Exhibit 99.1

 

Mercantile Bank Corporation Reports Fourth Quarter and

Full Year 2014 Results

Transformational year positions Bank for future growth

GRAND RAPIDS, Mich., January 20, 2015 – Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $6.3 million, or $0.37 per diluted share, for the fourth quarter of 2014, compared with net income of $5.2 million, or $0.59 per diluted share, for the prior-year period. For the full year 2014, Mercantile reported net income of $17.3 million, or $1.28 per diluted share, compared with net income of $17.0 million, or $1.95 per diluted share, for the full year 2013.

“Our fourth quarter results were especially gratifying, as the projected cost saves from our merger with Firstbank Corporation were on target and bode well for 2015 profitability,” said Michael Price, President and Chief Executive Officer. “In addition, loan growth bounced back during the quarter, and combined with our existing backlog, provides optimism for solid loan growth in 2015. Mortgage banking activity also rebounded, and while not at 2013 levels, provided a nice boost to our bottom line.”

Results in 2014 reflect the integration of Mercantile and Firstbank Corporation (“Firstbank”), which merged on June 1, 2014, including consolidated operating results for the combined businesses from the date of merger. Results for the fourth quarter of 2014 include $0.4 million in pre-tax merger-related costs. On an after-tax basis, these costs were $0.2 million, or $0.01 per diluted share. Results for the fourth quarter of 2013 also include $0.5 million in pre-tax merger-related costs, or $0.05 per diluted share after tax. During the fourth quarter of 2013, provision expense was negative $2.5 million, or $0.19 per diluted share after tax; no provision expense was recorded during the fourth quarter of 2014.

Results for the full year 2014 include $5.4 million in pre-tax merger-related costs. On an after-tax basis, these costs were $3.8 million, or $0.28 per diluted share. Results for the full year 2013 also include $1.2 million in pre-tax merger-related costs. On an after-tax basis, these costs were $1.1 million, or $0.13 per diluted share. Provision expense was negative $7.2 million, or $0.54 per diluted share after tax in 2013, compared to negative $3.0 million, or $0.14 per diluted share after tax in 2014.

“Implementation of the merger continues to go smoothly with both customers and staff, and only a few tasks remain to be completed,” said Samuel Stone, Executive Vice President. “The fourth quarter of 2014 was the second full quarter following the merger, and we are right on the time line established by our merger integration teams. Our projected annual cost savings as disclosed at the time the merger was announced were $5.5 million, or about $1.4 million quarterly. Our fourth quarter 2014 results included realizing a vast majority of this target. We expect to realize 100 percent of this target in the first quarter of 2015 and subsequent quarters.”

Except as noted, the Firstbank merger that was consummated effective June 1, 2014 is primarily contributing to the increases over the prior year periods in the income statement and balance sheet.  “Acquired loans”, as used herein, are those assumed in the Firstbank merger. The Firstbank merger was considered a business combination and accounted for under FASB Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”).  All Firstbank assets and liabilities were recorded at their estimated fair values as of the date of merger and identifiable intangible assets were recorded at their estimated fair value.  Estimated fair values are considered preliminary, and in accordance with ASC 805, are subject to change up to one year after the merger date.  This allows for adjustments to the initial purchase entries if additional information relative to closing date fair values becomes available.  Certain reclassifications of prior periods’ purchase entries may also be made to conform to the current period’s presentation and would have no effect on previously reported net income amounts.

Operating Results

Total revenue, which consists of net interest income and noninterest income, was $28.5 million during the fourth quarter of 2014, up $14.2 million or 99.5 percent from the prior-year fourth quarter. Net interest income during the fourth quarter of 2014 was $25.2million, up $12.5million or 98.3percent from the fourth quarter of 2013, primarily reflecting a 98.8 percent increase in average earning assets. Total revenue was $87.8 million during the full year 2014, up $33.5 million or 61.6 percent from 2013. Net interest income was $77.8 million in 2014, up $30.3 million or 63.9 percent from the prior year, primarily reflecting a 62.5 percent increase in average earning assets and a slight increase in the net interest margin.

The net interest margin of 3.79 percent in the fourth quarter of 2014 and 3.75 percent for the full year 2014 were only slightly different than the respective 2013 margins as a decreased yield on earning assets and a decreased cost of funds substantially offset each other. The yield on earning assets was negatively impacted by decreased yields on securities and loans, reflecting the ongoing low interest rate environment, while the cost of funds was positively impacted by the absorption of Firstbank’s lower-costing interest-bearing liability base and the lowering of interest rates on certain non-certificate of deposit accounts in the latter part of the fourth quarter of 2013.

Net interest income and the net interest margin 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 $1.5 million and $3.2 million, as well as decreases in interest expense on deposits and FHLB advances aggregating $0.6 million and $1.4 million, were recorded during the fourth quarter of 2014 and the seven months subsequent to consummation of the Firstbank merger, respectively.  Increases in interest expense on subordinated debentures totaling $0.2 million and $0.4 million were recorded during the respective time periods.  Mercantile expects to continue to record adjustments in interest income on loans and interest expense on subordinated debentures in future periods; however, the adjustments to interest expense on deposits and FHLB advances will no longer occur after July of 2015 in accordance with our fair value measurements at the time of the merger.  The resulting increase in interest expense will negatively affect our net interest margin by approximately nine basis points in future periods starting after July 31, 2015.  An ongoing reallocation of our earning asset mix will help offset this negative impact, as excess lower-yielding overnight funds and cash flows from lower-yielding investments are invested into higher-yielding loans.

Noninterest income during the fourth quarter of 2014 was $3.3million, up 109.5percent from the prior-year fourth quarter. Noninterest income for 2014 was $10.0 million, up 45.9 percent from 2013. An industry-wide slowdown in mortgage banking activity negatively affected our mortgage banking income during 2014; however, mortgage banking income in the fourth quarter of 2014 increased approximately 21 percent in comparison to the linked quarter, and was approximately 10 percent below what Firstbank and Mercantile combined had achieved in the fourth quarter of 2013. During the third quarter of 2014, mortgage banking income was less than half of what the two companies combined recorded during the third quarter of 2013.

Mercantile recorded no provision for loan losses during the fourth quarter of 2014 and a negative $3.0 million provision for the full year 2014 compared to a negative $2.5 million provision and a negative $7.2 million provision during the respective 2013 periods. The negative provisions are the result of several factors, including recoveries of previously charged-off loans, reversals of specific reserves, a reduced level of loan-rating downgrades and ongoing loan-rating upgrades as the quality of the loan portfolio continues to improve.

Noninterest expense totaled $19.6 million during the fourth quarter of 2014, up $10.5 million or 115.7 percent from the prior-year fourth quarter. Noninterest expense for 2014 was $65.6 million, up $29.2 million or 80.2 percent from 2013. The increase in noninterest expense in the 2014 periods compared to the respective 2013 periods was mainly attributable to higher costs necessary to operate the combined company. An increase in salary and benefit expenses was mainly due to the increase in employees associated with the completion of the merger with Firstbank, along with the hiring of additional staff members over the past year and merit pay increases. As of December 31, 2014, full-time equivalent employees numbered 653, up from 241 as of December 31, 2013. Pre-tax merger-related costs totaled $0.4 million during the fourth quarter of 2014 and $5.4 million during 2014, compared to $0.5 million and $1.2 million during the respective 2013 periods.

Mr. Price continued: “Our cost of funds to earning assets stabilized at 0.44 percent for both the third and fourth quarters of 2014, significantly below Mercantile’s 0.84 percent in 2013 and reflecting the expected benefit of the merger with Firstbank. We believe we are getting the full accretion to earnings that we expected, although we continue to see intense competitive pressure on loan yields, slower progress on growing loans to take greater advantage of the low cost funding base, and mortgage banking volumes that are improving but not as rapidly as we had desired. We remain committed to being diligent on standards for loan quality and profitable pricing, and we are well positioned to continue to see earnings benefit from all of these factors as time goes on.”

Balance Sheet

As of December 31, 2014, the balance sheet reflected the June consummation of the merger with Firstbank. Total assets were $2.89 billion, an increase of $1.47 billion or 102.8 percent from December 31, 2013; total loans increased $1.04 billion, or 98.4 percent, to $2.09 billion over the same time period. Approximately $90million and $258 million in term loans to new and existing borrowers were originated during the fourth quarter and full year of 2014, respectively. Ongoing sales and relationship building efforts have resulted in increased lending opportunities.

Robert B. Kaminski, Jr., Executive Vice President and Chief Operating Officer, noted: “As expected, our loan portfolio grew in the fourth quarter of 2014 as draws on existing commercial construction and development lines of credit occurred and as term loans to new and existing customers were originated. We will continue to identify and foster new relationships in our expanded banking markets resulting from the merger. Our loan pipeline remains strong and includes approximately $151 million in unfunded commitments related to commercial construction and development projects that are in the construction phase. We anticipate that new lending opportunities will arise as a result of our recent hiring of experienced commercial loan officers in the Grand Rapids and Lansing markets.”

Commercial-related real estate loans continue to comprise a majority of Mercantile’s loan portfolio, representing approximately 56 percent of total loans as of December 31, 2014.  Non-owner occupied commercial real estate (“CRE”) loans and owner-occupied CRE loans equaled 27 percent and 21 percent of total loans, respectively, as of December 31, 2014.  Commercial and industrial loans represented 26 percent of total loans as of December 31, 2014. 

As of December 31, 2014, total deposits were $2.28 billion, up $1.16 billion from December 31, 2013. Growth in local deposits was driven primarily by the merger, as well as new commercial loan relationships. Wholesale funds were $230 million, or less than 10 percent of total funds, as of December 31, 2014.

Asset Quality

Nonperforming assets (“NPAs”) at December 31, 2014 were $31.4 million, or 1.1 percent of total assets, compared to $9.6 million, or 0.7 percent of total assets, as of December 31, 2013. The nonperforming asset total of $31.4 million consists primarily of $29.4 million in nonperforming loans. The level of NPAs represents an increase of $21.8 million from the end of 2013, primarily resulting from the deterioration of one commercial credit relationship, which was placed on nonaccrual during the fourth quarter of 2014. This one relationship accounted for approximately 70 percent of total NPAs at December 31, 2014.

Net loan charge-offs were $0.3 million during the fourth quarter of 2014 compared with net loan charge-offs of $0.1 million for the linked quarter and net loan recoveries of $0.1 million for the prior-year fourth quarter. Net loan recoveries totaled $0.2 million during 2014 and $1.3 million during 2013.

Capital Position

Shareholders’ equity totaled $328 million as of December 31, 2014, an increase of $175 million from year-end 2013 primarily due to the merger with Firstbank. The Bank’s capital position remains above “well-capitalized” with a total risk-based capital ratio of 14.4 percent as of December 31, 2014, compared to 15.7percent at December 31, 2013. At December 31, 2014, the Bank had approximately $101 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a “well-capitalized” institution. Mercantile reported 16,976,839 total shares outstanding at December 31, 2014, reflecting the issuance of 8,087,272 new shares to Firstbank shareholders effective on the merger consummation at June 1, 2014.

Mr. Price concluded: “We are very pleased with our financial performance during 2014, delivering strong results while accomplishing the most significant event in the history of our Company. At the same time, we are excited about our prospects for 2015. Our team did an excellent job of executing the merger integration, and we can now focus our attention on new sales opportunities across our larger footprint.”

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 $2.9 billion and operates 53 banking offices serving communities in central and western Michigan. 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; our ability to successfully integrate the operations of Mercantile and Firstbank and their respective subsidiary banks; the ability of the combined company to compete in the highly competitive banking and financial services industry; 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:

AT MERCANTILE BANK CORPORATION:

Michael Price	Charles Christmas
President & Chief Executive Officer	Chief Financial Officer
616-726-1600	616-726-1202
mprice@mercbank.com	cchristmas@mercbank.com

Mercantile Bank Corporation

Fourth Quarter 2014 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

	DECEMBER 31,			DECEMBER 31,			DECEMBER 31,
	2014			2013			2012
	(Unaudited)			(Audited)			(Audited)
ASSETS
Cash and due from banks	$	43,754,000		$	17,149,000		$	20,302,000
Interest-bearing deposits		117,777,000			6,389,000			10,822,000
Federal funds sold		11,207,000			123,427,000			104,879,000
Total cash and cash equivalents		172,738,000			146,965,000			136,003,000
Securities available for sale		432,912,000			131,178,000			138,314,000
Federal Home Loan Bank stock		13,699,000			11,961,000			11,961,000
Loans		2,089,277,000			1,053,243,000			1,041,189,000
Allowance for loan losses		(20,041,000	)		(22,821,000	)		(28,677,000	)
Loans, net		2,069,236,000			1,030,422,000			1,012,512,000
Premises and equipment, net		48,812,000			24,898,000			25,919,000
Bank owned life insurance		57,861,000			51,377,000			50,048,000
Goodwill		49,473,000			0			0
Core deposit intangible		15,624,000			0			0
Other assets		33,024,000			30,165,000			48,169,000
Total assets	$	2,893,379,000		$	1,426,966,000		$	1,422,926,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	558,738,000		$	224,580,000		$	190,241,000
Interest-bearing		1,718,177,000			894,331,000			944,963,000
Total deposits		2,276,915,000			1,118,911,000			1,135,204,000
Securities sold under agreements to repurchase		167,569,000			69,305,000			64,765,000
Federal Home Loan Bank advances		54,022,000			45,000,000			35,000,000
Subordinated debentures		54,472,000			32,990,000			32,990,000
Accrued interest and other liabilities		12,263,000			7,435,000			8,377,000
Total liabilities		2,565,241,000			1,273,641,000			1,276,336,000
SHAREHOLDERS' EQUITY
Common stock		317,904,000			162,999,000			166,074,000
Retained earnings (deficit)		10,218,000			(4,101,000	)		(21,134,000	)
Accumulated other comprehensive income (loss)		16,000			(5,573,000	)		1,650,000
Total shareholders' equity		328,138,000			153,325,000			146,590,000
Total liabilities and shareholders' equity	$	2,893,379,000		$	1,426,966,000		$	1,422,926,000

Mercantile Bank Corporation

Fourth Quarter 2014 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF INCOME

	THREE MONTHS ENDED		THREE MONTHS ENDED			TWELVE MONTHS ENDED			TWELVE MONTHS ENDED
	December 31, 2014		December 31, 2013			December 31, 2014			December 31, 2013
	(Unaudited)		(Unaudited)			(Unaudited)			(Audited)
INTEREST INCOME
Loans, including fees	$	25,745,000	$	13,980,000		$	80,824,000		$	52,924,000
Investment securities		2,331,000		1,305,000			8,060,000			5,085,000
Federal funds sold		7,000		84,000			124,000			212,000
Interest-bearing deposits		64,000		4,000			110,000			21,000
Total interest income		28,147,000		15,373,000			89,118,000			58,242,000
INTEREST EXPENSE
Deposits		2,099,000		2,179,000			8,378,000			8,912,000
Short-term borrowings		40,000		22,000			123,000			80,000
Federal Home Loan Bank advances		163,000		154,000			635,000			533,000
Other borrowed money		672,000		323,000			2,204,000			1,261,000
Total interest expense		2,974,000		2,678,000			11,340,000			10,786,000
Net interest income		25,173,000		12,695,000			77,778,000			47,456,000
Provision for loan losses		0		(2,500,000	)		(3,000,000	)		(7,200,000	)
Net interest income after provision for loan losses		25,173,000		15,195,000			80,778,000			54,656,000
NONINTEREST INCOME
Service charges on accounts		837,000		377,000			2,586,000			1,532,000
Mortgage banking income		691,000		129,000			1,672,000			800,000
Other income		1,805,000		1,085,000			5,770,000			4,540,000
Total noninterest income		3,333,000		1,591,000			10,028,000			6,872,000
NONINTEREST EXPENSE
Salaries and benefits		10,310,000		5,204,000			33,703,000			20,298,000
Occupancy		1,496,000		626,000			4,637,000			2,547,000
Furniture and equipment		563,000		230,000			1,738,000			984,000
Merger-related costs		366,000		467,000			5,447,000			1,246,000
Problem asset costs		406,000		(188,000	)		585,000			595,000
FDIC insurance costs		449,000		189,000			1,182,000			793,000
Other expense		6,006,000		2,557,000			18,318,000			9,940,000
Total noninterest expense		19,596,000		9,085,000			65,610,000			36,403,000
Income before federal income tax expense		8,910,000		7,701,000			25,196,000			25,125,000
Federal income tax expense		2,617,000		2,538,000			7,865,000			8,092,000
Net Income	$	6,293,000	$	5,163,000		$	17,331,000		$	17,033,000
Basic earnings per share	$	0.37	$	0.59		$	1.28		$	1.96
Diluted earnings per share	$	0.37	$	0.59		$	1.28		$	1.95
Average basic shares outstanding		16,919,559		8,724,163			13,510,991			8,710,677
Average diluted shares outstanding		16,989,476		8,735,096			13,555,519			8,724,708

Mercantile Bank Corporation

Fourth Quarter 2014 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

	Quarterly															Year-To-Date
(dollars in thousands except per share data)	2014			2014			2014			2014			2013
	4th Qtr			3rd Qtr			2nd Qtr			1st Qtr			4th Qtr			2014			2013
EARNINGS
Net interest income	$	25,173			25,989			15,553			11,064			12,695			77,778			47,456
Provision for loan losses	$	0			(400	)		(700	)		(1,900	)		(2,500	)		(3,000	)		(7,200	)
Noninterest income	$	3,333			2,899			2,288			1,506			1,591			10,028			6,872
Noninterest expense	$	19,596			20,741			16,066			9,207			9,085			65,610			36,403
Net income before federal income tax expense	$	8,910			8,547			2,475			5,263			7,701			25,196			25,125
Net income	$	6,293			5,947			1,509			3,580			5,163			17,331			17,033
Basic earnings per share	$	0.37			0.35			0.13			0.41			0.59			1.28			1.96
Diluted earnings per share	$	0.37			0.35			0.13			0.41			0.59			1.28			1.95
Average basic shares outstanding		16,919,559			16,852,050			11,406,908			8,738,836			8,724,163			13,510,991			8,710,677
Average diluted shares outstanding		16,989,476			16,926,249			11,435,867			8,741,121			8,735,096			13,555,519			8,724,708
PERFORMANCE RATIOS
Return on average assets		0.86	%		0.82	%		0.32	%		1.02	%		1.43	%		0.76	%		1.22	%
Return on average equity		7.70	%		7.46	%		2.94	%		9.36	%		13.49	%		6.91	%		11.36	%
Net interest margin (fully tax-equivalent)		3.79	%		3.95	%		3.62	%		3.42	%		3.80	%		3.75	%		3.73	%
Efficiency ratio		68.74	%		71.80	%		90.05	%		73.25	%		63.59	%		74.72	%		67.01	%
Full-time equivalent employees		653			640			645			244			241			653			241
YIELD ON ASSETS / COST OF FUNDS
Yield on loans		4.90	%		5.03	%		4.85	%		4.63	%		5.26	%		4.89	%		5.04	%
Yield on securities		2.17	%		2.24	%		2.79	%		4.08	%		3.89	%		2.52	%		3.88	%
Yield on other interest-bearing assets		0.25	%		0.19	%		0.24	%		0.25	%		0.25	%		0.25	%		0.25	%
Yield on total earning assets		4.23	%		4.39	%		4.30	%		4.20	%		4.60	%		4.29	%		4.57	%
Yield on total assets		3.89	%		4.03	%		3.96	%		3.90	%		4.27	%		3.95	%		4.22	%
Cost of deposits		0.36	%		0.34	%		0.61	%		0.75	%		0.77	%		0.47	%		0.81	%
Cost of borrowed funds		1.37	%		1.52	%		1.49	%		1.27	%		1.32	%		1.42	%		1.34	%
Cost of interest-bearing liabilities		0.59	%		0.58	%		0.87	%		0.98	%		1.00	%		0.71	%		1.04	%
Cost of funds (total earning assets)		0.44	%		0.44	%		0.68	%		0.78	%		0.80	%		0.54	%		0.84	%
Cost of funds (total assets)		0.41	%		0.40	%		0.62	%		0.72	%		0.74	%		0.50	%		0.77	%
PURCHASE ACCOUNTING ADJUSTMENTS
Loan portfolio - increase interest income	$	1,507			1,175			512			0			0			3,194			0
Time deposits - reduce interest expense	$	588			588			196			0			0			1,372			0
FHLB advances - reduce interest expense	$	11			11			4			0			0			26			0
Trust preferred - increase interest expense	$	171			171			57			0			0			399			0
Core deposit intangible - increase overhead	$	794			794			265			0			0			1,853			0
CAPITAL
Tangible equity to tangible assets		9.30	%		9.07	%		8.82	%		11.16	%		10.74	%		9.30	%		10.74	%
Tier 1 leverage capital ratio		11.15	%		11.01	%		16.67	%		12.99	%		12.53	%		11.15	%		12.53	%
Tier 1 risk-based capital ratio		13.57	%		13.17	%		13.10	%		14.93	%		14.65	%		13.57	%		14.65	%
Total risk-based capital ratio		14.43	%		14.04	%		14.00	%		16.18	%		15.91	%		14.43	%		15.91	%
Tier 1 capital	$	314,752			307,562			302,365			183,251			178,598			314,752			178,598
Tier 1 plus tier 2 capital	$	334,793			327,936			323,221			198,667			193,925			334,793			193,925
Total risk-weighted assets	$	2,319,404			2,335,589			2,308,746			1,227,722			1,218,721			2,319,404			1,218,721
Book value per common share	$	19.33			19.04			18.77			18.05			17.54			19.33			17.54
Tangible book value per common share	$	15.49			15.05			14.73			18.05			17.54			15.49			17.54
Cash dividend per common share	$	0.12			0.12			2.12			0.12			0.12			2.48			0.45
ASSET QUALITY
Gross loan charge-offs	$	466			345			103			588			2,408			1,502			5,290
Recoveries	$	132			263			705			621			2,535			1,721			6,634
Net loan charge-offs	$	334			82			(602	)		(33	)		(127	)		(219	)		(1,344	)
Net loan charge-offs to average loans		0.06	%		0.02	%		(0.18%	)		(0.01%	)		(0.05%	)		(0.01%	)		(0.13%	)
Allowance for loan losses	$	20,041			20,374			20,856			20,954			22,821			20,041			22,821
Allowance to originated loans		1.54	%		1.72	%		1.82	%		1.96	%		2.17	%		1.54	%		2.17	%
Nonperforming loans	$	29,434			6,071			5,741			6,342			6,718			29,434			6,718
Other real estate/repossessed assets	$	1,995			2,659			2,878			2,350			2,851			1,995			2,851
Nonperforming loans to total loans		1.41	%		0.29	%		0.28	%		0.59	%		0.64	%		1.41	%		0.64	%
Nonperforming assets to total assets		1.09	%		0.30	%		0.30	%		0.61	%		0.67	%		1.09	%		0.67	%

Mercantile Bank Corporation

Fourth Quarter 2014 Results

MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

 

	Quarterly															Year-To-Date
(dollars in thousands except per share data)	2014			2014			2014			2014			2013
	4th Qtr			3rd Qtr			2nd Qtr			1st Qtr			4th Qtr			2014			2013
NONPERFORMING ASSETS - COMPOSITION
Residential real estate:
Land development	$	413			436			463			465			467			413			467
Construction	$	0			0			22			22			22			0			22
Owner occupied / rental	$	4,951			5,252			4,867			4,212			4,426			4,951			4,426
Commercial real estate:
Land development	$	209			222			327			453			481			209			481
Construction	$	0			0			0			0			0			0			0
Owner occupied	$	18,338			906			1,475			859			1,049			18,338			1,049
Non-owner occupied	$	1,075			1,585			1,198			1,883			2,108			1,075			2,108
Non-real estate:
Commercial assets	$	6,401			296			267			798			1,016			6,401			1,016
Consumer assets	$	42			33			0			0			0			42			0
Total nonperforming assets	$	31,429			8,730			8,619			8,692			9,569			31,429			9,569
NONPERFORMING ASSETS - RECON
Beginning balance	$	8,730			8,619			8,692			9,569			12,158			9,569			25,940
Additions - originated loans	$	24,734			1,215			164			174			1,869			26,287			3,907
Merger-related activity	$	160			830			1,187			0			0			2,177			0
Return to performing status	$	(779	)		0			0			0			0			(779	)		0
Principal payments	$	(227	)		(864	)		(523	)		(449	)		(3,073	)		(2,063	)		(10,934	)
Sale proceeds	$	(982	)		(910	)		(790	)		(501	)		(796	)		(3,183	)		(5,585	)
Loan charge-offs	$	(145	)		0			(67	)		(101	)		(553	)		(313	)		(3,044	)
Valuation write-downs	$	(62	)		(160	)		(44	)		0			(36	)		(266	)		(715	)
Ending balance	$	31,429			8,730			8,619			8,692			9,569			31,429			9,569
LOAN PORTFOLIO COMPOSITION
Commercial:
Commercial & industrial	$	550,629			541,805			538,791			289,009			286,373			550,629			286,373
Land development & construction	$	51,977			52,218			55,948			37,190			36,741			51,977			36,741
Owner occupied comm'l R/E	$	430,406			412,470			411,116			264,299			261,877			430,406			261,877
Non-owner occupied comm'l R/E	$	559,594			584,422			588,752			378,034			364,066			559,594			364,066
Multi-family & residential rental	$	122,772			95,649			93,939			35,686			37,639			122,772			37,639
Total commercial	$	1,715,378			1,686,564			1,688,546			1,004,218			986,696			1,715,378			986,696
Retail:
1-4 family mortgages	$	214,696			217,751			215,908			30,800			31,467			214,696			31,467
Home equity & other consumer	$	159,203			163,950			169,028			31,778			35,080			159,203			35,080
Total retail	$	373,899			381,701			384,936			62,578			66,547			373,899			66,547
Total loans	$	2,089,277			2,068,265			2,073,482			1,066,796			1,053,243			2,089,277			1,053,243
END OF PERIOD BALANCES
Loans	$	2,089,277			2,068,265			2,073,482			1,066,796			1,053,243			2,089,277			1,053,243
Securities	$	446,611			473,235			494,501			153,058			143,139			446,611			143,139
Other interest-bearing assets	$	128,984			82,545			60,123			84,124			129,816			128,984			129,816
Total earning assets (before allowance)	$	2,664,872			2,624,045			2,628,106			1,303,978			1,326,198			2,664,872			1,326,198
Total assets	$	2,893,379			2,863,104			2,879,282			1,413,515			1,426,966			2,893,379			1,426,966
Noninterest-bearing deposits	$	558,738			535,101			515,646			230,709			224,580			558,738			224,580
Interest-bearing deposits	$	1,718,177			1,736,607			1,787,615			877,542			894,331			1,718,177			894,331
Total deposits	$	2,276,915			2,271,708			2,303,261			1,108,251			1,118,911			2,276,915			1,118,911
Total borrowed funds	$	279,790			254,203			249,631			142,833			148,915			279,790			148,915
Total interest-bearing liabilities	$	1,997,967			1,990,810			2,037,246			1,020,375			1,043,246			1,997,967			1,043,246
Shareholders' equity	$	328,138			320,993			316,138			157,689			153,325			328,138			153,325
AVERAGE BALANCES
Loans	$	2,085,844			2,075,087			1,377,986			1,059,595			1,054,573			1,653,605			1,050,961
Securities	$	459,920			484,345			267,273			147,164			142,736			340,771			143,593
Other interest-bearing assets	$	109,128			66,207			89,741			114,553			138,077			94,851			91,171
Total earning assets (before allowance)	$	2,654,892			2,625,639			1,735,000			1,321,312			1,335,386			2,089,227			1,285,725
Total assets	$	2,889,475			2,862,349			1,882,618			1,420,512			1,437,436			2,269,913			1,392,398
Noninterest-bearing deposits	$	561,031			532,997			318,632			214,037			220,826			407,870			197,621
Interest-bearing deposits	$	1,736,242			1,757,162			1,169,863			890,698			907,277			1,391,818			899,707
Total deposits	$	2,297,273			2,290,159			1,488,495			1,104,735			1,128,103			1,799,688			1,097,328
Total borrowed funds	$	254,290			245,522			176,946			156,043			150,341			208,572			139,525
Total interest-bearing liabilities	$	1,990,532			2,002,685			1,346,809			1,046,741			1,057,618			1,600,390			1,039,232
Shareholders' equity	$	324,075			316,410			205,558			155,073			151,873			250,879			149,990