Magazine article American Banker

Mercantile in Mich. Reports Profit despite Smaller Balance Sheet

Magazine article American Banker

Mercantile in Mich. Reports Profit despite Smaller Balance Sheet

Article excerpt

Byline: John Reosti

Mercantile Bancorp in Grand Rapids, Mich., sought to assure investors that its underlying performance was strong despite balance sheet shrinkage that took place over the first quarter.

The $3.3 billion-asset company reported in a press release Tuesday that total loans fell 0.3% from the end of 2017, to $2.6 billion, while non-interest-bearing deposits decreased by 4%, to $830 million.

As for deposits, much of the decline was seasonal, reflecting tax-related expenses and employee bonus payouts by commercial clients, Chief Financial Officer Charles Christmas said during a conference call to discuss quarterly results. He added that noninterest checking relationships increased during the quarter.

While the company originated $111 million in loans during the quarter, those gains were partially offset by $42 million on runoff.

About half of the runoff involved loans on the company's watch list, or credits that CEO Robert Kaminski Jr. said he was "happy to see go."

Citing a strong pipeline, which includes $130 million in construction loans, Kaminski told analysts that he is confident loan growth will resume in the second quarter and that Mercantile should have little difficulty hitting its growth target of mid-to-high single digits.

"I'm still very comfortable with that guidance -- assuming a more normal level of payoffs," Kaminski said.

Overall, Mercantile's first-quarter earnings rose 43% from a year earlier, to $10. …

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