Mercantile Bank (MBWM) 8-K Mercantile Bank Corporation Reports Third Quarter 2012 Results

Exhibit 99.1

Mercantile Bank Corporation Reports Third Quarter 2012 Results

Improved asset quality, increased profitability and declared quarterly dividend

GRAND RAPIDS, Mich., Oct. 16, 2012 – Mercantile Bank Corporation (NASDAQ: MBWM) (“Mercantile”) reported net income attributable to common shares of $2.6 million, or $0.30 per diluted share, for the third quarter of 2012, compared with net income attributable to common shares of $2.7 million, or $0.30 per diluted share, for the prior-year period. On a pre-tax basis, income was $3.9 million in the third quarter of 2012 compared to $3.0 million in the prior-year third quarter, an increase of 27.5 percent.

The third quarter was highlighted by:

• Continued growth in profitability as asset quality continues to improve

• Nonperforming assets declined 37 percent from a year ago and 69 percent since peak in early 2010

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

• Improvement in net interest margin from previous quarter and on year-over-year basis

• Regulatory capital ratios remain significantly above minimum requirements for “well-capitalized” institutions

• Reinstatement of a quarterly dividend at $0.09 per common share, or a current yield of approximately 2%

“We are pleased to report another quarter of solid earnings which marks seven consecutive quarters of profitability driven by continued improvements in several key areas,” said Michael Price, Chairman and CEO of Mercantile Bank Corporation. “Our strong earnings momentum and the work we have done to build our capital structure have positioned us for future growth. Our business model remains focused on achieving and maintaining excellent asset quality, continued improvement of profitability, protecting our margin and further strengthening of the balance sheet.”

Operating Results

Total revenue, which consists of net interest income and noninterest income, was $13.6 million during the 2012 third quarter, down $0.5 million or 3.2 percent from the $14.1 million

generated during the third quarter of 2011, primarily reflecting a reduction in earning assets. Net interest income was $11.6 million, down $0.7 million or 5.8 percent from the $12.3 million earned in the prior-year third quarter. The decrease in net interest income resulted from a 10.2 percent decline in average earning assets as part of management’s strategic initiative to reduce commercial real estate exposure and migrate certain high risk loans out of the loan portfolio. The net interest margin during the third quarter of 2012 was 3.67 percent, 17 basis points higher than the level during the third quarter of 2011 and well above the historical average level.

Noninterest income for the 2012 third quarter was $2.1 million, up $0.3 million or 14.0 percent from the comparable 2011 period. The increase in noninterest income primarily resulted from increased residential mortgage banking fee income and an increase in rental income on foreclosed properties.

Mercantile had a negative $0.4 million provision for loan losses during the third quarter of 2012 compared to a provision expense of $1.1 million for the year-ago quarter. The negative provision expense is the result of several factors, including continued progress towards loan recoveries and collections as well as a reduced level of loan-rating downgrades and ongoing loan-rating upgrades.

Noninterest expense for the 2012 third quarter was $10.2 million, up $0.2 million from the same period in 2011. Salaries and benefits totaled $4.8 million, up $0.2 million from the prior-year quarter, primarily reflecting expense associated with reinstating certain employee benefit programs that had been suspended or reduced in prior years. 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 $1.6 million during the third quarters of 2011 and 2012, reflecting the continuation of Mercantile’s aggressive approach to managing and resolving problem assets. Federal Deposit Insurance Corporation insurance premiums were $0.3 million in the third quarter of 2012, down $0.3 million from the 2011 third quarter, primarily resulting from a decreased assessment rate that reflects the Company’s improved financial condition and operating performance.

Mr. Price continued: “Our financial results reflect an aggressive stance toward right-sizing our operations and asset base to sustain our operating performance and increase profitability. Our enhanced financial condition and capital strength are serving us well as we continue on our path of disciplined growth for long-term performance.”

Balance Sheet

Mercantile has steadily reduced its exposure to loans secured by commercial real estate over the past several years. While the rate of decline has slowed as a slight improvement of economic conditions has led to increased lending opportunities, efforts to reduce certain segments of the commercial real estate portfolio continue. Despite competitive pressures and economic uncertainty that continue to negatively impact the loan portfolio, during the third quarter of 2012 approximately $20 million of new loans were originated. As of September 30, 2012, total assets were $1.39 billion, down $44.9 million or 3.1 percent from

December 31, 2011; total loans decreased $37.1 million, or 3.5 percent, to $1.04 billion over the same period. Compared to September 30, 2011, total assets declined $89.6 million, or 6.1 percent, and total loans declined $58.7 million, or 5.4 percent.

Real estate loans comprise a majority of Mercantile’s loan portfolio. At September 30, 2012, real estate loans, excluding residential mortgage loans representing permanent financing of owner-occupied dwellings and home equity lines of credit, were $674 million or approximately 65 percent of total loans, representing a decline of $68.2 million, or 9.2 percent, from $742 million, or 67.8 percent of total loans, at September 30, 2011.

Non-owner-occupied commercial real estate (“CRE”) loans totaled $333 million as of September 30, 2012 (32.2 percent of total loans), a decline of $63.9 million over the past 12 months. Owner-occupied CRE loans were $271 million at the end of the third quarter of 2012, an increase of $1.6 million from a year ago. Vacant land, land development and construction (“C&D”) loans, including both residential and commercial projects, totaled $62.5 million at September 30, 2012, down $4.9 million from a year ago. The commercial and industrial (“C&I”) segment of the loan portfolio was $272 million at September 30, 2012, an increase of $11.2 million since year-end 2011 and an increase of $14.7 million over the past 12 months. The average balance of commercial lines of credit has remained relatively stable since early 2011.

LOANS SECURED BY REAL ESTATE

($000s)	9/30/12		6/30/12		3/31/12		12/31/11		9/30/11
Residential-Related:
Vacant Land	$	6,042	$	5,435	$	5,591	$	5,679	$	5,673
Land Development		14,639		15,256		16,173		17,007		17,441
Construction		4,031		4,055		4,318		4,923		4,647
		24,712		24,746		26,082		27,609		27,761
Comm’l Non-Owner Occupied:
Vacant Land		8,793		8,827		9,255		10,555		11,082
Land Development		13,798		14,355		14,418		14,486		14,541
Construction		9,877		15,424		16,936		13,615		11,061
Commercial Buildings		333,407		350,762		357,128		376,805		397,279
		365,875		389,368		397,737		415,461		433,963
Comm’l Owner Occupied:
Construction		5,316		3,751		6,198		4,213		2,986
Other		6,617		6,811		7,246		7,445		7,591
Commercial Buildings		271,364		281,519		273,376		268,479		269,776
		283,297		292,081		286,820		280,137		280,353
Total	$	673,884	$	706,195	$	710,639	$	723,207	$	742,077

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

Since December 2008, Mercantile has focused on improving liquidity by reducing wholesale funding and growing local deposits, especially interest-bearing checking and money market deposit accounts. As of September 30, 2012, total deposits were $1.11 billion, a decline of $492 million since year-end 2008. By comparison, local deposits increased $357 million to $827 million since year-end 2008, representing 74.7 percent of total deposits compared to 29.4 percent at December 31, 2008. Approximately 72 percent, or $257 million, of local deposit growth since year-end 2008 occurred in the interest-bearing checking and money market deposit account categories, while DDA checking accounted for $56.2 million, or about 16 percent of total growth. Growth in local deposits was driven primarily by 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 $315 million, or 26.2 percent of total funds, as of September 30, 2012, compared to $1.41 billion, or 71.5 percent of total funds, as of December 31, 2008. The $1.10 billion decline in wholesale funding since the end of 2008 reflects both the shift toward local deposits, as well as an $822 million decline in total loans. This strategy has allowed Mercantile to reduce brokered deposits and Federal Home Loan Bank advances as they matured since year-end 2008.

Short-term investments, consisting of federal funds sold and interest-bearing bank deposits, averaged $83.4 million during the third quarter of 2012. In addition to its short-term investments, at the end of the third quarter of 2012, Mercantile had approximately $150 million of borrowing capacity through various established lines of credit to meet potential funding needs, as well as $36.0 million of U.S. Government securities available to sell.

Asset Quality

Nonperforming assets (“NPAs”) at September 30, 2012 were $35.9 million, or 2.6 percent of total assets, compared to $60.4 million as of December 31, 2011, and $56.8 million as of September 30, 2011 (4.2 percent and 3.8 percent of total assets, respectively). This represents a decline of $24.4 million or 40.4 percent from the end of 2011, and a decline of $20.9 million or 36.8 percent from the year-ago quarter-end.

Robert B. Kaminski, Jr., Mercantile’s Executive Vice President and Chief Operating Officer, noted: “We are pleased with the continued improvement in our asset quality. During the third quarter, we witnessed a further contraction of nonperforming assets which was driven by a decline in nonperforming loans, and our 30-to 89-day delinquent loans remain virtually at zero. While we continue to dedicate resources towards moving our troubled assets off the balance sheet, we are encouraged by our progress thus far and the position it has afforded us as we face growing competition in our markets. Despite these competitive pressures in our markets, we are benefiting from our robust sales programs and marketing initiatives as evidenced by our strong commercial loan pipeline. Going forward, we will continue to leverage our relationship-based approach towards client acquisition to drive sustainable growth in our markets.”

Nonperforming loans (“NPLs”) totaled $24.8 million as of September 30, 2012, down $3.7 million and $14.8 million, respectively, from the linked quarter-end and the year-ago quarter-end, while foreclosed real estate and repossessed assets declined $0.4 million and $6.1 million, respectively, from the linked and year-ago quarter-ends. CRE loans represented 62.5 percent of NPLs, or $15.5 million at September 30, 2012. Investor-owned nonperforming CRE loans accounted for $11.2 million of total CRE nonperforming loans (3.4 percent of $333 million investor-owned CRE loans), while owner-occupied CRE nonperforming loans accounted for $4.2 million (1.6 percent of $271 million owner-occupied CRE loans).

Nonperforming C&D loans were $3.0 million as of September 30, 2012, a decrease of $0.3 million since the year-ago quarter-end. Nonperforming C&I loans were $1.4 million as of September 30, 2012, a decline of $2.5 million since September 30, 2011. Owner-occupied and rental residential NPLs were $5.0 million as of September 30, 2012, down $2.4 million since the year-ago quarter-end.

NONPERFORMING ASSETS

($000s)	9/30/12		6/30/12		3/31/12		12/31/11		9/30/11
Residential Real Estate:
Land Development	$	3,318	$	3,946	$	3,762	$	5,479	$	8,139
Construction		645		965		1,242		1,397		1,418
Owner Occupied / Rental		5,426		5,982		6,437		7,138		7,737
		9,389		10,893		11,441		14,014		17,294
Commercial Real Estate:
Land Development		1,158		1,174		1,531		2,111		1,885
Construction		0		0		403		409		0
Owner Occupied		6,395		6,850		7,687		10,642		11,287
Non-Owner Occupied		17,613		19,386		28,954		30,106		22,435
		25,166		27,410		38,575		43,268		35,607
Non-Real Estate:
Commercial Assets		1,386		1,765		2,144		3,060		3,897
Consumer Assets		1		1		14		14		29
		1,387		1,766		2,158		3,074		3,926
Total	$	35,942	$	40,069	$	52,174	$	60,356	$	56,827

During the third quarter of 2012, Mercantile added only $0.2 million of NPAs to its problem asset portfolio, while disposing of $4.3 million through a combination of asset sales and principal pay-downs ($2.4 million), loan charge-offs ($1.0 million), and foreclosed asset valuation write-downs ($0.9 million). In total, NPAs decreased by a net $4.1 million during the third quarter of 2012.

Improvement in asset quality is also apparent on a full-year basis. During the 12-month period ended September 30, 2012, Mercantile added $23.3 million of problem assets to its

NPA portfolio, successfully disposed of $36.1 million, and charged off or wrote down an additional $8.1 million. In total, NPAs declined by a net $20.9 million since September 30, 2011.

NONPERFORMING ASSETS RECONCILIATION

($000s)	3Q 2012			2Q 2012			1Q 2012			4Q 2011			3Q 2011
Beginning balance	$	40,069		$	52,174		$	60,356		$	56,827		$	61,895
Additions		158			3,306			9,651			10,188			3,740
Returns to performing status		0			0			(737	)		0			0
Principal payments		(1,245	)		(11,357	)		(5,533	)		(2,115	)		(5,058	)
Sale proceeds		(1,190	)		(1,586	)		(9,282	)		(3,038	)		(2,670	)
Loan charge-offs		(1,003	)		(1,337	)		(1,691	)		(890	)		(476	)
Valuation write-downs		(847	)		(1,131	)		(590	)		(616	)		(604	)
Total	$	35,942		$	40,069		$	52,174		$	60,356		$	56,827

Net loan charge-offs were $1.5 million during the third quarter of 2012, or an annualized 0.6 percent of average loans, compared with net loan recoveries of $1.7 million (negative 0.7 percent annualized) and net loan charge-offs of $0.5 million (0.2 percent annualized) for the linked and prior-year quarters, respectively. Approximately 90 percent of the gross loan charge-offs during the third quarter of 2012 were specifically reserved for as of June 30, 2012.

NET LOAN CHARGE-OFFS (RECOVERIES)

($000s)	3Q 2012			2Q 2012			1Q 2012			4Q 2011			3Q 2011
Residential Real Estate:
Land Development	$	77		$	(110	)	$	38		$	15		$	135
Construction		0			10			0			(90	)		(11	)
Owner Occupied / Rental		166			50			237			1,176			(187	)
		243			(50	)		275			1,101			(63	)
Commercial Real Estate:
Land Development		16			(7	)		103			(75	)		47
Construction		0			0			0			0			0
Owner Occupied		86			(164	)		793			68			(18	)
Non-Owner Occupied		1,317			(1,525	)		4,341			4,060			639
		1,419			(1,696	)		5,237			4,053			668
Non-Real Estate:
Commercial Assets		(148	)		(14	)		81			(435	)		(162	)
Consumer Assets		13			14			(4	)		0			26
		(135	)		0			77			(435	)		(136	)
Total	$	1,527		$	(1,746	)	$	5,589		$	4,719		$	469

Capital Position

Shareholders’ equity totaled $145 million as of September 30, 2012, a decrease of $20.4 million from December 31, 2011. During the second quarter of 2012, Mercantile repurchased the entire $21.0 million of preferred stock that was sold to the U.S. Department of the Treasury on May 15, 2009. On July 3, 2012 Mercantile repurchased, for $7.5 million, the warrant it sold to the U.S. Department of the Treasury on May 15, 2009. The warrant provided for the purchase of 616,438 shares of Mercantile common stock at a price of $5.11 per share. To fund the repurchases, the Bank paid cash dividends to the Company in approximately the same amounts. The Bank remains “well-capitalized” with a total risk-based capital ratio of 14.5 percent as of September 30, 2012, compared to 15.5 percent at December 31, 2011. At September 30, 2012, the Bank had approximately $53.0 million in excess of the 10.0 percent minimum regulatory threshold required to be considered a “well-capitalized” institution. Mercantile reported 8,635,070 total shares outstanding at September 30, 2012.

Reflecting the repurchase of the preferred stock and warrant that were sold to the U.S. Department of the Treasury, together with the continued strength of Mercantile’s operating performance and capital position, the Board of Directors declared a fourth quarter dividend of $0.09 per common share. This is the first dividend paid since a reduced dividend of $0.01 per share was paid in the first quarter of 2010.

Mr. Price concluded: “Throughout the economic downturn our priority has always remained to enhance our capital position while increasing value for our shareholders. Our sustained earnings growth and improved financial condition have brought us to yet another milestone, which is the Board of Directors’ approval of the reinstatement of our quarterly dividend at the $0.09 per share level. We are pleased to reward our shareholders and distribute competitive cash returns in the form of dividends.”

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

MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

	SEPTEMBER 30, 2012			DECEMBER 31, 2011			SEPTEMBER 30, 2011
	(Unaudited)			(Audited)			(Unaudited)
ASSETS
Cash and due from banks	$	15,311,000		$	12,402,000		$	18,890,000
Interest-bearing deposit balances		10,672,000			9,641,000			9,630,000
Federal funds sold		78,012,000			54,329,000			97,183,000
Total cash and cash equivalents		103,995,000			76,372,000			125,703,000
Securities available for sale		135,660,000			172,992,000			173,134,000
Federal Home Loan Bank stock		11,961,000			11,961,000			11,961,000
Loans		1,035,288,000			1,072,422,000			1,094,037,000
Allowance for loan losses		(27,762,000	)		(36,532,000	)		(39,351,000	)
Loans, net		1,007,526,000			1,035,890,000			1,054,686,000
Premises and equipment, net		26,100,000			26,802,000			26,865,000
Bank owned life insurance		49,690,000			48,520,000			48,083,000
Accrued interest receivable		3,939,000			4,403,000			4,887,000
Other real estate owned and repossessed assets		11,160,000			15,282,000			17,287,000
Net deferred tax asset		22,801,000			26,013,000			0
Other assets		15,532,000			14,994,000			15,379,000
Total assets	$	1,388,364,000		$	1,433,229,000		$	1,477,985,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	166,890,000		$	147,031,000		$	144,022,000
Interest-bearing		940,676,000			965,044,000			1,041,311,000
Total deposits		1,107,566,000			1,112,075,000			1,185,333,000
Securities sold under agreements to repurchase		60,031,000			72,569,000			69,340,000
Federal Home Loan Bank advances		35,000,000			45,000,000			45,000,000
Subordinated debentures		32,990,000			32,990,000			32,990,000
Other borrowed money		1,433,000			1,434,000			1,714,000
Accrued interest and other liabilities		6,786,000			4,162,000			6,875,000
Total liabilities		1,243,806,000			1,268,230,000			1,341,252,000
SHAREHOLDERS’ EQUITY
Preferred stock, net of discount		0			20,331,000			20,266,000
Common stock		166,728,000			173,979,000			173,972,000
Retained earnings (deficit)		(24,183,000	)		(32,639,000	)		(62,630,000	)
Accumulated other comprehensive income		2,013,000			3,328,000			5,125,000
Total shareholders’ equity		144,558,000			164,999,000			136,733,000
Total liabilities and shareholders’ equity	$	1,388,364,000		$	1,433,229,000		$	1,477,985,000

MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF OPERATIONS

	THREE MONTHS ENDED September  30, 2012			THREE MONTHS ENDED September  30, 2011		NINE MONTHS ENDED September  30, 2012			NINE MONTHS ENDED September  30, 2011
	(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)
INTEREST INCOME
Loans, including fees	$	13,386,000		$	14,951,000	$	40,653,000		$	47,854,000
Investment securities		1,328,000			2,027,000		4,460,000			6,653,000
Federal funds sold		46,000			60,000		116,000			138,000
Interest-bearing deposit balances		8,000			6,000		22,000			18,000
Total interest income		14,768,000			17,044,000		45,251,000			54,663,000
INTEREST EXPENSE
Deposits		2,728,000			4,040,000		8,581,000			13,007,000
Short-term borrowings		39,000			73,000		130,000			350,000
Federal Home Loan Bank advances		183,000			410,000		871,000			1,622,000
Other borrowed money		234,000			226,000		705,000			782,000
Total interest expense		3,184,000			4,749,000		10,287,000			15,761,000
Net interest income		11,584,000			12,295,000		34,964,000			38,902,000
Provision for loan losses		(400,000	)		1,100,000		(3,400,000	)		5,000,000
Net interest income after provision for loan losses		11,984,000			11,195,000		38,364,000			33,902,000
NONINTEREST INCOME
Service charges on accounts		378,000			405,000		1,142,000			1,228,000
Other income		1,679,000			1,399,000		4,789,000			4,031,000
Total noninterest income		2,057,000			1,804,000		5,931,000			5,259,000
NONINTEREST EXPENSE
Salaries and benefits		4,849,000			4,636,000		14,394,000			13,371,000
Occupancy		598,000			707,000		1,947,000			2,116,000
Furniture and equipment		282,000			305,000		888,000			912,000
Nonperforming asset costs		1,576,000			1,589,000		4,931,000			6,637,000
FDIC insurance costs		294,000			639,000		894,000			2,274,000
Other expense		2,586,000			2,099,000		7,389,000			6,689,000
Total noninterest expense		10,185,000			9,975,000		30,443,000			31,999,000
Income before federal income tax expense		3,856,000			3,024,000		13,852,000			7,162,000
Federal income tax expense		1,240,000			0		4,365,000			0
Net income		2,616,000			3,024,000		9,487,000			7,162,000
Preferred stock dividends and accretion		0			342,000		1,030,000			1,011,000
Net income attributable to common shares	$	2,616,000		$	2,682,000	$	8,457,000		$	6,151,000
Basic earnings per share	$	0.30		$	0.31	$	0.98		$	0.72
Diluted earnings per share	$	0.30		$	0.30	$	0.95		$	0.69
Average basic shares outstanding		8,622,719			8,604,263		8,612,831			8,602,654
Average diluted shares outstanding		8,653,751			8,868,122		8,896,728			8,875,025

MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

	Quarterly															Year-To-Date
(dollars in thousands except per share data)	2012 3rd Qtr			2012 2nd Qtr			2012 1st Qtr			2011 4th Qtr			2011 3rd Qtr			2012			2011
EARNINGS
Net interest income	$	11,584			11,511			11,869			12,335			12,295			34,964			38,902
Provision for loan losses	$	(400	)		(3,000	)		0			1,900			1,100			(3,400	)		5,000
Noninterest income	$	2,057			1,940			1,934			2,023			1,804			5,931			5,259
Noninterest expense	$	10,185			10,604			9,654			9,497			9,975			30,443			31,999
Net income before federal income tax expense	$	3,856			5,847			4,149			2,961			3,024			13,852			7,162
Net income	$	2,616			3,991			2,880			30,322			3,024			9,487			7,162
Net income common shares	$	2,616			3,288			2,552			29,991			2,682			8,457			6,151
Basic earnings per share	$	0.30			0.38			0.30			3.49			0.31			0.98			0.72
Diluted earnings per share	$	0.30			0.36			0.28			3.37			0.30			0.95			0.69
Average basic shares outstanding		8,622,719			8,610,181			8,605,484			8,604,240			8,604,263			8,612,831			8,602,654
Average diluted shares outstanding		8,653,751			9,043,791			8,991,422			8,888,900			8,868,122			8,896,728			8,875,025
PERFORMANCE RATIOS
Return on average assets		0.75	%		0.94	%		0.73	%		8.22	%		0.71	%		0.80	%		0.53	%
Return on average equity		7.19	%		8.46	%		6.14	%		85.19	%		7.89	%		7.24	%		6.32	%
Net interest margin(fully tax-equivalent)		3.67	%		3.63	%		3.73	%		3.65	%		3.50	%		3.67	%		3.58	%
Efficiency ratio		74.66	%		78.83	%		69.94	%		66.14	%		70.75	%		74.44	%		72.46	%
Full-time equivalent employees		230			231			225			232			237			230			237
CAPITAL
Period-ending equity to assets		10.41	%		10.80	%		11.92	%		11.51	%		9.25	%		10.41	%		9.25	%
Tier 1 leverage capital ratio		11.40	%		11.42	%		12.66	%		12.09	%		10.87	%		11.40	%		10.87	%
Tier 1 risk-based capital ratio		13.34	%		13.33	%		14.87	%		14.19	%		13.24	%		13.34	%		13.24	%
Total risk-based capital ratio		14.61	%		14.59	%		16.14	%		15.46	%		14.51	%		14.61	%		14.51	%
Book value per common share	$	16.74			17.38			16.97			16.73			13.45			16.74			13.45
Cash dividend per common share	$	0.00			0.00			0.00			0.00			0.00			0.00			0.00
ASSET QUALITY
Gross loan charge-offs	$	1,891			1,708			7,576			5,791			1,342			11,175			14,106
Net loan charge-offs	$	1,527			(1,746	)		5,589			4,719			469			5,370			11,017
Net loan charge-offs to average loans		0.58	%		(0.66	%)		2.10	%		1.75	%		0.17	%		0.68	%		1.25	%
Allowance for loan losses	$	27,762			29,689			30,943			36,532			39,351			27,762			39,351
Allowance for loan losses to total loans		2.68	%		2.80	%		2.94	%		3.41	%		3.60	%		2.68	%		3.60	%
Nonperforming loans	$	24,782			28,524			38,668			45,074			39,540			24,782			39,540
Other real estate and repossessed assets	$	11,160			11,545			13,506			15,282			17,287			11,160			17,287
Nonperforming assets to total assets		2.59	%		2.89	%		3.72	%		4.21	%		3.84	%		2.59	%		3.84	%
END OF PERIOD BALANCES
Loans	$	1,035,288			1,060,996			1,051,674			1,072,422			1,094,037			1,035,288			1,094,037
Total earning assets(before allowance)	$	1,271,593	��		1,264,609			1,284,982			1,321,345			1,385,945			1,271,593			1,385,945
Total assets	$	1,388,364			1,385,245			1,401,596			1,433,229			1,477,985			1,388,364			1,477,985
Deposits	$	1,107,566			1,105,630			1,093,434			1,112,075			1,185,333			1,107,566			1,185,333
Shareholders’ equity	$	144,558			149,662			167,084			164,999			136,733			144,558			136,733
AVERAGE BALANCES
Loans	$	1,042,370			1,067,933			1,065,285			1,072,851			1,111,184			1,058,470			1,174,223
Total earning assets(before allowance)	$	1,269,836			1,290,066			1,294,380			1,358,585			1,414,722			1,284,706			1,472,095
Total assets	$	1,387,519			1,407,400			1,409,953			1,448,000			1,504,640			1,401,572			1,557,717
Deposits	$	1,109,817			1,109,160			1,095,147			1,152,001			1,211,863			1,104,739			1,241,575
Shareholders’ equity	$	144,251			155,931			166,846			139,676			134,862			155,634			130,203