yield demonstrate our commitment to increasing shareholder value. As reflected by new commercial term loan originations and growth in residential mortgage loans and deposits, our focus on building and developing value-added relationships continues to successfully attract new clients as well as retain existing customers. We are excited about Mercantile’s future and are confident that the strong financial results achieved during the first quarter of 2018 will continue in the current year and beyond.”

 

 

 

 

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 $3.2 billion and operates 47 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 and CEO Executive Vice President and CFO
  616-726-1502 616-726-1202
  rkaminski@mercbank.com cchristmas@mercbank.com

                                             

 

 

 

MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

   

MARCH 31,

   

DECEMBER 31,

   

MARCH 31,

 
   

2018

   

2017

   

2017

 
                         

ASSETS

                       

Cash and due from banks

  $ 47,278,000     $ 55,127,000     $ 40,313,000  

Interest-earning deposits

    163,879,000       144,974,000       12,663,000  

Total cash and cash equivalents

    211,157,000       200,101,000       52,976,000  
                         

Securities available for sale

    336,988,000       335,744,000       332,441,000  

Federal Home Loan Bank stock

    11,036,000       11,036,000       9,236,000  
                         

Loans

    2,551,204,000       2,558,552,000       2,441,314,000  

Allowance for loan losses

    (19,974,000 )     (19,501,000 )     (18,276,000 )

Loans, net

    2,531,230,000       2,539,051,000       2,423,038,000  
                         

Premises and equipment, net

    46,300,000       46,034,000       45,848,000  

Bank owned life insurance

    69,010,000       68,689,000       66,211,000  

Goodwill

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

Core deposit intangible

    7,044,000       7,600,000       9,321,000  

Other assets

    31,662,000       28,976,000       30,375,000  
                         

Total assets

  $ 3,293,900,000     $ 3,286,704,000     $ 3,018,919,000  
                         
                         

LIABILITIES AND SHAREHOLDERS' EQUITY

                       

Deposits:

                       

Noninterest-bearing

  $ 830,187,000     $ 866,380,000     $ 757,706,000  

Interest-bearing

    1,709,866,000       1,655,985,000       1,520,310,000  

Total deposits

    2,540,053,000       2,522,365,000       2,278,016,000  
                         

Securities sold under agreements to repurchase

    104,894,000       118,748,000       126,679,000  

Federal Home Loan Bank advances

    220,000,000       220,000,000       205,000,000  

Subordinated debentures

    45,688,000       45,517,000       45,006,000  

Accrued interest and other liabilities

    14,925,000       14,204,000       16,168,000  

Total liabilities

    2,925,560,000       2,920,834,000       2,670,869,000  
                         

SHAREHOLDERS' EQUITY

                       

Common stock

    310,601,000       309,772,000       307,371,000  

Retained earnings

    68,283,000       61,001,000       45,596,000  

Accumulated other comprehensive income/(loss)

    (10,544,000 )     (4,903,000 )     (4,917,000 )

Total shareholders' equity

    368,340,000       365,870,000       348,050,000  
                         

Total liabilities and shareholders' equity

  $ 3,293,900,000     $ 3,286,704,000     $ 3,018,919,000  

 

 

 

 

MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF INCOME

(Unaudited)

 

   

THREE MONTHS ENDED

   

THREE MONTHS ENDED

 
   

March 31, 2018

   

March 31, 2017

 
                 

INTEREST INCOME

               

Loans, including fees

  $ 32,315,000     $ 26,733,000  

Investment securities

    2,196,000       1,828,000  

Other interest-earning assets

    470,000       143,000  

Total interest income

    34,981,000       28,704,000  
                 

INTEREST EXPENSE

               

Deposits

    3,085,000       1,868,000  

Short-term borrowings

    57,000       51,000  

Federal Home Loan Bank advances

    945,000       655,000  

Other borrowed money

    695,000       621,000  

Total interest expense

    4,782,000       3,195,000  
                 

Net interest income

    30,199,000       25,509,000  
                 

Provision for loan losses

    0       600,000  
                 

Net interest income after provision for loan losses

    30,199,000       24,909,000  
                 

NONINTEREST INCOME

               

Service charges on accounts

    1,053,000       1,018,000  

Credit and debit card income

    1,243,000       1,106,000  

Mortgage banking income

    884,000       1,123,000  

Earnings on bank owned life insurance

    331,000       1,738,000  

Other income

    870,000       866,000  

Total noninterest income

    4,381,000       5,851,000  
                 

NONINTEREST EXPENSE

               

Salaries and benefits

    12,337,000       11,272,000  

Occupancy

    1,772,000       1,554,000  

Furniture and equipment

    548,000       535,000  

Data processing costs

    2,128,000       2,011,000  

Other expense

    4,362,000       4,404,000  

Total noninterest expense

    21,147,000       19,776,000  
                 

Income before federal income tax expense

    13,433,000       10,984,000  
                 

Federal income tax expense

    2,552,000       3,369,000  
                 

Net Income

  $ 10,881,000     $ 7,615,000  
                 

Basic earnings per share

  $ 0.66     $ 0.46  

Diluted earnings per share

  $ 0.66     $ 0.46  
                 

Average basic shares outstanding

    16,595,115       16,434,647  

Average diluted shares outstanding

    16,604,325       16,449,210  

 

 

 

 

MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

 

   

Quarterly

 

(dollars in thousands except per share data)

 

2018

   

2017

   

2017

   

2017

   

2017

 
   

1st Qtr

   

4th Qtr

   

3rd Qtr

   

2nd Qtr

   

1st Qtr

 

EARNINGS

                                       

Net interest income

  $ 30,199       28,402       28,644       27,193       25,509  

Provision for loan losses

  $ 0       600       1,000       750       600  

Noninterest income

  $ 4,381       4,503       4,605       4,042       5,851  

Noninterest expense

  $ 21,147       19,848       20,210       19,882       19,776  

Net income before federal income tax expense

  $ 13,433       12,457       12,039       10,603       10,984  

Net income

  $ 10,881       7,979       8,337       7,343       7,615  

Basic earnings per share

  $ 0.66       0.48       0.51       0.45       0.46  

Diluted earnings per share

  $ 0.66       0.48       0.51       0.45       0.46  

Average basic shares outstanding

    16,595,115       16,525,625       16,483,492       16,471,060       16,434,647  

Average diluted shares outstanding

    16,604,325       16,536,225       16,494,540       16,485,356       16,449,210  
                                         

PERFORMANCE RATIOS

                                       

Return on average assets

    1.36 %     0.97 %     1.03 %     0.96 %     1.02 %

Return on average equity

    12.07 %     8.70 %     9.21 %     8.39 %     8.99 %

Net interest margin (fully tax-equivalent)

    4.06 %     3.76 %     3.83 %     3.85 %     3.73 %

Efficiency ratio

    61.15 %     60.32 %     60.78 %     63.65 %     63.06 %

Full-time equivalent employees

    640       641       634       643       617  
                                         

YIELD ON ASSETS / COST OF FUNDS

                                       

Yield on loans

    5.14 %     4.76 %     4.81 %     4.69 %     4.54 %

Yield on securities

    2.61 %     2.60 %     2.50 %     2.44 %     2.35 %

Yield on other interest-earning assets

    1.52 %     1.29 %     1.28 %     0.99 %     0.81 %

Yield on total earning assets

    4.70 %     4.35 %     4.41 %     4.37 %     4.20 %

Yield on total assets

    4.37 %     4.04 %     4.10 %     4.05 %     3.88 %

Cost of deposits

    0.50 %     0.45 %     0.43 %     0.35 %     0.33 %

Cost of borrowed funds

    1.83 %     1.74 %     1.75 %     1.69 %     1.53 %

Cost of interest-bearing liabilities

    0.94 %     0.88 %     0.85 %     0.77 %     0.68 %

Cost of funds (total earning assets)

    0.64 %     0.59 %     0.58 %     0.52 %     0.47 %

Cost of funds (total assets)

    0.60 %     0.55 %     0.54 %     0.48 %     0.43 %
                                         

PURCHASE ACCOUNTING ADJUSTMENTS

                                       

Loan portfolio - increase interest income

  $ 2,271       683       1,757       1,336       832  

Trust preferred - increase interest expense

  $ 171       171       171       171       171  

Core deposit intangible - increase overhead

  $ 556       556       556       609       636  
                                         

MORTGAGE BANKING ACTIVITY

                                       

Total mortgage loans originated

  $ 40,937       62,526       61,962       60,371       38,365  

Purchase mortgage loans originated

  $ 25,137       33,958       41,254       39,115       21,523  

Refinance mortgage loans originated

  $ 15,800       28,568       20,708       21,256       16,842  

Total mortgage loans sold

  $ 19,813       26,254       33,858       29,371       18,463  

Net gain on sale of mortgage loans

  $ 729       1,051       1,131       1,012       732  
                                         

CAPITAL

                                       

Tangible equity to tangible assets

    9.63 %     9.56 %     9.54 %     9.70 %     9.77 %

Tier 1 leverage capital ratio

    11.50 %     11.24 %     11.18 %     11.49 %     11.53 %

Common equity risk-based capital ratio

    11.04 %     10.71 %     10.54 %     10.65 %     10.83 %

Tier 1 risk-based capital ratio

    12.52 %     12.19 %     12.01 %     12.15 %     12.39 %

Total risk-based capital ratio

    13.20 %     12.85 %     12.66 %     12.79 %     13.05 %

Tier 1 capital

  $ 367,546       359,047       354,087       347,754       341,708  

Tier 1 plus tier 2 capital

  $ 387,520       378,548       373,280       366,048       359,984  

Total risk-weighted assets

  $ 2,935,367       2,946,527       2,949,011       2,861,605       2,757,616  

Book value per common share

  $ 22.19       22.05       21.99       21.69       21.13  

Tangible book value per common share

  $ 18.79       18.61       18.49       18.16       17.56  

Cash dividend per common share

  $ 0.22       0.19       0.19       0.18       0.18  
                                         

ASSET QUALITY

                                       

Gross loan charge-offs

  $ 654       920       709       1,150       456  

Recoveries

  $ 1,127       628       607       419       171  

Net loan charge-offs (recoveries)

  $ (473 )     292       102       731       285  

Net loan charge-offs (recoveries) to average loans

    (0.08% )     0.05 %     0.02 %     0.12 %     0.05 %

Allowance for loan losses

  $ 19,974       19,501       19,193       18,295       18,276  

Allowance to originated loans

    0.87 %     0.88 %     0.88 %     0.86 %     0.92 %

Nonperforming loans

  $ 5,742       7,143       8,231       6,450       7,292  

Other real estate/repossessed assets

  $ 2,384       2,260       2,327       789       495  

Nonperforming loans to total loans

    0.23 %     0.28 %     0.32 %     0.26 %     0.30 %

Nonperforming assets to total assets

    0.25 %     0.29 %     0.32 %     0.23 %     0.26 %

 

 

 

 

NONPERFORMING ASSETS - COMPOSITION

                                       

Residential real estate:

                                       

Land development

  $ 0       0       0       0       0  

Construction

  $ 0       0       0       0       0  

Owner occupied / rental

  $ 3,571       3,574       3,648       3,367       2,972  

Commercial real estate:

                                       

Land development

  $ 0       35       50       65       80  

Construction

  $ 0       0       0       0       0  

Owner occupied

  $ 3,913       4,272       4,627       1,313       1,221  

Non-owner occupied

  $ 0       36       84       400       421  

Non-real estate:

                                       

Commercial assets

  $ 620       1,444       2,126       2,081       3,076  

Consumer assets

  $ 22       42       23       13       17  

Total nonperforming assets

  $ 8,126       9,403       10,558       7,239       7,787  
                                         

NONPERFORMING ASSETS - RECON

                                       

Beginning balance

  $ 9,403       10,558       7,239       7,787       6,408  

Additions - originated loans & former branches

  $ 1,426       402       4,789       1,774       2,987  

Merger-related activity

  $ 29       0       210       16       0  

Return to performing status

  $ (175 )     0       (120 )     0       (113 )

Principal payments

  $ (1,557 )     (688 )     (1,089 )     (1,168 )     (1,289 )

Sale proceeds

  $ (299 )     (101 )     (373 )     (147 )     (56 )

Loan charge-offs

  $ (597 )     (754 )     (91 )     (953 )     (135 )

Valuation write-downs

  $ (104 )     (14 )     (7 )     (70 )     (15 )

Ending balance

  $ 8,126       9,403       10,558       7,239       7,787  
                                         

LOAN PORTFOLIO COMPOSITION

                                       

Commercial:

                                       

Commercial & industrial

  $ 739,805       753,764       776,562       780,816       757,219  

Land development & construction

  $ 31,437       29,872       28,575       29,027       31,924  

Owner occupied comm'l R/E

  $ 531,152       526,327       485,347       491,633       452,382  

Non-owner occupied comm'l R/E

  $ 794,206       791,685       805,167       783,036       768,565  

Multi-family & residential rental

  $ 96,428       101,918       119,170       114,081       113,257  

Total commercial

  $ 2,193,028       2,203,566       2,214,821       2,198,593       2,123,347  

Retail:

                                       

1-4 family mortgages

  $ 264,996       254,560       236,075       220,697       205,850  

Home equity & other consumer

  $ 93,180       100,426       103,376       107,991       112,117  

Total retail

  $ 358,176       354,986       339,451       328,688       317,967  

Total loans

  $ 2,551,204       2,558,552       2,554,272       2,527,281       2,441,314  
                                         

END OF PERIOD BALANCES

                                       

Loans

  $ 2,551,204       2,558,552       2,554,272       2,527,281       2,441,314  

Securities

  $ 348,024       346,780       341,126       333,294       341,677  

Other interest-earning assets

  $ 163,879       144,974       123,110       48,762       12,663  

Total earning assets (before allowance)

  $ 3,063,107       3,050,306       3,018,508       2,909,337       2,795,654  

Total assets

  $ 3,293,900       3,286,704       3,254,655       3,143,336       3,018,919  

Noninterest-bearing deposits

  $ 830,187       866,380       826,038       800,718       757,706  

Interest-bearing deposits

  $ 1,709,866       1,655,985       1,663,005       1,570,003       1,520,310  

Total deposits

  $ 2,540,053       2,522,365       2,489,043       2,370,721       2,278,016  

Total borrowed funds

  $ 373,824       387,468       390,868       404,370       380,009  

Total interest-bearing liabilities

  $ 2,083,690       2,043,453       2,053,873       1,974,373       1,900,319  

Shareholders' equity

  $ 368,340       365,870       362,546       357,499       348,050  
                                         

AVERAGE BALANCES

                                       

Loans

  $ 2,552,070       2,534,729       2,534,364       2,472,489       2,390,030  

Securities

  $ 348,431       346,318       339,125       338,045       339,537  

Other interest-earning assets

  $ 123,633       138,095       116,851       46,250       61,376  

Total earning assets (before allowance)

  $ 3,024,134       3,019,142       2,990,340       2,856,784       2,790,943  

Total assets

  $ 3,249,794       3,248,828       3,220,053       3,081,542       3,016,871  

Noninterest-bearing deposits

  $ 805,214       849,751       805,650       785,705       766,031  

Interest-bearing deposits

  $ 1,690,135       1,635,727       1,648,235       1,531,399       1,542,078  

Total deposits

  $ 2,495,349       2,485,478       2,453,885       2,317,104       2,308,109  

Total borrowed funds

  $ 376,890       384,168       393,910       400,508       352,614  

Total interest-bearing liabilities

  $ 2,067,025       2,019,895       2,042,145       1,931,907       1,894,692  

Shareholders' equity

  $ 365,521       363,823       359,131       351,216       343,344  

 

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