1. Mercantile Bank Corp.
Shares of Mercantile Bank Corp. (MBWM - Get Report) of Grand Rapids, Mich., closed at $16.50 Wednesday, returning 1% this year, following a 70% return during 2012. The shares trade just below tangible book value, and for 12.0 times the consensus 2014 EPS estimate of $1.37. The consensus 2013 EPS estimate is $1.54. Based on a quarterly payout of 11 cents, the shares have a dividend yield of 2.67%. The company had $1.4 billion in total assets as of March 31 and on April 16 reported first-quarter net income attributable to common shareholders of $4.4 million, or 50 cents a share, increasing from $3.0 million, or 35 cents a share, in the fourth quarter, and $2.6 million, or 28 cents a share, in the first quarter of 2012.
The company transferred $1.5 million from loan loss reserves during the first quarter, directly boosting pre-tax earnings. This compared to a provision for loan losses of $300,000 the previous quarter. During the first quarter of 2012, the company's provision for loan losses was zero. The earnings improvement also reflected a decline in noninterest expense to $8.6 million in the first quarter from $9.2 million the previous quarter and $9.7 million a year earlier, as the company saw a decline in expenses related to the resolution of nonperforming loans and disposal of repossessed assets. Mercantile Bank Corp's first-quarter ROA was a strong 1.28%, and its return on average equity was 12.07%. Rodis in a note on April 16 said Mercantile Bank Corp. had a "solid quarter," and that the company's core results of 50 cents a share, including 11 cents for the negative provision for loan losses, beat his EPS estimate of 35 cents. Rodis's price target for Mercantile Bank Corp.'s shares is $20, and he estimates the company will earn $1.47 a share this year, with earnings declining to $1.34 a share in 2014. "Fundamentally, the Company continues to show nice improvement as [nonperforming assets] continue to fall and the loan portfolio appears to be stabilizing," he wrote. Rodis added that his price target assumes the shares will trade "closer to 110-115% of our TBV estimate one-year out (~ $17.75/share)." Interested in more on Mercantile Bank Corp.? See TheStreet Ratings' report card for this stock. -- Written by Philip van Doorn in Jupiter, Fla. >Contact by Email. Follow @PhilipvanDoorn