In what it is calling a first step toward replenishing its capital, Mercantile Bancorp Inc. in Quincy, Ill., said it intends to merge its flailing Florida bank with a stronger unit.
Shares of the $1.7 billion-asset Mercantile rose about 10% Tuesday, to $2.80, after the company announced the plan late Monday.
Mercantile, which operates six bank units, said it has requested regulatory approval to combine the $154 million-asset Royal Palm Bank of Florida with the stronger $752 million-asset flagship bank in its home state.
The company said Royal Palm would operate as a division of Mercantile Bank, which would remain well capitalized after the combination. Royal Palm, which has a regulatory order requiring it to boost its capital levels, had fallen to adequately capitalized at the end of the second quarter, with a total risk-based capital ratio of 8.6%.
The company also is working to satisfy regulatory orders at its undercapitalized Heartland Bank in Leawood, Kan. It said in August that as part of that effort it had submitted a three-year strategic and capital plan to the Federal Reserve Bank of St. Louis for review.