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Jun 30, 2020
Mercantile Bank Q2 2020 Earnings Report
Reported a decrease in net income due to increased loan loss reserves, partially offset by robust mortgage banking income.
Key Takeaways
Mercantile Bank Corporation reported a net income of $8.7 million for the second quarter of 2020, a decrease compared to the prior-year period. The results were impacted by an increase in loan loss reserves due to the COVID-19 pandemic, which was partially offset by a substantial increase in mortgage banking income.
Net income decreased to $8.7 million, or $0.54 per diluted share, compared to $11.7 million, or $0.71 per diluted share, in the prior-year quarter.
Total revenue increased by 11.0 percent to $41.6 million, driven by higher noninterest income.
Net interest margin decreased to 3.17 percent, compared to 3.79 percent in the prior-year quarter.
Paycheck Protection Program loan fundings totaled approximately $549 million.
Revenue by Segment
Forward Guidance
Mercantile Bank anticipates solid mortgage banking income based on the current pipeline and application volume. They expect service charges on accounts and credit/debit card income to rebound as COVID-19 restrictions are relaxed. The bank remains committed to meeting growth objectives in a cost-conscious manner.
Positive Outlook
- Solid mortgage banking income is expected in future periods based on the current pipeline and application volume.
- Service charges on accounts and credit/debit card income are expected to rebound as certain restrictions are relaxed.
- The bank remains committed to meeting growth objectives in a cost-conscious manner.
- The bank is continually reviewing its branch system, product delivery channels, and treasury management solutions to operate more efficiently.
- Purchase mortgage applications have increased in light of certain COVID-19 restrictions being lifted and is at an all-time high.
Challenges Ahead
- The COVID-19 pandemic presents unique challenges and economic uncertainty.
- Certain segments of the commercial loan portfolio are more susceptible to the risks presented by the pandemic.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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