Mercantile Bank (MBWM) 8-K Mercantile Bank Corporation Reports Strong Full Year 2011 Results

Mercantile Bank Corporation Reports Strong Full Year 2011 Results

Closes 2011 with Four Consecutive Quarters of Positive Earnings

GRAND RAPIDS, Mich., Jan.17, 2012 – Mercantile Bank Corporation (NASDAQ: MBWM) (“Mercantile”) reported net income attributable to common shares of $30.0 million, or $3.37 per diluted share, for the fourth quarter of 2011, compared with a net loss attributable to common shares of $5.3 million, or ($0.62) per diluted share, for the prior-year period. For the full year 2011, Mercantile reported net income attributable to common shares of $36.1 million, or $4.07 per diluted share, compared with a net loss attributable to common shares of $14.6 million, or ($1.72) per diluted share, for the full year 2010.

Net income attributable to common shares was positively impacted by the reversal of the previously established net deferred tax asset valuation allowance resulting in a federal income tax benefit of $27.4 million during the fourth quarter. Excluding the reversal of this allowance, the fourth quarter net income attributable to common shares would have been $2.6 million, or $0.30 per diluted share, and $8.8 million, or $0.99 per diluted share, for the full year 2011.

2011 was highlighted by:

• Return to profitability with lower provision expense and higher net interest margin

• Further strengthening of regulatory capital ratios; total risk based capital ratio up 25 percent compared to year-end 2010

• Reversal of the net deferred tax asset valuation allowance

• Additional improvement in asset quality; continued decline in nonperforming assets, down 30 percent from year-end 2010

• Provision expense down $24.9 million or 78 percent from 2010

• Level of loans in the 30- to 89-days delinquent category remains at virtually zero

• Wholesale funds declined to 31% of total funds from 40% at year-end 2010

• Brought dividends on preferred stock and distributions on trust preferred securities current

“The fourth quarter was another solid quarter that rounded out a year of strong performance and achievement of many milestones for Mercantile,” said Michael Price, Chairman and CEO of Mercantile Bank Corporation. “Throughout 2011, the results of our strategic initiatives implemented during the Great Recession returned our company to sustained profitability. We were able to reverse our net deferred tax asset valuation allowance, reflecting our belief that Mercantile should remain profitable and that we have positioned the organization for even further improved operating performance.”

Operating Results

Total revenue, which consists of net interest income and noninterest income, was $58.5 million during the full year 2011, down $7.1 million or 10.8 percent from the $65.6 million generated during 2010, primarily reflecting a reduction in average earning assets. Net interest income was $51.2 million, down $5.1 million or 9.1 percent from the $56.3 million earned in the prior year. The decrease in net interest income resulted from a 16.4 percent decline in average earning assets, which was partially offset by a 29 basis point increase in the net interest margin. The reduction in average earning assets was the result of a shift of assets out of the loan portfolio as part of management’s strategic initiative to reduce Mercantile’s commercial real estate exposure.

Noninterest income for 2011 was $7.3 million, down $2.0 million or 21.2 percent from 2010. The decrease in noninterest income primarily reflects lower rental income from fewer foreclosed properties and a decline in mortgage banking activity. In addition, 2010 noninterest income includes gains totaling $0.8 million from the sale of certain assets.

Throughout 2011, Mercantile made significant progress in reducing provision expense. Provision expense decreased from $31.8 million in 2010 to $6.9 million in 2011. The overall lower level of provision is the result of a decline in total nonperforming loans, a slowdown in loan-rating downgrades, and an increase in loan-rating upgrades as the quality of the loan portfolio continues to improve. Additionally, in many instances the reserve allocation factors for non-impaired commercial loans were lowered as the higher loan charge-off periods of 2009 were replaced with the lower 2011 charge-off periods in the quarterly reserve migration calculations.

Mercantile has made further reductions in controllable costs and has significantly reduced costs associated with nonperforming assets. Noninterest expense for 2011 was $41.5 million, down $5.7 million from 2010. Costs associated with the administration and resolution of problem assets, including legal expenses, property tax payments, appraisal costs and write-downs on foreclosed properties, totaled $8.3 million during 2011, down $2.6 million or 23.7 percent from a year ago. FDIC insurance premiums were $2.8 million in 2011, down from $4.4 million in 2010, resulting from a decreased assessment rate.

“Our strategic plan to weather this troubled economy has been a multi-pronged approach including initiatives to reduce nonperforming assets, protect and improve our net interest margin, remain well-capitalized, reduce our controllable costs, and thus return the organization to sustained profitability,” added Price. “While we are pleased with our execution of the plan to date, we recognize there is still significant work to do. We will use

our momentum and build upon our successes as we shift our focus from capital preservation to growth. We also expect to develop a framework for redeeming the TARP preferred stock that we had issued.”

Balance Sheet

While Mercantile continues to reduce its exposure to loans secured by commercial real estate, commercial/industrial activity has yet to rebound sufficiently to offset these efforts, resulting in a lower level of total assets. As of December 31, 2011, total assets were $1.43 billion, down $199 million or 12.2 percent from December 31, 2010; total loans declined $190 million or 15.1 percent to $1.07 billion over the same time period.

Real estate loans comprise a majority of Mercantile’s loan portfolio. At December 31, 2011, real estate loans, excluding residential mortgage loans representing permanent financing of owner-occupied dwellings and home equity lines of credit, were $723 million or approximately 67 percent of total loans, representing a decline of $164 million, or 18.5 percent, from $887 million, or 70.3 percent of total loans, at December 31, 2010.

Non-owner-occupied commercial real estate (“CRE”) loans totaled $377 million as of December 31, 2011 (35.1 percent of total loans), a decline of $113 million over the past 12 months. Owner-occupied CRE loans were $268 million at the end of the fourth quarter of 2011, a decline of $13.9 million over the same period. Vacant land, land development and construction (“C&D”) loans, including both residential and commercial projects, totaled $77.9 million at December 31, 2011, down $37.6 million from a year ago. The commercial and industrial (“C&I”) segment of the loan portfolio was $267 million at December 31, 2011, a decline of approximately $22 million over the past 12 months, which reflected the continued sluggishness in business activity and a corresponding reduction in accounts receivable and inventory financings, as well as fewer requests for new equipment financing.

LOANS SECURED BY REAL ESTATE

($000s)	12/31/11		9/30/11		6/30/11		3/31/11		12/31/10
Residential-Related:
Vacant Land	$	13,124	$	13,264	$	13,484	$	16,321	$	17,201
Land Development		17,007		17,441		18,134		27,171		28,147
Construction		4,923		4,647		4,706		4,906		5,621
		35,054		35,352		36,324		48,398		50,969
Comm’l Non-Owner Occupied:
Vacant Land		10,555		11,082		12,639		13,669		14,293
Land Development		14,486		14,541		16,348		16,492		17,807
Construction		13,615		11,061		10,709		10,046		31,827
Commercial Buildings		376,805		397,279		429,708		484,629		489,371
		415,461		433,963		469,404		524,836		553,298
Comm’l Owner Occupied:
Construction		4,213		2,986		1,517		1,404		672
Commercial Buildings		268,479		269,776		264,848		273,739		282,388
		272,692		272,762		266,365		275,143		283,060
Total	$	723,207	$	742,077	$	772,093	$	848,377	$	887,327

Note – Excludes residential mortgage loans representing permanent financing of owner-occupied dwellings and home equity lines of credit.

In an effort to improve liquidity since December 2008, Mercantile has been focused on reducing wholesale funding and growing local deposits, especially interest-bearing checking and money market deposit accounts. As of December 31, 2011, total deposits were $1.11 billion, a decline of $162 million since year-end 2010 and a reduction of $488 million since year-end 2008. By comparison, local deposits increased $312 million over the past three years to $782 million, representing 70.3 percent of total deposits compared to 29.4 percent at December 31, 2008. Approximately 80 percent, or $250 million, of local deposit growth since year-end 2008 occurred in the interest-bearing checking and money market deposit account categories, primarily reflecting the introduction of innovative new products, various deposit-gathering initiatives, enhanced advertising and branding campaigns, and transfers from maturing time deposit accounts.

Wholesale funds were $376 million, or 30.5 percent of total funds, as of December 31, 2011, compared to $1.41 billion, or 71.5 percent of total funds, as of December 31, 2008. Compared to a year ago, wholesale funding was reduced by $209 million, or 35.7 percent. The $1.04 billion decline in wholesale funding since the end of 2008 reflects both the shift toward local deposits, as well as a $784 million decline in total loans. This change has allowed Mercantile to reduce brokered deposits and Federal Home Loan Bank (“FHLB”) advances as they matured over the past three years, and to prepay certain FHLB advances during the fourth quarter of 2010 and second quarter of 2011.

Short-term investments, consisting of federal funds sold and interest-bearing bank deposits, averaged $88.3 million during 2011. In addition to its short-term investments, at the end of the fourth quarter Mercantile had approximately $116 million of borrowing capacity through various established lines of credit to meet potential funding needs, as well as $37.6 million of U.S. Government securities available to sell.

Asset Quality

Nonperforming assets (“NPAs”) at December 31, 2011 were $60.3 million, or 4.2 percent of total assets, compared to $86.1 million, or 5.3 percent of total assets as of December 31, 2010. This represents a decline of $25.8 million, or 29.9 percent, from the end of 2010.

Robert B. Kaminski Jr., Mercantile’s Executive Vice President and Chief Operating Officer, noted: “Over the past couple of years we have made significant progress in improving our asset quality, by working relentlessly to move troubled assets out of the portfolio. With much of this work behind us, we are encouraged to have the opportunity to begin shifting focus towards driving growth in our markets. With the lessons learned throughout this experience, we will continue to work on expanding our customer footprint and supporting

our lending customers with Mercantile’s relationship-based approach, while marketing innovative new products that offer compelling value to consumers.”

Nonperforming loans (“NPLs”) totaled $45.1 million as of December 31, 2011, down $24.4 million from a year ago, while foreclosed real estate and repossessed assets declined $1.4 million from December 31, 2010. CRE loans represented 71.1 percent of NPLs, or $32.0 million at year-end 2011. Investor-owned nonperforming CRE loans accounted for $23.9 million of total CRE nonperforming loans (6.3 percent of $377 million investor-owned CRE loans), while owner-occupied CRE nonperforming loans accounted for $8.1 million (3.0 percent of $268 million owner-occupied CRE loans).

Progress was achieved this past year toward resolution of nonperforming C&D loans, including both residential and commercial projects. C&D loans currently total $77.9 million, of which $3.9 million, or 5.0 percent, were nonperforming at December 31, 2011. This represents a marked improvement since December 31, 2010 when $14.9 million, or 12.9 percent, of the $116 million C&D loan portfolio was nonperforming. Nonperforming C&I loans were $3.1 million as of December 31, 2011, a decline of $5.2 million since the end of 2010. Owner-occupied and rental residential NPLs were $6.0 million as of December 31, 2011, down $3.1 million since the year-ago quarter-end.

NONPERFORMING ASSETS

($000s)	12/31/11		9/30/11		6/30/11		3/31/11			12/31/10
Residential Real Estate:
Land Development	$	5,479	$	8,139	$	8,531	$	14,252		$	14,547
Construction		1,397		1,418		2,089		2,268	��		2,333
Owner Occupied / Rental		7,138		7,737		8,996		8,893			9,454
		14,014		17,294		19,616		25,413			26,334
Commercial Real Estate:
Land Development		2,111		1,885		2,223		2,422			2,454
Construction		409		0		0		0			0
Owner Occupied		10,642		11,287		10,749		13,389			14,740
Non-Owner Occupied		30,106		22,435		25,526		30,086			34,209
		43,268		35,607		38,498		45,897			51,403
Non-Real Estate:
Commercial Assets		3,060		3,897		3,777		4,728			8,221
Consumer Assets		14		29		4		51			161
		3,074		3,926		3,781		4,779			8,382
Total	$	60,356	$	56,827	$	61,895	$	76,089		$	86,119

During the fourth quarter of 2011, Mercantile added $10.2 million of NPAs to its problem asset portfolio and successfully disposed of $5.2 million through a combination of asset sales and principal pay-downs. Loan charge-offs were $0.9 million and foreclosed asset

valuation write-downs were $0.6 million. In total, NPAs increased by a net $3.5 million during the fourth quarter of 2011.

Improvement in asset quality is apparent on a full-year basis. During the 12-month period ended December 31, 2011, Mercantile added $24.2 million of problem assets to its NPA portfolio, successfully disposed of $35.9 million, and charged-off or wrote-down an additional $14.1 million. In total, NPAs declined by a net $25.8 million since December 31, 2010.

NONPERFORMING ASSETS RECONCILIATION

($000s)	4Q 2011			3Q 2011			2Q 2011			1Q 2011			4Q 2010
Beginning balance	$	56,827		$	61,895		$	76,089		$	86,119		$	92,397
Additions		10,188			3,740			6,478			3,848			13,602
Returns to performing status		0			0			0			(766	)		(1,019	)
Principal payments		(2,115	)		(5,058	)		(12,067	)		(5,555	)		(7,217	)
Sale proceeds		(3,038	)		(2,670	)		(2,547	)		(2,085	)		(5,282	)
Loan charge-offs		(890	)		(476	)		(5,393	)		(4,800	)		(4,650	)
Valuation write-downs		(616	)		(604	)		(665	)		(672	)		(1,712	)
Total	$	60,356		$	56,827		$	61,895		$	76,089		$	86,119

Net loan charge-offs were $4.7 million during the fourth quarter of 2011, or an annualized 1.8 percent of average loans, compared with $0.5 million (0.2 percent annualized) and $5.3 million (1.6 percent annualized) for the linked and prior-year quarters, respectively.

Net loan charge-offs were $15.7 million for the full year 2011, or 1.4 percent of average loans, compared with $34.3 million, or 2.4 percent of average loans, for 2010.

NET LOAN CHARGE-OFFS (RECOVERIES)

($000s)	4Q 2011			3Q 2011			2Q 2011			1Q 2011			4Q 2010
Residential Real Estate:
Land Development	$	15		$	135		$	2,496		$	(2	)	$	312
Construction		(90	)		(11	)		(9	)		0			173
Owner Occupied / Rental		1,176			(187	)		1,819			1,208			120
		1,101			(63	)		4,306			1,206			605
Commercial Real Estate:
Land Development		(75	)		47			(62	)		(73	)		219
Construction		0			0			0			0			0
Owner Occupied		68			(18	)		755			1,436			976
Non-Owner Occupied		4,060			639			445			(40	)		2,642
		4,053			668			1,138			1,323			3,837
Non-Real Estate:
Commercial Assets		(435	)		(162	)		(336	)		2,794			819
Consumer Assets		0			26			(9	)		126			47
		(435	)		(136	)		(345	)		2,920			866
Total	$	4,719		$	469		$	5,099		$	5,449		$	5,308

Capital Position

Shareholders’ equity, totaling $165 million as of December 31, 2011, increased $39.1 million from year-end 2010 primarily reflecting net income and the reversal of the net deferred tax asset valuation allowance. The Bank remains “well-capitalized” with a total risk-based capital ratio of 15.5 percent as of December 31, 2011, compared to 12.5 percent at December 31, 2010. At December 31, 2011, the Bank had approximately $67 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a “well-capitalized” institution. Mercantile reported 8,605,391 total shares outstanding at the end of 2011.

Mr. Price concluded: “2011 marked a turning point for Mercantile as we returned to solid profitability. Our disciplined approach over the past three years combined with our strengthened net interest margin and enhanced regulatory capital ratios, positions us well and gives us confidence in our ability to continue these positive trends and grow our business for continued profitability.”

About Mercantile Bank Corporation

Based in Grand Rapids, Michigan, Mercantile Bank Corporation is the bank holding company for Mercantile Bank of Michigan. Founded in 1997 to provide banking services to businesses, individuals and governmental units, the Bank differentiates itself on the basis of service quality and the expertise of its banking staff. Mercantile has seven full-service banking offices in Grand Rapids, Holland and Lansing, Michigan. Mercantile Bank Corporation’s common stock is listed on the NASDAQ Global Select Market under the symbol “MBWM.”

Forward-Looking Statements

This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and nontraditional competitors; changes in banking regulation or actions by bank regulators; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; changes in the national and local economies; and other factors,

including risk factors, disclosed from time to time in filings made by Mercantile with the Securities and Exchange Commission. Mercantile undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

FOR FURTHER INFORMATION:

AT MERCANTILE BANK CORPORATION:

Michael Price Chairman & CEO 616-726-1600 mprice@mercbank.com Charles Christmas Chief Financial Officer 616-726-1202 cchristmas@mercbank.com

MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

	DECEMBER 31, 2011			DECEMBER 31, 2010			DECEMBER 31, 2009
	(Unaudited)			(Audited)			(Audited)
ASSETS
Cash and due from banks	$	12,402,000		$	6,674,000		$	18,896,000
Interest-bearing deposit balances		9,641,000			9,600,000			1,471,000
Federal funds sold		54,329,000			47,924,000			1,368,000
Total cash and cash equivalents		76,372,000			64,198,000			21,735,000
Securities available for sale		172,992,000			220,830,000			182,491,000
Securities held to maturity		0			0			59,212,000
Federal Home Loan Bank stock		11,961,000			14,345,000			15,681,000
Loans		1,072,422,000			1,262,630,000			1,539,818,000
Allowance for loan losses		(36,532,000	)		(45,368,000	)		(47,878,000	)
Loans, net		1,035,890,000			1,217,262,000			1,491,940,000
Premises and equipment, net		26,802,000			27,873,000			29,684,000
Bank owned life insurance		48,520,000			46,743,000			45,024,000
Accrued interest receivable		4,403,000			5,942,000			7,088,000
Other real estate owned and repossessed assets		15,282,000			16,675,000			26,608,000
Deferred tax asset		26,013,000			0			0
Other assets		14,994,000			18,553,000			26,745,000
Total assets	$	1,433,229,000		$	1,632,421,000		$	1,906,208,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	147,031,000		$	112,944,000		$	121,157,000
Interest-bearing		965,044,000			1,160,888,000			1,280,470,000
Total deposits		1,112,075,000			1,273,832,000			1,401,627,000
Securities sold under agreements to repurchase		72,569,000			116,979,000			99,755,000
Federal funds purchased		0			0			2,600,000
Federal Home Loan Bank advances		45,000,000			65,000,000			205,000,000
Subordinated debentures		32,990,000			32,990,000			32,990,000
Other borrowed money		1,434,000			11,804,000			16,890,000
Accrued interest and other liabilities		4,162,000			5,880,000			7,242,000
Total liabilities		1,268,230,000			1,506,485,000			1,766,104,000
SHAREHOLDERS’ EQUITY
Preferred stock, net of discount		20,331,000			20,077,000			19,839,000
Common stock		173,979,000			173,815,000			173,576,000
Retained earnings (deficit)		(32,639,000	)		(68,781,000	)		(54,170,000	)
Accumulated other comprehensive income (loss)		3,328,000			825,000			859,000
Total shareholders’ equity		164,999,000			125,936,000			140,104,000
Total liabilities and shareholders’ equity	$	1,433,229,000		$	1,632,421,000		$	1,906,208,000

MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF OPERATIONS

	THREE MONTHS ENDED December 31, 2011			THREE MONTHS ENDED December 31, 2010			TWELVE MONTHS ENDED December 31, 2011			TWELVE  MONTHS ENDED December 31, 2010
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Interest income
Loans, including fees	$	14,502,000		$	18,035,000		$	62,356,000		$	77,791,000
Investment securities		1,837,000			2,413,000			8,490,000			10,137,000
Federal funds sold		61,000			66,000			199,000			176,000
Interest-bearing deposit balances		6,000			9,000			24,000			39,000
Total interest income		16,406,000			20,523,000			71,069,000			88,143,000
Interest expense
Deposits		3,377,000			5,403,000			16,384,000			23,529,000
Short-term borrowings		55,000			319,000			405,000			1,410,000
Federal Home Loan Bank advances		410,000			795,000			2,033,000			5,509,000
Other borrowed money		229,000			319,000			1,010,000			1,346,000
Total interest expense		4,071,000			6,836,000			19,832,000			31,794,000
Net interest income		12,335,000			13,687,000			51,237,000			56,349,000
Provision for loan losses		1,900,000			6,800,000			6,900,000			31,800,000
Net interest income after provision for loan losses		10,435,000			6,887,000			44,337,000			24,549,000
Noninterest income
Service charges on accounts		411,000			432,000			1,640,000			1,797,000
Gain on sale of commercial loans		0			0			0			324,000
Net gain on sale of investment securities		0			0			0			476,000
Other income		1,612,000			1,872,000			5,642,000			6,647,000
Total noninterest income		2,023,000			2,304,000			7,282,000			9,244,000
Noninterest expense
Salaries and benefits		4,520,000			4,423,000			17,891,000			18,297,000
Occupancy		664,000			669,000			2,780,000			2,838,000
Furniture and equipment		294,000			318,000			1,206,000			1,481,000
Nonperforming asset costs		1,654,000			2,999,000			8,290,000			10,858,000
FDIC insurance costs		569,000			920,000			2,843,000			4,370,000
Other expense		1,796,000			2,852,000			8,485,000			9,312,000
Total noninterest expense		9,497,000			12,181,000			41,495,000			47,156,000
Income (loss) before federal income tax expense (benefit)		2,961,000			(2,990,000	)		10,124,000			(13,363,000	)
Federal income tax expense (benefit)		(27,361,000	)		1,963,000			(27,361,000	)		(47,000	)
Net income (loss)		30,322,000			(4,953,000	)		37,485,000			(13,316,000	)
Preferred stock dividends and accretion		331,000			329,000			1,343,000			1,295,000
Net income (loss) attributable to common shares	$	29,991,000		$	(5,282,000	)	$	36,142,000		$	(14,611,000	)
Basic earnings (loss) per share		$3.49			($0.62	)		$4.20			($1.72	)
Diluted earnings (loss) per share		$3.37			($0.62	)		$4.07			($1.72	)
Average basic shares outstanding		8,604,240			8,516,202			8,602,845			8,507,572
Average diluted shares outstanding		8,888,900			8,516,202			8,878,180			8,507,572

MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

	Quarterly															Year-To-Date
(dollars in thousands except per share data)	2011 4th Qtr			2011 3rd Qtr			2011 2nd Qtr			2011 1st Qtr			2010 4th Qtr			2011			2010
EARNINGS
Net interest income	$	12,335			12,295			13,158			13,449			13,687			51,237			56,349
Provision for loan losses	$	1,900			1,100			1,700			2,200			6,800			6,900			31,800
Noninterest income	$	2,023			1,804			1,703			1,752			2,304			7,282			9,244
Noninterest expense	$	9,497			9,975			10,443			11,581			12,181			41,495			47,156
Net income (loss) before federal income tax expense (benefit)	$	2,961			3,024			2,718			1,420			(2,990	)		10,124			(13,363	)
Net income (loss)	$	30,322			3,024			2,718			1,420			(4,953	)		37,485			(13,316	)
Net income (loss) common shares	$	29,991			2,682			2,381			1,088			(5,282	)		36,142			(14,611	)
Basic earnings (loss) per share	$	3.49			0.31			0.28			0.13			(0.62	)		4.20			(1.72	)
Diluted earnings (loss) per share	$	3.37			0.30			0.27			0.12			(0.62	)		4.07			(1.72	)
Average basic shares outstanding		8,604,240			8,604,263			8,604,476			8,599,166			8,516,202			8,602,845			8,507,572
Average diluted shares outstanding		8,888,900			8,868,122			8,872,692			8,884,675			8,516,202			8,878,180			8,507,572
PERFORMANCE RATIOS
Return on average assets		8.22	%		0.71	%		0.61	%		0.28	%		(1.21	%)		2.36	%		(0.80	%)
Return on average common equity		85.19	%		7.89	%		7.39	%		3.49	%		(15.83	%)		27.28	%		(10.62	%)
Net interest margin(fully tax-equivalent)		3.65	%		3.50	%		3.61	%		3.64	%		3.36	%		3.60	%		3.31	%
Efficiency ratio		66.14	%		70.75	%		70.27	%		76.19	%		76.17	%		70.91	%		71.89	%
Full-time equivalent employees		232			237			235			241			242			232			242
CAPITAL
Period-ending equity to assets		11.51	%		9.25	%		8.51	%		8.04	%		7.71	%		11.51	%		7.71	%
Tier 1 leverage capital ratio		12.09	%		10.87	%		10.27	%		9.88	%		9.09	%		12.09	%		9.09	%
Tier 1 risk-based capital ratio		14.19	%		13.24	%		12.58	%		11.70	%		11.17	%		14.19	%		11.17	%
Total risk-based capital ratio		15.46	%		14.51	%		13.85	%		12.98	%		12.45	%		15.46	%		12.45	%
Book value per common share	$	16.73			13.45			12.77			12.30			12.20			16.73			12.20
Cash dividend per common share	$	0.00			0.00			0.00			0.00			0.00			0.00			0.01
ASSET QUALITY
Gross loan charge-offs	$	5,791			1,342			6,733			6,031			5,892			19,897			37,128
Net loan charge-offs	$	4,719			469			5,099			5,449			5,308			15,736			34,310
Net loan charge-offs to average loans		1.75	%		0.17	%		1.73	%		1.79	%		1.63	%		1.37	%		2.43	%
Allowance for loan losses	$	36,532			39,351			38,720			42,118			45,368			36,532			45,368
Allowance for loan losses to total loans		3.41	%		3.60	%		3.45	%		3.49	%		3.59	%		3.41	%		3.59	%
Nonperforming loans	$	45,074			39,540			43,422			60,205			69,444			45,074			69,444
Other real estate and repossessed assets	$	15,282			17,287			18,473			15,884			16,675			15,282			16,675
Nonperforming assets to total assets		4.21	%		3.84	%		4.02	%		4.83	%		5.28	%		4.21	%		5.28	%
END OF PERIOD BALANCES
Loans	$	1,072,422			1,094,037			1,122,999			1,206,886			1,262,630			1,072,422			1,262,630
Total earning assets(before allowance)	$	1,321,345			1,385,945			1,447,756			1,494,163			1,555,329			1,321,345			1,555,329
Total assets	$	1,433,229			1,477,985			1,537,874			1,576,935			1,632,421			1,433,229			1,632,421
Deposits	$	1,112,075			1,185,333			1,247,932			1,253,644			1,273,832			1,112,075			1,273,832
Shareholders’ equity	$	164,999			136,733			130,917			126,814			125,936			164,999			125,936
AVERAGE BALANCES
Loans	$	1,072,851			1,111,184			1,179,786			1,233,037			1,292,289			1,148,671			1,412,555
Total earning assets(before allowance)	$	1,358,585			1,414,722			1,483,409			1,519,304			1,636,471			1,443,485			1,727,120
Total assets	$	1,448,000			1,504,640			1,566,708			1,602,882			1,728,375			1,530,031			1,820,925
Deposits	$	1,152,001			1,211,863			1,251,818			1,261,590			1,339,149			1,219,094			1,368,726
Shareholders’ equity	$	139,676			134,862			129,242			126,412			132,409			132,463			137,594