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EX-99.1 - EX-99.1 - Mercantile Bancorp, Inc. | c62028exv99w1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): December 21, 2010
MERCANTILE BANCORP, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware (State or Other Jurisdiction of Incorporation) |
001-32434 (Commission File Number) |
37-1149138 (I.R.S. Employer Identification No.) |
200 North 33rd Street, Quincy, Illinois 62301
(Address of Principal Executive Offices) (Zip Code)
(Address of Principal Executive Offices) (Zip Code)
(217) 223-7300
Registrants Telephone Number, Including Area Code
Registrants Telephone Number, Including Area Code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 4.02 | Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review |
On December 21, 2010, the Audit Committee of Mercantile Bancorp, Inc. (the Company)
determined that the Companys unaudited financial statements issued for the three and nine months
ended September 30, 2010 and included in the Companys Quarterly Report on Form 10-Q filed with the
U.S. Securities and Exchange Commission on November 15, 2010, should no longer be relied upon as a
result of an additional approximately $16.3 million of noncash losses that the Company will record
in the third quarter of 2010. The additional noncash losses are due to a change in the calculation
of loan loss provision relating to the additional write-down of approximately $6.2 million in loans
(subject to any potential recovery) and a re-evaluation of deferred tax assets as of September 30,
2010 that resulted in the recording of additional deferred tax asset valuation of approximately
$10.1 million. The Company will restate its financial statements for the three and nine months
ended September 30, 2010, and will file an amendment on Form 10-Q/A with the U.S. Securities and
Exchange Commission as soon as practicable, to reflect these changes.
The Company determined that it needed to make these changes to its loan loss provision and
deferred tax assets after Mercantile Bank, the Companys largest subsidiary bank, received the
results of a recent, regularly scheduled safety and soundness examination conducted jointly by the
Federal Deposit Insurance Corporation (the FDIC) and the Illinois Division of Financial
Institutions (the IDFI) and completed in December. Subsequently, Mercantile Bank amended its
call report on December 17, 2010, to reflect an additional $6.2 million in loan loss provision.
The additional loan loss provision was required to increase the allowance for loan losses to a
level deemed appropriate by Company management following the additional write-down of two
commercial real estate loans. As a result of the examination, Mercantile Bank reviewed Financial
Accounting Standards Board Accounting Standards Codification (ASC) Topic 855, Subsequent
Events, and also reassessed it evaluation of potential impairment losses required by ASC Topic
310, Receivables, as well as information about the valuation of the underlying loan collateral
and the financial condition of the borrowers, and determined that it was appropriate to record the
write-down of the two impaired commercial real estate loans and make the additional adjustments
retroactive to the third quarter of 2010.
Due to the determination to record additional loan loss provision in the third quarter of
2010, the Companys capital ratios will be reduced and the Company re-evaluated the adequacy of the
valuation allowance established for its deferred tax assets. Based on its analysis, the Company
determined that it was no longer more likely than not that it could generate sufficient taxable
income to realize the deferred tax assets in future near-term periods as defined by generally
accepted accounting principles, and accordingly recorded an additional valuation allowance in the
third quarter of 2010 in the amount of $10.1 million, representing the full remaining balance of
the Companys and each of its subsidiary banks deferred tax assets prior to the adjustment.
The decision to restate the Companys financial statements was made and authorized by the
Audit Committee of the Board of Directors of the Company, upon the recommendation of Company
management. The Companys Chief Financial Officer and the Audit Committee
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discussed the matters disclosed in this filing with BKD LLP, the Companys independent registered
public accounting firm.
Based on the need to revise the unaudited consolidated financial statements for the three and
nine months ended September 30, 2010, the Companys management and the Audit Committee of the Board
of Directors have taken steps recently to evaluate the Companys internal control over financial
reporting, subsequent to September 30, 2010, and have concluded there is a material weakness in
their design of such internal controls. The material weakness relates to the identification and
communication of subsequent events. Management is in the process of implementing procedures for
the timely identification and communication of subsequent events to the Audit Committee.
This Current Report on Form 8-K contains forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements speak
only as of the date of this Current Report, and the Company assumes no obligation to update such
forward-looking statements. Investors are cautioned that such forward-looking statements are
subject to many risks and uncertainties, and may differ materially or adversely from the Companys
actual results or future events. Specifically, the anticipated effects of the restatement
described above are preliminary and may be subject to change as the Company completes its analysis.
Additional 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.
Item 9.01 | Financial Statements And Exhibits |
(d) Exhibits:
Exhibit | ||||
Number | Description | |||
99.1 | Press release issued by Mercantile Bancorp, Inc. on December 28, 2010 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Mercantile Bancorp, Inc. |
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By: | /s/Ted T. Awerkamp | |||
Name: | Ted T. Awerkamp | |||
Title: | President and Chief Executive Officer | |||
Date: December 28, 2010
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