GRAND RAPIDS — Mercantile Bank Corp. recorded lower third quarter earnings amid what President and CEO Robert Kaminski Jr. called a “challenging operating environment” from the COVID-19 pandemic.
The Grand Rapids-based Mercantile Bank (Nasdaq: MBWM) on Tuesday reported $10.7 million quarterly net income, or 66 cents per diluted share. That compares to net income of $12.6 million, or 77 cents per diluted share, in the third quarter of 2019.
CFO Chuck Christmas told brokerage analysts in a conference call that although “uncertainties remain that may impact Mercantile’s financial condition and operating performance in future periods,” bank executives are pleased with the quarterly results “and believe we are well positioned to navigate through the unprecedented environment created by the coronavirus pandemic and other events.”
“We note that we entered a stress environment with strong asset quality and solid capital position,” Christmas said.
The third quarter included a $3.2 million loan-loss provision that was primarily from adjusting risk ratings for commercial loans, Christmas said. The provision — combined with higher overhead costs — contributed to the lower quarterly earnings, he said.
Despite the provision and commercial loan downgrades, “we feel really good about where we stand working with our clients, knowing exactly where they are in terms of their economic recovery and any challenges that remain ahead for them,” Kaminski said.
Through three quarters, Mercantile Bank had $30.1 million in net income, or $1.85 per diluted share, versus $36.1 million, or $2.20 per diluted share, for the first nine months of 2019.
Mercantile Bank has 40 offices across the Lower Peninsula with $4.42 billion in total assets as of Sept. 30. The bank at one time had 53 offices and continues to reduce the branch network to 37 locations amid an acceleration in the use of digital banking during the pandemic.
“An evolution in the way banking is done appears to be at hand,” Kaminski said.