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): July 11, 2007

Mercantile Bank Corporation

(Exact name of registrant as specified in its charter)

Michigan (State or other jurisdiction of incorporation)	000-26719 (Commission File Number)	38-3360865 (IRS Employer 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 July 11, 2007, Mercantile Bank Corporation issued a press release announcing earnings and other financial results for the quarter ended June 30, 2007. 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 ended June 30, 2007.

2

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: July 11, 2007

3

Exhibit Index

Exhibit Number	Description
99.1	Press release of Mercantile Bank Corporation reporting financial results and earnings for the quarter ended June 30, 2007.

4

EX-99.1

Exhibit 99.1

FOR FURTHER INFORMATION:

AT MERCANTILE BANK CORPORATION:

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

MERCANTILE BANK CORPORATION ANNOUNCES SECOND QUARTER
NET INCOME OF $2.2 MILLION

Grand Rapids, MI — July 11, 2007 — Mercantile Bank Corporation (Nasdaq: MBWM) reported earnings for the second quarter of 2007 of $2.2 million, or $0.26 per diluted share, a decrease of 56.5 percent from the $5.1 million, or $0.60 per diluted share, reported for the second quarter of 2006. For the first six months of 2007, Mercantile reported net income of $6.5 million, or $0.77 per diluted share, a decrease of 35.2 percent and 34.7 percent, respectively, from the $10.0 million, or $1.18 per diluted share, reported in the prior-year period. The decline in 2007 earnings is primarily the result of increased non-performing assets, which have negatively impacted all major areas of Mercantile’s performance. Also, earnings were lowered by a one-time expense associated with the retirement of Mercantile’s former chairman and CEO, Gerald Johnson, Jr.

Michael Price, Mercantile’s newly-appointed chairman and CEO, commented, “Mercantile achieved an impressive track record over the first ten years of its existence by adhering to a disciplined strategy based on strong loan growth, superb asset quality, and low overhead. We are currently in the midst of a difficult economic period in Michigan, which has depressed our real estate market to levels beyond our expectation. This has affected not only asset quality, but also loan growth. We believe we are taking every step possible to identify problem loans and proactively address the issues involved. As a result, non-performing assets nearly doubled this quarter. We believe we are approaching a peak in non-performing assets and should see improvement going forward. On a more positive note, loan originations have picked up, reflecting the success of our restructured lending teams.

“It is our goal to return to the quality results which have defined our organization. We are hopeful that the days of major provisioning are over. While our margin is still on the low side, much of the impact is derived from the higher level of nonaccrual loans on our books.”

Operating Results

Total revenue, consisting of net interest income and non-interest income, was $15.4 million for the second quarter of 2007, a decrease of 9.2 percent from the $16.9 million reported for the prior-year second quarter. Net interest income for the current quarter was $13.9 million, a decrease of $1.7 million, or 10.9 percent, from the 2006 second quarter level due to a 56 basis point decline in the net interest margin, partially offset by a 6.7 percent increase in average earning assets. Compared with the first quarter of 2007, the decline in net interest income was $536,000, or 3.7 percent; the impact to net interest income was primarily due to a 16 basis point decline in the margin from the previous quarter, since earning assets remained stable. Mr. Price commented, “The competition for quality loans is still intense, so loan pricing has been under pressure. However, we are seeing a leveling in the cost of funds; for the current quarter, the increase was only six basis points compared to first quarter of 2007. The more significant contributor to the margin decline was an 11 basis point drop in asset yield that was largely attributable to the rise in non-performing assets during the quarter.” Non-interest income for the second quarter of 2007 was $1.4 million, an increase of $146,000, or 11.5 percent over the second quarter of 2006.

The provision for loan and lease losses increased 56.7 percent year over year, from $1.5 million in the second quarter of 2006 to $2.35 million for the current quarter, primarily due to an increase in net loan charge-offs and non-performing loans this quarter compared with last year.

Mr. Price continued, “Efficient operations have been a key component to our business strategy since inception, and we maintain this discipline throughout our Company.” Non-interest expense for the second quarter of 2007 was $10.0 million, an increase of $2.0 million, or 25.0 percent, over the prior-year period, and an increase of $1.3 million, or 14.9 percent, from the first quarter of 2007. Exclusive of the $1.2 million one-time charge associated with Mr. Johnson’s retirement, operating expenses rose 10.1% from last year, primarily related to the addition of 28 FTE employees since June 30, 2006. The efficiency ratio was 65.3 percent for the second quarter of 2007, compared with 47.5 percent for the year-ago quarter. For the six-month 2007 period, the ratio was 60.1 percent, compared with 48.2 percent for the prior-year period. Excluding the impact of Mr. Johnson’s retirement package, the efficiency ratio for the current quarter would be 57.5 percent.

Asset Quality

According to Mr. Price, “We have been extremely diligent in reviewing our loan portfolio. The large addition to non-performing loans this quarter accounts for what we believe to be most of the recent credit weakness we have experienced; we are hopeful that this quarter represents a high point in non-performing assets against which

improvement in asset quality can be measured.” Non-performing assets were $24.0 million, or 1.14 percent of total assets at June 30, 2007, compared with $12.6 million, or 0.60 percent of total assets at March 31, 2007, and $8.7 million, or 0.44 percent of total assets at June 30, 2006. Mr. Price explained that the majority of the recent increase can be attributed to two loans totaling $8.0 million that Mercantile placed on non-accrual status this quarter. Mr. Price added, “Over 90 percent of non-performing loans are collateralized by real estate; although resolution of real estate loans is a lengthy process, we believe we are adequately reserved as present market conditions stand.”

Net loan charge-offs for the second quarter of 2007 were $1.2 million, equivalent to 0.28 percent of average loans on an annualized basis, compared with $0.8 million or 0.18 percent of average loans in the first quarter of 2007, and $1.0 million or 0.24 percent for the second quarter of 2006. Loan and lease loss reserves were $22.8 million, or 1.28 percent of total loans and leases at June 30, 2007, up from the 1.24 percent level reported at March 31, 2007.

Balance Sheet

Total assets were $2.10 billion at June 30, 2007, an increase of $134.1 million, or 6.8 percent, from June 30, 2006. Over the last twelve months, loans grew by $105.6 million, or 6.3 percent; year to date 2007 loan growth was $30.5 million, with the second quarter contributing $27.2 million. Most of the growth since year-end 2006 was in commercial real estate loans, including multi-family properties, which increased by $44.4 million, or 5.3 percent, to $883.7 million; commercial real estate accounts for 49.8 percent of total loan outstandings. Otherwise, Mercantile’s portfolio composition remained relatively unchanged, with commercial and industrial loans, the second largest component of Mercantile’s loan portfolio, holding a 26.1 percent share, followed by construction and land development loans, which are also primarily commercial in nature, holding a 16.7 percent share.

Shareholders’ equity at June 30, 2007 was $174.5 million, a twelve-month increase of $12.9 million, or 8.0 percent. Total shares outstanding at quarter-end were 8,476,673. Mercantile’s total risk-based capital ratio was 11.4 percent at quarter-end, well in excess of well-capitalized requirements. Mr. Price concluded, “We have strengthened our credit underwriting and loan review processes, completed an extensive review and analysis of our loan portfolio, and believe we have identified most of our problem assets. Our restructured lending teams are proving their effectiveness in the marketplace, and we are hopeful that our performance will shortly begin to reflect the progress we’ve made in these areas.”

About Mercantile Bank Corporation

Mercantile Bank Corporation is the bank holding company for Mercantile Bank of Michigan. Headquartered in Grand Rapids, the Bank provides a wide variety of commercial banking services through its five full-service banking offices in greater Grand Rapids, and its full-service banking offices in Holland, Lansing, and Ann Arbor, 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 non-traditional 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 the national and local economy; 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
Second Quarter 2007 Results

MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS

	JUNE 30,			DECEMBER 31,			JUNE 30,
	2007			2006			2006
	(Unaudited)			(Audited)			(Unaudited)
ASSETS
Cash and due from banks	$	48,190,000		$	51,098,000		$	47,142,000
Short-term investments		251,000			282,000			271,000
Total cash and cash equivalents		48,441,000			51,380,000			47,413,000
Securities available for sale		133,247,000			130,967,000			119,023,000
Securities held to maturity		63,664,000			63,943,000			61,759,000
Federal Home Loan Bank stock		7,534,000			7,509,000			7,887,000
Total loans and leases		1,776,026,000			1,745,478,000			1,670,471,000
Allowance for loan and lease losses		(22,800,000	)		(21,411,000	)		(21,507,000	)
Total loans and leases, net		1,753,226,000			1,724,067,000			1,648,964,000
Premises and equipment, net		34,797,000			33,539,000			30,824,000
Bank owned life insurance policies		32,330,000			30,858,000			29,852,000
Accrued interest receivable		9,971,000			10,287,000			9,047,000
Other assets		20,310,000			14,718,000			14,660,000
Total assets	$	2,103,520,000		$	2,067,268,000		$	1,969,429,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	124,977,000		$	133,197,000		$	129,483,000
Interest-bearing		1,514,033,000			1,513,706,000			1,418,429,000
Total deposits		1,639,010,000			1,646,903,000			1,547,912,000
Securities sold under agreements to repurchase		84,987,000			85,472,000			64,431,000
Federal funds purchased		9,100,000			9,800,000			11,400,000
Federal Home Loan Bank advances		135,000,000			95,000,000			130,000,000
Subordinated debentures		32,990,000			32,990,000			32,990,000
Other borrowed money		3,653,000			3,316,000			2,957,000
Accrued expenses and other liabilities		24,249,000			21,872,000			18,079,000
Total liabilities		1,928,989,000			1,895,353,000			1,807,769,000
SHAREHOLDERS’ EQUITY
Common stock		176,461,000			161,223,000			160,872,000
Retained earnings		1,038,000			11,794,000			4,070,000
Accumulated other comprehensive income (loss)		(2,968,000	)		(1,102,000	)		(3,282,000	)
Total shareholders’ equity		174,531,000			171,915,000			161,660,000
Total liabilities and shareholders’ equity	$	2,103,520,000		$	2,067,268,000		$	1,969,429,000

Mercantile Bank Corporation
Second Quarter 2007 Results

MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME

	THREE MONTHS ENDED		THREE MONTHS ENDED		SIX MONTHS ENDED		SIX MONTHS ENDED
	June 30, 2007		June 30, 2006		June 30, 2007		June 30, 2006
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
INTEREST INCOME
Loans and leases, including fees	$	33,513,000	$	31,304,000	$	66,935,000	$	60,031,000
Investment securities		2,485,000		2,299,000		4,991,000		4,536,000
Federal funds sold		82,000		139,000		175,000		271,000
Short-term investments		4,000		4,000		8,000		7,000
Total interest income		36,084,000		33,746,000		72,109,000		64,845,000
INTEREST EXPENSE
Deposits		19,179,000		15,358,000		38,004,000		28,843,000
Short-term borrowings		866,000		720,000		1,698,000		1,321,000
Federal Home Loan Bank advances		1,390,000		1,369,000		2,584,000		2,684,000
Long-term borrowings		701,000		653,000		1,391,000		1,252,000
Total interest expense		22,136,000		18,100,000		43,677,000		34,100,000
Net interest income		13,948,000		15,646,000		28,432,000		30,745,000
Provision for loan and lease losses		2,350,000		1,500,000		3,370,000		2,725,000
Net interest income after provision for loan and lease losses		11,598,000		14,146,000		25,062,000		28,020,000
NON INTEREST INCOME
Service charges on accounts		393,000		329,000		782,000		645,000
Net gain on sales of commercial loans		0		0		0		29,000
Other income		1,028,000		946,000		2,047,000		1,844,000
Total non interest income		1,421,000		1,275,000		2,829,000		2,518,000
NON INTEREST EXPENSE
Salaries and benefits		6,521,000		4,683,000		11,905,000		9,448,000
Occupancy		814,000		772,000		1,581,000		1,602,000
Furniture and equipment		501,000		515,000		994,000		1,037,000
Other expense		2,203,000		2,061,000		4,298,000		3,950,000
Total non interest expense		10,039,000		8,031,000		18,778,000		16,037,000
Income before federal income tax expense		2,980,000		7,390,000		9,113,000		14,501,000
Federal income tax expense		759,000		2,279,000		2,609,000		4,461,000
Net income	$	2,221,000	$	5,111,000	$	6,504,000	$	10,040,000
Basic earnings per share	$	0.26	$	0.61	$	0.77	$	1.20
Diluted earnings per share	$	0.26	$	0.60	$	0.77	$	1.18
Average basic shares outstanding *		8,455,891		8,401,047		8,446,419		8,386,996
Average diluted shares outstanding *		8,503,138		8,525,811		8,494,276		8,517,021

* - Adjusted for 5% stock dividend paid on May 4, 2007

Mercantile Bank Corporation
Second Quarter 2007 Results

MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)

	Quarterly															Year-To-Date
	2007			2007			2006			2006			2006
(dollars in thousands except per share data)	2nd Qtr			1st Qtr			4th Qtr			3rd Qtr			2nd Qtr			2007			2006
EARNINGS
Net interest income	$	13,948			14,484			15,295			15,547			15,646			28,432			30,745
Provision for loan and lease losses	$	2,350			1,020			1,700			1,350			1,500			3,370			2,725
Noninterest income	$	1,421			1,408			1,381			1,362			1,275			2,829			2,518
Noninterest expense	$	10,039			8,739			8,197			8,028			8,031			18,778			16,037
Net income	$	2,221			4,283			4,605			5,202			5,111			6,504			10,040
Basic earnings per share	$	0.26			0.51			0.55			0.62			0.61			0.77			1.20
Diluted earnings per share	$	0.26			0.50			0.54			0.61			0.60			0.77			1.18
Average basic shares outstanding*		8,455,891			8,436,933			8,421,318			8,416,816			8,401,047			8,446,419			8,386,996
Average diluted shares outstanding*		8,503,138			8,518,791			8,523,314			8,524,116			8,525,811			8,494,276			8,517,021
PERFORMANCE RATIOS
Return on average assets		0.43	%		0.84	%		0.89	%		1.04	%		1.06	%		0.63	%		1.06	%
Return on average common equity		5.08	%		10.04	%		10.78	%		12.54	%		12.81	%		7.53	%		12.77	%
Net interest margin (fully tax-equivalent)		2.91	%		3.07	%		3.19	%		3.34	%		3.47	%		2.99	%		3.49	%
Efficiency ratio		65.32	%		54.99	%		49.15	%		47.48	%		47.46	%		60.07	%		48.21	%
Full-time equivalent employees		305			295			291			284			277			305			277
CAPITAL
Period-ending equity to assets		8.30	%		8.40	%		8.32	%		8.27	%		8.21	%		8.30	%		8.21	%
Tier 1 leverage capital ratio		10.10	%		10.12	%		10.04	%		10.14	%		10.15	%		10.10	%		10.15	%
Tier 1 risk-based capital ratio		10.26	%		10.44	%		10.37	%		10.47	%		10.52	%		10.26	%		10.52	%
Total risk-based capital ratio		11.37	%		11.52	%		11.45	%		11.61	%		11.66	%		11.37	%		11.66	%
Book value per share	$	20.64			20.70			20.36			19.90			19.21			20.64			19.21
Cash dividend per share	$	0.14			0.14			0.13			0.13			0.13			0.28			0.25
ASSET QUALITY
Gross loan charge-offs	$	1,358			1,134			2,276			1,250			1,083			2,492			1,863
Net loan charge-offs	$	1,204			777			2,227			920			988			1,981			1,744
Net loan charge-offs to average loans		0.28	%		0.18	%		0.51	%		0.22	%		0.24	%		0.23	%		0.22	%
Allowance for loan and lease losses	$	22,800			21,654			21,411			21,938			21,507			22,800			21,507
Allowance for losses to total loans		1.28	%		1.24	%		1.23	%		1.28	%		1.29	%		1.28	%		1.29	%
Nonperforming loans	$	20,595			10,018			8,571			9,017			8,530			20,595			8,530
Other real estate and repossessed assets	$	3,369			2,540			986			421			150			3,369			150
Nonperforming assets to total assets		1.14	%		0.60	%		0.46	%		0.47	%		0.44	%		1.14	%		0.44	%
END OF PERIOD BALANCES
Loans and leases	$	1,776,026			1,748,838			1,745,478			1,710,268			1,670,471			1,776,026			1,670,471
Total earning assets (before allowance)	$	1,980,722			1,967,733			1,948,179			1,922,051			1,859,411			1,980,722			1,859,411
Total assets	$	2,103,520			2,089,577			2,067,268			2,026,834			1,969,429			2,103,520			1,969,429
Deposits	$	1,639,010			1,686,157			1,646,903			1,614,703			1,547,912			1,639,010			1,547,912
Shareholders’ equity	$	174,531			175,477			171,915			167,548			161,660			174,531			161,660
AVERAGE BALANCES
Loans and leases	$	1,755,033			1,741,531			1,729,899			1,684,700			1,643,022			1,748,320			1,612,489
Total earning assets (before allowance)	$	1,965,345			1,953,416			1,938,499			1,881,873			1,841,666			1,959,414			1,810,354
Total assets	$	2,075,217			2,058,718			2,042,037			1,984,199			1,939,413			2,067,013			1,905,865
Deposits	$	1,643,522			1,647,000			1,628,233			1,569,614			1,521,037			1,645,252			1,490,322
Shareholders’ equity	$	175,434			173,028			169,452			164,560			160,039			174,236			158,487

* - Adjusted for 5% stock dividend paid on May 4, 2007