Mercantile in Michigan Posts 4Q Profit as Cleanup Continues

Mercantile Bank (MBWM) in Grand Rapids, Mich., posted another profitable quarter despite renewed efforts to purge bad assets.

The $1.4 billion-asset company's fourth-quarter earnings rose 17% from the third quarter but fell 90% from a year earlier, to $3 million. Results for the fourth quarter of 2011 included a $27.4 million tax reversal.

Net interest income rose 1.3% from the third quarter but fell 5% from a year earlier, to $11.7 million. Noninterest income edged up 0.3% from the third quarter and rose 2% from a year earlier, to $2.1 million.

The company's noninterest expenses decreased by 10% from the third quarter and 3% from a year earlier, to $9.2 million. Mercentile set aside $300,000 to cover potential loan losses, despite posted $600,000 in net recoveries during the third quarter. The company had a $400,000 credit to its loan-loss reserve in the third quarter.

Nonperforming assets fell 57% from a year earlier, to $25.9 million, or 1.8% of total assets, reflecting efforts to clean up the loan portfolio. The company's risk-based capital ratio was 14.6% at Dec. 31.

Mercantile reported full-year net income of $11.5 million.

Mercantile Bank has been profitable for two years, after losing money in 2009 and 2010 over credit problems. The company exited the Troubled Asset Relief Program last summer.