Mercantile Bank Corp. in Grand Rapids, Mich., announced Wednesday that its fourth-quarter earnings fell nearly 98% due largely to an increase in nonperforming assets.
The $2.1 billion-asset company earned $95,000 in the quarter, compared to $4.6 million a year earlier. For the year its earnings fell 55%, to $9 million.
The earnings report sent the company's stock into a tailspin. At the close Wednesday, its shares were down 14.2% from Tuesday's close, at $11.47.
The company attributed the drop to an increase in its provision for loan losses. Mercantile took a $4.9 million provision in the fourth quarter, bringing its total to $11.1 million for all of last year.
"During the fourth quarter, we devoted substantial time and effort to reviewing our loan portfolio for signs of weakness," Michael Price, Mercantile's chairman and chief executive, said in a press release. "We wanted to identify and downgrade relationships with significant potential to become problems down the road in light of the continuing weakness in the economy. During this process, we downgraded any credit where we identified signs of current or likely future significant weakness."
Of the $29.8 million it classified as nonperforming at Dec. 31, the company said, $18.5 million were either current or less than 90 days past due.
