Net interest income growth, loan portfolio expansion, strong local deposit generation, and continued strength in asset quality metrics and capital levels highlight the quarter
GRAND RAPIDS, Mich., Oct. 20, 2026 /PRNewswire/ -- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $24.1 million, or $1.39 per diluted share, for the third quarter of 2026, compared with net income of $23.8 million, or $1.46 per diluted share, for the third quarter of 2025. Net income during the first nine months of 2026 totaled $72.7 million, or $4.21 per diluted share, compared with net income of $65.9 million, or $4.06 per diluted share, during the first nine months of 2025. Excluding non-recurring costs associated with the acquisition of Eastern Michigan Financial Corporation and core and digital banking system conversion and the impacts of other one-time items (non-GAAP measurements), adjusted net income was $24.5 million, or $1.42 per diluted share, for the third quarter of 2026, $24.3 million, or $1.50 per diluted share, for the third quarter of 2025, $76.1 million, or $4.41 per diluted share, for the first nine months of 2026, and $66.4 million, or $4.09 per diluted share, for the first nine months of 2025. Using these non-GAAP measures, adjusted earnings per diluted share increased $0.32, or 7.8 percent, in the first nine months of 2026 compared to the respective 2025 period.
"Our financial performance metrics remained strong during the third quarter of 2026," said Ray Reitsma, President and Chief Executive Officer of Mercantile. "The robust operating results were fueled by net interest income expansion, reflecting solid earning asset growth and a higher net interest margin, a significant increase in treasury management fees, strong local deposit growth, a relatively low level of provision expense stemming from ongoing strength in asset quality measures, and the maintenance of a sound regulatory capital profile. As evidenced by the growth in the loan and local deposit portfolios, our team members have continued to meet the needs of existing customers and secure new client relationships. At the same time, we have devoted significant efforts and resources on core and digital banking system conversion-related activities to ensure a smooth transition that is expected to occur in the first quarter of 2027, which we believe will provide for a superior experience and a more durable platform for us and our customers. The notable net growth in local deposits provided for a further reduction in our loan-to-deposit ratio. We believe ample opportunities are available to us to expand our presence in Southeast Michigan, and as such, we have made meaningful investments in talented individuals to serve that area and gain market share."
Third quarter highlights include:
- Return on average assets of 1.4 percent and return on average equity of 12.6 percent
- Tangible book value per common share of $37.81 as of September 30, 2026, up nearly 4 percent on an annualized basis since December 31, 2025
- Net revenue expansion of over 17 percent compared to the prior-year third quarter, including net interest income and noninterest income growth of approximately 17 percent and 18 percent, respectively
- Improved net interest margin, primarily reflecting lower cost of funds, commercial loan growth, and ongoing upward repricing of matured fixed-rate loans and securities
- Notable increase in treasury management fees of approximately 28 percent
- Sustained strength in commercial loan pipeline
- Continued low level of nonperforming assets and nominal past due loans and loan charge-offs
- Substantial reduction in loan-to-deposit ratio from approximately 96 percent as of September 30, 2025, to approximately 88 percent as of September 30, 2026, primarily reflecting solid local deposit generation and the onboarding of Eastern Michigan Bank's deposit portfolio
- Noteworthy decreases in brokered deposits of $110 million during the first nine months of 2026, and $159 million during the twelve months ended September 30, 2026, leaving a balance of only $20.1 million that is scheduled to mature in late 2026
- Strong tangible and regulatory capital positions
Operating Results
Net revenue, consisting of net interest income and noninterest income, was $73.2 million during the third quarter of 2026, an increase of $10.8 million, or 17.3 percent, from $62.4 million during the prior-year third quarter. Net interest income during the third quarter of 2026 was $60.9 million, up $8.9 million, or 17.1 percent, from $52.0 million during the respective 2025 period mainly due to growth in earning assets and a higher net interest margin. Eastern Michigan Bank's net interest income totaled $5.8 million during the third quarter of 2026. Noninterest income totaled $12.3 million during the current-year third quarter, up $1.9 million, or 18.4 percent, from $10.4 million during the third quarter of 2025 primarily due to increases in treasury management fees, interest rate swap income, and mortgage banking income. Eastern Michigan Bank generated $0.5 million in noninterest income during the third quarter of 2026, mainly consisting of deposit service charges.
The net interest margin was 3.73 percent in the third quarter of 2026, up from 3.49 percent in the prior-year third quarter. The yield on average earning assets was 5.52 percent during the third quarter of 2026, a decrease from 5.74 percent during the respective 2025 period. The lower yield largely resulted from a reduced yield on loans, which more than offset an improved yield on securities resulting from the reinvestment of relatively low-yielding bonds and investment portfolio expansion activities, along with the positive impact stemming from the addition of Eastern Michigan Bank's securities portfolio. The yield on loans was 6.12 percent during the third quarter of 2026, down from 6.35 percent during the third quarter of 2025, mainly due to lower interest rates on variable-rate commercial loans resulting from the Federal Open Market Committee ("FOMC") reducing the targeted federal funds rate. The FOMC decreased the targeted federal funds rate by 25 basis points in each of September, October, and December of 2025, during which time average variable-rate commercial loans represented approximately 77 percent of average total commercial loans. The yield on securities equaled 3.43 percent during the third quarter of 2026, up from 2.90 percent during the prior-year third quarter. A change in earning asset mix, consisting of a decrease in higher-yielding loans as a percentage of earning assets and an increase in relatively lower-yielding securities as a percentage of earning assets and reflecting a strategic initiative to reduce the loan-to-deposit ratio and the onboarding of Eastern Michigan Bank's liquid balance sheet, and a lower yield on other interest-earning assets, reflecting the aforementioned decreased interest rate environment, negatively impacted the yield on average earning assets during the third quarter of 2026.
During the third quarter of 2026, the cost of funds was 1.79 percent, down from 2.25 percent during the third quarter of 2025, primarily due to lower rates paid on money market accounts and time deposits, reflecting the decreased interest rate environment. An increase in low-cost deposit products as a percentage of total funding sources, mainly resulting from the addition of Eastern Michigan Bank's deposit base and successful client acquisition efforts, also contributed to the reduced cost of funds. Furthermore, the expansion of existing deposit relationships and a reduction in brokered deposits positively impacted the cost of funds during the third quarter of 2026. The latter reflects a strategy to refine the deposit base whereby the brokered deposit market will be accessed on a limited basis and reliance on other higher-priced deposit relationships will be lessened.
Mercantile recorded provisions for credit losses of $0.7 million and $0.2 million during the third quarters of 2026 and 2025, respectively. The provision expense recorded during the current-year third quarter primarily reflected increases in specific and qualitative factor allocations of $1.7 million and $0.7 million, respectively, along with allocations of $0.6 million necessitated by net loan growth. These factors were partially offset by decreases in the required reserve of $1.5 million and $0.7 million stemming from an increase in residential mortgage and consumer loan prepayment speeds and a decline in baseline loss allocations, respectively. The recording of net loan recoveries and ongoing strength in loan quality metrics during both periods positively impacted necessary provision levels.
Noninterest income totaled $12.3 million during the third quarter of 2026, up $1.9 million, or 18.4 percent, from $10.4 million during the prior-year third quarter. The increase primarily stemmed from growth in treasury management fees, interest rate swap income, and mortgage banking income. The rise in treasury management fees largely resulted from new commercial customer acquisitions and clients' expanded use of products and services. The growth in interest rate swap income, which can vary from period to period due to the timing of closing transactions, mainly reflected a higher volume of new swap transactions.
Noninterest expense totaled $43.6 million during the third quarter of 2026, compared to $34.8 million during the third quarter of 2025. Costs related to the core and digital banking system conversion aggregated $0.4 million during the third quarter of 2026, while costs associated with the acquisition of Eastern Michigan Financial Corporation totaled $0.2 million and $0.6 million during the current-year third quarter and third quarter of 2025, respectively. Excluding these non-recurring costs, noninterest expense increased $8.8 million during the third quarter of 2026 compared to the prior-year third quarter. Eastern Michigan Bank's noninterest expense totaled $4.1 million during the third quarter of 2026, including salary and benefit costs of $1.7 million and core deposit intangible asset amortization of $0.9 million. The remaining increase in noninterest expense largely stemmed from higher salary and benefit costs, mainly reflecting increased bonus accruals, annual merit pay increases, market adjustments, and talent acquisitions to assist with the core and digital banking system conversion and expand deposit and loan market share in Southeast Michigan, along with cost inflation and a larger balance sheet.
Federal income tax expense was $4.9 million during the third quarter of 2026, compared to $3.7 million during the prior-year third quarter. The increase in federal income tax expense mainly resulted from a higher level of income before federal income tax and a lower level of net benefits from transferable energy tax credits. Mercantile's effective tax rate, which equaled 16.8 percent and 13.4 percent during the third quarters of 2026 and 2025, respectively, has been positively impacted by tax benefits derived from the acquisition of transferable energy tax credits and low-income housing and historic tax credit investments.
Mr. Reitsma commented, "The notable increase in net interest income during the third quarter of 2026 resulted from robust earning asset growth and a higher net interest margin, primarily reflecting a lower cost of funds and the upward repricing of matured fixed-rate loans and securities. We are pleased with the significant increase in treasury management fees, reflecting customers' expanded use of products and services and our ongoing success in cultivating new client relationships. Meeting asset growth objectives in a cost-effective manner while remaining focused on providing customers with excellent service and market-leading products and services remain important strategic objectives. Excluding costs related to the core and digital banking system conversion and acquisition of Eastern Michigan Financial Corporation, overhead costs as a percentage of net revenue during the third quarter of 2026 increased slightly compared to the third quarter of 2025, in part reflecting investments in personnel to assist with the core and digital banking system conversion and expansion activities in Southeast Michigan."
Balance Sheet
Total assets were $7.16 billion as of September 30, 2026, up $328 million from December 31, 2025. Total loans increased $37.4 million, or an annualized 3.0 percent, during the third quarter of 2026, and $131 million, or an annualized 3.6 percent, during the first nine months of 2026, primarily reflecting commercial loan portfolio expansion of $20.4 million, or an annualized 2.0 percent, and $152 million, or an annualized 5.2 percent, during the respective periods. Commercial loans grew in both 2026 periods notwithstanding the full payoffs and partial paydowns of certain larger relationships, which aggregated $147 million during the third quarter of 2026, and $448 million during the first nine months of 2026. The payoffs and paydowns, reflecting sales of assets, secondary market refinancings, and customers using excess cash flows generated within their operations to make line of credit reductions, remained above the historical average of approximately $50 million per quarter during the third quarter of 2026. Payoffs and paydowns during 2025 were also well above historical levels, totaling approximately $363 million and averaging about $91 million per quarter. Commercial loan originations, consisting of loans to new customers and growth in existing credit relationships, stayed strong across all segments during the first nine months of 2026. Residential mortgage loans increased $13.2 million during the third quarter of 2026 and declined $27.1 million during the first nine months of 2026, while other consumer loans were up $3.8 million and $6.1 million during the respective periods.
During the first nine months of 2026, interest-earning deposits grew $151 million, and securities available for sale were down $4.2 million. The increase in interest-earning deposits primarily resulted from strong local deposit growth during the third quarter of 2026, while the reduction in securities available for sale mainly reflected an increase in the net unrealized loss on these securities stemming from the recent higher interest rate environment.
As of September 30, 2026, 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 $266 million and $43.9 million, respectively. The unused balance on construction loans remains relatively stable as new construction loan opportunities are identified and as construction loans shift to term real estate loans upon completion of the projects.
Commercial and industrial loans and owner-occupied commercial real estate loans combined represented approximately 55 percent of total commercial loans as of September 30, 2026, a level that has remained relatively consistent with prior periods and in line with our expectations.
Total deposits equaled $5.61 billion as of September 30, 2026, compared to $5.28 billion as of December 31, 2025. Local deposits grew $438 million, or an annualized 11.4 percent, during the first nine months of 2026, while brokered deposits decreased $110 million. The growth in local deposits, which occurred despite the customary level of seasonal noninterest-bearing deposit withdrawals by customers to make bonus and tax payments and partnership distributions, reflected successful customer acquisition efforts and net growth in various existing deposit relationships. The loan-to-deposit ratio equaled 88.3 percent as of September 30, 2026, down from 92.8 percent and 91.2 percent as of June 30, 2026, and December 31, 2025, respectively, largely due to local deposit portfolio expansion. As of September 30, 2026, wholesale funds, consisting of Federal Home Loan Bank of Indianapolis advances and brokered deposits, were $325 million, or approximately 5 percent of total funds, compared to $457 million, or approximately 8 percent of total funds, as of December 31, 2025. Noninterest-bearing checking accounts represented approximately 26 percent of total deposits as of September 30, 2026, compared to about 25 percent as of year-end 2025.
Mr. Reitsma noted, "The commercial loan portfolio grew during the third quarter and first nine months of 2026 despite elevated levels of payoffs and line of credit paydowns, reflecting ongoing strength in loan originations. Based on our current pipeline and continuing discussions with existing and prospective borrowers, we believe ample opportunities to book commercial loans will exist in upcoming periods. We are pleased with the noteworthy increase in local deposits during the third quarter of 2026 and related decline in our loan-to-deposit ratio and remain focused on funding loan originations and investment purchases through local deposit generation."
Asset Quality
Nonperforming assets totaled $9.8 million, or 0.1 percent of total assets, as of September 30, 2026, compared to $7.9 million, or 0.1 percent of total assets, as of December 31, 2025, and $9.8 million, or 0.2 percent of total assets, as of September 30, 2025. The level of past due loans remains nominal. During the third quarter of 2026, loan charge-offs were less than $0.1 million, while recoveries of prior period loan charge-offs equaled $0.3 million, providing for net loan recoveries of $0.3 million, or an annualized 0.02 percent of average total loans.
Mr. Reitsma remarked, "Our asset quality measures remained strong during the third quarter of 2026 as evidenced by ongoing low levels of nonperforming assets, past due loans, and loan charge-offs. We remain steadfast in our commitment to underwrite loans across all portfolio segments cautiously and in adherence with internal policy guidelines and identify any weakening commercial loan relationships or emerging sector-specific or systemic credit issues as early as possible to minimize the impact of such on our overall financial condition. Our commercial borrowers have generally continued to operate effectively during the extended and continuing period of uncertain macro-economic conditions, and our residential mortgage loan and consumer loan portfolios have also continued to perform well."
Capital Position
Shareholders' equity totaled $744 million as of September 30, 2026, up $19.0 million from December 31, 2025. Positively impacting shareholders' equity during the first nine months of 2026 was net income of $72.7 million and activity related to the issuance and sale of common stock through various stock-based compensation programs and our dividend reinvestment plan totaling $4.1 million, which was partially offset by a $37.8 million after-tax decrease in the market value of our available for sale securities portfolio, generally reflecting the recent increase in market interest rates, and the payment of cash dividends totaling $20.1 million. Mercantile Bank and Eastern Michigan Bank each maintained "well-capitalized" positions as of September 30, 2026, with total risk-based capital ratios of 13.4 percent and 23.9 percent, respectively. As of September 30, 2026, Mercantile Bank and Eastern Michigan Bank had approximately $200 million and $39 million, respectively, in excess of the 10 percent minimum regulatory threshold required to be categorized as a "well-capitalized" institution.
Mercantile reported 17,288,352 total shares outstanding as of September 30, 2026.
Mr. Reitsma concluded, "Our ongoing financial strength enabled us to continue our regular cash dividend program and once again provide shareholders with meaningful cash returns on their investments. We believe we are well positioned to effectively address any issues emerging from the extended period of unstable economic and operating conditions as a result of sustained strength in our operating results, asset quality metrics, capital levels, and commercial loan funding opportunities, along with the anticipated attainment of solid financial performance in future periods. Our firm commitment to meeting clients' needs has been successful in retaining existing and fostering new relationships, and we believe the continuation of this commitment will present us with abundant opportunities to originate loans and generate local deposits in upcoming periods. Due to the outstanding efforts of our team members, we are making steady progress regarding the core and digital banking system conversion and expect it to be completed in the first quarter of 2027 as originally planned."
Investor Presentation
Mercantile has prepared presentation materials that management intends to use during its previously announced third quarter 2026 conference call on Tuesday, October 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 together comprise one of the largest Michigan-based banking organizations with total combined assets of approximately $7.2 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.
Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
This news release contains certain non-GAAP financial measures, including adjusted net income and adjusted diluted earnings per share, each of which excludes costs associated with (i) Mercantile's acquisition of Eastern Michigan Financial Corporation that was completed during the fourth quarter of 2025 ($0.2 million and $0.5 million during the third quarter and first nine months of 2026, respectively), and (ii) the previously announced core and digital banking system conversion ($0.4 million and $3.9 million during the third quarter and first nine months of 2026, respectively), on an after-tax basis. These non-GAAP financial measures are identified in this news release where they appear. We believe that presenting these non-GAAP financial measures provides investors, analysts, and other interested parties with meaningful supplementary information to assess Mercantile's underlying operational performance by removing the effect of costs we consider to be non-recurring in nature and not reflective of Mercantile's core operating results. These non-GAAP financial measures are used by management to evaluate Mercantile's ongoing operations, for internal planning and forecasting purposes, and to assess period-over-period comparability. Management believes it is useful for the reader to review these non-GAAP adjusted measures alongside the GAAP measures. Our definition of these adjusted financial measures may differ from similarly named measures used by others. These non-GAAP measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for our GAAP measures. Our net income and diluted earnings per share are presented on a GAAP-basis in the first paragraph of this release.
Forward-Looking Statements
This news release contains statements and 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," "endeavor," "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 ongoing integration of Mercantile Bank and Eastern Michigan Bank and achieving anticipated synergies, cost savings and other benefits from the transaction; delays, cost overruns, disruptions, or other difficulties in completing the core and digital banking system conversion, or failure to realize its anticipated benefits; 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 factors; 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, except as required by law. Investors are cautioned not to place undue reliance on any forward-looking statements contained herein.
MERCANTILE BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
2026 2025 2025
ASSETS
Cash and due from banks $
56,105,000 $
54,755,000 $
58,593,000
Interest-earning deposits and Federal Funds sold 572,393,000 418,569,000 418,426,000
Total cash and cash equivalents 628,498,000 473,324,000 477,019,000
Securities available for sale 1,098,016,000 1,102,230,000 855,138,000
Mortgage loans held for sale 22,439,000 17,160,000 17,433,000
Loans 4,952,942,000 4,821,888,000 4,615,160,000
Allowance for credit losses (56,415,000) (58,191,000) (59,129,000)
Loans, net 4,896,527,000 4,763,697,000 4,556,031,000
Premises and equipment, net 60,799,000 62,468,000 56,155,000
Bank owned life insurance 117,407,000 105,342,000 94,848,000
Goodwill 73,689,000 72,656,000 49,473,000
Core deposit intangible, net 16,442,000 20,388,000 0
Other assets 249,051,000 217,954,000 202,390,000
Total assets $
7,162,868,000 $
6,835,219,000 $
6,308,487,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $
1,446,357,000 $
1,339,666,000 $
1,182,775,000
Interest-bearing 4,165,919,000 3,944,786,000 3,629,038,000
Total deposits 5,612,276,000 5,284,452,000 4,811,813,000
Securities sold under agreements to repurchase 197,453,000 232,291,000 251,499,000
Federal Home Loan Bank advances 305,322,000 326,221,000 346,221,000
Subordinated debentures 51,529,000 51,015,000 50,844,000
Subordinated notes 89,914,000 89,657,000 89,571,000
Term note 22,500,000 30,000,000 0
Accrued interest and other liabilities 140,039,000 96,699,000 100,909,000
Total liabilities 6,419,033,000 6,110,335,000 5,650,857,000
SHAREHOLDERS' EQUITY
Common stock 353,553,000 349,431,000 303,463,000
Retained earnings 452,046,000 399,448,000 382,679,000
Accumulated other comprehensive income/(loss) (61,764,000) (23,995,000) (28,512,000)
Total shareholders' equity 743,835,000 724,884,000 657,630,000
Total liabilities and shareholders' equity $
7,162,868,000 $
6,835,219,000 $
6,308,487,000
MERCANTILE BANK CORPORATION
CONSOLIDATED REPORTS OF INCOME
(Unaudited)
THREE MONTHS ENDED THREE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED
September 30, 2026 September 30, 2025 September 30, 2026 September 30, 2025
INTEREST INCOME
Loans, including fees $
76,630,000 $
74,659,000 $
221,820,000 $
220,003,000
Investment securities 9,345,000 5,855,000 27,368,000 16,227,000
Other interest-earning assets 4,294,000 5,129,000 13,203,000 11,710,000
Total interest income 90,269,000 85,643,000 262,391,000 247,940,000
INTEREST EXPENSE
Deposits 23,121,000 26,817,000 69,507,000 77,735,000
Short-term borrowings 1,430,000 1,974,000 4,396,000 5,656,000
Federal Home Loan Bank advances 2,611,000 2,895,000 7,762,000 8,689,000
Other borrowed money 2,207,000 1,955,000 6,666,000 5,831,000
Total interest expense 29,369,000 33,641,000 88,331,000 97,911,000
Net interest income 60,900,000 52,002,000 174,060,000 150,029,000
Provision for credit losses 700,000 200,000 (2,900,000) 3,900,000
Net interest income after
provision for credit losses 60,200,000 51,802,000 176,960,000 146,129,000
NONINTEREST INCOME
Service charges on accounts 2,744,000 2,064,000 7,874,000 5,871,000
Mortgage banking income 3,359,000 3,066,000 9,474,000 9,686,000
Credit and debit card income 2,912,000 2,371,000 8,421,000 6,922,000
Interest rate swap income 774,000 377,000 1,880,000 1,687,000
Payroll services 851,000 825,000 2,799,000 2,648,000
Earnings on bank owned life insurance 789,000 858,000 2,230,000 1,961,000
Other income 874,000 827,000 2,759,000 1,777,000
Total noninterest income 12,303,000 10,388,000 35,437,000 30,552,000
NONINTEREST EXPENSE
Salaries and benefits 26,853,000 21,094,000 75,155,000 61,362,000
Occupancy 2,308,000 2,122,000 6,985,000 6,395,000
Furniture and equipment 1,016,000 846,000 2,967,000 2,458,000
Data processing costs 4,829,000 3,945,000 13,872,000 11,315,000
Core conversion costs 438,000 0 3,897,000 0
Acquisition costs 153,000 606,000 547,000 628,000
Core deposit intangible amortization 865,000 0 2,596,000 0
Other expense 7,091,000 6,137,000 18,964,000 17,075,000
Total noninterest expense 43,553,000 34,750,000 124,983,000 99,233,000
Income before federal income
tax expense 28,950,000 27,440,000 87,414,000 77,448,000
Federal income tax expense 4,878,000 3,682,000 14,729,000 11,535,000
Net Income $
24,072,000 $
23,758,000 $
72,685,000 $
65,913,000
Basic earnings per share $1.39 $1.46 $4.21 $4.06
Diluted earnings per share $1.39 $1.46 $4.21 $4.06
Average basic shares outstanding 17,286,048 16,249,267 17,267,297 16,229,243
Average diluted shares outstanding 17,286,048 16,249,267 17,267,297 16,229,243
MERCANTILE BANK CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
Quarterly Year-To-Date
(dollars in thousands except per share data) 2026 2026 2026 2025 2025
3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2026 2025
EARNINGS
Net interest income $
60,900 57,258 55,901 51,015 52,002 174,060 150,029
Provision for credit losses $
700 (1,800) (1,800) (700) 200 (2,900) 3,900
Noninterest income $
12,303 11,498 11,688 11,056 10,388 35,437 30,552
Noninterest expense $
43,553 39,375 42,107 36,726 34,750 124,983 99,233
Net income before federal income
tax expense $
28,950 31,181 27,282 26,045 27,440 87,414 77,448
Net income $
24,072 25,927 22,685 22,841 23,758 72,685 65,913
Basic earnings per share $
1.39 1.50 1.32 1.40 1.46 4.21 4.06
Diluted earnings per share $
1.39 1.50 1.32 1.40 1.46 4.21 4.06
Average basic shares outstanding 17,286,048 17,278,057 17,237,249 16,263,884 16,249,267 17,267,297 16,229,243
Average diluted shares outstanding 17,286,048 17,278,057 17,237,249 16,263,884 16,249,267 17,267,297 16,229,243
PERFORMANCE RATIOS
Return on average assets 1.37 % 1.52 % 1.35 % 1.44 % 1.50 % 1.41 % 1.44 %
Return on average equity 12.61 % 13.97 % 12.54 % 13.50 % 14.72 % 13.04 % 14.28 %
Net interest margin (fully tax-equivalent) 3.73 % 3.59 % 3.55 % 3.43 % 3.49 % 3.62 % 3.48 %
Efficiency ratio 59.50 % 57.27 % 62.30 % 59.17 % 55.70 % 59.66 % 54.95 %
Full-time equivalent employees 812 827 766 770 683 812 683
YIELD ON ASSETS / COST OF FUNDS
Yield on loans 6.12 % 6.01 % 6.04 % 6.12 % 6.35 % 6.06 % 6.31 %
Yield on securities 3.43 % 3.36 % 3.27 % 2.96 % 2.90 % 3.35 % 2.82 %
Yield on other interest-earning assets 3.96 % 4.04 % 4.00 % 4.25 % 4.63 % 4.00 % 4.75 %
Yield on total earning assets 5.52 % 5.42 % 5.42 % 5.52 % 5.74 % 5.45 % 5.74 %
Yield on total assets 5.16 % 5.09 % 5.09 % 5.20 % 5.41 % 5.11 % 5.43 %
Cost of deposits 1.69 % 1.74 % 1.77 % 2.04 % 2.20 % 1.73 % 2.22 %
Cost of borrowed funds 3.66 % 3.57 % 3.58 % 3.56 % 3.61 % 3.60 % 3.62 %
Cost of interest-bearing liabilities 2.49 % 2.53 % 2.54 % 2.87 % 3.06 % 2.52 % 3.08 %
Cost of funds (total earning assets) 1.79 % 1.83 % 1.87 % 2.09 % 2.25 % 1.83 % 2.26 %
Cost of funds (total assets) 1.68 % 1.72 % 1.75 % 1.97 % 2.12 % 1.72 % 2.14 %
MORTGAGE BANKING ACTIVITY
Total mortgage loans originated $
142,377 159,105 127,939 141,451 136,840 429,421 379,157
Purchase mortgage loans originated $
117,615 126,798 68,769 85,973 107,993 313,182 300,734
Refinance mortgage loans originated $
24,762 32,307 59,170 55,478 28,847 116,239 78,423
Mortgage loans originated with intent to sell $
92,569 107,447 105,873 116,886 111,334 305,889 304,110
Income on sale of mortgage loans $
3,215 3,156 3,049 3,375 3,482 9,420 9,156
CAPITAL
Tangible equity to tangible assets 9.24 % 9.87 % 9.41 % 9.37 % 9.72 % 9.24 % 9.72 %
Tier 1 leverage capital ratio 11.11 % 11.04 % 10.61 % 11.30 % 10.90 % 11.11 % 10.90 %
Common equity risk-based capital ratio 11.44 % 11.44 % 11.27 % 11.01 % 11.33 % 11.44 % 11.33 %
Tier 1 risk-based capital ratio 12.23 % 12.25 % 12.09 % 11.83 % 12.20 % 12.23 % 12.20 %
Total risk-based capital ratio 14.60 % 14.65 % 14.59 % 14.35 % 14.87 % 14.60 % 14.87 %
Tier 1 capital $
768,377 749,048 723,395 704,776 685,440 768,377 685,440
Tier 1 plus tier 2 capital $
917,167 896,267 872,668 854,876 835,263 917,167 835,263
Total risk-weighted assets $
6,283,913 6,116,615 5,981,420 5,958,763 5,617,005 6,283,913 5,617,005
Book value per common share $
43.03 43.68 42.66 42.19 40.46 43.03 40.46
Tangible book value per common share $
37.81 38.42 37.34 36.78 37.41 37.81 37.41
Cash dividend per common share $
0.40 0.39 0.39 0.38 0.38 1.18 1.12
ASSET QUALITY
Gross loan charge-offs $
46 10 5 2,842 172 61 273
Recoveries $
319 514 351 206 726 1,184 1,048
Net loan charge-offs (recoveries) $
(273) (504) (346) 2,636 (554) (1,123) (775)
Net loan charge-offs to average loans (0.02 %) (0.04 %) (0.03 %) 0.23 % (0.05 %) (0.03 %) (0.02 %)
Allowance for credit losses $
56,415 55,441 56,736 58,191 59,129 56,415 59,129
Allowance to loans 1.14 % 1.13 % 1.18 % 1.21 % 1.28 % 1.14 % 1.28 %
Nonperforming loans $
9,742 5,803 7,543 7,870 9,844 9,742 9,844
Other real estate/repossessed assets $
82 0 0 0 0 82 0
Nonperforming loans to total loans 0.20 % 0.12 % 0.16 % 0.16 % 0.21 % 0.20 % 0.21 %
Nonperforming assets to total assets 0.14 % 0.09 % 0.11 % 0.12 % 0.16 % 0.14 % 0.16 %
NONPERFORMING ASSETS - COMPOSITION
Commercial:
Commercial & industrial $
2,880 942 1,122 1,393 1,509 2,880 1,509
Land development & construction $
0 0 0 201 0 0 0
Owner occupied comm'l real estate $
3,789 953 494 517 0 3,789 0
Nonowner occupied comm'l real estate $
0 0 2,732 2,732 5,532 0 5,532
Multi-family & residential rental $
0 0 0 0 0 0 0
Total commercial $
6,669 1,895 4,348 4,843 7,041 6,669 7,041
Retail:
1-4 family mortgages $
3,049 3,811 3,114 2,971 2,767 3,049 2,767
Other consumer $
106 97 81 56 36 106 36
Total retail $
3,155 3,908 3,195 3,027 2,803 3,155 2,803
Total nonperforming assets $
9,824 5,803 7,543 7,870 9,844 9,824 9,844
NONPERFORMING ASSETS - RECON
Beginning balance $
5,803 7,543 7,870 9,844 9,743 7,870 5,743
Additions $
6,136 1,284 410 1,299 426 7,830 6,641
Return to performing status $
0 0 (12) 0 (27) (12) (27)
Principal payments $
(2,086) (3,016) (725) (466) (222) (5,827) (2,351)
Sale proceeds $
0 0 0 0 0 0 0
Loan charge-offs $
(29) (8) 0 (2,807) (76) (37) (162)
Valuation write-downs $
0 0 0 0 0 0 0
Ending balance $
9,824 5,803 7,543 7,870 9,844 9,824 9,844
LOAN PORTFOLIO COMPOSITION
Commercial:
Commercial & industrial $
1,499,086 1,537,029 1,429,830 1,374,522 1,337,729 1,499,086 1,337,729
Land development & construction $
112,646 119,386 119,560 117,373 70,806 112,646 70,806
Owner occupied comm'l real estate $
757,329 803,884 799,066 778,869 729,451 757,329 729,451
Nonowner occupied comm'l real estate $
1,159,659 1,091,844 1,101,758 1,110,674 1,091,210 1,159,659 1,091,210
Multi-family & residential rental $
542,058 498,253 485,175 537,224 521,111 542,058 521,111
Total commercial $
4,070,778 4,050,396 3,935,389 3,918,662 3,750,307 4,070,778 3,750,307
Retail:
1-4 family mortgages $
763,715 750,526 768,237 790,857 780,917 763,715 780,917
Other consumer $
118,449 114,631 113,067 112,369 83,936 118,449 83,936
Total retail $
882,164 865,157 881,304 903,226 864,853 882,164 864,853
Total loans $
4,952,942 4,915,553 4,816,693 4,821,888 4,615,160 4,952,942 4,615,160
END OF PERIOD BALANCES
Loans $
4,952,942 4,915,553 4,816,693 4,821,888 4,615,160 4,952,942 4,615,160
Securities $
1,098,016 1,125,529 1,125,433 1,102,230 855,138 1,098,016 855,138
Other interest-earning assets $
619,830 327,399 577,619 458,548 457,373 619,830 457,373
Total earning assets (before allowance) $
6,670,788 6,368,481 6,519,745 6,382,666 5,927,671 6,670,788 5,927,671
Total assets $
7,162,868 6,819,490 6,945,035 6,835,219 6,308,487 7,162,868 6,308,487
Noninterest-bearing deposits $
1,446,357 1,420,591 1,331,947 1,339,666 1,182,775 1,446,357 1,182,775
Interest-bearing deposits $
4,165,919 3,875,797 4,087,571 3,944,786 3,629,038 4,165,919 3,629,038
Total deposits $
5,612,276 5,296,388 5,419,518 5,284,452 4,811,813 5,612,276 4,811,813
Total borrowed funds $
668,270 690,554 704,853 730,778 739,688 668,270 739,688
Total interest-bearing liabilities $
4,834,189 4,566,351 4,792,424 4,675,564 4,368,726 4,834,189 4,368,726
Shareholders' equity $
743,835 755,124 736,947 724,884 657,630 743,835 657,630
AVERAGE BALANCES
Loans $
4,967,799 4,891,868 4,828,031 4,627,544 4,668,173 4,896,411 4,664,356
Securities $
1,126,018 1,128,063 1,119,988 880,619 841,853 1,124,712 803,026
Other interest-earning assets $
424,354 413,729 467,991 426,758 433,055 435,198 324,920
Total earning assets (before allowance) $
6,518,171 6,433,660 6,416,010 5,934,921 5,943,081 6,456,321 5,792,302
Total assets $
6,957,917 6,851,065 6,837,239 6,296,341 6,294,841 6,882,516 6,125,953
Noninterest-bearing deposits $
1,440,772 1,376,108 1,318,537 1,227,100 1,215,918 1,378,920 1,171,789
Interest-bearing deposits $
3,999,140 3,956,008 3,999,141 3,599,012 3,610,600 3,984,763 3,506,005
Total deposits $
5,439,912 5,332,116 5,317,678 4,826,112 4,826,518 5,363,683 4,677,794
Total borrowed funds $
677,906 707,080 712,240 720,499 749,679 698,949 746,080
Total interest-bearing liabilities $
4,677,046 4,663,088 4,711,381 4,319,511 4,360,279 4,683,712 4,252,085
Shareholders' equity $
757,527 744,193 733,366 671,029 640,495 745,117 617,126
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SOURCE Mercantile Bank Corporation
Ray Reitsma, President and CEO, 616-233-2349, rreitsma@mercbank.com or Charles Christmas, Executive Vice President and CFO, 616-726-1202, cchristmas@mercbank.com