EX-99.1 2 k49131exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(MERCANTILE LOGO)
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 First Quarter 2010 Results
GRAND RAPIDS, Mich., April 20, 2010 (GLOBE NEWSWIRE) — Mercantile Bank Corporation (NASDAQ: MBWM) (“Mercantile”) reported a first quarter 2010 net loss attributable to common shares of $2.96 million, or ($0.35) per diluted common share, compared to net losses of $4.49 million, or ($0.53) per diluted common share, and $36.4 million, or ($4.28) per diluted common share, for the 2009 first and fourth quarters, respectively. The major factor affecting Mercantile’s profitability for all three quarters was the magnitude of the provision for loan and lease losses, and additionally for the fourth quarter of 2009, the imposition of a $23.2 million valuation allowance on its net deferred tax asset.
With the establishment of the deferred tax asset valuation allowance, Mercantile’s ability to recognize federal income tax benefits during periods in which net losses are recorded is significantly limited, thereby distorting bottom line comparisons to earlier quarters. On a pretax basis, the 2010 first quarter loss was $3.07 million compared to the year-ago first quarter loss of $7.34 million, a 58.1 percent improvement due primarily to a higher level of net interest income and lower loan loss provision in the 2010 quarter.
Michael Price, Chairman and CEO of Mercantile Bank Corporation, commented, “The economic environment has been extremely challenging, and will likely remain difficult for at least the next several quarters. However, we continue to make steady progress improving the performance of our core banking activities. Over the past two years, we have implemented many strategic initiatives that have resulted in improved net interest income,

 

 

lower controllable overhead costs, a decline in non-owner occupied commercial real estate loans, strong local deposit growth and significantly reduced levels of, and reliance on, wholesale funds. At all times, our Bank has maintained its “well-capitalized” status. Our improved fundamentals have not only helped mitigate the impact of asset quality costs in the current operating environment, but should have a lasting positive impact on future performance as well.
“By comparison, improvement in the performance of our problem credit portfolio has been achieved at a slower rate, and has been difficult to forecast. Improvement depends largely on external factors, namely, the health of the Michigan economy and our real estate markets, and unemployment levels. It appears that a return to a semblance of economic normalcy will take an extended period of time. Meanwhile, our charge remains to identify and resolve our problem lending relationships as expeditiously as possible, working in partnership with our customers to minimize credit exposure. We strive to maintain open communications with our customer base and preserve those credit relationships that we value. And with these valued customers, we have been proactive in meeting their credit as well as other banking needs.
“The timing and extent of Michigan’s economic recovery is uncertain. Our ability to right-size the bank in response to changes in the economic environment has allowed us to maintain our flexibility as well as our well-capitalized status without additional (and highly dilutive) common equity or capital that would involve significant additional expense. Over the past twelve months, our total assets declined by 15 percent, while our total risk-based capital ratio improved by 66 basis points. We are currently seeing limited creditworthy opportunities, and we have become more selective in our lending efforts as well. Our right-sizing strategy has allowed us to keep pace with economic conditions, yet maintain the capacity to grow through internally-generated equity as the economy improves.”
Operating Results
For the first quarter of 2010, total revenue, consisting of net interest income and noninterest income, was $17.0 million, up $3.1 million, or 22.6 percent, from the $13.8 million reported for the 2009 first quarter. Net interest income was $14.3 million compared to $11.8 million for the year-ago quarter, an increase of $2.5 million, or 21.2 percent, primarily due to an improved net interest margin. The 2010 first quarter net interest margin expanded by 97 basis points, or 42.5 percent, from the net interest margin in the prior-year first quarter, reaching 3.25 percent and more than offsetting the $331 million, or 15.4 percent, decline in average earning assets. Margin improvement resulted from the preservation of asset yield despite increased levels of nonaccruing assets, combined with sharply declining funding costs, primarily from repricing CDs and FHLB advances at lower interest rates as they matured.
First quarter 2010 noninterest income was $2.66 million, up $0.62 million, or 30.7 percent, from the $2.03 million generated in the first quarter of 2009. Since Mercantile will not be in a taxable position near-term, the Company elected to sell $20 million of its $60 million portfolio of tax-exempt municipal securities late during the quarter, realizing a $0.5 million

 

 

gain on sale. Proceeds will be reinvested in taxable securities available for sale, primarily during early second quarter. In addition, Mercantile realized a $0.2 million gain on the sale of $5.5 million of the SBA-guaranteed portion of commercial loans. Excluding the gains of $0.7 million, recurring noninterest income declined 3.6 percent in the first quarter of 2010 compared to the first quarter of 2009. The 2010 first quarter was affected by a modest decline in overdraft service charges and lower mortgage banking income, partially offset by increased rental income from foreclosed properties and earnings on bank-owned life insurance.
The provision for loan and lease losses was $8.4 million for the 2010 first quarter compared to $25.3 million and $10.4 million for the linked and year-ago quarters, respectively. Mercantile continues to boost its loan loss reserve, which stands at 3.35 percent of total loans and leases as of March 31, 2010 compared to 1.79 percent at March 31, 2009.
Noninterest expenses for the first quarter of 2010 were $11.6 million, up $0.9 million, or 8.0 percent, from the prior-year first quarter, driven by greater nonperforming asset administration and resolution costs (namely, legal expenses, property tax payments, appraisal costs, and write-downs on foreclosed properties) as well as increased FDIC insurance premiums. First quarter 2010 nonperforming asset administration and resolution costs and FDIC insurance premiums totaled $3.7 million, more than double the $1.6 million incurred in the first quarter of 2009. Mercantile partially offset growth of these problem credit-related and FDIC costs by implementing initiatives that reduced controllable expenses; salaries and benefits, occupancy, furniture and equipment, and other operating expenses decreased by $1.2 million, or 13.2 percent, from first quarter 2009. Staff levels were reduced by 47 employees over the past twelve months, contributing to a 16.0 percent reduction in salary and benefit costs in the first quarter of 2010 compared to the year-ago first quarter.
Balance Sheet
Total assets as of March 31, 2010 were $1.90 billion, virtually unchanged from 2009 year-end. Loans and leases were $1.50 billion, a decline of $42.2 million, or 2.7 percent, since 2009 year-end. Compared to March 31, 2009, total assets declined by $337 million, or 15.0 percent, and loans and leases declined by $280 million, or 15.8 percent. Total real estate loans, excluding residential mortgage loans representing permanent financing of owner-occupied dwellings and home equity lines of credit, were $1.01 billion at March 31, 2010, a decline of $23.4 million, or 2.3 percent, from year-end 2009, and $153 million, or 13.2 percent, since the year-ago quarter-end. Commercial non-owner occupied real estate loans totaled $633 million at the end of the 2010 first quarter, a decrease of $15.8 million, or 2.4 percent, from year-end 2009, and $70.3 million, or 10.0 percent, from the year-ago quarter-end. Commercial owner-occupied real estate loans were $318 million at March 31, 2010, a decline of $7.9 million, or 2.4 percent, from year-end 2009, and $56.6 million, or 15.1 percent, since the year-ago quarter-end. Residential-related vacant land, land development, and construction loans totaled $60.9 million as of March 31, 2010, an increase of $0.3 million, or 0.4 percent, from year-end 2009, but a decline of $26.4 million, or 30.2 percent, from the year-ago quarter-end.

 

 

At March 31, 2010, securities and cash and cash equivalents represented 12.0 percent and 5.1 percent of total assets, respectively. Since Mercantile is not currently in a taxable position, the Company liquidated $20 million of its $60 million portfolio of tax-exempt municipal securities during the first quarter of 2010. Proceeds will be reinvested in taxable securities available for sale, and all securities, including the remaining municipal securities, are now included in the available for sale portfolio.
LOANS SECURED BY REAL ESTATE *
                                         
    3/31/10     12/31/09     9/30/09     6/30/09     3/31/09  
Residential-Related:
                                        
Vacant Land
   $ 20,871,000     $ 19,465,000     $ 20,630,000     $ 21,400,000     $ 22,244,000  
Land Development
     32,199,000       34,027,000       33,862,000       42,053,000       50,402,000  
Construction
     7,872,000       7,199,000       9,446,000       11,157,000       14,646,000  
 
                              
 
     60,942,000       60,691,000       63,938,000       74,610,000       87,292,000  
 
                                        
Commercial Non-Owner Occupied:
                                        
Vacant Land
     22,304,000       25,549,000       25,564,000       29,005,000       28,775,000  
Land Development
     19,058,000       19,402,000       22,412,000       23,469,000       24,636,000  
Construction
     52,107,000       65,697,000       79,339,000       94,225,000       93,322,000  
Commercial Buildings
     539,284,000       537,891,000       528,727,000       545,501,000       556,280,000  
 
                              
 
     632,753,000       648,539,000       656,042,000       692,200,000       703,013,000  
 
                                        
Commercial Owner-Occupied
                                        
Construction
     1,651,000       1,404,000       5,456,000       7,407,000       9,290,000  
Commercial Buildings
     316,302,000       324,451,000       349,335,000       359,610,000       365,250,000  
 
                              
 
     317,953,000       325,855,000       354,791,000       367,017,000       374,540,000  
 
                              
 
                                        
Total
   $ 1,011,648,000     $ 1,035,085,000     $ 1,074,771,000     $ 1,133,827,000     $ 1,164,845,000  
 
                              
 
*   Excludes residential mortgage loans representing permanent financing of owner occupied dwellings and home equity lines of credit.
Total deposits at March 31, 2010 were $1.42 billion, up $18.6 million, or 1.3 percent, from December 31, 2009. Local deposits increased by $8.6 million to $685.3 million, led by growth in NOW and money market accounts, which more than offset the decline in local certificates of deposit. Since year-end 2009, brokered deposits increased $10.0 million to $735 million at March 31, 2010; they now account for 51.7 percent of total deposits, unchanged from year-end 2009.
Total wholesale funds were $940 million as of March 31, 2010, a decline of $7.6 million from year-end 2009 and $382 million from the year-ago quarter-end. As a percentage of total funds, wholesale funds equaled 54.5 percent at the end of the first quarter of 2010, down from 55.0 percent at year-end 2009 and 65.5 percent at the prior-year first quarter-end.
Asset Quality

 

 

Nonperforming assets at March 31, 2010 were $118 million, or 6.2 percent of total assets, compared to $112 million (5.9 percent of total assets) and $83.7 million (3.7 percent of total assets), respectively, at December 31, 2009 and March 31, 2009. Nonperforming assets increased by $5.9 million since year-end 2009 and $33.8 million from the year-ago quarter-end.
Robert B. Kaminski Jr., Executive Vice President and Chief Operating Officer of Mercantile Bank Corporation, addressed Mercantile’s ongoing efforts to identify and administer problem assets and minimize exposure associated with their resolution. “While we are still adding to our problem asset levels due to the continued difficult economic environment, one of the more encouraging signs in our markets for the past few quarters has been the increased interest demonstrated by potential investors in commercial properties. This interest has recently been translating into elevated sales activity.”
Commercial real estate assets, excluding land development and construction assets, accounted for the majority of the $118 million of nonperforming assets at March 31, 2010 — $63.9 million, or approximately 54 percent, up $5.5 million since year-end 2009 and $26.7 million since March 31, 2009. Non-owner occupied properties comprised approximately 73 percent of nonperforming commercial real estate assets at March 31, 2010. Nonperforming construction and land development (“C&D”) assets (both residential and commercial combined) were $38.5 million at March 31, 2010, accounting for 32.7 percent of total nonperforming assets; they increased by $2.4 million, or 6.7 percent, from year-end 2009 and by $9.9 million, or 34.7 percent, from March 31, 2009. At March 31, 2010, approximately 89 percent of nonperforming C&D assets were related to residential construction projects. Nonperforming non-real estate commercial loans and repossessed assets were $9.3 million at 2010 first quarter-end, a decline of $0.5 million from year-end 2009 and $3.9 million from the prior-year first quarter-end. Nonperforming owner-occupied and rental residential assets totaled $5.9 million at March 31, 2010, down $1.6 million from December 31, 2009, but $1.0 million higher than March 31, 2009.
NONPERFORMING ASSETS
                                         
    3/31/10     12/31/09     9/30/09     6/30/09     3/31/09  
Residential Real Estate:
                                        
Land Development
   $ 22,781,000     $ 19,722,000     $ 13,645,000     $ 10,422,000     $ 12,646,000  
Construction
     11,425,000       12,103,000       13,021,000       12,882,000       13,538,000  
Owner Occupied / Rental
     5,908,000       7,493,000       6,830,000       4,910,000       4,877,000  
 
                              
 
     40,114,000       39,318,000       33,496,000       28,214,000       31,061,000  
 
                                        
Commercial Real Estate:
                                        
Land Development
     3,031,000       2,971,000       4,621,000       2,292,000       2,383,000  
Construction
     1,238,000       1,268,000       228,000       0       0  
Owner Occupied
     17,311,000       19,918,000       21,429,000       17,378,000       8,753,000  
Non-Owner Occupied
     46,552,000       38,417,000       36,473,000       28,110,000       28,364,000  
 
                              
 
     68,132,000       62,574,000       62,751,000       47,780,000       39,500,000  
 
                                        
Non-Real Estate:
                                        
Commercial Assets
     9,303,000       9,758,000       14,510,000       10,629,000       13,155,000  
Consumer Assets
     8,000       8,000       8,000       8,000       31,000  
 
                              
 
     9,311,000       9,766,000       14,518,000       10,637,000       13,186,000  
 
                              
 
                                        
Total
   $ 117,557,000     $ 111,658,000     $ 110,765,000     $ 86,631,000     $ 83,747,000  
 
                              

 

 

NONPERFORMING LOANS
                                         
    3/31/10     12/31/09     9/30/09     6/30/09     3/31/09  
Past due 90 days+ and accruing interest
   $ 0     $ 243,000     $ 3,040,000     $ 48,000     $ 2,426,000  
Nonaccrual
     88,450,000       81,818,000       87,190,000       73,623,000       71,943,000  
Troubled debt restructurings
     6,011,000       2,989,000       1,012,000       0       0  
 
                              
 
                                        
Total
   $ 94,461,000     $ 85,050,000     $ 91,242,000     $ 73,671,000     $ 74,369,000  
 
                              
Since year-end 2009, Mercantile added $23.0 million of nonperforming assets to its problem portfolio and successfully disposed of $10.1 million through a combination of asset sales, principal paydowns and a return to performing status. Loan charge-offs accounted for a reduction of $6.1 million and OREO valuation write-downs were $0.9 million. Nonperforming assets increased a net $5.9 million during the first quarter of 2010.
NONPERFORMING ASSETS RECONCILIATION
                                         
    1st Qtr     4th Qtr     3rd Qtr     2nd Qtr     1st Qtr  
    2010     2009     2009     2009     2009  
Beginning balance
   $ 111,658,000     $ 110,765,000     $ 86,631,000     $ 83,747,000     $ 57,421,000  
Additions
     23,054,000       22,308,000       39,815,000       18,768,000       31,745,000  
Returns to performing status
     (811,000 )     0       (47,000 )     0       (1,156,000 )
Principal payments
     (4,242,000 )     (8,652,000 )     (3,707,000 )     (5,438,000 )     (1,318,000 )
Sale proceeds
     (5,080,000 )     (3,353,000 )     (1,630,000 )     (1,484,000 )     (451,000 )
Loan charge-offs
     (6,117,000 )     (7,862,000 )     (8,578,000 )     (8,785,000 )     (2,209,000 )
Valuation write-downs
     (905,000 )     (1,548,000 )     (1,719,000 )     (177,000 )     (285,000 )
 
                              
 
                                        
Total
   $ 117,557,000     $ 111,658,000     $ 110,765,000     $ 86,631,000     $ 83,747,000  
 
                              
Net loan and lease charge-offs for the 2010 first quarter were $6.2 million, or 1.6 percent of average loans and leases (annualized), compared with $10.9 million (2.7 percent annualized) and $5.6 million (1.3 percent annualized) for the fourth and first quarters of 2009, respectively.

 

 

NET LOAN CHARGE-OFFS
                                         
    1st Qtr     4th Qtr     3rd Qtr     2nd Qtr     1st Qtr  
    2010     2009     2009     2009     2009  
Residential Real Estate:
                                        
Land Development
   $ 565,000     $ 2,204,000     $ 467,000     $ 1,060,000     $ 624,000  
Construction
     587,000       733,000       3,208,000       1,023,000       86,000  
Owner Occupied / Rental
     326,000       946,000       530,000       729,000       1,442,000  
 
                              
 
     1,478,000       3,883,000       4,205,000       2,812,000       2,152,000  
 
                                        
Commercial Real Estate:
                                        
Land Development
     617,000       45,000       0       74,000       0  
Construction
     0       0       0       0       0  
Owner Occupied
     1,091,000       1,140,000       1,254,000       593,000       75,000  
Non-Owner Occupied
     1,945,000       3,009,000       3,265,000       2,347,000       786,000  
 
                              
 
     3,653,000       4,194,000       4,519,000       3,014,000       861,000  
 
                                        
Non-Real Estate:
                                        
Commercial Assets
     1,012,000       2,788,000       2,232,000       4,918,000       2,475,000  
Consumer Assets
     9,000       (1,000 )     7,000       35,000       136,000  
 
                              
 
     1,021,000       2,787,000       2,239,000       4,953,000       2,611,000  
 
                              
 
                                        
Total
   $ 6,152,000     $ 10,864,000     $ 10,963,000     $ 10,779,000     $ 5,624,000  
 
                              
Capital Position
Shareholders’ equity totaled $138 million as of March 31, 2010, a decrease of $31.1 million, or 18.4 percent, from March 31, 2009. The Bank remains “well-capitalized,” with a total risk-based capital ratio of 11.2 percent as of March 31, 2010 compared to 11.1 percent and 10.8 percent at December 31 and March 31, 2009, respectively. The Bank’s total regulatory capital as of March 31, 2010 was $188 million, approximately $20.2 million in excess of the minimum 10.0 percent required to be considered “well-capitalized”. This past quarter, Mercantile’s Board of Directors elected to suspend future quarterly cash dividend payments on common stock until economic conditions and financial performance improve. Mercantile’s total shares outstanding at first quarter-end were 8,593,270.
Mr. Price concluded, “We are hopeful that the worst of the economic crisis is behind us, although we are aware that a return to full economic health will take an extended period of time. In the meantime, we believe we are well-positioned to weather the continued drag on our profitability with the strategies we have in place, and will continue to look for opportunities to enhance our core banking performance and maintain our well-capitalized status.”
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, individuals, and governmental units, the Bank differentiates itself on the basis of service quality and the expertise of its banking staff. 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 or actions by bank regulators; 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.

 

 

Mercantile Bank Corporation
First Quarter 2010 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
                         
    MARCH 31,     DECEMBER 31,     MARCH 31,  
    2010     2009     2009  
    (Unaudited)     (Audited)     (Unaudited)  
ASSETS
                        
Cash and due from banks
   $ 12,606,000     $ 18,896,000     $ 17,155,000  
Short-term investments
     9,475,000       1,471,000       30,032,000  
Federal funds sold
     74,352,000       1,368,000       90,099,000  
 
                  
Total cash and cash equivalents
     96,433,000       21,735,000       137,286,000  
 
                        
Securities available for sale
     212,949,000       182,491,000       161,484,000  
Securities held to maturity
     0       59,212,000       65,451,000  
Federal Home Loan Bank stock
     15,681,000       15,681,000       15,681,000  
 
                        
Loans and leases
     1,497,624,000       1,539,818,000       1,778,057,000  
Allowance for loan and lease losses
     (50,126,000 )     (47,878,000 )     (31,884,000 )
 
                  
Loans and leases, net
     1,447,498,000       1,491,940,000       1,746,173,000  
 
                        
Premises and equipment, net
     29,141,000       29,684,000       31,697,000  
Bank owned life insurance policies
     45,436,000       45,024,000       42,807,000  
Accrued interest receivable
     7,057,000       7,088,000       8,597,000  
Other real estate owned and repossessed assets
     23,096,000       26,608,000       9,378,000  
Other assets
     25,632,000       26,745,000       21,210,000  
 
                  
 
                        
Total assets
   $ 1,902,923,000     $ 1,906,208,000     $ 2,239,764,000  
 
                  
 
                        
LIABILITIES AND SHAREHOLDERS’ EQUITY
                        
Deposits:
                        
Noninterest-bearing
   $ 118,391,000     $ 121,157,000     $ 112,617,000  
Interest-bearing
     1,301,818,000       1,280,470,000       1,538,666,000  
 
                  
Total deposits
     1,420,209,000       1,401,627,000       1,651,283,000  
 
                        
Securities sold under agreements to repurchase
     98,619,000       99,755,000       91,982,000  
Federal funds purchased
     0       2,600,000       0  
Federal Home Loan Bank advances
     190,000,000       205,000,000       260,000,000  
Subordinated debentures
     32,990,000       32,990,000       32,990,000  
Other borrowed money
     16,829,000       16,890,000       16,825,000  
Accrued expenses and other liabilities
     6,056,000       7,242,000       17,339,000  
 
                  
Total liabilities
     1,764,703,000       1,766,104,000       2,070,419,000  
 
                        
SHAREHOLDERS’ EQUITY
                        
Preferred stock, net of discount
     19,896,000       19,839,000       0  
Common stock
     173,631,000       173,576,000       172,194,000  
Retained earnings (deficit)
     (57,134,000 )     (54,170,000 )     (5,770,000 )
Accumulated other comprehensive income (loss)
     1,827,000       859,000       2,921,000  
 
                  
Total shareholders’ equity
     138,220,000       140,104,000       169,345,000  
 
                  
 
                        
Total liabilities and shareholders’ equity
   $ 1,902,923,000     $ 1,906,208,000     $ 2,239,764,000  
 
                  

 

Mercantile Bank Corporation
First Quarter 2010 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME
                 
    THREE MONTHS ENDED     THREE MONTHS ENDED  
    March 31, 2010     March 31, 2009  
    (Unaudited)     (Unaudited)  
INTEREST INCOME
                
Loans and leases, including fees
   $ 20,406,000     $ 25,185,000  
Investment securities
     2,743,000       2,776,000  
Federal funds sold
     31,000       47,000  
Short-term investments
     9,000       13,000  
 
            
Total interest income
     23,189,000       28,021,000  
 
                
INTEREST EXPENSE
                
Deposits
     6,497,000       12,841,000  
Short-term borrowings
     344,000       440,000  
Federal Home Loan Bank advances
     1,696,000       2,452,000  
Other borrowings
     346,000       483,000  
 
            
Total interest expense
     8,883,000       16,216,000  
 
            
 
                
Net interest income
     14,306,000       11,805,000  
 
                
Provision for loan and lease losses
     8,400,000       10,400,000  
 
            
 
                
Net interest income after provision for loan and lease losses
     5,906,000       1,405,000  
 
                
NONINTEREST INCOME
                
Service charges on accounts
     466,000       512,000  
Gain on sale of commercial loans
     220,000       0  
Net gain on sale of investment securities
     476,000       0  
Other income
     1,493,000       1,520,000  
 
            
Total noninterest income
     2,655,000       2,032,000  
 
                
NONINTEREST EXPENSE
                
Salaries and benefits
     4,665,000       5,552,000  
Occupancy
     750,000       921,000  
Furniture and equipment
     409,000       467,000  
Nonperforming asset costs
     2,504,000       983,000  
FDIC insurance costs
     1,186,000       634,000  
Other expense
     2,120,000       2,215,000  
 
            
Total noninterest expense
     11,634,000       10,772,000  
 
            
 
                
Income (loss) before federal income tax expense (benefit)
     (3,073,000 )     (7,335,000 )
 
                
Federal income tax expense (benefit)
     (430,000 )     (2,846,000 )
 
            
Net income (loss)
     (2,643,000 )     (4,489,000 )
 
                
Preferred stock dividends and accretion
     320,000       0  
 
            
 
                
Net income (loss) attributable to common shares
   $ (2,963,000 )   $ (4,489,000 )
 
            
 
                
Basic earnings (loss) per share
     ($0.35 )     ($0.53 )
Diluted earnings (loss) per share
     ($0.35 )     ($0.53 )
 
                
Average basic shares outstanding
     8,501,671       8,481,265  
Average diluted shares outstanding
     8,501,671       8,481,265  

 

Mercantile Bank Corporation
First Quarter 2010 Results
MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
                                         
    Quarterly
    1st Qtr   4th Qtr   3rd Qtr   2nd Qtr   1st Qtr
(dollars in thousands except per share data)   2010   2009   2009   2009   2009
EARNINGS
                                        
Net interest income
   $ 14,306       13,511       13,567       12,450       11,805  
Provision for loan and lease losses
   $ 8,400       25,300       11,800       11,500       10,400  
Noninterest income
   $ 2,655       1,953       1,710       1,863       2,032  
Noninterest expense
   $ 11,634       10,835       12,517       12,364       10,772  
Net income (loss) before federal income tax expense (benefit)
   $ (3,073 )     (20,671 )     (9,040 )     (9,551 )     (7,335 )
Net income (loss)
   $ (2,643 )     (36,087 )     (5,286 )     (6,225 )     (4,489 )
Net income (loss) common shares
   $ (2,963 )     (36,406 )     (5,606 )     (6,388 )     (4,489 )
Basic earnings (loss) per share
   $ (0.35 )     (4.28 )     (0.66 )     (0.75 )     (0.53 )
Diluted earnings (loss) per share
   $ (0.35 )     (4.28 )     (0.66 )     (0.75 )     (0.53 )
Average shares outstanding
     8,501,671       8,496,555       8,492,946       8,487,747       8,481,265  
Average diluted shares outstanding
     8,501,671       8,496,555       8,492,946       8,487,747       8,481,265  
 
                                        
PERFORMANCE RATIOS
                                        
Return on average assets
     (0.63 %)     (7.28 %)     (1.09 %)     (1.19 %)     (0.81 %)
Return on average common equity
     (8.62 %)     (81.98 %)     (12.26 %)     (14.54 %)     (10.50 %)
Net interest margin (fully tax-equivalent)
     3.25 %     2.93 %     2.85 %     2.50 %     2.28 %
Efficiency ratio
     68.59 %     70.07 %     81.93 %     86.38 %     77.85 %
Full-time equivalent employees
     251       257       265       278       298  
 
                                        
CAPITAL
                                        
Period-ending equity to assets
     7.26 %     7.35 %     8.79 %     8.77 %     7.56 %
Tier 1 leverage capital ratio
     8.77 %     8.64 %     9.70 %     9.46 %     8.49 %
Tier 1 risk-based capital ratio
     10.02 %     9.92 %     10.72 %     10.48 %     9.38 %
Total risk-based capital ratio
     11.29 %     11.18 %     11.98 %     11.74 %     10.63 %
Book value per share
   $ 13.64       13.86       18.19       18.71       19.70  
Cash dividend per share
   $ 0.01       0.01       0.01       0.01       0.04  
 
                                        
ASSET QUALITY
                                        
Gross loan charge-offs
   $ 6,846       11,225       11,545       11,111       5,740  
Net loan charge-offs
   $ 6,152       10,864       10,963       10,779       5,624  
Net loan charge-offs to average loans
     1.64 %     2.72 %     2.61 %     2.47 %     1.25 %
Allowance for loan and lease losses
   $ 50,126       47,878       33,443       32,605       31,884  
Allowance for loan losses to total loans
     3.35 %     3.11 %     2.07 %     1.91 %     1.79 %
Nonperforming loans
   $ 94,461       85,050       91,242       73,671       74,369  
Other real estate and repossessed assets
   $ 23,096       26,608       19,523       12,960       9,378  
Nonperforming assets to total assets
     6.18 %     5.86 %     5.49 %     4.18 %     3.74 %
 
                                        
END OF PERIOD BALANCES
                                        
Loans and leases
   $ 1,497,624       1,539,818       1,614,226       1,708,524       1,778,057  
Total earning assets (before allowance)
   $ 1,810,081       1,800,041       1,904,944       1,968,436       2,140,804  
Total assets
   $ 1,902,923       1,906,208       2,017,350       2,071,372       2,239,764  
Deposits
   $ 1,420,209       1,401,627       1,450,968       1,478,633       1,651,283  
Shareholders’ equity
   $ 138,220       140,104       177,291       181,692       169,345  
 
                                        
AVERAGE BALANCES
                                        
Loans and leases
   $ 1,516,898       1,585,523       1,663,510       1,749,919       1,821,428  
Total earning assets (before allowance)
   $ 1,823,828       1,874,752       1,935,637       2,050,071       2,155,278  
Total assets
   $ 1,920,751       1,983,111       2,042,355       2,146,593       2,254,307  
Deposits
   $ 1,433,091       1,421,850       1,469,264       1,558,206       1,658,323  
Shareholders’ equity
   $ 139,485       176,196       181,400       176,189       173,414