GRAND RAPIDS — Steady growth led Mercantile Bank Corp. to proceed with an addition at its corporate headquarters.
Rising on the south side of the headquarters building at Leonard Street and U.S. 131 in Grand Rapids, the three-story, 25,000-square-foot addition will enable Mercantile Bank to bring together commercial banking teams and support staff — lenders, treasury and credit analysts — at one location.
“It’s a classic case of we’re growing and we want to keep our people together,” bank President Ray Reitsma told MiBiz. “We find our customers are served best if we’re all together working in close proximity to serve them.”
Grand Rapids-based Rockford Construction Co. is handling construction of the addition project, which was designed by Ghafari Associates, also of Grand Rapids. Occupancy is targeted for late summer, Reitsma said.
Built and opened 15 years ago, Mercantile Bank’s 60,000-square-foot corporate headquarters now houses a staff of about 175 employees.
The headquarters is full and Mercantile needs more space to accommodate growth and additional staff the bank may hire in the years ahead as it expands further, Reitsma said. It also needed space to support its Grand Rapids market commercial banking team.
“We literally did not have an open chair in the building,” Reitsma said. “If we would have kept the existing building envelope, we would have had incredible employee density within the building and we didn’t want to do that. We wanted to keep the space such that it was comfortable for our employees and that they had plenty of room to collaborate.”
The addition also will better allow Mercantile Bank to accommodate the 30 to 40 college students it brings in each summer for internships.
“When you don’t have space to put them, it makes it harder to run an effective program,” Reitsma said. “Along with pure business purposes, some things like that are also just a lot easier when you have a little bit of extra space to work with.”
Founded in 1997, Mercantile Bank has been growing steadily since recovering from difficulty it faced in the Great Recession a decade ago.
Mercantile Bank (Nasdaq: MBWM) last month reported fourth quarter net income of $11.5 million, or 70 cents per diluted share. That compares to net income of $7.9 million, or 48 cents per diluted share, in the fourth quarter of 2017. Full-year net income totaled $42 million, or $2.53 per diluted share, versus $31.2 million, or $1.90 per diluted share, in the prior year.
The bank’s “sustained strength and core profitability” and a “healthy” commercial loan pipeline combined to “properly position us to enter 2019 in a strong fashion and to take advantage of future growth opportunities in the coming year and beyond,” President and CEO Robert Kaminski said during a January conference call with brokerage analysts to discuss results.
Mercantile Bank originated $136 million in commercial term loans during the fourth quarter and $508 million for all of 2018. Annual growth of $195 million, or 7.5 percent, pushed total loans to $2.75 billion for the year.
Total commercial loans alone grew more than $54 million in the fourth quarter. For the full year, Mercantile reported commercial loans grew by 7 percent, or $157 million, to $2.36 billion.
At the end of 2018, Mercantile Bank had about $170 million in unfunded commitments for commercial construction and development loans that it expects to fund largely within the next 12 to 18 months.
Fourth quarter commercial and industrial loan growth was similar to what the bank had experienced in recent quarters and came with “great diversity,” Kaminski said.
“They are coming in from a variety of industries within our market, and that’s encouraging because it shows the breadth of our client efforts (and) the breadth that our loan officers are engaging clients to develop relationships,” he said.
Economy still positive
Mercantile Bank, which has 47 offices across the Lower Peninsula and $3.63 billion in total assets as of Dec. 31, expects net loan growth of 7 percent to 8 percent this year. The bank entered 2019 with a loan pipeline “that is consistent with the prior year,” Reitsma said.
Kaminski also told analysts that for now, the direction of Michigan’s economy “remains positive even as rising interest rates and a tightening job market and housing market are increasingly evident.”
“Employment in our primary market continued to grow and overall real estate conditions remain healthy,” he said. “Overall, our client base remains positive on the economic outlook for 2019 in our markets and seeks to appropriately assess and leverage opportunities to expand their businesses.”
EDITOR’S NOTE: This story was updated from its original form.