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Mercantile Bank Corp. has a market cap of $46.92 million; its shares were traded at around $5.46 with and P/S ratio of 0.42. MBWM is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:During the first six months of 2010, our total assets decreased $102.1 million, and totaled $1.80 billion as of June 30, 2010. The decline in total assets was comprised primarily of a $129.1 million reduction in total loans and leases and a $24.6 million decrease in securities, more than offsetting a $58.1 million increase in cash and cash equivalents. Total deposits declined $61.5 million, while Federal Home Loan Bank (“FHLB”) advances decreased $45.0 million.
Commercial loans and leases declined $123.1 million during the first six months of 2010, and at June 30, 2010 totaled $1.29 billion, or 91.2% of the total loan and lease portfolio. The decline in outstanding balances primarily reflects the slowdown in business activity in our markets and the impact of a concerted effort on our part to reduce exposure to certain non-owner occupied commercial real estate (“CRE”) and automotive-related businesses. The largest decline occurred in the commercial and industrial (“C&I”) loan portfolio, where total outstanding balances were reduced by $52.6 million, in large part reflecting the slowdown in business activity and a corresponding reduction in accounts receivable and inventory financings. We would expect to see an increase in commercial line of credit usage when economic conditions improve. During the first six months of 2010, commercial loans collateralized by non-owner occupied real estate declined by $45.0 million. Our systematic approach to reducing our exposure to certain CRE lending will be pro-longed, given the nature of CRE lending and the current depressed economic conditions; however, we believe that such a reduction is in our best interest when taking into account the increased inherent credit risk, relatively low loan rates and nominal deposit balances associated with targeted borrowing relationships.
As of December 31, 2007, nonperforming assets totaled $35.7 million, or 1.68% of total assets, an increase from the $9.6 million, or 0.46% of total assets, as of December 31, 2006. Nonperforming loans and leases totaled $29.8 million and foreclosed properties/repossessed assets equaled $5.9 million at year-end 2007, compared to $8.6 million and $1.0 million, respectively, at year-end 2006. As of December 31, 2007, nonperforming loans secured by real estate, combined with all foreclosed properties, totaled $28.6 million, or about 80% of total nonperforming assets. Nonperforming loans and foreclosed properties associated with the development of residential real estate totaled $11.1 million, with another $3.2 million in nonperforming loans secured by, and foreclosed properties consisting of, residential properties. Net loan and lease charge-offs during 2007 totaled $6.7 million, or 0.38% of average total loans and leases. During 2006, net loan and lease charge-offs totaled $4.9 million, or 0.29% of average total loans and leases.
As of December 31, 2008, nonperforming assets totaled $57.4 million, or 2.60% of total assets. Nonperforming loans and leases totaled $49.3 million and foreclosed properties/repossessed assets equaled $8.1 million at year-end 2008, compared to $29.8 million and $5.9 million, respectively, at year-end 2007. As of December 31, 2008, nonperforming loans secured by real estate, combined with all foreclosed properties, totaled $52.3 million, or about 91% of total nonperforming assets. Nonperforming loans and foreclosed properties associated with the development of residential real estate totaled $25.3 million, with another $4.2 million in nonperforming loans secured by, and foreclosed properties consisting of, residential properties. Net loan and lease charge-offs during 2008 totaled $19.9 million, or 1.09% of average total loans and leases. The increase in net loan and lease charge-offs during 2008 over prior periods primarily reflects a combination of a higher level of nonperforming loans and leases and the significant decline in property values.
As of December 31, 2009, nonperforming assets totaled $111.7 million, or 5.86% of total assets. Nonperforming loans and leases totaled $85.1 million and foreclosed properties/repossessed assets equaled $26.6 million at year-end 2009. As of December 31, 2009, nonperforming loans secured by CRE, combined with all foreclosed properties, totaled $62.6 million. Nonperforming loans and foreclosed properties associated with the development of residential-related real estate totaled $31.8 million, with another $7.5 million in nonperforming loans secured by, and foreclosed properties consisting of, residential properties. Nonperforming C&I loans and repossessed assets totaled $9.8 million. Net loan and lease charge-offs during 2009 totaled $38.2 million, or 2.24% of average total loans and leases. The increase in net loan and lease charge-offs during 2009 over prior periods primarily reflects a combination of a higher level of nonperforming loans and leases and the continued significant decline in property values.
As of June 30, 2010, nonperforming assets totaled $110.5 million, or 6.13% of total assets. Nonperforming loans and leases totaled $87.5 million and foreclosed properties/repossessed assets equaled $23.0 million. As of June 30, 2010, nonperforming loans secured by CRE, combined with all foreclosed properties, totaled $65.5 million. Nonperforming loans and foreclosed properties associated with the development of residential-related real estate totaled $31.8 million, with another $6.2 million in nonperforming loans secured by, and foreclosed properties consisting of, residential properties. Nonperforming C&I loans and repossessed assets totaled $7.0 million. Net loan and lease charge-offs during the second quarter of 2010 totaled $8.6 million, or an annualized 2.35% of average total loans and leases, and totaled $14.7 million during the first six months of 2010, or an annualized 1.99% of average total loans and leases. Net loan and lease charge-offs in at least the next few quarters are expected to remain elevated compared to historical averages due to a higher volume of nonperforming loans and leases and significant declines in property values.
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