Mercantile Bank Corp. in Grand Rapids, Mich., is considering “some type of capital issuance” to maintain its torrid growth rate, chairman Gerald J. Johnson said.

Mercantile’s assets rose 39%, to $512 million, in 2000, while its loan portfolio grew 40%, to $424 million. And Mr. Johnson said its 2001 prospects are “tremendous” in part because of the substantial customer runoff he expects from Fifth Third Bancorp’s $4.9 billion deal to buy Grand Rapids’ Old Kent Financial Corp. That deal, slated to close next quarter, is “a once-in-a-lifetime opportunity,” he said.

But the holding company for three-year-old Mercantile Bank of West Michigan might miss that chance without more capital.

Michael H. Price, its president and chief executive officer, said the company needs to add capital to maintain its “well-capitalized” status with regulators, though he would not say just how it plans to raise funds.

At 10.69%, Mercantile’s risk-based capital ratio is close to falling below the 10% minimum regulators require for well-capitalized institutions.

The well-capitalized designation may seem like a minor issue, since Mercantile’s capital ratios exceed the absolute minimums required by regulators by a wide margin. But federal law allows only companies with “well-capitalized” status to obtain brokered deposits, a key source of funding for Mercantile.

Brokered deposits — mainly in the form of certificates of deposit — made up nearly 60% of the $426 million deposited in Mercantile Bank of West Michigan last year.

Some regulators and industry analysts have questioned Mercantile’s reliance on brokered deposits, which are generally more expensive and more volatile than those obtained locally. The brokers who place the deposits tend to withdraw them quickly if a bank runs into trouble, analysts say.

Mr. Price said Mercantile’s top priority is to get a bigger share of Grand Rapids’ deposit base, and the company has succeeded in attracting local money. Its core deposits grew 40% between July and December, but that was not enough to fully fund its expanding loan portfolio, he said.

Despite its reliance on brokered deposits, Mercantile had robust earnings in 2000. Net income rose 30%, to $2.8 million, and fourth-quarter earnings rose 29%, to $880,000.

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