8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (date of earliest event reported): January 19, 2010

Mercantile Bank Corporation

(Exact name of registrant as specified in its charter)

Michigan	000-26719	38-3360865
(State or other jurisdiction	(Commission File	(IRS Employer
of incorporation)	Number)	Identification Number)

310 Leonard Street NW, Grand Rapids, Michigan	49504
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code 616-406-3000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

     Earnings Release. On January 19, 2010, Mercantile Bank Corporation issued a press release announcing earnings and other financial results for the quarter and year ended December 31, 2009. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated here by reference.

     In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number		Description
	99.1	Press release of Mercantile Bank Corporation reporting financial results and earnings for the quarter and year ended December 31, 2009.

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Signatures

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Mercantile Bank Corporation
By:	/s/ Charles E. Christmas
	Charles E. Christmas
	Senior Vice President, Chief Financial Officer and Treasurer

Date: January 19, 2010

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Exhibit Index

Exhibit Number		Description
	99.1	Press release of Mercantile Bank Corporation reporting financial results and earnings for the quarter and year ended December 31, 2009

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EX-99.1

Exhibit 99.1

FOR FURTHER INFORMATION:

AT MERCANTILE BANK CORPORATION:

Michael Price	Charles Christmas
Chairman & CEO	Chief Financial Officer
616-726-1600	616-726-1202
mprice@mercbank.com	cchristmas@mercbank.com

Mercantile Bank Corporation Reports 2009 Fourth Quarter and Year-End Results

GRAND RAPIDS, Mich., January 19, 2010 (GLOBE NEWSWIRE) — Mercantile Bank Corporation (NASDAQ: MBWM) (“Mercantile”) reported a fourth quarter 2009 net loss attributable to common shares of $26.4 million, or ($3.11) per diluted share, compared with net income of $0.3 million, or $0.04 per diluted share, for the fourth quarter of 2008. For the twelve months ended December 31, 2009, Mercantile reported a net loss attributable to common shares of $42.9 million, or ($5.05) per diluted share, compared to a net loss of $5.0 million, or ($0.59) per diluted share, for the prior year.

Fourth quarter results include a one-time non-cash charge to federal income tax expense of $19.7 million to establish a valuation allowance on its net deferred tax assets. Excluding the impact of this one-time charge, the fourth quarter net loss attributable to common shares was $6.66 million, or ($0.78) per diluted share. Mercantile’s banking subsidiary, Mercantile Bank of Michigan, continues to maintain capital levels well in excess of regulatory minimums for well-capitalized banks. Michael Price, Chairman and CEO of Mercantile Bank Corporation, commented on this charge. “We expect to reduce and ultimately eliminate the deferred tax asset valuation allowance in future periods when we return to profitability.”

Similar to most banking companies, Mercantile has a net deferred tax asset for expected future tax deductions. The deferred tax valuation allowance was established against the entire balance of net deferred tax assets and was due primarily to Mercantile’s recent losses resulting from the distressed operating environment currently confronting banks. The creation of the valuation allowance is a non-cash charge and does not affect the Company’s liquidity position. Although Mercantile was already excluding the net deferred tax asset from its

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regulatory capital ratios, the increased net deferred tax asset balance resulting from 2009 operations further impacted regulatory capital ratios at year-end 2009. The valuation allowance will continue to be analyzed quarterly and will be adjusted in accordance with the accounting rules.

In addition to the $19.7 million tax charge to establish a valuation allowance for the net deferred tax assets, 2009 full-year results include a $1.3 million charge relating to Mercantile’s consolidation of its mid- and eastern-Michigan banking regions and a $0.9 million charge for the industry-wide FDIC special assessment.

Mercantile’s 2009 operating performance has been impacted by the distressed Michigan and national economies and their negative impact on real estate values and the financial strength of its borrowers. The level of problem assets and costs associated with their administration and disposition increased substantially during the course of the year; Mercantile responded aggressively to address its problem assets as expeditiously as circumstances would allow while also continuing to build its loan and lease loss reserve. Notwithstanding the increased loan and lease loss provision expense and problem asset administration costs, improvements were achieved throughout 2009 in key areas including an expanded net interest margin, increased regulatory capital levels, a continued shift to local funding sources and reduced controllable overhead expenses.

Mr. Price continued, “We have made substantial progress over the course of this past year, which is not entirely reflected in our financial statements. We have become well-versed with challenges presented by the recessionary environment and have been able to respond more vigorously — and more effectively — to achieve control over our problem assets. However, the costs associated with the aggressive management of problem assets have been sizeable, but necessary, despite their substantial negative impact on our bottom line. A return to strong asset quality remains our number one priority, which we believe includes proactive identification of potential problem loans and aggressive resolution of existing problem assets.

“As the economy deteriorated over the past two years, the various strategies we’ve employed to manage our loan portfolio have provided us with numerous options for the timely resolution of problem assets. The partnerships we developed with our borrowers initially are still in place to foster a positive environment for loan resolution and increased repayments. We continue to work through Michigan’s prolonged foreclosure process and have recently been able to accelerate the disposition of foreclosed real estate. This past quarter alone, paydowns and proceeds from the liquidation of nonperforming assets totaled $12 million, whereas for the entire year payments and proceeds totaled $26 million. So we are seeing more activity in our markets, and we are participating in it.

“Operating efficiency has been an important element of our strategy from Mercantile’s earliest days. However, market conditions have caused certain credit-related expenses to escalate disproportionately. To offset this negative impact, we regularly review our banking activities to identify additional revenue enhancements and opportunities to reduce operating costs without sacrificing quality service. Through incremental improvements in virtually every revenue and expense category, we have made substantial progress over the past year.”

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Operating Results

Total revenue for 2009, consisting of net interest income and noninterest income, was $58.9 million, up 10.1 percent from the $53.5 million reported for 2008. Net interest income was $51.3 million in 2009 compared to $46.2 million for the prior year, up $5.1 million, or 11.1 percent; the increase was primarily the result of a 32 basis point, or 13.9 percent, expansion of the net interest margin, from 2.30 percent for 2008 to 2.62 percent for 2009, partially offset by a $56.0 million, or 2.7 percent, decline in average earning assets year over year. Lower funding costs accounted for the entire margin improvement in 2009. Despite the substantial increase in nonaccrual loans during the course of the past year, the asset yield remained virtually unchanged as loan pricing initiatives offset foregone interest income.

Fourth quarter 2009 net interest income was $13.5 million, a $1.0 million, or 8.0 percent increase from the $12.5 million generated in the year-ago fourth quarter. The net interest margin for the 2009 fourth quarter was 2.93 percent, up 53 basis points, or 22.1 percent, from the year-ago fourth quarter. Average earning assets declined by $241.8 million, or 11.4 percent, from the year-ago quarter.

Noninterest income for 2009 was $7.6 million, up $0.3 million from the $7.3 million generated in 2008, primarily from increased levels of mortgage banking income and rental income from foreclosed properties. For the fourth quarter of 2009, noninterest income was $2.0 million, up 14.2 percent and 7.4 percent, respectively, from the third quarter of 2009 and the fourth quarter of 2008.

The provision for loan and lease losses totaled $49.0 million for 2009, with $15.3 million recorded in the fourth quarter. This compares with a 2008 provision expense of $21.2 million for the entire year, including $4.0 million in the fourth quarter. The increased 2009 provision expense reflects a higher level of net loan and lease charge-offs as well as additions to reserves to provide for potential losses in the existing loan and lease portfolio. The allowance for loan and lease losses was 2.46 percent of total loans and leases as of December 31, 2009, compared to 2.07 percent and 1.46 percent, respectively, at third quarter-end and the 2008 fourth quarter-end.

Noninterest expense for 2009 was $46.5 million. Excluding the $1.3 million of one-time expenses associated with the consolidation of Mercantile’s mid- and eastern banking regions and the $0.9 million charge related to the industry-wide FDIC special assessment, noninterest expense for 2009 was $44.2 million, up $2.1 million, or 5.1 percent, from the $42.1 million recorded in 2008. The year-over-year growth in noninterest expense resulted from higher costs associated with the administration and disposition of nonperforming assets (namely, legal expenses, property tax payments, appraisal costs, and write-downs on foreclosed properties) and increased FDIC insurance premiums. For 2009, costs related to nonperforming assets and standard FDIC premiums more than doubled: $11.2 million for 2009 compared to $5.2 million in 2008. Mercantile partially offset growth of credit administration costs and FDIC premiums through disciplined management of overhead expenses. Salaries and benefits, occupancy, furniture and equipment, and other operating expenses decreased by $3.9 million, or 10.6 percent, from 2008 levels.

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Balance Sheet

Total assets as of December 31, 2009, were $1.92 billion, down $292 million, or 13.2 percent, from the $2.21 billion reported as of December 31, 2008. Loans and leases declined $317 million, or 17.1 percent, to $1.54 billion during the same twelve-month period. Importantly, commercial real estate (“CRE”) loans declined by $66.1 million, or 7.1 percent, to $862 million at December 31, 2009, while over the same twelve-month period, construction and land development (“C&D”) loans, including both residential and commercial projects, declined by $85.2 million, or 33.0 percent, to $173 million. Commercial and industrial “(C&I”) loans accounted for most of the remaining decline in loan outstandings — primarily due to the economic slowdown which lowered usage of lines of credit by $138 million.

COMMERCIAL LOANS SECURED BY REAL ESTATE

	12/31/09		9/30/09		6/30/09		3/31/09		12/31/08
Residential-Related:
Vacant Land		19,465,000		20,630,000		21,400,000		22,244,000		21,374,000
Land Development		34,027,000		33,862,000		42,053,000		50,402,000		54,055,000
Construction		7,199,000		9,446,000		11,157,000		14,646,000		16,839,000
Subtotal		60,691,000		63,938,000		74,610,000		87,292,000		92,268,000
Comm’l Non-Owner Occupied:
Vacant Land		25,549,000		25,564,000		29,005,000		28,775,000		29,269,000
Land Development		19,402,000		22,412,000		23,469,000		24,636,000		24,629,000
Construction		65,697,000		79,339,000		94,225,000		93,322,000		102,464,000
Commercial Buildings		537,891,000		528,727,000		545,501,000		556,280,000		558,360,000
Subtotal		648,539,000		656,042,000		692,200,000		703,013,000		714,722,000
Comm’l Owner Occupied:
Construction		1,404,000		5,456,000		7,407,000		9,290,000		9,344,000
Commercial Buildings		324,451,000		349,335,000		359,610,000		365,250,000		370,099,000
Subtotal		325,855,000		354,791,000		367,017,000		374,540,000		379,443,000
Total		1,035,085,000		1,074,771,000		1,133,827,000		1,164,845,000		1,186,433,000

Note — Excludes residential mortgage loans representing permanent financing of owner occupied dwellings and home equity lines of credit.

Total deposits at December 31, 2009 were $1.40 billion, down $198 million, or 12.4 percent, from December 31, 2008. Local deposits, primarily NOW accounts and time deposits, increased by $209 million over the past twelve months to $679 million, while total wholesale funds declined by $472 million to $943 million over the same twelve-month period. Total wholesale funds accounted for 54.7 percent of total funds as of December 31, 2009, down from 71.5 percent at year-end 2008.

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Asset Quality

Nonperforming assets at December 31, 2009, were $112 million, or 5.8 percent of total assets, compared to $111 million (5.5 percent of total assets) and $57.4 million (2.6 percent of total assets), respectively, at September 30, 2009 and December 31, 2008. Over the past twelve months, nonperforming assets increased by $54.2 million.

Robert B. Kaminski Jr., Executive Vice President and Chief Operating Officer of Mercantile Bank Corporation, addressed Mercantile’s progress with asset quality issues over the past year. “We remain aggressive in problem asset resolution. Our net charge-offs for the year exceeded two percent of our average loans and leases. We continue to recognize problem loans at early stages of weakness and have not hesitated to place loans on nonaccrual if we believe the likelihood of full repayment may be compromised. At year-end 2009, over 40 percent of our nonperforming loans were contractually current. As of December 31, 2009, our 30-89 day delinquencies were under $1 million, the lowest level since year-end 2005. We consider this to be an encouraging sign of the progress we are making.”

Commercial real estate assets, excluding land development and construction assets, accounted for the majority of the $112 million of nonperforming assets at December 31, 2009 — $58.3 million, or about 52 percent, up $37.8 million since the beginning of 2009. Non-owner occupied properties comprised approximately 66 percent of nonperforming CRE assets. Meanwhile, nonperforming C&D assets were up $8.5 million, or 30.9 percent, from $27.5 million at the prior year-end to $36.1 million (32.3 percent of total nonperforming assets) at December 31, 2009. Nonperforming C&I loans and repossessed assets were $9.8 million compared to $5.2 million at December 2008 year-end, while nonperforming owner-occupied and rental residential loans totaled $7.5 million, up from $4.2 million at December 31, 2008.

NONPERFORMING ASSETS BY LOAN CATEGORY

	12/31/09		9/30/09		6/30/09		3/31/09		12/31/08
Residential Real Estate:
Land Development		19,722,000		13,645,000		10,422,000		12,646,000		14,273,000
Construction		12,103,000		13,021,000		12,882,000		13,538,000		11,040,000
Owner Occupied / Rental		7,493,000		6,830,000		4,910,000		4,877,000		4,160,000
Subtotal		39,318,000		33,496,000		28,214,000		31,061,000		29,473,000
Commercial Real Estate:
Land Development		2,971,000		4,621,000		2,292,000		2,383,000		2,234,000
Construction		1,268,000		228,000		0		0		0
Owner Occupied		19,918,000		21,429,000		17,378,000		8,753,000		6,495,000
Non-Owner Occupied		38,417,000		36,473,000		28,110,000		28,364,000		14,055,000
Subtotal		62,574,000		62,751,000		47,780,000		39,500,000		22,784,000
Non-Real Estate:
Commercial Assets		9,758,000		14,510,000		10,629,000		13,155,000		5,134,000
Consumer Assets		8,000		8,000		8,000		31,000		30,000
Subtotal		9,766,000		14,518,000		10,637,000		13,186,000		5,164,000
Total		111,658,000		110,765,000		86,631,000		83,747,000		57,421,000

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During the course of 2009, Mercantile added $113 million of nonperforming assets to its problem portfolio and successfully disposed of $58.4 million of nonperforming assets by year-end. The Company utilized a combination of workout strategies to accomplish its objectives: asset sales, principal paydowns and a return to performing status accounted for $27.2 million of the reduction; charge-offs were $27.4 million; and OREO valuation write-downs were $3.7 million. Nonperforming asset totals remained virtually unchanged from the third quarter of 2009 to year-end, up only $0.9 million.

NONPERFORMING ASSETS RECONCILIATION

	4th Qtr			3rd Qtr			2nd Qtr			1st Qtr			Whole Year
	2009			2009			2009			2009			2009
Beginning Balance		110,765,000			86,631,000			83,747,000			57,421,000			57,421,000
Additions		22,308,000			39,815,000			18,768,000			31,745,000			112,636,000
Returns to Performing Status		0			(47,000	)		0			(1,156,000	)		(1,203,000	)
Principal Payments		(8,652,000	)		(3,707,000	)		(5,438,000	)		(1,318,000	)		(19,115,000	)
Sale Proceeds		(3,353,000	)		(1,630,000	)		(1,484,000	)		(451,000	)		(6,918,000	)
Charge-Offs		(7,862,000	)		(8,578,000	)		(8,785,000	)		(2,209,000	)		(27,434,000	)
Valuation Write-Downs		(1,548,000	)		(1,719,000	)		(177,000	)		(285,000	)		(3,729,000	)
Ending Balance		111,658,000			110,765,000			86,631,000			83,747,000			111,658,000

Reflecting Mercantile’s conservative identification and administration of problem assets, approximately 40 percent of nonperforming loans and leases were contractually current at December 31, 2009, while loans in the 30-89 day past due category totaled less than $1.0 million. OREO and repossessed assets were $26.6 million at year-end, up $18.5 million from the $8.1 million at December 31, 2008. The net increase was anticipated, since Mercantile continues to gain ownership of properties through the foreclosure process which generally includes a six-to-twelve month redemption period.

NONPERFORMING ASSETS BY TYPE

	12/31/09		9/30/09		6/30/09		3/31/09		12/31/08
Past Due Over 90 Days & Accruing		243,000		3,040,000		48,000		2,426,000		1,358,000
Nonaccrual Loans — Current		34,377,000		36,069,000		28,323,000		32,328,000		11,208,000
Nonaccrual Loans — Past Due		47,441,000		51,121,000		45,300,000		39,615,000		36,737,000
Troubled Debt Restructurings		2,989,000		1,012,000		0		0		0
Foreclosed & Repossessed Assets		26,608,000		19,523,000		12,960,000		9,378,000		8,118,000
Total		111,658,000		110,765,000		86,631,000		83,747,000		57,421,000

Net loan and lease charge-offs for 2009 were $38.2 million, or 2.24 percent of average loans and leases, compared to $19.9 million, or 1.09 percent of average loans and leases for 2008. For the fourth quarter of 2009, net loan and lease charge-offs were $10.9 million, or 2.72 percent annualized of average loans and leases, compared with $11.0 million (2.61 percent

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annualized) and $6.4 million (1.37 percent annualized) for the 2009 third quarter and fourth quarter of 2008, respectively.

NET LOAN CHARGE-OFFS

	4th Qtr			3rd Qtr		2nd Qtr		1st Qtr		Whole Year
	2009			2009		2009		2009		2009
Residential Real Estate:
Land Development		2,204,000			467,000		1,060,000		624,000		4,355,000
Construction		733,000			3,208,000		1,023,000		86,000		5,050,000
Owner Occupied / Rental		946,000			530,000		729,000		1,442,000		3,647,000
Subtotal		3,883,000			4,205,000		2,812,000		2,152,000		13,052,000
Commercial Real Estate:
Land Development		45,000			0		74,000		0		119,000
Construction		0			0		0		0		0
Owner Occupied		1,140,000			1,254,000		593,000		75,000		3,062,000
Non-Owner Occupied		3,009,000			3,265,000		2,347,000		786,000		9,407,000
Subtotal		4,194,000			4,519,000		3,014,000		861,000		12,588,000
Non-Real Estate:
Commercial Assets		2,788,000			2,232,000		4,918,000		2,475,000		12,413,000
Consumer Assets		(1,000	)		7,000		35,000		136,000		177,000
Subtotal		2,787,000			2,239,000		4,953,000		2,611,000		12,590,000
Total		10,864,000			10,963,000		10,779,000		5,624,000		38,230,000

Capital Position

Shareholders’ equity totaled $150.1 million at December 31, 2009, a decrease of $24.3 million, or 13.9 percent, from December 31, 2008. Approximately $19.7 million of the decline resulted from the non-cash valuation allowance established this quarter on Mercantile’s deferred tax assets. The Bank remains “well-capitalized,” with a total risk-based capital ratio of 11.6 percent as of December 31, 2009 compared to 10.8 percent at December 31, 2008. The Bank’s total regulatory capital as of December 31, 2009 was $201.1 million, approximately $27.6 million in excess of the minimum 10 percent required to be categorized as “well-capitalized”. Mercantile’s total shares outstanding at fourth quarter-end were 8,592,514.

Mr. Price concluded, “During this critical period, we continue to take the necessary actions to enhance Mercantile’s operating performance, strengthen our balance sheet and maintain our capital in excess of “well-capitalized” levels. While these improvements are not yet sufficient to offset the costs associated with our current level of problem assets, we anticipate increasingly positive contributions to future quarterly results.”

About Mercantile Bank Corporation

Based in Grand Rapids, Michigan, Mercantile Bank Corporation is the bank holding company for Mercantile Bank of Michigan. Founded in 1997 to provide banking services to businesses,

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individuals, and governmental units, the Bank differentiates itself on the basis of service quality and its banking staff expertise. Mercantile has seven full-service banking offices in Grand Rapids, Holland and Lansing, Michigan. Mercantile Bank Corporation’s common stock is listed on the NASDAQ Global Select Market under the symbol “MBWM.”

Forward-Looking Statements

This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and nontraditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; changes in the national and local economies; and other factors, including risk factors, disclosed from time to time in filings made by Mercantile with the Securities and Exchange Commission. Mercantile undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

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Mercantile Bank Corporation
Fourth Quarter 2009 Results

MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS

	DECEMBER 31,			DECEMBER 31,			DECEMBER 31,
	2009			2008			2007
	(Unaudited)			(Audited)			(Audited)
ASSETS
Cash and due from banks	$	18,896,000		$	16,754,000		$	29,138,000
Short-term investments		1,471,000			100,000			292,000
Federal funds sold		1,368,000			8,950,000			0
Total cash and cash equivalents		21,735,000			25,804,000			29,430,000
Securities available for sale		182,491,000			162,669,000			136,673,000
Securities held to maturity		59,212,000			64,437,000			65,330,000
Federal Home Loan Bank stock		15,681,000			15,681,000			9,733,000
Loans and leases		1,539,818,000			1,856,915,000			1,799,880,000
Allowance for loan and lease losses		(37,878,000	)		(27,108,000	)		(25,814,000	)
Loans and leases, net		1,501,940,000			1,829,807,000			1,774,066,000
Premises and equipment, net		29,684,000			32,334,000			34,351,000
Bank owned life insurance policies		45,024,000			42,462,000			39,118,000
Accrued interest receivable		7,088,000			8,513,000			9,957,000
Other real estate owned and repossessed assets		26,608,000			8,118,000			5,895,000
Other assets		26,745,000			18,185,000			16,850,000
Total assets	$	1,916,208,000		$	2,208,010,000		$	2,121,403,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	121,157,000		$	110,712,000		$	133,056,000
Interest-bearing		1,280,470,000			1,488,863,000			1,458,125,000
Total deposits		1,401,627,000			1,599,575,000			1,591,181,000
Securities sold under agreements to repurchase		99,755,000			94,413,000			97,465,000
Federal funds purchased		2,600,000			0			13,800,000
Federal Home Loan Bank advances		205,000,000			270,000,000			180,000,000
Subordinated debentures		32,990,000			32,990,000			32,990,000
Other borrowed money		16,890,000			19,528,000			4,013,000
Accrued interest and other liabilities		7,242,000			17,132,000			23,799,000
Total liabilities		1,766,104,000			2,033,638,000			1,943,248,000
SHAREHOLDERS’ EQUITY
Preferred stock, net of discount		19,839,000			0			0
Common stock		173,576,000			172,353,000			172,938,000
Retained earnings (deficit)		(44,170,000	)		(1,281,000	)		4,948,000
Accumulated other comprehensive income		859,000			3,300,000			269,000
Total shareholders’ equity		150,104,000			174,372,000			178,155,000
Total liabilities and shareholders’ equity	$	1,916,208,000		$	2,208,010,000		$	2,121,403,000

Mercantile Bank Corporation
Fourth Quarter 2009 Results

MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME

	THREE MONTHS ENDED			THREE MONTHS ENDED			TWELVE MONTHS ENDED			TWELVE MONTHS ENDED
	December 31, 2009			December 31, 2008			December 31, 2009			December 31, 2008
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Interest income
Loans and leases, including fees	$	21,453,000		$	27,306,000		$	93,903,000		$	110,013,000
Investment securities		2,644,000			2,781,000			10,849,000			10,848,000
Federal funds sold		28,000			47,000			136,000			204,000
Short-term investments		4,000			0			21,000			7,000
Total interest income		24,129,000			30,134,000			104,909,000			121,072,000
Interest expense
Deposits		7,850,000			13,668,000			41,269,000			59,812,000
Short-term borrowings		460,000			515,000			1,845,000			2,021,000
Federal Home Loan Bank advances		1,948,000			2,720,000			8,808,000			10,554,000
Other borrowings		360,000			726,000			1,654,000			2,476,000
Total interest expense		10,618,000			17,629,000			53,576,000			74,863,000
Net interest income		13,511,000			12,505,000			51,333,000			46,209,000
Provision for loan and lease losses		15,300,000			4,000,000			49,000,000			21,200,000
Net interest income after provision for loan and lease losses		(1,789,000	)		8,505,000			2,333,000			25,009,000
Noninterest income
Service charges on accounts		523,000			522,000			2,023,000			1,994,000
Other income		1,430,000			1,296,000			5,535,000			5,288,000
Total noninterest income		1,953,000			1,818,000			7,558,000			7,282,000
Noninterest expense
Salaries and benefits		4,734,000			5,462,000			20,331,000			22,493,000
Occupancy		718,000			927,000			3,377,000			3,826,000
Furniture and equipment		452,000			478,000			1,871,000			1,980,000
Nonperforming asset costs		2,289,000			921,000			7,294,000			3,266,000
FDIC insurance costs		1,202,000			850,000			4,852,000			1,890,000
Branch consolidation costs		0			0			1,308,000			0
Other expense		1,440,000			1,868,000			7,455,000			8,671,000
Total noninterest expense		10,835,000			10,506,000			46,488,000			42,126,000
Income (loss) before federal income tax expense (benefit)		(10,671,000	)		(183,000	)		(36,597,000	)		(9,835,000	)
Federal income tax expense (benefit)		15,416,000			(496,000	)		5,490,000			(4,876,000	)
Net income (loss)		(26,087,000	)		313,000			(42,087,000	)		(4,959,000	)
Preferred stock dividends and accretion		319,000			0			802,000			0
Net income (loss) attributable to common shareholders	$	(26,406,000	)	$	313,000		$	(42,889,000	)	$	(4,959,000	)
Basic earnings (loss) per share	$	(3.11	)	$	0.04		$	(5.05	)	$	(0.59	)
Diluted earnings (loss) per share	$	(3.11	)	$	0.04		$	(5.05	)	$	(0.59	)
Average basic shares outstanding		8,496,555			8,476,119			8,489,679			8,470,795
Average diluted shares outstanding		8,496,555			8,532,153			8,489,679			8,470,795

Mercantile Bank Corporation
Fourth Quarter 2009 Results

MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)

	Quarterly															Year-To-Date
	2009			2009			2009			2009			2008
(dollars in thousands except per share data)	4th Qtr			3rd Qtr			2nd Qtr			1st Qtr			4th Qtr			2009			2008
EARNINGS
Net interest income	$	13,511			13,567			12,450			11,805			12,505			51,333			46,209
Provision for loan and lease losses	$	15,300			11,800			11,500			10,400			4,000			49,000			21,200
Noninterest income	$	1,953			1,710			1,863			2,032			1,818			7,558			7,282
Noninterest expense	$	10,835			12,517			12,364			10,772			10,506			46,488			42,126
Net income (loss)	$	(26,087	)		(5,286	)		(6,225	)		(4,489	)		313			(42,087	)		(4,959	)
Net income (loss) common shareholders	$	(26,406	)		(5,606	)		(6,388	)		(4,489	)		313			(42,889	)		(4,959	)
Basic earnings (loss) per share	$	(3.11	)		(0.66	)		(0.75	)		(0.53	)		0.04			(5.05	)		(0.59	)
Diluted earnings (loss) per share	$	(3.11	)		(0.66	)		(0.75	)		(0.53	)		0.04			(5.05	)		(0.59	)
Average basic shares outstanding		8,496,555			8,492,946			8,487,747			8,481,265			8,476,119			8,489,679			8,470,795
Average diluted shares outstanding		8,496,555			8,492,946			8,487,747			8,481,265			8,532,153			8,489,679			8,470,795
PERFORMANCE RATIOS
Return on average assets		(5.28	%)		(1.09	%)		(1.19	%)		(0.81	%)		0.06	%		(2.04	%)		(0.23	%)
Return on average common equity		(59.46	%)		(12.26	%)		(14.54	%)		(10.50	%)		0.72	%		(24.26	%)		(2.87	%)
Net interest margin (fully tax-equivalent)		2.93	%		2.85	%		2.50	%		2.28	%		2.40	%		2.62	%		2.30	%
Efficiency ratio		70.07	%		81.93	%		86.38	%		77.85	%		73.35	%		78.94	%		78.75	%
Full-time equivalent employees		257			265			278			298			303			257			303
CAPITAL
Period-ending equity to assets		7.83	%		8.79	%		8.77	%		7.56	%		7.90	%		7.83	%		7.90	%
Tier 1 leverage capital ratio		9.14	%		9.70	%		9.46	%		8.49	%		9.17	%		9.14	%		9.17	%
Tier 1 risk-based capital ratio		10.43	%		10.72	%		10.48	%		9.38	%		9.68	%		10.43	%		9.68	%
Total risk-based capital ratio		11.70	%		11.98	%		11.74	%		10.63	%		10.93	%		11.70	%		10.93	%
Book value per common share	$	15.01			18.19			18.71			19.70			20.29			15.01			20.29
Cash dividend per common share	$	0.01			0.01			0.01			0.04			0.04			0.07			0.31
ASSET QUALITY
Gross loan charge-offs	$	11,225			11,545			11,111			5,740			6,564			39,621			20,594
Net loan charge-offs	$	10,864			10,963			10,779			5,624			6,403			38,230			19,906
Net loan charge-offs to average loans		2.72	%		2.61	%		2.47	%		1.25	%		1.37	%		2.24	%		1.09	%
Allowance for loan and lease losses	$	37,878			33,443			32,605			31,884			27,108			37,878			27,108
Allowance for losses to total loans		2.46	%		2.07	%		1.91	%		1.79	%		1.46	%		2.46	%		1.46	%
Nonperforming loans	$	85,050			91,242			73,671			74,369			49,303			85,050			49,303
Other real estate and repossessed assets	$	26,608			19,523			12,960			9,378			8,118			26,608			8,118
Nonperforming assets to total assets		5.83	%		5.49	%		4.18	%		3.74	%		2.60	%		5.83	%		2.60	%
END OF PERIOD BALANCES
Loans and leases	$	1,539,818			1,614,226			1,708,524			1,778,057			1,856,915			1,539,818			1,856,915
Total earning assets (before allowance)	$	1,800,041			1,904,944			1,968,436			2,140,804			2,108,752			1,800,041			2,108,752
Total assets	$	1,916,208			2,017,350			2,071,372			2,239,764			2,208,010			1,916,208			2,208,010
Deposits	$	1,401,627			1,450,968			1,478,633			1,651,283			1,599,575			1,401,627			1,599,575
Shareholders’ equity	$	150,104			177,291			181,692			169,345			174,372			150,104			174,372
AVERAGE BALANCES
Loans and leases	$	1,585,523			1,663,510			1,749,919			1,821,428			1,858,701			1,704,335			1,829,686
Total earning assets (before allowance)	$	1,874,752			1,935,637			2,050,071			2,155,278			2,116,540			2,002,979			2,058,957
Total assets	$	1,983,111			2,042,355			2,146,593			2,254,307			2,214,412			2,105,673			2,157,322
Deposits	$	1,421,850			1,469,264			1,558,206			1,658,323			1,588,615			1,526,105			1,562,429
Shareholders’ equity	$	176,196			181,400			176,189			173,414			172,374			176,820			172,777