Michigan bank plans for the future

Mercantile Bank of Michigan, Grand Rapids, has its eyes on long term profitability, which has not diminished short term gains. 

The bank headed into the end of 2019 having earned $36.1 million in the first nine months of 2019, a $5.7 million increase over the prior year. Bank-owned life insurance claims and a gain on the sale of a former branch facility increased reported net income during the first nine months of 2019 by approximately $3.1 million. 

Mercantile executives told its investors the bank may not have maximized all of the market opportunities over a lengthy period of economic growth, but its moves have been to solidify a foundation to absorb any quakes. 

Bob Kaminski, president and CEO, said staying competitive in the mortgage sector has meant staying disciplined. 

“We’ve been very intentional about the lenders we’ve added to our mortgage area,” Kaminski said. “These are lenders who are veterans in our markets who have demonstrated the ability to, despite the environmental conditions and the things that naturally occur in the economy, develop loyal followings where they’ve been able to have some strong production regardless of the economic conditions. Will it be as strong as it is at a time such as right now? No, probably not. But, I think overall in terms of the ability for them to generate volume gives us some encouragement and provides some good comfort that the mortgage banking activity will continue to be a growth area for us. We’ll continue to look to add commissioned mortgage lenders as the department continues to grow and gain in reputation with our clients and among the mortgage community.”

Chuck Christmas, Mercantile CFO, said the bank prepares for potential Federal Reserve rate cuts in one way by considering loan rate floors as the need arises. 

“Right now it’s not a high percentage of loans that have floors,” Christmas said. “We do have some, we have been over the last few years trying to negotiate some floors into our loan relationships and we’ve been successful. Those that do still have a few more potential rate cuts before they come into play. But I can assure you that as the Fed has started to talk about lowering rates we’ve been much more active in negotiating floors into our relationships.”

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