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Mercantile Bank Corp

Mercantile Bank Corporation Announces Strong Fourth Quarter and Full-Year 2025 Results

Increases in net interest income and certain noninterest income categories,  sustained strength in asset quality metrics and capital levels, and acquisition  of Eastern Michigan Financial Corporation highlight the year

GRAND RAPIDS, Mich. , Jan. 20, 2026 /PRNewswire/ -- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $22.8 million, or $1.40 per diluted share, for the fourth quarter of 2025, compared with net income of $19.6 million, or $1.22 per diluted share, for the respective prior-year period.  For the full-year 2025, Mercantile reported net income of $88.8 million, or $5.47 per diluted share, compared with net income of $79.6 million, or $4.93 per diluted share, for the full-year 2024.

"We are very pleased to report another year of solid financial performance amid the prolonged and continuing period of uncertain macro-economic conditions," said Ray Reitsma, President and Chief Executive Officer of Mercantile.  "Our robust financial results were driven by net interest income expansion, a steady net interest margin, notable increases in treasury management fees, mortgage banking income, and payroll services fees, a reduced provision for credit losses, lower federal income tax expense, solid local deposit growth, and ongoing strength in asset quality and capital measures.  We lowered our loan-to-deposit ratio through local deposit generation, and we will remain focused on building our local deposit base to fund anticipated asset growth.  We were also pleased to complete the acquisition of Eastern Michigan Financial Corporation on December 31, 2025, and look forward to working with our new colleagues to bring an expanded suite of financial solutions to clients and prospects in East and Southeast Michigan." 

Full-year highlights include:

  • Acquired Eastern Michigan Financial Corporation ("Eastern"), former holding company for Eastern Michigan Bank, which is headquartered in Croswell, Michigan, and had $572 million in total assets, further expanding Mercantile's presence in East and Southeast Michigan
  • Return on average assets of 1.4 percent and return on average equity of 14.1 percent
  • Tangible book value per common share of $36.78 as of December 31, 2025, up $3.64, or approximately 11 percent, since December 31, 2024
  • Net interest income growth of approximately 5 percent
  • Steady net interest margin despite changing interest rate environment
  • Notable increases in treasury management fees, mortgage banking income, and payroll services fees of approximately 11 percent, 6 percent, and 14 percent, respectively
  • Substantial decline in effective tax rate from approximately 19 percent during 2024 to 14 percent during 2025 in part due to the acquisition of transferable energy credits and net benefits from investments in low income housing and historical tax credit structures
  • Sustained strength in commercial loan pipeline
  • Continuing low levels of nonperforming assets, past due loans, and loan charge-offs
  • Noteworthy reduction in loan-to-deposit ratio from approximately 98 percent as of December 31, 2024, to approximately 95 percent as of December 31, 2025, primarily reflecting robust local deposit growth, with a further decline to 91 percent when considering the impact of the acquisition of Eastern
  • Solid tangible and regulatory capital positions
  • Contributed $1.1 million to The Mercantile Bank Foundation

Operating Results

Net revenue, consisting of net interest income and noninterest income, was $62.1 million during the fourth quarter of 2025, up $3.6 million, or 6.0 percent, from $58.5 million during the prior-year fourth quarter.  Net interest income during the fourth quarter of 2025 was $51.0 million, up $2.6 million, or 5.5 percent, from $48.4 million during the respective 2024 period primarily due to growth in earning assets and a slightly higher net interest margin.  Noninterest income totaled $11.1 million during the fourth quarter of 2025, up $0.9 million, or 8.7 percent, from $10.2 million during the fourth quarter of 2024.  The increase in noninterest income mainly reflected higher levels of bank owned life insurance income and treasury management fees.

The net interest margin was 3.43 percent in the fourth quarter of 2025, up marginally from 3.41 percent in the prior-year fourth quarter.  The yield on average earning assets was 5.52 percent during the current-year fourth quarter, a decrease from 5.80 percent during the respective 2024 period.  The lower yield mainly stemmed from a reduced yield on loans and a change in earning asset mix, which more than offset an improved yield on securities resulting from the reinvestment of relatively low-yielding bonds and portfolio expansion activities.  The yield on loans was 6.12 percent during the fourth quarter of 2025, down from 6.38 percent during the fourth quarter of 2024, primarily due to lower interest rates on variable-rate commercial loans resulting from the Federal Open Market Committee ("FOMC") lowering the targeted federal funds rate.  The FOMC decreased the targeted federal funds rate by 25 basis points in each of November and December of 2024 and September, October, and December of 2025, during which time average variable-rate commercial loans represented approximately 75 percent of average total commercial loans.  Signifying the success of a strategic initiative to lower the loan-to-deposit ratio and increase on-balance sheet liquidity, higher-yielding loans represented a decreased percentage of earning assets and lower-yielding securities accounted for an increased percentage of earning assets in the fourth quarter of 2025 compared to the fourth quarter of 2024. The yield on securities equaled 2.96 percent during the fourth quarter of 2025, up from 2.54 percent during the prior-year fourth quarter.  

During the fourth quarter of 2025, the cost of funds was 2.09 percent, down from 2.39 percent during the fourth quarter of 2024, mainly due to lower rates paid on money market accounts and time deposits, reflecting the decreased interest rate environment from November of 2024 through December of 2025 corresponding with the FOMC's lowering of the targeted federal funds rate during the period.

Net revenue was $243 million during 2025, up $11.2 million, or 4.8 percent, from $231 million during 2024.  Net interest income totaled $201 million during 2025, up $10.0 million, or 5.2 percent, from $191 million during 2024 as growth in earning assets and a decreased cost of funds more than offset a lower yield on earning assets.  Noninterest income was $41.6 million during 2025, up $1.2 million, or 3.0 percent, from $40.4 million during 2024.  The increase in noninterest income primarily reflected higher levels of treasury management fees, bank owned life insurance income, mortgage banking income, and payroll services fees.

The net interest margin was 3.47 percent in 2025, down from 3.58 percent in 2024.  The yield on average earning assets was 5.69 percent during 2025, a decline from 6.01 percent during 2024.  The decreased yield resulted from a lower yield on loans, a change in earning asset mix, and a reduced yield on other interest-earning assets, which more than offset an improved yield on securities reflecting the reinvestment of relatively low-yielding bonds and portfolio growth activities. The yield on loans was 6.26 percent during 2025, down from 6.59 percent during 2024 largely due to reduced interest rates on variable-rate commercial loans stemming from the FOMC lowering the targeted federal funds rate by 50 basis points in September of 2024 and 25 basis points in each of November and December of 2024 and September, October, and December of 2025.  Higher-yielding loans accounted for a decreased percentage of earning assets and lower-yielding securities represented an increased percentage of earning assets in 2025 compared to 2024.  The decreased yield on other interest-earning assets during 2025 primarily reflected the lower interest rate environment.  The yield on securities equaled 2.86 percent during 2025, up from 2.29 percent during 2024. 

The cost of funds was 2.22 percent during 2025, down from 2.43 percent during 2024, mainly due to decreased rates paid on money market accounts and time deposits, reflecting the reduced interest rate environment that began in September of 2024 in conjunction with the FOMC's lowering of the targeted federal funds rate.

Mercantile recorded a negative provision for credit losses of $0.7 million during the fourth quarter of 2025, compared to a positive provision for credit losses of $1.5 million during the fourth quarter of 2024.  Positive provisions for credit losses of $3.2 million and $7.4 million were recorded during 2025 and 2024, respectively.  The negative provision expense recorded during the current-year fourth quarter mainly reflected improvements to the economic forecast and changes in loan mix, each of which decreased the calculated allowance by $0.3 million.  The provision expense recorded during 2025 primarily reflected a $1.9 million reserve increase related to changes in the economic forecast, a $1.8 million net increase in specific allocations driven by a $5.5 million allocation for a commercial construction loan relationship that was placed on nonaccrual during the second quarter of 2025, and a $1.5 million net increase in qualitative factor allocations.  The impacts of these factors were partially offset by $2.3 million and $1.3 million reductions in the reserve related to faster residential mortgage and consumer loan prepayment speeds and the associated reduced average lives of the portfolios and changes in baseline loss rates, respectively. 

Noninterest income totaled $11.1 million and $41.6 million during the fourth quarter of 2025 and full-year 2025, respectively, compared to $10.2 million and $40.4 million during the fourth quarter of 2024 and full-year 2024, respectively.  Noninterest income during the fourth quarter of 2025 and full-year 2025 included bank owned life insurance death benefit claims of $0.8 million and $1.0 million, respectively.  Noninterest income during all of 2024 included bank owned life insurance death benefit claims and gains on the sales of other real estate owned totaling $0.7 million and $0.4 million, respectively.  Excluding these transactions, noninterest income increased $0.1 million in the fourth quarter of 2025 compared to the prior-year fourth quarter and $1.3 million in 2025 compared to 2024.  The increased level of noninterest income in the fourth quarter of 2025 mainly reflected growth in treasury management fees, while the higher level of noninterest income during 2025 primarily reflected increased treasury management fees, mortgage banking income, and payroll services fees.  Growth in treasury management and payroll services fees mainly stemmed from new commercial relationships and successful marketing efforts leading to customers' expanded use of products and services.  The higher level of mortgage banking income primarily resulted from increased production and a heightened percentage of loans originated with the intent to sell.  Interest rate swap income declined during the fourth quarter of 2025 and full-year 2025 compared to the respective 2024 periods, generally reflecting a lower volume of new swap transactions.

Noninterest expense totaled $36.7 million and $136 million during the fourth quarter of 2025 and full-year 2025, respectively, compared to $33.8 million and $126 million during the fourth quarter of 2024 and full-year 2024, respectively.  The increases in noninterest expense during the 2025 periods primarily resulted from higher salary and benefit costs, mainly reflecting annual merit pay increases, market adjustments, and lower residential mortgage loan deferred salary costs, the recording of acquisition costs related to the Eastern acquisition, growth in data processing costs, and higher allocations to the reserve for unfunded loan commitments.

Federal income tax expense was $3.2 million during the fourth quarter of 2025, compared to $3.6 million during the respective 2024 period.  The $0.4 million decrease in federal income tax expense primarily resulted from the acquisition of transferable energy tax credits, which resulted in a net benefit of $1.0 million that was partially offset by a higher level of income before federal income tax.  Federal income tax expense totaled $14.7 million during 2025, compared to $18.7 million during 2024.  The acquisition of transferable energy tax credits and the net benefits from investments in low-income housing and historic tax credit structures provided for aggregate tax benefits of $3.5 million and $1.8 million, respectively, during 2025.  The recording of the tax benefits positively impacted Mercantile's effective tax rate, which equaled 14.2 percent during 2025, down from 19.0 percent during 2024.  Net benefits from investments in tax credit structures totaled $0.2 million during 2024.

Mr. Reitsma commented, "Growth in earning assets and a reduction in the cost of funds provided for a notable increase in net interest income during 2025 compared to 2024.  Reflecting our strategy to be interest rate agnostic, the net interest margin was stable throughout the year despite a changing interest rate environment.  We are pleased with the increases in net interest income, treasury management fees, mortgage banking income, and payroll services fees, along with the decline in federal income tax expense, during 2025 compared to 2024. We remain committed to expanding the balance sheet in a cost-efficient manner while continuing to provide our clients with exceptional service and a wide array of market-leading products and services to meet their needs."

Balance Sheet

As of December 31, 2025, total assets were $6.84 billion, up $783 million from December 31, 2024, reflecting pre-acquisition asset growth of $211 million and $572 million in assets added to the balance sheet in association with the acquisition of Eastern.  Total loans increased $221 million, or 4.8 percent, during 2025, reflecting pre-acquisition portfolio expansion of $17.4 million and $204 million in loans added to the portfolio as a result of the acquisition of Eastern.  Mercantile's pre-acquisition commercial loan portfolio grew $58.6 million, or nearly 2 percent.  Full payoffs and partial paydowns of certain larger relationships aggregated approximately $312 million during all of 2025, compared to about $194 million during all of 2024.  The payoffs and paydowns generally stemmed from sales of assets and customers using excess cash flows generated within their operations to make line of credit reductions.  Commercial loan originations, consisting of loans to new clients and expansions of existing credit relationships, remained solid across all segments during 2025.

During 2025, other consumer loans were up $46.5 million, reflecting pre-acquisition growth of $19.5 million and additions to the portfolio of $27.0 million associated with the acquisition, and residential mortgage loans declined $36.7 million, reflecting a pre-acquisition reduction in the portfolio of $60.7 million and an acquisition-related increase of $24.0 million.  During 2025, pre-acquisition securities available for sale and interest-earning deposits increased $174 million and $40.5 million, respectively; acquisition-related increases in these asset categories totaled $198 million and $42.1 million, respectively.

As of December 31, 2025, unfunded commitments on commercial construction and development loans, which are expected to be funded over the next 12 to 18 months, and residential construction loans, which are expected to be largely funded over the next 12 months, totaled $237 million and $34 million, respectively. 

Commercial and industrial loans and owner-occupied commercial real estate loans together represented approximately 55 percent of total commercial loans as of December 31, 2025, a level that has remained relatively consistent with prior periods and in line with our expectations.

Total deposits equaled $5.28 billion as of December 31, 2025, compared to $4.70 billion as of December 31, 2024.  Pre-acquisition local deposits were up $130 million, or 2.9 percent during 2025, while brokered deposits decreased $19.2 million.  The increase in local deposits reflected net growth in various existing deposit relationships and successful client acquisition efforts.  The acquisition of Eastern added $475 million in deposits, all of which were local, to the year-end 2025 balance sheet.  The pre-acquisition loan-to-deposit ratio equaled 95 percent as of December 31, 2025, down from 98 percent as of year-end 2024 largely due to the increase in local deposits.  The loan-to-deposit ratio equaled 91 percent at year-end 2025 when factoring in the impact of the acquisition.  Excluding the impact of the acquisition, wholesale funds were $457 million, or approximately 8 percent of total funds, and $537 million, or approximately 10 percent of total funds, at December 31, 2025, and December 31, 2024, respectively.  Eastern Michigan Bank did not have any wholesale funds at year-end 2025. Noninterest-bearing checking accounts represented approximately 25 percent of total deposits as of December 31, 2025, on both a pre- and post-acquisition basis.

Mr. Reitsma noted, "During 2025, the impact of strong commercial loan originations on total loan growth was substantially offset by elevated levels of line paydowns and payoffs during the year.  Our current loan pipeline is solid, which coupled with ongoing discussions with existing and potential borrowers, should provide us with ample opportunities to originate commercial loans in future periods.  We are pleased with the increase in local deposits and related decrease in our loan-to-deposit ratio during 2025 and intend on continuing our efforts to fund loan originations and investment purchases through local deposit growth."

Asset Quality

Nonperforming assets totaled $7.9 million, or 0.1 percent of total assets, as of December 31, 2025, compared to $9.8 million, or 0.2 percent of total assets, as of September 30, 2025, and $5.7 million, or less than 0.1 percent of total assets, at December 31, 2024. 

The increase in nonperforming assets during 2025 mainly reflected the weakening of a commercial construction loan, which necessitated specific reserve allocations totaling $5.5 million during the second quarter and third quarter of 2025, and was subject to a partial charge-off of $2.8 million during the fourth quarter of 2025.  In addition, $1.0 million in nonperforming assets were added to the balance sheet as of year-end 2025 in association with the acquisition of Eastern.  The level of past due loans remains nominal.  During the fourth quarter of 2025, loan charge-offs totaled $2.8 million while recoveries of prior period loan charge-offs equaled $0.2 million, providing for net loan charge-offs of $2.6 million, or an annualized 0.2 percent of average total loans.  During the full-year 2025, loan charge-offs totaled $3.1 million while recoveries of prior period loan charge-offs equaled $1.2 million, providing for net loan charge-offs of $1.9 million, or less than 0.1 percent of average total loans.  The aforementioned partial charge-off of the deteriorated commercial construction loan represented approximately 99 percent and 90 percent of total loan charge-offs during the fourth quarter of 2025 and full-year 2025, respectively.

Mr. Reitsma remarked, "Our asset quality metrics remained strong during 2025, reflecting our unwavering commitment to underwriting all of our loan types in a sound and disciplined manner and our customers' demonstrated abilities to operate effectively during the protracted and ongoing period of uncertain macro-economic conditions.  Nonperforming assets, past due loans, and loan charge-offs remain at low levels.  We believe our robust loan administration practices, which include a thorough loan review program, will allow us to identify deteriorating commercial loan relationships and detect any emerging systemic or sector-specific credit problems in a timely manner and limit the impact of such on our overall financial condition." 

Capital Position

Shareholders' equity totaled $725 million as of December 31, 2025, up $140 million from December 31, 2024.  Mercantile Bank and Eastern Michigan Bank maintained "well-capitalized" positions at year-end 2025, with total risk-based capital ratios of 13.8 percent and 15.3 percent, respectively.  As of December 31, 2025, Mercantile Bank and Eastern Michigan Bank had approximately $213 million and $20.4 million, respectively, in excess of the 10 percent minimum regulatory threshold required to be categorized as a "well-capitalized" institution.

Mercantile reported 17,181,110 total shares outstanding as of December 31, 2025.

Mr. Reitsma concluded, "Our Board of Directors' declaration of an increased first quarter 2026 regular cash dividend demonstrates our commitment to building shareholder value through meaningful cash returns while providing sufficient support for asset expansion objectives.  We believe our strong operating results and sustained strength in asset quality and capital measures, coupled with the attainment of solid financial results in future periods as expected, should allow us to effectively address any issues arising from shifting economic and operating conditions and continue our regular cash dividend program.  Our community banking philosophy, including our steadfast focus on developing mutually beneficial relationships, has been instrumental in our ability to retain existing customers and acquire new clients, and we believe these inherent traits will provide us with ample opportunities to originate loans and grow local deposits in upcoming periods.  We are excited about our acquisition of Eastern Michigan Financial Corporation, which has already assisted us in meeting certain important strategic goals, such as lowering our loan-to-deposit ratio and increasing our on-balance sheet liquidity."

Investor Presentation

Mercantile has prepared presentation materials that management intends to use during its previously announced fourth quarter 2025 conference call on Tuesday, January 20, 2026, at 10:00 a.m. Eastern Time, and from time to time thereafter in presentations about the company's operations and performance.  These materials, which are available for viewing in the Investor Relations section of Mercantile's website at www.mercbank.com, have been furnished to the U.S. Securities and Exchange Commission concurrently with this press release.

About Mercantile Bank Corporation

Based in Grand Rapids, Michigan, Mercantile Bank Corporation is the bank holding company for Mercantile Bank and Eastern Michigan Bank.  Mercantile Bank and Eastern Michigan Bank provide financial products and services in a professional and personalized manner designed to make banking easier for businesses, individuals, and governmental units.  Distinguished by exceptional service, knowledgeable staff, and a commitment to the communities they serve, Mercantile Bank and Eastern Michigan Bank, as combined, comprise one of the largest Michigan-based banking organizations with total combined assets of approximately $6.8 billion. Mercantile Bank Corporation's common stock is listed on the NASDAQ Global Select Market under the symbol "MBWM." For more information about Mercantile, visit www.mercbank.com, and follow us on Facebook, Instagram, X (formerly Twitter) @MercBank, and LinkedIn @merc-bank.

Forward-Looking Statements

This news release contains statements or information that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will," and similar references to future periods.  Any such statements are based on current expectations that involve a number of risks and uncertainties.  Actual results may differ materially from the results expressed in forward-looking statements.  Factors that might cause such a difference include difficulties and delays in the integration of Mercantile and Eastern and achieving anticipated synergies, cost savings and other benefits from the transaction; changes in interest rates and interest rate relationships; increasing rates of inflation and slower growth rates or recession; significant declines in the value of commercial real estate; market volatility; demand for products and services; climate impacts; labor markets; the degree of competition by traditional and nontraditional financial services companies; changes in banking regulation or actions by bank regulators; changes in tax laws and other laws and regulations applicable to us; changes in prices, levies, and assessments; the impact of technological advances; potential cyber-attacks, information security breaches and other criminal activities; litigation liabilities; governmental and regulatory policy changes; the outcomes of existing or future contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; damage to our reputation resulting from adverse publicity, regulatory actions, litigation, operational failures, and the failure to meet client expectations and other facts; changes in the national and local economies; unstable political and economic environments; disease outbreaks, such as the COVID-19 pandemic or similar public health threats, and measures implemented to combat them; and other factors, including those expressed as risk factors, disclosed from time to time in filings made by Mercantile with the Securities and Exchange Commission.  Mercantile undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.  Investors are cautioned not to place undue reliance on any forward-looking statements contained herein.

 

Mercantile Bank Corporation







Fourth Quarter 2025 Results







MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)










DECEMBER 31,


DECEMBER 31,


DECEMBER 31,



2025


2024


2023

ASSETS







   Cash and due from banks

$

54,755,000

$

56,991,000

$

70,408,000

   Interest-earning deposits


418,569,000


336,019,000


60,125,000

      Total cash and cash equivalents


473,324,000


393,010,000


130,533,000








   Securities available for sale


1,102,230,000


730,352,000


617,092,000

   Mortgage loans held for sale


17,160,000


15,824,000


18,607,000








   Loans


4,821,888,000


4,600,781,000


4,303,758,000

   Allowance for credit losses


(58,191,000)


(54,454,000)


(49,914,000)

      Loans, net


4,763,697,000


4,546,327,000


4,253,844,000








   Premises and equipment, net


62,468,000


53,427,000


50,928,000

   Bank owned life insurance


105,342,000


93,839,000


85,668,000

   Goodwill


72,656,000


49,473,000


49,473,000

   Core deposit intangible asset


20,388,000


0


0

   Other assets


217,954,000


169,909,000


147,079,000








      Total assets

$

6,835,219,000

$

6,052,161,000

$

5,353,224,000















LIABILITIES AND SHAREHOLDERS' EQUITY







   Deposits:







      Noninterest-bearing

$

1,339,666,000

$

1,264,523,000

$

1,247,640,000

      Interest-bearing


3,944,786,000


3,433,843,000


2,653,278,000

         Total deposits


5,284,452,000


4,698,366,000


3,900,918,000








   Securities sold under agreements to repurchase


232,291,000


121,521,000


229,734,000

   Federal Home Loan Bank advances


326,221,000


387,083,000


467,910,000

   Subordinated debentures


51,015,000


50,330,000


49,644,000

   Subordinated notes


89,657,000


89,314,000


88,971,000

   Term note


30,000,000


0


0

   Accrued interest and other liabilities


96,699,000


121,021,000


93,902,000

         Total liabilities


6,110,335,000


5,467,635,000


4,831,079,000








SHAREHOLDERS' EQUITY







   Common stock


349,431,000


299,705,000


295,106,000

   Retained earnings


399,448,000


334,646,000


277,526,000

   Accumulated other comprehensive income/(loss)   


(23,995,000)


(49,825,000)


(50,487,000)

      Total shareholders' equity


724,884,000


584,526,000


522,145,000








      Total liabilities and shareholders' equity

$

6,835,219,000

$

6,052,161,000

$

5,353,224,000

 

Mercantile Bank Corporation












Fourth Quarter 2025 Results












MERCANTILE BANK CORPORATION

CONSOLIDATED REPORTS OF INCOME

(Unaudited)














THREE MONTHS ENDED

THREE MONTHS ENDED

TWELVE MONTHS ENDED

TWELVE MONTHS ENDED


December 31, 2025

December 31, 2024

December 31, 2025

December 31, 2024

INTEREST INCOME












   Loans, including fees

$

71,353,000


$

73,415,000


$

291,355,000


$

291,921,000

   Investment securities


6,271,000



4,316,000



22,499,000



14,040,000

   Interest-earning assets


4,630,000



4,756,000



16,340,000



15,541,000

      Total interest income


82,254,000



82,487,000



330,194,000



321,502,000













INTEREST EXPENSE












   Deposits


24,775,000



26,874,000



102,510,000



101,395,000

   Short-term borrowings


1,808,000



2,086,000



7,464,000



7,717,000

   Federal Home Loan Bank advances


2,715,000



3,150,000



11,404,000



13,018,000

   Other borrowed money


1,941,000



2,016,000



7,772,000



8,286,000

      Total interest expense


31,239,000



34,126,000



129,150,000



130,416,000













      Net interest income


51,015,000



48,361,000



201,044,000



191,086,000













Provision for credit losses


(700,000)



1,500,000



3,200,000



7,400,000













      Net interest income after












         provision for credit losses


51,715,000



46,861,000



197,844,000



183,686,000













NONINTEREST INCOME












   Service charges on accounts


2,263,000



1,866,000



8,134,000



6,842,000

   Mortgage banking income


3,334,000



3,611,000



13,021,000



12,301,000

   Credit and debit card income


2,285,000



2,177,000



9,207,000



8,821,000

   Interest rate swap income


270,000



717,000



1,957,000



3,210,000

   Payroll services


825,000



763,000



3,473,000



3,058,000

   Earnings on bank owned life insurance


1,332,000



497,000



3,293,000



2,555,000

   Other income


747,000



541,000



2,523,000



3,602,000

      Total noninterest income


11,056,000



10,172,000



41,608,000



40,389,000













NONINTEREST EXPENSE












   Salaries and benefits


21,836,000



21,482,000



83,198,000



77,924,000

   Occupancy


2,115,000



1,989,000



8,511,000



8,643,000

   Furniture and equipment


899,000



926,000



3,357,000



3,716,000

   Data processing costs


3,958,000



3,630,000



15,273,000



13,772,000

   Charitable foundation contributions


761,000



1,000,000



1,066,000



1,708,000

   Acquisition costs


1,187,000



0



1,815,000



0

   Other expense


5,970,000



4,779,000



22,739,000



20,026,000

      Total noninterest expense


36,726,000



33,806,000



135,959,000



125,789,000













      Income before federal income












         tax expense


26,045,000



23,227,000



103,493,000



98,286,000













Federal income tax expense


3,204,000



3,601,000



14,740,000



18,693,000













      Net Income

$

22,841,000


$

19,626,000


$

88,753,000


$

79,593,000













   Basic earnings per share


$1.40



$1.22



$5.47



$4.93

   Diluted earnings per share


$1.40



$1.22



$5.47



$4.93













   Average basic shares outstanding


16,263,884



16,142,578



16,237,974



16,130,696

   Average diluted shares outstanding


16,263,884



16,142,578



16,237,974



16,130,696

 

Mercantile Bank Corporation















Fourth Quarter 2025 Results















MERCANTILE BANK CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)


















Quarterly


Year-To-Date

(dollars in thousands except per share data)

2025


2025


2025


2025


2024







4th Qtr


3rd Qtr


2nd Qtr


1st Qtr


4th Qtr


2025


2024

EARNINGS















   Net interest income

$

51,015


52,002


49,479


48,548


48,361


201,044


191,086

   Provision for credit losses

$

(700)


200


1,600


2,100


1,500


3,200


7,400

   Noninterest income

$

11,056


10,388


11,462


8,702


10,172


41,608


40,389

   Noninterest expense

$

36,726


34,750


33,379


31,104


33,806


135,959


125,789

   Net income before federal income















      tax expense

$

26,045


27,440


25,962


24,046


23,227


103,493


98,286

   Net income

$

22,841


23,758


22,618


19,537


19,626


88,753


79,593

   Basic earnings per share

$

1.40


1.46


1.39


1.21


1.22


5.47


4.93

   Diluted earnings per share

$

1.40


1.46


1.39


1.21


1.22


5.47


4.93

   Average basic shares outstanding


16,263,884


16,249,267


16,239,919


16,197,978


16,142,578


16,237,974


16,130,696

   Average diluted shares outstanding


16,263,884


16,249,267


16,239,919


16,197,978


16,142,578


16,237,974


16,130,696
















PERFORMANCE RATIOS















   Return on average assets


1.44 %


1.50 %


1.50 %


1.32 %


1.30 %


1.44 %


1.40 %

   Return on average equity


13.50 %


14.72 %


14.72 %


13.34 %


13.36 %


14.08 %


14.35 %

   Net interest margin (fully tax-equivalent)


3.43 %


3.49 %


3.48 %


3.47 %


3.41 %


3.47 %


3.58 %

   Efficiency ratio


59.17 %


55.70 %


54.77 %


54.33 %


57.76 %


56.03 %


54.34 %

   Full-time equivalent employees


770


683


692


662


668


770


668
















YIELD ON ASSETS / COST OF FUNDS















   Yield on loans


6.12 %


6.35 %


6.29 %


6.28 %


6.38 %


6.26 %


6.59 %

   Yield on securities


2.96 %


2.90 %


2.82 %


2.73 %


2.54 %


2.86 %


2.29 %

   Yield on other interest-earning assets


4.25 %


4.63 %


4.91 %


4.80 %


4.98 %


4.66 %


5.61 %

   Yield on total earning assets


5.52 %


5.74 %


5.75 %


5.73 %


5.80 %


5.69 %


6.01 %

   Yield on total assets


5.20 %


5.41 %


5.44 %


5.43 %


5.50 %


5.37 %


5.69 %

   Cost of deposits


2.04 %


2.20 %


2.24 %


2.23 %


2.36 %


2.17 %


2.40 %

   Cost of borrowed funds


3.56 %


3.61 %


3.61 %


3.62 %


3.73 %


3.60 %


3.65 %

   Cost of interest-bearing liabilities


2.87 %


3.06 %


3.09 %


3.08 %


3.30 %


3.03 %


3.38 %

   Cost of funds (total earning assets)


2.09 %


2.25 %


2.27 %


2.26 %


2.39 %


2.22 %


2.43 %

   Cost of funds (total assets)


1.97 %


2.12 %


2.15 %


2.14 %


2.27 %


2.09 %


2.30 %
















MORTGAGE BANKING ACTIVITY















   Total mortgage loans originated

$

141,451


136,840


141,921


100,396


121,010


520,608


484,612

   Purchase mortgage loans originated

$

85,973


107,993


111,247


81,494


82,212


386,707


366,566

   Refinance mortgage loans originated

$

55,478


28,847


30,674


18,902


38,798


133,901


118,046

   Mortgage loans originated intent to sell

$

116,886


111,334


112,323


80,453


100,628


420,996


380,076

   Income on sale of mortgage loans

$

3,376


3,482


3,219


2,455


3,768


12,532


11,695
















CAPITAL















   Tangible equity to tangible assets


9.37 %


9.72 %


9.49 %


9.17 %


8.91 %


9.37 %


8.91 %

   Tier 1 leverage capital ratio


11.30 %


10.90 %


10.93 %


10.75 %


10.60 %


11.30 %


10.60 %

   Common equity risk-based capital ratio


11.00 %


11.33 %


10.90 %


10.90 %


10.66 %


11.00 %


10.66 %

   Tier 1 risk-based capital ratio


11.82 %


12.20 %


11.75 %


11.78 %


11.54 %


11.82 %


11.54 %

   Total risk-based capital ratio


14.34 %


14.87 %


14.37 %


14.44 %


14.17 %


14.34 %


14.17 %

   Tier 1 capital

$

704,776


685,440


666,068


647,795


633,134


704,776


633,134

   Tier 1 plus tier 2 capital

$

854,876


835,263


814,796


794,143


777,857


854,876


777,857

   Total risk-weighted assets

$

5,961,281


5,617,005


5,670,571


5,499,046


5,487,886


5,961,281


5,487,886

   Book value per common share

$

42.19


40.46


38.87


37.47


36.20


42.19


36.20

   Tangible book value per common share

$

36.78


37.41


35.82


34.42


33.14


36.78


33.14

   Cash dividend per common share

$

0.38


0.38


0.37


0.37


0.36


1.50


1.42
















ASSET QUALITY















   Gross loan charge-offs

$

2,842


172


38


63


3,787


3,115


3,838

   Recoveries

$

206


726


147


175


150


1,254


977

   Net loan charge-offs (recoveries)

$

2,636


(554)


(109)


(112)


3,637


1,861


2,861

   Net loan charge-offs to average loans


0.23 %


(0.05 %)


(0.01 %)


(0.01 %)


0.31 %


0.04 %


0.60 %

   Allowance for credit losses

$

58,191


59,129


58,375


56,666


54,454


58,191


54,454

   Allowance to loans


1.21 %


1.28 %


1.24 %


1.22 %


1.18 %


1.21 %


1.18 %

   Nonperforming loans

$

7,870


9,844


9,743


5,361


5,743


7,870


5,743

   Other real estate/repossessed assets

$

0


0


0


0


0


0


0

   Nonperforming loans to total loans


0.16 %


0.21 %


0.21 %


0.12 %


0.12 %


0.16 %


0.12 %

   Nonperforming assets to total assets


0.12 %


0.16 %


0.16 %


0.09 %


0.09 %


0.12 %


0.09 %
















NONPERFORMING ASSETS - COMPOSITION













   Commercial:















      Commercial & industrial

$

1,393


1,509


1,727


2,257


2,726


1,393


2,726

      Land development & construction

$

201


0


0


0


0


201


0

      Owner occupied comm'l R/E

$

517


0


0


41


42


517


42

      Non-owner occupied comm'l R/E

$

2,732


5,532


5,532


0


0


2,732


0

      Multi-family & residential rental

$

0


0


0


0


0


0


0

         Total commercial

$

4,843


7,041


7,259


2,298


2,768


4,843


2,768

   Retail:















      1-4 family mortgages

$

2,971


2,767


2,484


3,063


2,975


2,971


2,975

      Other consumer

$

56


36


0


0


0


56


0

         Total retail

$

3,027


2,803


2,484


3,063


2,975


3,027


2,975

Total nonperforming assets

$

7,870


9,844


9,743


5,361


5,743


7,870


5,743
















NONPERFORMING ASSETS - RECON















   Beginning balance

$

9,844


9,743


5,361


5,743


9,877


5,743


3,615

   Additions

$

1,299


426


5,792


423


224


7,940


8,502

   Return to performing status

$

0


(27)


0


0


(102)


(27)


(102)

   Principal payments

$

(466)


(222)


(1,385)


(744)


(515)


(2,817)


(2,331)

   Sale proceeds

$

0


0


0


0


0


0


(200)

   Loan charge-offs

$

(2,807)


(76)


(25)


(61)


(3,741)


(2,969)


(3,741)

   Valuation write-downs

$

0


0


0


0


0


0


0

   Ending balance

$

7,870


9,844


9,743


5,361


5,743


7,870


5,743
















LOAN PORTFOLIO COMPOSITION















   Commercial:















      Commercial & industrial

$

1,374,522


1,337,729


1,375,368


1,314,383


1,287,308


1,374,522


1,287,308

      Land development & construction

$

117,373


70,806


67,520


68,790


66,936


117,373


66,936

      Owner occupied comm'l R/E

$

778,869


729,451


725,106


705,645


748,837


778,869


748,837

      Non-owner occupied comm'l R/E

$

1,110,674


1,091,210


1,134,012


1,183,728


1,128,404


1,110,674


1,128,404

      Multi-family & residential rental

$

537,224


521,111


519,152


479,045


475,819


537,224


475,819

         Total commercial

$

3,918,662


3,750,307


3,821,158


3,751,591


3,707,304


3,918,662


3,707,304

   Retail:















      1-4 family mortgages

$

790,857


780,917


799,426


817,212


827,597


790,857


827,597

      Other consumer

$

112,369


83,936


77,435


67,746


65,880


112,369


65,880

         Total retail

$

903,226


864,853


876,861


884,958


893,477


903,226


893,477

         Total loans

$

4,821,888


4,615,160


4,698,019


4,636,549


4,600,781


4,821,888


4,600,781
















END OF PERIOD BALANCES















   Loans

$

4,821,888


4,615,160


4,698,019


4,636,549


4,600,781


4,821,888


4,600,781

   Securities

$

1,102,230


855,138


826,415


787,583


730,352


1,102,230


730,352

   Other interest-earning assets

$

458,548


457,373


246,254


351,846


373,357


458,548


373,357

   Total earning assets (before allowance)

$

6,382,666


5,927,671


5,770,688


5,775,978


5,704,490


6,382,666


5,704,490

   Total assets

$

6,835,219


6,308,487


6,180,988


6,141,200


6,052,161


6,835,219


6,052,161

   Noninterest-bearing deposits

$

1,339,666


1,182,775


1,180,801


1,173,499


1,264,523


1,339,666


1,264,523

   Interest-bearing deposits

$

3,944,786


3,629,038


3,529,671


3,508,286


3,433,843


3,944,786


3,433,843

   Total deposits

$

5,284,452


4,811,813


4,710,472


4,681,785


4,698,366


5,284,452


4,698,366

   Total borrowed funds

$

730,778


739,688


740,685


749,711


649,528


730,778


649,528

   Total interest-bearing liabilities

$

4,675,564


4,368,726


4,270,356


4,257,997


4,083,371


4,675,564


4,083,371

   Shareholders' equity

$

724,884


657,630


631,519


608,346


584,526


724,884


584,526
















AVERAGE BALANCES















   Loans

$

4,627,544


4,668,173


4,695,367


4,629,098


4,565,837


4,655,077


4,432,671

   Securities

$

880,619


841,853


803,264


763,095


720,632


822,584


657,901

   Other interest-earning assets

$

426,758


433,055


235,965


304,325


373,375


350,589


277,247

   Total earning assets (before allowance)

$

5,934,921


5,943,081


5,734,596


5,696,518


5,659,844


5,828,250


5,367,819

   Total assets

$

6,296,341


6,294,841


6,061,819


6,018,158


5,967,036


6,168,640


5,667,655

   Noninterest-bearing deposits

$

1,227,100


1,215,918


1,152,631


1,144,781


1,188,561


1,185,730


1,174,082

   Interest-bearing deposits

$

3,599,012


3,610,600


3,463,067


3,443,770


3,335,477


3,529,448


3,058,151

   Total deposits

$

4,826,112


4,826,518


4,615,698


4,588,551


4,524,038


4,715,178


4,232,233

   Total borrowed funds

$

720,499


749,679


749,811


738,628


770,838


739,632


796,016

   Total interest-bearing liabilities

$

4,319,511


4,360,279


4,212,878


4,182,398


4,106,315


4,269,080


3,854,167

   Shareholders' equity

$

671,029


640,495


616,229


594,145


582,829


630,452


554,544

 

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SOURCE Mercantile Bank Corporation