| News Release
Quincy, Illinois, February 15, 2006 - Mercantile Bancorp. Inc., (AMEX: MBR) today reported unaudited net income for the year ended December 31, 2005 increased 14.3 percent to $9.5 million, or $4.85 per share, from $8.3 million, or $4.24 per share, a year earlier. For the fourth quarter ended December 31, 2005 the company posted net income of $2.5 million, or $1.26 per share versus net income of $2.7 million, or $1.37 per share, in the comparable period a year earlier. "We maintained our momentum in 2005 despite a challenging interest rate environment," said Dan S. Dugan, chairman, president and chief executive officer. "Assets grew by more than 9 percent to $1.1 billion. Our loan portfolio expanded in nearly every category despite a rising and uncertain interest rate environment. The most significant growth in loans during the year came from commercial lending, including commercial real estate lending. Real estate construction loans and consumer lending were also particularly strong during the year. Of course we continued to see strong demand in our core mortgage lending business throughout the year as the housing market remained robust. We also experienced growth in deposits, both in the total and in the number of accounts. Our investments in other banking institutions also continued to enhance our performance throughout the year. "We accomplished this while keeping our operating costs under control. Despite our growth we did not find it necessary to add significantly to staff. Our efficiency ratio, a measure of how well we manage our operating expenses, improved to 63 percent for the year from 65 percent the prior year," Dugan noted. The company said net interest income rose by 11.5 percent to $35.4 million in 2005 from $31.8 million in the prior year. The increase was a result of 10.8 percent growth in average loans and in a 66 basis point increase in the average yield on loans to 6.50 percent from 5.84 percent a year earlier, partially offset by higher interest expense as the company's cost of funds also rose. Noninterest income in 2005 grew to $8.5 million from $7.9 million the previous year, an increase of 8.8 percent. This was due to a combination of growth in fee income related to the higher number of accounts and from growth in trust fees related to an increase in trust assets under management. Notably, noninterest expense was up for the year by only 7.5 percent to $27.8 million from $25.9 million a year earlier as costs remained well under control, the company said. "We faced a significantly different environment in 2005 than we did the year before," said Dugan. "The boom in mortgage refinancings that was a major factor in our performance in the last few years effectively ended. However, refinancing activity remains a consistent, although modest, source of both new loans and fees. Home mortgage lending, a cornerstone of our business, remained strong in all our markets even as interest rates rose during the year. The efforts we've made to ensure that we are not overly dependent on any single aspect of our business allowed us to deliver significant growth despite changing conditions." The decline in fourth quarter net income was due in part to the impact of a non-recurring charge related to an adjustment in the write-off period of leasehold improvements made to certain facilities to match the terms of the original lease. The company's balance sheet remained strong as of the end of 2005. Total assets were $1.1 billion as of December 31, 2005. Cash and equivalents stood at $44.2 million, compared with $39.7 million at the same time a year earlier. Net loans at year-end stood at $849.6 million, an increase of 11.6 percent from $761.6 million at the end of the prior year. Deposits at year-end were up by more than 8 percent to $946.1 million from $873.4 million at the same time a year ago. Minority interest more than doubled to $7.6 million as of year-end 2005 from $3.4 million at the end of 2004. "The strategic investments we made over the past few years have proven to be a good use of our capital. Although they represent a small percentage of our total capital, they are a source of additional growth. They provide us with opportunities beyond those available from organic sources alone," Dugan said. Shareholders' equity at the end of 2005 stood at $91.5 million, an increase of 6.4 percent from $86.0 million a year earlier, the company noted. Looking forward, Dugan said early indications are that 2006 will be another year of growth. "Our strong foundation should allow us to continue to grow in the coming year and beyond. We expect to see some moderation in growth of the housing market and the corresponding demand for mortgages, although by historic standards that market will still be strong. Assuming that the current interest rate cycle is nearing its peak, economic conditions in our markets are such that our commercial real estate lending and construction lending should continue to expand and increase their contribution to our performance. We also believe the agricultural component of our loan portfolio will improve its performance as that industry recovers from the difficult conditions it experienced last year. "We should also see some improvement in our cost structure from a number of actions we took recently. In particular, we are in the process of combining the charters of our Illinois banks, reducing the number from six to three. This should result in reductions in our costs and in the administrative burden," Dugan concluded. Mercantile Bancorp, Inc. is a Quincy, Illinois-based bank holding company with majority-owned subsidiaries consisting of 6 banks in Illinois, 2 banks in Missouri and 1 bank in Kansas, where the Company conducts full-service commercial and consumer banking business, engages in mortgage banking, trust services and asset management, and provides other financial services and products. In addition, the Company has minority investments in 5 community banks in Missouri, Georgia and Florida. Further information is available on the Company's website at www.mercbanx.com . Questions regarding this information should be directed to Mr. Dugan at (217) 223-7300, or by e-mail at investor.relations@mercbanx.com This release contains information and "forward-looking statements" that relate to matters that are not historical facts and which are usually preceded by the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions. These forward-looking statements are subject to significant risks, assumptions and uncertainties. Because of these and other uncertainties, our actual results may be materially different from those described in these forward-looking statements. The forward-looking statements in this release speak only as of the date of the release, and we do not assume any obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contained in the forward-looking statements. - Tables Follow-
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
 Home
| Investor Relations | News
& Publications | Market Area | A
Message from the CEO | Affiliate Banks
Contact Us | Career Oportunities | Privacy © 2004 - 2008 Mercantile Bancorp, Inc. |