Commenting on the repurchase of stocks under the Treasury’s Capital Purchase Program (CPP), as part of TARP, Mercantile Bank Corporation chairman and CEO Michael Price said participating in the TARP program the bank navigated through the challenges of the ‘Great Recession,’ but the firm is the first of the community banks to repurchase all of its outstanding preferred stock.
"Our ability to complete the repurchase solely with internally generated funds is a result of our enhanced capital position, which reflects our return to profitability, the effective management of our balance sheet and our focus on protecting shareholder value," Price said.
The bank has obtained no objection certificate from the Treasury Department following approval from the Federal Reserve and consultation with the Federal Deposit Insurance Corporation, to buy the remaining preferred stock.
The acquisition of stocks will reduce its earnings by nearly $280,000 in the second quarter of 2012, said the firm.
Though, the preferred stock repurchase will affect negatively Mercantile’s and Mercantile Bank of Michigan’s regulatory capital ratios, the bank remains "well capitalized" for regulatory purposes.
