Mercantile Bank in Grand Rapids, Mich., reported a significant decline in earnings that was largely tied to merger-related costs.
The $2.9 billion-asset Mercantile said in a press release Tuesday that second-quarter net income fell 63% from a year earlier, to $1.5 million. The results included $3.5 million in pretax expenses associated with Mercantile's June 1 acquisition of Firstbank. The deal faced several delays as the companies waited for regulatory approval.
Net interest income increased 38%, to $15.6 million. The margin compressed by 4 basis points, to 3.62%, somewhat offsetting an increase in total loans.
Noninterest income rose 29%, to $2.3 million. Noninterest expense soared 82%, to $16.1 million, largely due to the merger-related expenses. Still, the company noted that costs associated with the administration and resolution of problem assets, including legal expenses, appraisal costs and write-downs on foreclosed properties, increased 33%, to $400,000.
The company also benefited from a $700,000 reserve release and $600,000 in net recoveries from previously charged off loans.
The integration of Firstbank will continue over the next several quarters, Michael Price, Mercantile's president and chief executive, said in the release. "We remain very encouraged by what we are seeing in new business activities and our competitive positioning in our region," he said.