Mercantile Bancorp Announces Revised Third Quarter 2010 Loan Loss Provision and Deferred Tax Asset Valuation Allowance
December 28 2010 - 6:26PM
Marketwired
Mercantile Bancorp, Inc. (NYSE Amex: MBR) today announced it has
recorded additional noncash losses of approximately $16.3 million
for the period ended September 30, 2010. The noncash losses relate
to an additional loan loss provision of approximately $6.2 million,
reflecting the additional write-down of two commercial real estate
loans (subject to any potential recovery), and an additional
valuation allowance related to its deferred tax assets of
approximately $10.1 million. The Company determined that it needed
to make the additional noncash loan loss provision of $6.2 million
based on the results of a recent regularly scheduled safety and
soundness examination conducted jointly by the Federal Deposit
Insurance Corporation and the Illinois Division of Financial
Institutions and completed in December.
Due to the determination of the additional loan loss provision,
the Company has also amended its third quarter 2010 results to
record an additional valuation allowance to offset the remaining
balance of the Company's and each of its subsidiary banks' deferred
tax assets, a noncash loss amounting to approximately $10.1
million. This adjustment reflects the Company's current capital
structure and potential to generate sufficient taxable income to
realize these assets in future near-term periods, as defined by
generally accepted accounting principles. As previously announced,
the Company is working with its financial advisors and legal
counsel in assessing its strategic and capital-raising options.
The Company intends to file an amended Quarterly Report on Form
10-Q for the three and nine months ended September 30, 2010 as soon
as practicable to reflect these adjustments. The decision to
restate the Company's financial statements for the third quarter of
2010 to reflect the combined approximately $16.3 million in noncash
losses was made and authorized by the Audit Committee of the Board
of Directors of the Company, upon the recommendation of management
and discussions with the Company's auditors.
Investor Relations Update In addition to
notification of shareholder materials, shareholders and those who
wish to closely follow Company news may now enroll to receive email
notice of news and updates at the time of release. Register at the
Company's website or directly at the following address:
http://www.mercbanx.com/shareholders/enroll.php.
About Mercantile Bancorp Mercantile
Bancorp, Inc. is a Quincy, Illinois-based bank holding company with
majority-owned subsidiaries consisting of one bank in each of
Illinois, Kansas, and Florida, where the Company conducts
full-service commercial and consumer banking business, engages in
mortgage banking, trust services and asset management, and provides
other financial services and products. The Company also operates
Mercantile Bank branch offices in Missouri and Indiana. In
addition, the Company has minority investments in six community
banks in Missouri, Georgia, Florida, Colorado, California, and
Tennessee. Further information is available on the company's
website at www.mercbanx.com.
Forward-Looking Statements This press
release may contain "forward-looking statements" which reflect the
Company's current views with respect to future events and financial
performance. The Private Securities Litigation Reform Act of 1995
("the Act") provides a safe harbor for forward-looking statements
that are identified as such and are accompanied by the
identification of important factors that could cause actual results
to differ materially from the forward-looking statements. For these
statements, the Company, together with its subsidiaries, claims the
protection afforded by the safe harbor in the Act. Forward-looking
statements are not based on historical information, but rather are
related to future operations, strategies, financial results or
other developments. Forward-looking statements are based on
management's expectations as well as certain assumptions and
estimates made by, and information available to, management at the
time the statements are made. Those statements are based on general
assumptions and are subject to various risks, uncertainties and
other factors that may cause actual results to differ materially
from the views, beliefs and projections expressed in such
statements. Examples of forward-looking statements include, but are
not limited to, estimates or projections with respect to our future
financial condition, results of operations or business, such as:
projections of revenues, income, earnings per share, capital
expenditures, assets, liabilities, dividends, capital structure, or
other financial items; descriptions of plans or objectives of
management for future operations, products, or services, including
pending acquisition transactions; forecasts of future economic
performance; and descriptions of assumptions underlying or relating
to any of the foregoing. These risks, uncertainties and other
factors that may cause actual results to differ from expectations,
are set forth in the Company's Annual Report on Form 10-K for the
year ended December 31, 2009 and Forms 10-Q for the quarters ended
March 31, 2010, June 30, 2010, and September 30, 2010, as on file
with the Securities and Exchange Commission, and include, among
other factors, the following: the anticipated effects of the
restatement described above are preliminary and may be subject to
change as the Company completes its analysis; the effects of
current and future business and economic conditions in the markets
we serve change or are less favorable than we expected; deposit
attrition, operating costs, customer loss and business disruption
are greater than we expected; competitive factors, including
product and pricing pressures among financial services
organizations may increase; the effects of changes in interest
rates on the level and composition of deposits, loan demand, the
values of loan collateral, securities and interest sensitive assets
and liabilities may lead to a reduction in our net interest
margins; changes in market rates and prices may adversely impact
our securities, loans, deposits, mortgage servicing rights, and
other financial instruments; the legislative or regulatory
developments, including changes in laws and regulations concerning
taxes, banking, securities, insurance and other aspects of the
financial securities industry, such as the recently enacted
Dodd-Frank Wall Street Reform and Consumer Protection Act, and the
extensive rule making it requires to be undertaken by various
regulatory agencies may adversely affect our business, financial
condition and results of operations; personal or commercial
bankruptcies increase; our ability to expand and grow our business
and operations, including the establishment of additional branches
and acquisition of additional banks or branches of banks may be
more difficult or costly than we expected; any future acquisitions
may be more difficult to integrate than expected and we may be
unable to realize any cost savings and revenue enhancements we may
have projected in connection with such acquisitions; changes in
accounting principles, policies or guidelines; credit risks,
including credit risks resulting from the devaluation of collateral
debt obligations and/or structured investment vehicles on the
capital markets to which we currently have no direct exposure; the
failure of assumptions underlying the establishment of our
allowance for loan losses; construction and development loans are
based upon estimates of costs and value associated with the
complete project, which estimates may be inaccurate, and cause us
to be exposed to more losses on these projects than on other loans;
changes that occur in the securities markets; technology-related
changes may be harder to make or more expensive than we
anticipated; worldwide political and social unrest, including acts
of war and terrorism; and changes in monetary and fiscal policies
of the U.S. government, including policies of the U.S. Treasury and
the Federal Reserve Board. The words "believe," "expect,"
"anticipate," "project," and similar expressions often signify
forward-looking statements. You should not place undue reliance on
any forward-looking statements. Any forward-looking statements in
this release speak only as of the date of the release, and the
Company does not assume any obligation to update the
forward-looking statements or to update the reasons why actual
results could differ from those contained in the forward-looking
statements.
FOR FURTHER INFORMATION Ted T. Awerkamp President &
CEO (217) 223-7300 ted.awerkamp@mercbanx.com
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