Mercantile Bank Corp. in Grand Rapids is warning investors that it expects to record a loss for the first quarter after concluding that "numerous" commercial borrowers would be unable to make their loan payments.
The $2.1 billion-asset Mercantile said Friday that deteriorating real estate conditions in Michigan have hurt its loan portfolio. As a result, it plans to record a first-quarter loan-loss provision of between $8.7 million and $9.2 million. That would reduce earnings by $5.7 million to $6 million after taxes, resulting in a net loss for the quarter.
In the first quarter of last year, Mercantile earned $4.3 million. Its fourth-quarter earnings declined 98% from the same period in 2006, to $100,000.
By late Friday, Mercantile's shares had dropped 11.9% from Thursday's close, to $10.88.
