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8-K - FORM 8-K - Mercantile Bancorp, Inc. | c62028e8vk.htm |
Exhibit 99.1
MERCANTILE BANCORP ANNOUNCES REVISED THIRD QUARTER 2010 LOAN
LOSS PROVISION AND DEFERRED TAX ASSET VALUATION ALLOWANCE
LOSS PROVISION AND DEFERRED TAX ASSET VALUATION ALLOWANCE
Quincy, IL, December 28, 2010 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 Companys and each of its subsidiary banks deferred tax assets, a noncash loss
amounting to approximately $10.1 million. This adjustment reflects the Companys 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 Companys 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
Companys 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 Companys 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 companys website at
www.mercbanx.com.
Forward-Looking Statements
This press release may contain forward-looking statements which reflect the Companys 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
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developments. Forward-looking statements are based on managements 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 Companys 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 w
e 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.
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