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): April 9, 2008

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
(Address of principal executive offices) 49504
(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 April 9, 2008, Mercantile Bank Corporation issued a press release announcing earnings and other financial results for the quarter ended March 31, 2008. 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 March 31, 2008.

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
Date: April 9, 2008		Senior Vice President, Chief Financial Officer and Treasurer

2

Exhibit Index

Exhibit Number		Description
	99.1	Press release of Mercantile Bank Corporation reporting financial results and earnings for the quarter ended March 31, 2008.

3

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 ANNOUNCES

2008 FIRST QUARTER RESULTS

Grand Rapids, MI – April 9, 2008 – Mercantile Bank Corporation (NASDAQ: MBWM) reported a net loss of $3.7 million, or $0.44 per diluted share, for the first quarter of 2008 compared with net income of $4.3 million, or $0.50 per diluted share, for the first quarter of 2007. Mercantile’s first quarter 2008 performance was impacted by the steep decline in interest rates that began late in the third quarter of 2007, and the sizeable provision for loan and lease losses taken in response to the deteriorating quality of certain of its commercial loan relationships.

Chairman and CEO Michael Price commented, “Last quarter, we identified weaknesses in parts of our loan portfolio as a result of the continuing decline in the Michigan economy, and specifically, the condition of our residential real estate markets, and we increased our loan loss provision accordingly. We are now witnessing the impact of Michigan’s declining economy on other sectors, including local businesses and commercial real estate. Our real estate collateral values, both residential and commercial, have deteriorated and the cash flow of some of our borrowers is increasingly strained. In light of current market conditions, we announced earlier this quarter that we were again increasing our loan loss provision to maintain a prudent level of reserves until we see signs of improvement.”

Operating Results

First quarter 2008 total revenue, consisting of net interest income plus noninterest income, was $13.3 million, a 16.5 percent decrease from the $15.9 million reported for the prior year first quarter. Net interest income was $11.4 million, down 21.4 percent from $14.5 million for the year-ago quarter; the 74 basis point, or 24.1 percent, decline in the net interest margin, from 3.07 percent to 2.33 percent, was partially offset by a 3.2 percent increase in average earning assets. Noninterest income for the first quarter was $1.9 million, up 34.2 percent from the $1.4 million reported for last year’s first quarter.

Mr. Price added, “As has most of the banking industry, we have experienced price competition for both deposits and loans. This has been a factor contributing to our net interest margin compression over the past year, and has been significantly exacerbated by the Federal Reserve’s 300 basis point rate cut over a period of six-months. In the near-term, Mercantile is an asset-sensitive bank, and the aggressive series of rate cuts has outpaced our ability to reduce our funding costs as rapidly.

“In view of the current state of the economy,” Mr. Price continued, “we anticipate that there could be further rate cuts ahead. However, when interest rates finally stabilize, we should see improvement in our net interest margin. Meanwhile, we continue to reprice our funding sources at significantly lower rates.”

The provision for loan and lease losses was $9.1 million for first quarter 2008 compared with $4.9 million for the fourth quarter of 2007, and $1.0 million for the year-ago quarter. Mr. Price stated that, “As long as our economy remains challenged, it is our intention to maintain a strong loan and lease loss reserve so we can respond aggressively to changing conditions.” The reserve for loans and leases was 1.67 percent of total loans and leases as of March 31, 2008, compared with 1.43 percent at December 31, 2007 and 1.24 percent as of March 31, 2007.

Noninterest expense for the first quarter of 2008 was $10.3 million, up $1.6 million, or 18.2 percent, over the prior-year first quarter, and $0.3 million, or 3.2 percent, over the linked quarter. Salaries and benefits were $5.8 million for the current quarter, up $0.4 million, or 7.2 percent, from first quarter 2007 and $0.2 million, or 4.1 percent, from the previous quarter, primarily reflecting annual salary increases as well as eleven additional full-time equivalent employees. Other expense increased by $0.9 million quarter over quarter, in large part from increased expenses associated with the administration and resolution of problem assets and increased FDIC insurance premium assessments.

Balance Sheet

“Asset growth is still curtailed by competitive pricing pressures and the weakened state of our economy. Since traditionally, the majority of our loans have been collateralized by local real estate, this has provided a further drag on our growth,” added Mr. Price. Total assets were $2.12 billion at March 31, 2008, an increase of $26.4 million, or 1.3 percent, since March 31, 2007. Loans grew $45.5 million, or 2.6 percent, year over year to $1.8 billion. Mercantile’s loan portfolio is approximately 73 percent secured by real property, with construction and development loans accounting for $269 million, equivalent to 14.9 percent of total loans and leases. Deposits totaled $1.6 billion at March 31, 2008, a decline of 7.8 percent, or $131.4 million, from March 31, 2007. Mercantile continues to shift a portion of its brokered deposits into lower-rate FLHB advances, which increased $140 million above the year-ago quarter, to $230 million.

Asset Quality

“While problem assets have increased over the last several quarters, this past quarter we experienced a sudden and rapid deterioration in a number of our commercial loan relationships, which previously had been performing fairly well. Analysis of certain commercial borrowers revealed a reduced capability on part of these borrowers to make required payments as indicated by factors such as delinquent loan payments, diminished operating cash flow, deteriorating financial performance, or past due property taxes, and in the case of commercial and residential development projects slow absorption or sales trends. In addition, commercial real estate is the primary collateral source for many of these borrowing relationships and recently completed evaluations and appraisals in many cases reflect significant declines from the original estimated values. In this context, we felt it to be prudent to take the $9.1 million provision,” added Mr. Price.

At March 31, 2008, Mercantile reported nonperforming assets of $40.6 million, or 1.92 percent of total assets, up from $35.7 million (1.68 percent of total assets) at December 31, 2007, and $12.6 million (0.60 percent of total assets) for the year-ago quarter. “While Mercantile has had a history of strong asset quality,” Mr. Price continued, “our current performance should be viewed in the context of Michigan’s weak economy. According to the fourth quarter 2007 FDIC Michigan state profile, the median value for nonperforming loans was 3.58 percent of loans; this median includes all 164 banks in the state of Michigan.”

Nonperforming loans and foreclosed properties associated with the development and construction of residential real estate totaled $13.1 million, plus another $4.3 million in nonperforming loans secured by, and foreclosed properties consisting of, residential properties at March 31, 2008; this compares with nonperforming loans of $11.1 million and foreclosed properties of $3.2 million at December 31, 2007. Commercial nonperforming assets were $23.2 million as of March 31, 2008 compared with $21.4 million as of December 31, 2007.

Net loan charge-offs for first quarter 2008 were $5.0 million, or an annualized 1.1 percent of average loans, compared with $3.9 million, or an annualized 0.87 percent of average loans during the fourth quarter of 2007. Net loan charge-offs associated with residential-related loans and commercial-related loans were $1.7 million and $3.3 million, respectively.

Shareholders’ equity at March 31, 2008 was $174.3 million, a decline of $3.9 million, or 2.2 percent, from December 31, 2007. Total shares outstanding at first quarter-end 2008 were 8,530,082. The Bank is still “well-capitalized” under regulatory capital requirements, with a total risk-based capital ratio of 11.3 percent at March 31, 2008, compared to 11.4 percent as of December 31, 2007.

In conclusion, Mr. Price added, “Despite a disappointing first quarter, we have a healthy loan loss reserve and a well-capitalized balance sheet. Mercantile has grown into an important banking force in the West Michigan market, and our expansion initiatives have been met with strong customer acceptance. We have built a solid company, able to withstand the vagaries of the Michigan economy. With our well-trained, experienced and highly motivated team of commercial lenders, we believe we are well positioned to take advantage of Michigan’s eventual economic recovery.”

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, Ann Arbor and Oakland County, 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 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
First Quarter 2008 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)	2008			2007			2007			2007			2007
EARNINGS
Net interest income	$	11,383			13,074			14,051			13,948			14,484
Provision for loan and lease losses	$	9,100			4,900			2,800			2,350			1,020
NonInterest income	$	1,890			1,534			1,507			1,421			1,408
NonInterest expense	$	10,329			10,008			9,570			10,039			8,739
Net income (loss)	$	(3,738	)		95			2,367			2,221			4,283
Basic earnings (loss) per share	$	(0.44	)		0.01			0.28			0.26			0.51
Diluted earnings (loss) per share	$	(0.44	)		0.01			0.28			0.26			0.50
Average shares outstanding		8,465,148			8,462,260			8,458,601			8,455,891			8,436,842
Average diluted shares outstanding		8,465,148			8,485,035			8,491,612			8,503,138			8,518,666
PERFORMANCE RATIOS
Return on average assets		(0.71	%)		0.02	%		0.45	%		0.43	%		0.84	%
Return on average common equity		(8.44	%)		0.21	%		5.32	%		5.08	%		10.04	%
Net interest margin (fully tax-equivalent)		2.33	%		2.64	%		2.86	%		2.91	%		3.07	%
Efficiency ratio		77.82	%		68.51	%		61.51	%		65.32	%		54.99	%
Full-time equivalent employees		317			306			302			305			295
CAPITAL
Period-ending equity to assets		8.24	%		8.40	%		8.44	%		8.30	%		8.40	%
Tier 1 leverage capital ratio		9.69	%		9.97	%		10.06	%		10.10	%		10.12	%
Tier 1 risk-based capital ratio		10.05	%		10.14	%		10.19	%		10.26	%		10.44	%
Total risk-based capital ratio		11.33	%		11.39	%		11.40	%		11.37	%		11.52	%
Book value per share	$	20.43			20.89			20.96			20.59			20.70
Cash dividend per share	$	0.15			0.14			0.14			0.14			0.13
ASSET QUALITY
Gross loan charge-offs	$	5,137			3,988			795			1,358			1,134
Net loan charge-offs	$	4,957			3,943			743			1,204			777
Net loan charge-offs to average loans		1.11	%		0.87	%		0.17	%		0.28	%		0.18	%
Allowance for loan and lease losses	$	29,957			25,814			24,857			22,800			21,654
Allowance for loan losses to total loans		1.67	%		1.43	%		1.38	%		1.28	%		1.24	%
Nonperforming loans	$	35,259			29,809			23,070			20,595			10,018
Other real estate and repossessed assets	$	5,371			5,895			2,820			3,369			2,540
Nonperforming assets to total assets		1.92	%		1.68	%		1.23	%		1.14	%		0.60	%
END OF PERIOD BALANCES
Loans and leases	$	1,794,310			1,799,880			1,796,962			1,776,026			1,748,838
Total earning assets (before allowance)	$	2,006,373			2,011,908			2,005,136			1,980,722			1,967,733
Total assets	$	2,115,948			2,121,403			2,106,427			2,103,520			2,089,577
Deposits	$	1,554,750			1,591,181			1,640,984			1,639,010			1,686,157
Shareholders’ equity	$	174,295			178,155			177,724			174,531			175,477
AVERAGE BALANCES
Loans and leases	$	1,793,726			1,791,510			1,773,151			1,755,033			1,741,531
Total earning assets (before allowance)	$	2,015,210			2,006,940			1,992,075			1,965,345			1,953,416
Total assets	$	2,115,468			2,104,212			2,096,597			2,075,217			2,058,718
Deposits	$	1,578,545			1,618,825			1,632,153			1,643,522			1,647,000
Shareholders’ equity	$	177,632			178,583			176,482			175,434			173,028

Mercantile Bank Corporation
First Quarter 2008 Results

MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS

	MARCH 31,			DECEMBER 31,			MARCH 31,
	2008			2007			2007
	(Unaudited)			(Audited)			(Unaudited)
ASSETS
Cash and due from banks	$	31,903,000		$	29,138,000		$	52,098,000
Short term investments		537,000			292,000			268,000
Federal funds sold		0			0			13,400,000
Total cash and cash equivalents		32,440,000			29,430,000			65,766,000
Securities available for sale		133,978,000			136,673,000			133,346,000
Securities held to maturity		65,318,000			65,330,000			64,372,000
Federal Home Loan Bank stock		12,230,000			9,733,000			7,509,000
Loans and leases		1,794,310,000			1,799,880,000			1,748,838,000
Allowance for loan and lease losses		(29,957,000	)		(25,814,000	)		(21,654,000	)
Loans and leases, net		1,764,353,000			1,774,066,000			1,727,184,000
Premises and equipment, net		34,178,000			34,351,000			34,294,000
Bank owned life insurance policies		39,553,000			39,118,000			31,155,000
Accrued interest receivable		9,132,000			9,957,000			10,997,000
Other assets		24,766,000			22,745,000			14,954,000
Total assets	$	2,115,948,000		$	2,121,403,000		$	2,089,577,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	121,755,000		$	133,056,000		$	130,857,000
Interest-bearing		1,432,995,000			1,458,125,000			1,555,300,000
Total deposits		1,554,750,000			1,591,181,000			1,686,157,000
Securities sold under agreements to repurchase		83,184,000			97,465,000			78,045,000
Federal funds purchased		15,800,000			13,800,000			0
Federal Home Loan Bank advances		230,000,000			180,000,000			90,000,000
Subordinated debentures		32,990,000			32,990,000			32,990,000
Other borrowed money		4,086,000			4,013,000			3,480,000
Accrued expenses and other liabilities		20,843,000			23,799,000			23,428,000
Total liabilities		1,941,653,000			1,943,248,000			1,914,100,000
SHAREHOLDERS’ EQUITY
Common stock		173,134,000			172,938,000			172,515,000
Retained earnings (deficit)		(60,000	)		4,948,000			3,817,000
Accumulated other comprehensive income (loss)		1,221,000			269,000			(855,000	)
Total shareholders’ equity		174,295,000			178,155,000			175,477,000
Total liabilities and shareholders’ equity	$	2,115,948,000		$	2,121,403,000		$	2,089,577,000

Mercantile Bank Corporation
First Quarter 2008 Results

MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME

	THREE MONTHS ENDED			THREE MONTHS ENDED
	March 31, 2008			March 31, 2007
	(Unaudited)			(Unaudited)
INTEREST INCOME
Loans and leases, including fees	$	29,063,000		$	33,422,000
Investment securities		2,802,000			2,506,000
Federal funds sold		86,000			93,000
Short term investments		4,000			4,000
Total interest income		31,955,000			36,025,000
INTEREST EXPENSE
Deposits		17,103,000			18,825,000
Short term borrowings		551,000			832,000
Federal Home Loan Bank advances		2,329,000			1,194,000
Long term borrowings		589,000			690,000
Total interest expense		20,572,000			21,541,000
Net interest income		11,383,000			14,484,000
Provision for loan and lease losses		9,100,000			1,020,000
Net interest income after provision for loan and lease losses		2,283,000			13,464,000
NONINTEREST INCOME
Service charges on accounts		504,000			389,000
Other income		1,386,000			1,019,000
Total noninterest income		1,890,000			1,408,000
NONINTEREST EXPENSE
Salaries and benefits		5,774,000			5,384,000
Occupancy		974,000			767,000
Furniture and equipment		540,000			493,000
Other expense		3,041,000			2,095,000
Total noninterest expense		10,329,000			8,739,000
Income (loss) before federal income tax expense (benefit)		(6,156,000	)		6,133,000
Federal income tax expense (benefit)		(2,418,000	)		1,850,000
Net income (loss)	$	(3,738,000	)	$	4,283,000
Basic earnings (loss) per share		($0.44	)	$	0.51
Diluted earnings (loss) per share		($0.44	)	$	0.50
Average basic shares outstanding		8,465,148			8,436,842
Average diluted shares outstanding		8,465,148			8,518,666