Mercantile Bank Corporation

Good morning and welcome to the Mercantile Bank Corporation first quarter 2021 earnings results conference call and webcast. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would like now to turn the conference over to Tyler Durr from Lambert, Mercantile's investor relations firm. Please go ahead.

Thanks, Matt. Good morning, everyone, and thank you for joining Mercantile Bank Corporation's conference call and webcast to discuss the company's financial results for the first quarter of 2021. I'm Tyler Durr with Lambert IR, Mercantile's investor relations firm, and joining me today are members of their management team, including Bob Kaminsky, President and Chief Executive Officer, Chuck Christmas, Executive Vice President and Chief Financial Officer, and Ray Reichma, President of Mercantile Bank Michigan. You'll begin the call with management's prepared remarks and presentation to review the quarter's results, then open up the call to questions. However, before we begin today's call, it is my responsibility to inform you that this call may involve certain forward-looking statements, such as projections of revenue, earnings, and capital structure, as well as statements on the plans and objectives of the company's business. The company's actual results could differ materially from any forward-looking statements made today due to the factors described in the company's latest Securities and Exchange Commission filings. The company assumes no obligation to update any forward-looking statements made during the call. If anyone does not already have a copy of the first quarter 2021 press release and presentation deck issued by Mercantile today, you can access it at the company's website, www.mercbank.com. At this time, I would like to turn the call over to Mercantile's President and Chief Executive Officer, Bob Kaminski. Bob?

Thank you, Tyler, and good morning, everyone. On the call this morning, we will provide you with detailed information on the company's performance in the first quarter, as well as updates on the current operating environment, which continues to be impacted by the COVID-19 pandemic. As has been outlined in our release this morning, Mercantile had an extremely strong quarter to start 2021. The wonderful work of our team across all fronts throughout 2020 and during the first quarter positioned us well for success in the rest of this year and beyond. Despite the recent surges of COVID experience throughout the country and specifically in the state of Michigan, we remain optimistic due to the increasing pace of vaccinations. We continue to closely monitor pandemic-related developments while prioritizing the health and safety of our customers and employees and are constantly finding ways to seamlessly transition as needed to navigate these new and changing environments. Our full timeline of pandemic-related activities can be found on slide 10 of our deck. The Mercantile team once again demonstrated resiliency and adaptability during the first quarter. delivering another solid financial performance. We achieved net income of $14.2 million and per share earnings of 87 cents per share. We also announced this morning the declaration of a cash dividend in the amount of 29 cents per share, payable on June 16. Later in this call, Chuck will dive deeper into the details of our financial statements as of March 31st. which include the ongoing strength and mortgage banking income, sound asset quality, solid growth in core commercial loans, and managed overhead costs. In addition to our commercial lending team's continued efforts on the forgiveness phase of round one PPP in the first quarter, we also work to assist past and new loan recipient clients with second round PPP funding requests. These new opportunities for relationship building speak to not only the dedicated and efficient efforts of our lending group, but also the adaptability and perseverance of the local economies and businesses throughout our communities. We are fully engaged to meet the evolving needs of our customers as we understand their challenges related to the pandemic. We also continue to evaluate new product and service opportunities to further strengthen our relationships within these markets in support of our communities as they transition toward recovery from the pandemic and a more robust economic growth. While our dedication to the needs of our new and existing customers requires a significant amount of time and effort, we remain committed to growing our customer relationships. This work is demonstrated by our solid and sustained new business pipelines. Ray will provide you with an update on our growth and ongoing new business development later in this call. The ongoing success of strategic initiatives in mortgage banking that we designed to boost market share and increase revenue was especially evident in the first quarter. Our mortgage team, including those at our new lending offices, exceeded expectations and continued to leverage opportunities to produce solid loan production numbers. Their work has allowed us to position ourselves extremely well to leverage the strong demand and capitalize on this market to deliver robust mortgage banking income. Additionally, higher levels of refinance activity remain persistent through the first quarter in light of the historically low interest rate environment. Once again, the relationship-based approach of mercantile will provide us the ability to generate consistently solid mortgage production in times when interest rate and market conditions are favorable, such as we currently enjoy, but also at times when conditions aren't as accommodating. Ray will share more details on this in his comments. During two-hour operations, we are constantly evaluating our processes across the board to ensure adaptation of industry best practices while leveraging available data to capture efficiencies, customize unique client interactions, and optimize our internal systems. We remain focused on expanding our non-interest income revenue streams and continuing to identify opportunities to build on the strength of this income as we have over the past five years. While non-interest income growth has been strongly driven by our robust mortgage banking production, we have also implemented ongoing initiatives with a strategic focus on enhancing the customer experience through digital delivery and the development of advancing technology. For years, Mercantile has focused on investments and the evolution of banking. This change in the manner in which banks do business has only been accelerated in the current environment. This investment in new ways of banking has enabled recent branch consolidations while ensuring the efficient optimization of each of our relationship centers. This allows our staff to fully engage clients so we can meet their new banking needs while more routine and repetitive transactions can be serviced at their convenience through our digital channels. Mercantile's current footprint can be viewed on slide three of the deck. All of our initiatives illustrate our resolute focus on our people, which continues to heighten our commitment to pursuing best practices in environmental, social, and governance, with particular emphasis on the social component as we work to meet the needs of our shareholders, customers, and communities. In the first quarter, we approved a supplier diversity program and diversity equity and inclusion policies, while our entire DEI team has been continuously providing access to enriched learning and growth opportunities for the Mercantile staff through a wide variety of methods. These include live virtual speaking engagements, videos, books, articles, group discussions, training, and creating safe spaces for employees to ask questions and engage in conversations. All of our supervisors have been provided with best practice overviews, resources, and other tools to engage their teams in DEI work and are strongly encouraged to collaborate with other supervisors to share ideas across the organization. The Banks Diversity Council, comprised of a wide cross-section of employees and departments, is also actively working to implement additional supportive DEI strategies and constantly developing new ideas. We remain committed to providing enhanced knowledge and growth opportunities for all of our team members to ensure that diversity, equity, and inclusion are not reactive measures, but a natural part of our workspace culture where everyone is equipped to be a leader in their specific roles. As I close my comments, I want to reemphasize our optimism for the year ahead across all of our markets and business lines as our team has proven their leadership capabilities well beyond traditional banking. We remain focused on building on these foundational efforts throughout our company, capitalize on sustained strategies for future success of all of our customers, employees, communities, and shareholders. Those are my prepared remarks. I'll now turn the call over to Ray.