RankingBanking 24 Digital (1) - Flipbook - Page 26
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the Federal Deposit Insurance Corp., far outpacing
top performers leverage relationships in their com-
its nearest competitor, Nashville-based Pinnacle
munities to enhance their balance sheet and grow.
Financial Partners, with 13% of the market. Bir-
But it’s equally as important to balance flexibility
mingham, Alabama-based Regions Financial Corp.
with discipline in today’s increasingly uncertain,
holds 6% of the county’s deposits.
higher rate environment.
Over the decades, the bank has grown outside
Mercantile Bank Corp., in Grand Rapids, Mich-
Wilson County’s borders deeper into middle Ten-
igan, got its start as a commercial bank in 1997.
nessee’s diverse communities, including Nashville,
The $5.6 billion bank placed among the top 25
affluent Williamson County and rural DeKalb
banks in the RankingBanking study, coming in
County. Wilson Bank expanded into the eastern
fourth largely due to high profitability — a 1.65%
half of the state with a loan production office in
ROAA and 17.54% ROAE — and a low nonper-
Chattanooga last year. Different markets have dif-
forming asset ratio, at 0.08%. Mercantile is a
ferent needs — from well-heeled suburbs to more
business-focused lender with strong credit metrics,
rustic outskirts. Keeping close ties to its communi-
says DelMonte, who covers the stock. “They oper-
ties helps Wilson Bank identify opportunities and
ate in very attractive markets,” he says. “There’s
adapt its approach in response to local nuances.
a lot of development going on and a lot of invest-
And at $4.9 billion, McDearman believes Wilson
ment throughout those different communities”
Bank is the right size to fill gaps in the market that
around Grand Rapids.
very small or very large banks won’t pursue.
In addition to loans, primarily commercial real
“There’s plenty of opportunity for us,” he says.
estate and commercial & industrial (C&I), Mer-
“We don’t try to be all things [to all people], but we
cantile emphasizes getting a larger relationship
do try to listen and tailor-fit individual situations.”
with customers that creates more revenue streams,
Meanwhile, depositors tend to stick with the
through services that generate noninterest income
bank. Wilson Bank’s cost of funds rose dramati-
and create stickier deposits. These include more
cally over the past year, from an average 0.5% in
common bank services such as treasury manage-
2022 to 2.3% in 2023. Its net interest margin con-
ment as well as payroll and human capital ser-
tracted slightly, to 3.3% from 3.7%. “We would
vices — platforms that help customers hire and
rather pay our customers versus brokered depos-
onboard employees, and manage benefits — which
its when possible,” says McDearman. Most of the
bank leaders see as a strategic differentiator.
bank’s deposits are homegrown, and he says it feels
“really good” to reward savers with higher rates.
But another surprising driver of noninterest income has been mortgage, says Raymond Rietsma,
“I’ve been grateful for a balance sheet that’s
Mercantile’s CEO. “Even in this environment of
resilient, that was built with a conservative nature
relatively scarce housing inventory and relatively
over time,” says McDearman. That’s a balance
high rates, we continue to build our market share,”
sheet built on local retail customers and mom-
he says.
and-pop small businesses — not several large
Mercantile saw an opportunity to grow its
depositors that could leave the bank in a pickle
mortgage operation as brokers and financial insti-
should those funds seek yield elsewhere. Those old-
tutions were scaling back. When other mortgage
school depositors “are very sticky,” he says.
lenders let staff go, Mercantile hired them. In a
higher interest rate environment, they’re putting
Exercising Discipline
Like Wilson Bank, many of RankingBanking’s
in elbow grease by building relationships with real
estate agents and developers. “You’re not getting
