Mercantile Bank Corp. in Grand Rapids said Wednesday that its second-quarter earnings fell 57% from a year earlier, to $2.2 million.
Diluted earnings per share also fell 57%, to 26 cents. Earnings per share missed the average of analysts' expectations by 23 cents, as reported by Thomson Financial. Related Links
For the six months that ended June 30, Mercantile's net income fell 35% from a year earlier, to $6.5 million, and earnings per share fell 35%, to 77 cents.
The $2.1 billion-asset company cited an increase in nonperforming assets and a one-time $1.2 million charge because of the retirement of its chairman and chief executive, Gerald Johnson Jr., who announced his retirement in May and left June 30.
Mercantile blamed its credit quality troubles on the struggling Michigan economy. Second-quarter nonperforming assets soared 176% from a year earlier, to $24 million. As a result, the company increased its provision for loan losses by 57% in the quarter, to $2.4 million. Net interest income after the provisions fell 18%, to $11.6 million.
Michael Price, who succeeded Mr. Johnson as chairman and CEO, said in a press release that the "difficult economic period in Michigan … has depressed our real estate market to levels beyond our expectation. This has affected not only asset quality, but also loan growth."
Mercantile's shares fell more than 11% Wednesday, to $23.20.
