UPDATE: D.A. Davidson Initiates Coverage on Mercantile Bank on Potential for Improved Profitability, Multiple Expansion

In a report published Thursday, D.A. Davidson & Co. analyst Stephen Geyen initiated coverage on Mercantile Bank Corporation MBWM with a Neutral rating and $23.00 price target. In the report, D.A. Davidson & Co. noted, “Mercantile has successfully managed through the most challenging credit cycle of the bank's 15-year history. Credit metrics and loan growth began to slowly recover in 2012 and, in our view, 2013 marked a significant turning point for the bank. 2Q loans increased at a 14% annualized pace and a provision benefit contributed approximately $0.12 to 2Q EPS. Furthermore, in 2Q management noted that the pipeline for new loans was at its highest rate in more than five years. We are projecting loan growth near 5% in both 2013 and 2014.” Mercantile Bank Corporation closed on Wednesday at $22.06.