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Mercantiles Income Earnings Down Again
Mercantile Bank Corp. of Michigan reported net income of $1.1 million, or 13 cents per diluted share, for the third quarter of 2008 compared with net income of $2.4 million, or 28 cents per diluted share, for the third quarter of 2007. For the first nine-month of this year, the company sustained a net loss of $5.3 million, or 62 cents per diluted share, versus 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 after reporting net losses for the first two quarters of this year, primarily reflecting a significantly lower provision for loan and lease losses. Mercantile’s year-to-date performance has been impacted by several factors: net interest margin compression resulting from the rapid interest rate decline that began in the third quarter of 2007; 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, according to the company.
“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,” said Chairman and CEO Michael Price. “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.”
But nonperforming and other delinquent loans remain at elevated levels, Price noted. He said the bank is “cautiously optimistic” that it’s near the peak in asset quality challenges, but remains “appropriately reserved and vigilant.”
Mercantile’s Board of Directors declared a fourth quarter cash dividend of 4 cents per share on the corporation’s common stock. The dividend is payable on Dec. 10, to shareholders of record as of the close of business on Nov. 10. The dividend will be the company’s 24th consecutive quarterly cash dividend payment to shareholders.