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): October 14, 2008

Mercantile Bank Corporation

(Exact name of registrant as specified in its charter)

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

TABLE OF CONTENTS

	Item 2.02 Results of Operations and Financial Condition.
	Item 9.01 Financial Statements and Exhibits.
Signatures
Exhibit Index
EX-99.1

Item 2.02 Results of Operations and Financial Condition.

     Earnings Release. On October 14, 2008, Mercantile Bank Corporation issued a press release announcing earnings and other financial results for the quarter ended September 30, 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 September 30, 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
	Senior Vice President, Chief Financial Officer and Treasurer

Date: October 14, 2008

2

Exhibit Index

Exhibit Number	Description
99.1	Press release of Mercantile Bank Corporation reporting financial results and earnings for the quarter ended September 30, 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 THIRD QUARTER RESULTS

Grand Rapids, MI — October 14, 2008 — Mercantile Bank Corporation (NASDAQ: MBWM) reported net income of $1.1 million, or $0.13 per diluted share, for the third quarter of 2008 compared with net income of $2.4 million, or $0.28 per diluted share, for the third quarter of 2007. For the nine-month 2008 period, a net loss of $5.3 million, or $0.62 per diluted share, was recorded, compared with net income of $8.9 million, or $1.05 per diluted share, for the prior-year nine months.

Mercantile returned to profitability during the third quarter of 2008 after reporting net losses for the first two quarters of 2008, primarily reflecting a significantly lower provision for loan and lease losses. Mercantile’s year-to-date 2008 performance has been impacted by several factors: net interest margin compression resulting from the rapid interest rate decline that began during the third quarter of last year; sizable provisions for loan and lease losses taken in response to deteriorating asset quality; and write-downs on foreclosed properties to reflect lower estimated market values.

Chairman and CEO Michael Price commented, “While we continue to face some very strong headwinds with the economy and within the banking industry, it is gratifying to see that our aggressive approach to identifying and administering problem credits may be starting to yield results. Over a year ago, we became concerned with the deteriorating financial condition of certain borrowers and the status of underlying projects in our commercial real estate portfolio, especially within the residential real estate development segment. The early identification of problem loans has provided us the opportunity to

closely work with our distressed borrowers, and during the third quarter we saw notable improvement in a number of larger relationships. Nonperforming and other delinquent loans remain at elevated levels, and further hard work remains. However, we are pleased with our progress thus far. We are cautiously optimistic that we are near the peak in asset quality challenges, but we remain appropriately reserved and vigilant.”

Mr. Price continued, “A second priority has been to improve our net interest margin, which has been impacted by the series of aggressive interest rate cuts implemented by the Federal Reserve beginning in September 2007 and continuing through April 2008, as well as by an elevated level of nonperforming assets and price competition for loans and deposits. This quarter, we began to reverse the decline with a 15 basis point improvement in the net interest margin over the second quarter. A steady prime rate and the initial benefits of several loan-pricing initiatives have stabilized our loan yield, while our cost of funds continues to decline.”

“Although we were hopeful the improved trend would continue, last week’s 50 basis point prime rate reduction will once again negatively impact our net interest margin over the near term. Further anticipated declines in our cost of funds are expected to largely offset the impact of the prime rate cut, and a relatively steady rather than improving net interest margin is the likely fourth quarter outcome. We expect the loan pricing initiatives that were initiated during the third quarter to increase in scope and value in future periods. However, the extreme volatility in financial markets makes it difficult to forecast net interest income and the net interest margin with any precision.”

“The outstanding performance of our employees throughout this critical period has made a huge difference in the results we’ve been able to achieve. Our employees continue to provide our customers with an exceptional banking experience, and the difficult banking environment has provided us the opportunity to strengthen our position within our markets. We continue to see much more rational commercial loan pricing and terms, which should positively impact our earnings performance in future periods.”

Operating Results

Third quarter 2008 total revenue, consisting of net interest income plus noninterest income, was $13.5 million, down 12.9 percent from the $15.6 million reported for the prior-year third quarter. Net interest income totaled $11.7 million, a decline of $2.3 million, or 16.5 percent, from the $14.1 million generated in the year-ago quarter. The net interest margin declined from 2.86 percent in the prior-year third quarter to 2.30 percent in the current-year third quarter, a decrease of 56 basis points, or 19.6 percent. The negative impact of the lower net interest margin on net interest income was partially offset by an $81.7 million increase in average earning assets. Noninterest income was $1.8 million in the third quarter of 2008, up $0.3 million, or 20.6 percent, from the $1.5 million reported in last year’s third quarter, primarily due to increased service charge and bank-owned life insurance policy income.

The provision for loan and lease losses totaled $17.2 million for the first nine months of 2008, including $1.9 million expensed during the third quarter. In comparison, the provision expense equaled $6.2 million during the first nine months of 2007, including $2.8 million recorded in the third quarter. The larger provision expense recognized

during the first nine months of 2008 reflects a higher level of net loan and lease charge-offs and loan and lease growth in 2008. In addition, higher reserve levels relative to the prior year were necessary to provide for possible future losses in the existing loan and lease portfolio. The allowance for loan and lease losses equaled 1.58 percent of total loans and leases as of September 30, 2008, compared to 1.73 percent at June 30, 2008, and 1.38 percent at September 30, 2007.

Noninterest expense for the third quarter of 2008 was $10.5 million, an increase of $0.9 million, or 9.9 percent, over the prior-year third quarter. Compared with the second quarter of 2008, third quarter noninterest expense declined $0.3 million, or 2.4 percent. For the first nine months of 2008, noninterest expense was $31.6 million, up $3.3 million, or 11.5 percent, from $28.3 million for the same time period in 2007. A majority of the 2008 noninterest expense growth relates to costs associated with the administration and resolution of problem assets, including legal expenses, property tax payments, appraisal costs, and write-downs on foreclosed properties. These costs totaled $2.3 million during the first nine months of 2008, including $0.8 million expensed during the third quarter of 2008. By comparison, costs related to problem assets totaled $0.6 million for the first nine months of 2007, with $0.3 million of costs incurred in the third quarter. Write-downs on foreclosed properties accounted for $0.9 million of the $2.3 million in costs related to problem assets incurred during the first nine months of 2008.

Asset Quality

“While we saw a small increase in the level of nonperforming assets in the third quarter, the rate of increase was considerably lower than over the past several quarters,” noted Mr. Price. “The marked slowdown in borrowing relationships that deteriorated to nonperforming status had a positive impact on our provision expense for the third quarter. However, the majority of our nonperforming loans are real estate-related, secured by collateral that has illiquid characteristics in the current market. Updated appraisals often reflect significant declines from the original estimated values, requiring additional reserves for potential future loan and lease losses.”

At September 30, 2008, nonperforming assets totaled $47.8 million, or 2.17 percent of total assets, up from $46.6 million (2.16 percent of total assets) at June 30, 2008 and $25.9 million (1.23 percent of total assets) at September 30, 2007. Approximately 36 percent of nonperforming loans were contractually current on payments as of September 30, 2008. The net increase in nonperforming assets during the third quarter of 2008 was $1.2 million, reflecting the addition of $11.5 million of new nonperforming loans, less the return of loans to accruing status, loan paydowns, sales of foreclosed real estate and write-downs of foreclosed properties totaling $6.6 million and net loan and lease charge-offs of $3.7 million.

Commercial-related nonperforming assets were $26.7 million as of September 30, 2008, compared to $28.7 million as of June 30, 2008. Nonperforming loans and foreclosed properties associated with the development and construction of residential real estate totaled $15.9 million, with an additional $5.2 million in nonperforming loans secured by, and foreclosed properties consisting of, residential properties at September 30, 2008. At June 30, 2008, the levels were $14.7 million and $3.2 million, respectively.

Net loan and lease charge-offs in the third quarter of 2008 were $4.3 million, or an annualized 0.91 percent of average total loans and leases, compared to $4.3 million (0.95 percent) and $5.0 million (1.11 percent) during the second and first quarters of 2008, respectively. Net loan and lease charge-offs associated with commercial-related loans and residential-related loans totaled $3.6 million and $0.7 million during the third quarter, and $10.0 million and $3.6 million during the first nine months of 2008, respectively. Of the $4.5 million in gross loan and lease charge-offs during the third quarter, approximately $3.0 million, or 66 percent, reflect the charge-off of specific reserves that were created through provisions for loan and lease losses in prior quarters.

Balance Sheet

Total assets were $2.21 billion as of September 30, 2008, an increase of $100.9 million, or 4.8 percent, since September 30, 2007. Total loans and leases increased $73.8 million, or 4.1 percent, over the past twelve months, with $30.0 million of the growth occurring in the third quarter of 2008. Approximately 72 percent of Mercantile’s loan portfolio is secured by real estate, with construction and land development loans accounting for $277.4 million, or 14.8 percent of total loans and leases. Deposits totaled $1.58 billion as of September 30, 2008, a decline of $65.3 million since September 30, 2007, in part reflecting the shifting of a portion of brokered deposits into lower-rate Federal Home Loan Bank advances, which increased $150.0 million over the past twelve months.

Shareholders’ equity totaled $171.3 million at September 30, 2008, a decline of $6.8 million, or 3.8 percent, from the level of equity at December 31, 2007. Total shares outstanding at the end of the third quarter of 2008 were 8,532,535. The Bank remains “well-capitalized” under regulatory capital requirements, with a total risk-based capital ratio of 10.9 percent as of September 30, 2008. The Bank’s total regulatory capital equaled $226.1 million at September 30, 2008, approximately $15.3 million in excess of the amount required to provide for the minimum “well-capitalized”.

In conclusion, Mr. Price commented, “Our third quarter results represent a significant improvement over the previous three quarters. While we expect the third quarter is the beginning of a trend, the future is difficult to predict due to the unprecedented challenges facing the banking industry. Our focus on asset quality remains unwavering, and we believe we are well-positioned to weather this difficult period.”

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 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
Third Quarter 2008 Results

MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS

	SEPTEMBER 30,			DECEMBER 31,			SEPTEMBER 30,
	2008			2007			2007
	(Unaudited)			(Audited)			(Unaudited)
ASSETS
Cash and due from banks	$	25,694,000		$	29,138,000		$	28,764,000
Short-term investments		87,000			292,000			534,000
Federal funds sold		4,820,000			0			0
Total cash and cash equivalents		30,601,000			29,430,000			29,298,000
Securities available for sale		144,019,000			136,673,000			135,243,000
Securities held to maturity		64,002,000			65,330,000			64,863,000
Federal Home Loan Bank stock		15,681,000			9,733,000			7,534,000
Loans and leases		1,870,799,000			1,799,880,000			1,796,962,000
Allowance for loan and lease losses		(29,511,000	)		(25,814,000	)		(24,857,000	)
Loans and leases, net		1,841,288,000			1,774,066,000			1,772,105,000
Premises and equipment, net		32,958,000			34,351,000			34,492,000
Bank owned life insurance policies		41,459,000			39,118,000			32,962,000
Accrued interest receivable		9,044,000			9,957,000			11,143,000
Other assets		28,307,000			22,745,000			18,787,000
Total assets	$	2,207,359,000		$	2,121,403,000		$	2,106,427,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	109,154,000		$	133,056,000		$	121,336,000
Interest-bearing		1,466,559,000			1,458,125,000			1,519,648,000
Total deposits		1,575,713,000			1,591,181,000			1,640,984,000
Securities sold under agreements to repurchase		105,986,000			97,465,000			88,683,000
Federal funds purchased		0			13,800,000			3,300,000
Federal Home Loan Bank advances		285,000,000			180,000,000			135,000,000
Subordinated debentures		32,990,000			32,990,000			32,990,000
Other borrowed money		19,393,000			4,013,000			3,839,000
Accrued interest and other liabilities		16,929,000			23,799,000			23,907,000
Total liabilities		2,036,011,000			1,943,248,000			1,928,703,000
SHAREHOLDERS’ EQUITY
Common stock		172,480,000			172,938,000			172,793,000
Retained earnings (deficit)		(1,593,000	)		4,948,000			6,037,000
Accumulated other comprehensive income (loss)		461,000			269,000			(1,106,000	)
Total shareholders’ equity		171,348,000			178,155,000			177,724,000
Total liabilities and shareholders’ equity	$	2,207,359,000		$	2,121,403,000		$	2,106,427,000

Mercantile Bank Corporation
Third Quarter 2008 Results

MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME

	THREE MONTHS ENDED		THREE MONTHS ENDED		NINE MONTHS ENDED			NINE MONTHS ENDED
	September 30, 2008		September 30, 2007		September 30, 2008			September 30, 2007
	(Unaudited)		(Unaudited)		(Unaudited)			(Unaudited)
INTEREST INCOME
Loans and leases, including fees	$	27,161,000	$	34,077,000	$	82,707,000		$	101,012,000
Investment securities		2,641,000		2,530,000		8,067,000			7,521,000
Federal funds sold		40,000		168,000		157,000			343,000
Short-term investments		1,000		5,000		6,000			13,000
Total interest income		29,843,000		36,780,000		90,937,000			108,889,000
INTEREST EXPENSE
Deposits		14,180,000		19,357,000		46,144,000			57,361,000
Short term borrowings		483,000		900,000		1,506,000			2,598,000
Federal Home Loan Bank advances		2,839,000		1,759,000		7,834,000			4,343,000
Long term borrowings		613,000		713,000		1,750,000			2,104,000
Total interest expense		18,115,000		22,729,000		57,234,000			66,406,000
Net interest income		11,728,000		14,051,000		33,703,000			42,483,000
Provision for loan and lease losses		1,900,000		2,800,000		17,200,000			6,170,000
Net interest income after provision for loan and lease losses		9,828,000		11,251,000		16,503,000			36,313,000
NONINTEREST INCOME
Service charges on accounts		488,000		402,000		1,472,000			1,184,000
Other income		1,329,000		1,105,000		3,993,000			3,152,000
Total noninterest income		1,817,000		1,507,000		5,465,000			4,336,000
NONINTEREST EXPENSE
Salaries and benefits		5,584,000		5,425,000		17,031,000			17,330,000
Occupancy		967,000		881,000		2,899,000			2,462,000
Furniture and equipment		482,000		530,000		1,502,000			1,524,000
Other expense		3,480,000		2,734,000		10,187,000			7,032,000
Total noninterest expense		10,513,000		9,570,000		31,619,000			28,348,000
Income (loss) before federal income tax expense (benefit)		1,132,000		3,188,000		(9,651,000	)		12,301,000
Federal income tax expense (benefit)		53,000		821,000		(4,380,000	)		3,430,000
Net income (loss)	$	1,079,000	$	2,367,000	$	(5,271,000	)	$	8,871,000
Basic earnings (loss) per share	$	0.13	$	0.28		($0.62	)	$	1.05
Diluted earnings (loss) per share	$	0.13	$	0.28		($0.62	)	$	1.05
Average basic shares outstanding		8,472,569		8,458,601		8,468,951			8,450,524
Average diluted shares outstanding		8,530,347		8,491,612		8,468,951			8,488,226

Mercantile Bank Corporation
Third Quarter 2008 Results

MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)

	Quarterly
	2008			2008			2008			2007			2007			Year-To-Date
(dollars in thousands except per share data)	3rd Qtr			2nd Qtr			1st Qtr			4th Qtr			3rd Qtr			2008			2007
EARNINGS
Net interest income	$	11,728			10,592			11,383			13,074			14,051			33,703			42,483
Provision for loan and lease losses	$	1,900			6,200			9,100			4,900			2,800			17,200			6,170
Noninterest income	$	1,817			1,758			1,890			1,534			1,507			5,465			4,336
Noninterest expense	$	10,513			10,777			10,329			10,008			9,570			31,619			28,348
Net income (loss)	$	1,079			(2,612	)		(3,738	)		95			2,367			(5,271	)		8,871
Basic earnings (loss) per share	$	0.13			(0.31	)		(0.44	)		0.01			0.28			(0.62	)		1.05
Diluted earnings (loss) per share	$	0.13			(0.31	)		(0.44	)		0.01			0.28			(0.62	)		1.05
Average basic shares outstanding		8,472,569			8,469,097			8,465,148			8,462,260			8,458,601			8,468,951			8,450,524
Average diluted shares outstanding		8,530,347			8,469,097			8,465,148			8,485,035			8,491,612			8,468,951			8,488,226
PERFORMANCE RATIOS
Return on average assets		0.20	%		(0.49	%)		(0.71	%)		0.02	%		0.45	%		(0.33	%)		0.57	%
Return on average common equity		2.53	%		(6.09	%)		(8.44	%)		0.21	%		5.32	%		(4.06	%)		6.78	%
Net interest margin (fully tax-equivalent)		2.30	%		2.15	%		2.33	%		2.64	%		2.86	%		2.26	%		2.94	%
Efficiency ratio		77.62	%		87.26	%		77.82	%		68.51	%		61.51	%		80.73	%		60.55	%
Full-time equivalent employees		307			318			317			306			302			307			302
CAPITAL
Period-ending equity to assets		7.76	%		7.75	%		8.24	%		8.40	%		8.44	%		7.76	%		8.44	%
Tier 1 leverage capital ratio		9.34	%		9.50	%		9.69	%		9.97	%		10.06	%		9.34	%		10.06	%
Tier 1 risk-based capital ratio		9.61	%		9.71	%		10.05	%		10.14	%		10.19	%		9.61	%		10.19	%
Total risk-based capital ratio		10.86	%		10.96	%		11.33	%		11.39	%		11.40	%		10.86	%		11.40	%
Book value per share	$	20.08			19.66			20.43			20.89			20.96			20.08			21.00
Cash dividend per share	$	0.04			0.08			0.15			0.14			0.14			0.27			0.41
ASSET QUALITY
Gross loan charge-offs	$	4,462			4,431			5,137			3,988			795			14,030			3,287
Net loan charge-offs	$	4,271			4,275			4,957			3,943			743			13,503			2,724
Net loan charge-offs to average loans		0.91	%		0.95	%		1.11	%		0.87	%		0.17	%		0.99	%		0.21	%
Allowance for loan and lease losses	$	29,511			31,881			29,957			25,814			24,857			29,511			24,857
Allowance for losses to total loans		1.58	%		1.73	%		1.67	%		1.43	%		1.38	%		1.58	%		1.38	%
Nonperforming loans	$	42,047			43,297			35,259			29,809			23,070			42,047			23,070
Other real estate and repossessed assets	$	5,743			3,322			5,371			5,895			2,820			5,743			2,820
Nonperforming assets to total assets		2.17	%		2.16	%		1.92	%		1.68	%		1.23	%		2.17	%		1.23	%
END OF PERIOD BALANCES
Loans and leases	$	1,870,799			1,840,793			1,794,310			1,799,880			1,796,962			1,870,799			1,796,962
Total earning assets (before allowance)	$	2,099,408			2,048,703			2,006,373			2,011,908			2,005,136			2,099,408			2,005,136
Total assets	$	2,207,359			2,163,354			2,115,948			2,121,403			2,106,427			2,207,359			2,106,427
Deposits	$	1,575,713			1,544,704			1,554,750			1,591,181			1,640,984			1,575,713			1,640,984
Shareholders’ equity	$	171,348			167,713			174,295			178,155			177,724			171,348			177,724
AVERAGE BALANCES
Loans and leases	$	1,852,848			1,812,898			1,793,726			1,791,510			1,773,151			1,819,944			1,756,688
Total earning assets (before allowance)	$	2,073,787			2,029,494			2,015,210			2,006,940			1,992,075			2,039,622			1,970,420
Total assets	$	2,172,859			2,125,731			2,115,468			2,104,212			2,096,597			2,138,152			2,076,983
Deposits	$	1,550,544			1,531,853			1,578,545			1,618,825			1,632,153			1,553,636			1,640,838
Shareholders’ equity	$	169,241			171,902			177,632			178,583			176,482			172,912			174,993