On Oct. 11, Mercantile Bank (NASDAQ:MBWM) released earnings for the third quarter ended Sept. 30.

  • Net interest income decreased almost 10% for the quarter. Loans increased 5.1% and deposits increased slightly -- 1.6%.
  • Non-interest revenue increased 15%. Non-interest expenses rose 19.2% thanks to increases in salaries and benefits expenses.
  • The company said it will expand, opening its ninth bank during the fourth quarter.
  • Mercantile Bank is given our lowest Motley Fool CAPS rating -- one star. That isn't far off from banking peers like Fifth Third Bancorp (NASDAQ:FITB) and Macatawa Bank (NASDAQ:MCBC), which also carry one star, and Huntington Bancshares (NASDAQ:HBAN), with two stars. CAPS is completely free, so join today to give us your Foolish opinion.

(Figures in thousands, except per-share data)

Income Statement Highlights

Q3 2007

Q3 2006

Change

Total Revenue

 $15,600

 $16,900

(8.0%)

Net Interest Income

 $14,051

 $15,547

(9.6%)

Net Profit

 $2,367

 $5,202

(54.5%)

EPS*

 $0.28

 $0.61

(54.1%)

*Non-GAAP EPS as reported by the company.

Get back to basics with a look at the income statement.

Ratio Checkup

Q3 2007

Q3 2006

Change*

Net Interest Margin

2.86%

3.34%

(0.48%)

Efficiency Ratio

61.51%

47.48%

14.03%

Nonperforming Assets / Assets

1.23%

0.47%

0.76%

Return on Average Assets

0.45%

1.04%

(0.59%)

Return on Average Equity

5.32%

12.54%

(7.22%)

*Expressed in percentage points.

Find out more about bank performance ratios.

Balance Sheet Highlights

Assets

Q3 2007

Q3 2006

Change

Investments

 $208,174

 $211,783

(1.7%)

Loans

 $1,796,962

 $1,710,268

5.1%

Liabilities

Q3 2007

Q3 2006

Change

Deposits

 $1,640,984

 $1,614,703

1.6%

Total Liabilities

 $1,928,703

 $1,859,286

3.7%

Learn about bank assets and bank liabilities.

Related Foolishness:

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.