Mercantile Bank Corporation Announces Strong Third Quarter 2025 Results

Growth in net interest income and certain noninterest income categories and continued strength in asset quality metrics and capital measures highlight the quarter , /PRNewswire/ -- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") reported net income of $23.8 million, or $1.46 per diluted share, for the third quarter of 2025, compared with net income of $19.6 million, or $1.22 per diluted share, for the third quarter of 2024. Net income during the first nine months of 2025 totaled $65.9 million, or $4.06 per diluted share, compared with net income of $60.0 million, or $3.72 per diluted share, during the first nine months of 2024. "We are very pleased to report another quarter of robust financial performance, especially when taking into consideration the lengthy and ongoing period of uncertain macro-economic conditions," said Ray Reitsma, President and Chief Executive Officer of Mercantile. "Our strong operating results reflected net interest income expansion, a stable and healthy net interest margin, solid growth in certain core noninterest income categories, a notable decline in federal income tax expense, strong local deposit growth, and continuing strength in asset quality metrics and capital measures. The growth in local deposits provided for a reduction in our loan-to-deposit ratio, the lowering of which remains an important strategic goal." Third quarter highlights include: Return on average assets of 1.50 percent and return on average equity of 14.72 percent Tangible book value per common share of $37.41 as of September 30, 2025, up $4.27, or approximately 13 percent, since year-end 2024 Net interest income expansion of nearly 8 percent Noteworthy increases in treasury management and payroll services fees of approximately 11 percent and 16 percent, respectively Significant decrease in effective tax rate from approximately 20 percent in the third quarter of 2024 to approximately 13 percent in the third quarter of 2025 due to the acquisition of transferable energy tax credits and net benefits from investments in tax credit structures Solid commercial loan pipeline Ongoing low levels of nonperforming assets, past due loans, and loan charge-offs Notable reduction in loan-to-deposit ratio from 102 percent as of September 30, 2024, to 96 percent as of September 30, 2025, largely reflecting robust local deposit growth Strong tangible and regulatory capital positions Announced planned partnership with Eastern Michigan Financial Corporation Operating Results Net revenue, consisting of net interest income and noninterest income, was $62.4 million during the third quarter of 2025, up $4.4 million, or 7.6 percent, from $58.0 million during the prior-year third quarter. Net interest income during the current-year third quarter was $52.0 million, up $3.7 million, or 7.7 percent, from $48.3 million during the respective 2024 period as growth in earning assets more than offset a slightly lower net interest margin. Noninterest income totaled $10.4 million during the third quarter of 2025, compared to $9.7 million during the third quarter of 2024. The increase primarily reflected higher levels of treasury management and payroll services fees and earnings on bank owned life insurance. The net interest margin was 3.50 percent in the third quarter of 2025, down marginally from 3.52 percent in the prior-year third quarter. The yield on average earning assets was 5.75 percent during the current-year third quarter, a decrease from 6.08 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 6.38 percent during the third quarter of 2025, down from 6.69 percent during the third 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 50 basis points in September of 2024 and 25 basis points in each of November and December of 2024, during which time average variable-rate commercial loans represented approximately 73 percent of average total commercial loans. A further 25 basis point reduction in the targeted federal funds, which was approved by the FOMC in September of 2025, also contributed to the reduced loan yield. 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 third quarter of 2025 compared to the third quarter of 2024. During the third quarter of 2025, the cost of funds was 2.25 percent, down from 2.56 percent in the third quarter of 2024, mainly due to lower rates paid on money market accounts and time deposits, reflecting the decreased interest rate environment that began in September of 2024 in conjunction with the FOMC's lowering of the targeted federal funds rate. Mercantile recorded provisions for credit losses of $0.2 million and $1.1 million during the third quarters of 2025 and 2024, respectively. The provision expense recorded during the current-year third quarter mainly reflected a $3.1 million increase in the specific allocation for a commercial construction loan relationship that was placed on nonaccrual during the second quarter of 2025 and a $0.9 million net increase in qualitative factor allocations resulting from changes in the composition of the loan portfolio; the impacts of these factors were partially offset by faster residential mortgage and consumer loan prepayment speeds and the associated shortened average lives of the portfolios and a net decline in the loan portfolio. The provision expense recorded during the third quarter of 2024 primarily reflected an increase in qualitative factor allocations and allocations necessitated by net loan growth, which were partially offset by decreases in the calculated allowance stemming from the payoffs of two larger problem commercial lending relationships. The recording of net loan recoveries and sustained strength in loan quality metrics during both periods positively impacted necessary provision levels. Noninterest income totaled $10.4 million during the third quarter of 2025, up $0.7 million, or 7.5 percent, from $9.7 million during the respective 2024 period, mainly due to growth in treasury management fees and payroll services fees of approximately 11 percent and 16 percent, respectively, which more than offset a reduction in mortgage banking income. The lower level of mortgage banking income primarily resulted from a change in the quarter-end fair value of commitments to originate salable residential mortgage loans. Noninterest income during the third quarter of 2025 also included bank owned life insurance claims totaling $0.3 million. Noninterest expense totaled $34.8 million during the third quarter of 2025, up from $32.3 million during the prior-year third quarter. The increase mainly resulted from higher salary and benefit costs, primarily reflecting annual merit pay increases, market adjustments, and lower residential mortgage loan deferred salary costs, which more than offset a lower bonus accrual and reduced health insurance claims. Acquisition costs related to Mercantile's previously announced partnership with Eastern Michigan Bank Corporation, along with increased data processing costs, contributions to The Mercantile Bank Foundation, and allocations to the reserve for unfunded loan commitments, largely resulting from an increase in commercial loan commitments, also contributed to the rise in noninterest expense. Federal income tax expense was $3.7 million during the third quarter of 2025, compared to $4.9 million during the respective 2024 period. The acquisition of transferable energy tax credits and the net benefits from investments in tax credit structures during the third quarter of 2025 provided for aggregate tax benefits of $1.0 million and $0.7 million, respectively, during the period. The recording of the tax benefits positively impacted Mercantile's effective tax rate, which equaled 13.4 percent during the current-year third quarter, down from 20.1 percent during the third quarter of 2024. Mr. Reitsma commented, "Our net interest margin has remained strong and relatively steady over the past five quarters, with ongoing growth in earning assets providing for net interest income expansion. We are pleased with the higher levels of treasury management and payroll services fees, mainly reflecting customers' increased use of products and services and effective marketing efforts, and noteworthy decrease in federal income tax expense, primarily resulting from the acquisition of transferable energy tax credits and net benefits from investments in tax credit structures. Growing our balance sheet in a cost-effective manner while continuing to deliver outstanding service and offer market-leading products and services to our customers remain important objectives." Balance Sheet As of September 30, 2025, total assets were $6.31 billion, up $256 million from December 31, 2024. Total loans increased $14.4 million during the first nine months of 2025, primarily reflecting net growth in commercial loans of $43.0 million. Commercial loans grew an annualized 1.6 percent during the nine months ended September 30, 2025, despite the full payoffs and partial paydowns of certain larger relationships, which aggregated $255 million during the period, including $101 million during the third quarter. The payoffs and paydowns 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 the third quarter of 2025. Residential mortgage loans declined $46.7 million, and other consumer loans were up $18.1 million during the first nine months of 2025. During the first nine months of 2025, securities available for sale grew $125 million, and interest-earning deposits increased $82.4 million. As of September 30, 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 $216 million and $37.0 million, respectively. As of September 30, 2024, unfunded commitments on commercial construction and development loans and residential construction loans totaled $241 million and $34.0 million, respectively. Commercial and industrial loans and owner-occupied commercial real estate loans combined represented approximately 55 percent of total commercial loans as of September 30, 2025, a level that has remained relatively consistent with prior periods and in line with our expectations. Total deposits equaled $4.81 billion as of September 30, 2025, compared to $4.70 billion as of December 31, 2024. Local deposits were up $84.2 million, or 1.9 percent, during the first nine months of 2025, while brokered deposits increased $29.2 million during the respective period. The increase in local deposits reflected net growth in various existing deposit relationships and successful client acquisition efforts, which more than offset the typical level of seasonal deposit withdrawals by customers to make bonus and tax payments and partnership distributions. The loan-to-deposit ratio declined from 98 percent as of year-end 2024 to 96 percent as of September 30, 2025, largely reflecting the increase in local deposits and expansion of the securities portfolio. The loan-to-deposit ratio equaled 102 percent as of September 30, 2024. Wholesale funds were $525 million and $537 million at September 30, 2025, and December 31, 2024, respectively, with both amounts representing approximately 10 percent of total funds at the end of each period. Noninterest-bearing checking accounts represented approximately 25 percent of total deposits as of September 30, 2025. Mr. Reitsma noted, "While being overshadowed by the elevated levels of line paydowns and full payoffs, commercial loan originations remained strong during the third quarter of 2025. Based on our current pipeline and ongoing discussions with existing and prospective borrowers, we believe plentiful opportunities to originate commercial loans will exist in future periods. We are pleased with the growth in local deposits and associated decline in our loan-to-deposit ratio during the third quarter of 2025 and will continue our efforts to fund loan originations and investment purchases through local deposit generation." Asset Quality Nonperforming assets totaled $9.8 million, or 0.2 percent of total assets, as of September 30, 2025, compared to $5.7 million, or less than 0.1 percent of total assets, as of December 31, 2024, and $9.9 million, or 0.2 percent of total assets, as of September 30, 2024. The increase in nonperforming assets during the first nine months of 2025 mainly reflected the weakening of the previously mentioned nonperforming commercial construction loan, which accounted for approximately 56 percent of total nonperforming assets as of September 30, 2025, and necessitated specific reserve allocations totaling $5.5 million during the second quarter and third quarter of 2025. The level of past due loans remains nominal. During the first nine months of 2025, loan charge-offs were $0.3 million, while recoveries of prior period loan charge-offs totaled $1.1 million, providing for net loan recoveries of $0.8 million, or an annualized 0.02 percent of average total loans. Mr. Reitsma remarked, "As reflected by continuing low levels of nonperforming assets, past due loans, and loan charge-offs, the quality of our asset base remained robust during the third quarter of 2025. We remain committed to underwriting loans across all portfolio segments in a disciplined manner, including adherence to internal policy guidelines, and detecting any weakening credit relationships and developing systemic or sector-specific credit issues as soon as possible to minimize the impact of such on our overall financial health. Our borrowers have continued to perform well during the prolonged period of uncertain macro-economic conditions." Capital Position Shareholders' equity totaled $658 million as of September 30, 2025, up $73.1 million from December 31, 2024. Mercantile Bank maintained "well-capitalized" positions at the end of the third quarter of 2025 and year-end 2024, with total risk-based capital ratios of 14.3 percent and 13.9 percent, respectively. As of September 30, 2025, Mercantile Bank had approximately $236 million in excess of the 10 percent minimum regulatory threshold required to be categorized as a "well-capitalized" institution. All of Mercantile Bank's investments are categorized as available-for-sale. As of September 30, 2025, the net unrealized loss on these investments totaled $36.1 million, resulting in an after-tax reduction to equity capital of $28.5 million. As of December 31, 2024, the net unrealized loss on these investments totaled $63.1 million, resulting in an after-tax reduction to equity capital of $49.8 million. Although unrealized gains and losses on investments are excluded from regulatory capital ratio calculations, Mercantile Bank's excess capital over the minimum regulatory requirement to be considered a "well-capitalized" institution would approximate $208 million on an adjusted basis as of September 30, 2025. Mercantile reported 16,253,544 total shares outstanding as of September 30, 2025. 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 arising from the continuing uncertain macro-economic and operating conditions based on our sustained strength in capital levels, operating results, and asset quality metrics. Our deep focus on meeting clients' needs has played a significant role in our ability to retain existing relationships and secure new relationships, and we are confident that these inherent traits will provide us with abundant opportunities to book commercial loans and grow local deposits in future periods. We are excited about our planned partnership with Eastern Michigan Financial Corporation, which we believe will strengthen our Bank's standing as the largest bank founded, headquartered, and operated in the State of Michigan and assist us in meeting certain strategic goals, including enhancing our on-balance sheet liquidity and lowering our loan-to-deposit ratio." Investor Presentation Mercantile has prepared presentation materials that management intends to use during its previously announced third quarter 2025 conference call on Tuesday, October 21, 2025, 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. Mercantile provides 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 it serves, Mercantile is one of the largest Michigan-based banks with assets of approximately $6.3 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 the inability to complete the acquisition of Eastern Michigan Financial Corporation or our ability to operate the combined company successfully following the acquisition; 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 Third Quarter 2025 Results MERCANTILE BANK CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, 2025 2024 2024 ASSETS Cash and due from banks $ 58,593,000 $ 56,991,000 $ 87,766,000 Interest-earning deposits 418,426,000 336,019,000 240,780,000 Total cash and cash equivalents 477,019,000 393,010,000 328,546,000 Securities available for sale 855,138,000 730,352,000 703,375,000 Federal Home Loan Bank stock 21,513,000 21,513,000 21,513,000 Mortgage loans held for sale 17,433,000 15,824,000 29,260,000 Loans 4,615,160,000 4,600,781,000 4,553,018,000 Allowance for credit losses (59,129,000) (54,454,000) (56,590,000) Loans, net 4,556,031,000 4,546,327,000 4,496,428,000 Premises and equipment, net 56,155,000 53,427,000 54,230,000 Bank owned life insurance 94,848,000 93,839,000 86,486,000 Goodwill 49,473,000 49,473,000 49,473,000 Other assets 180,877,000 148,396,000 147,816,000 Total assets $ 6,308,487,000 $ 6,052,161,000 $ 5,917,127,000 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-bearing $ 1,182,775,000 $ 1,264,523,000 $ 1,182,219,000 Interest-bearing 3,629,038,000 3,433,843,000 3,273,679,000 Total deposits 4,811,813,000 4,698,366,000 4,455,898,000 Securities sold under agreements to repurchase 251,499,000 121,521,000 220,936,000 Federal Home Loan Bank advances 346,221,000 387,083,000 417,083,000 Subordinated debentures 50,844,000 50,330,000 50,158,000 Subordinated notes 89,571,000 89,314,000 89,228,000 Accrued interest and other liabilities 100,909,000 121,021,000 100,513,000 Total liabilities 5,650,857,000 5,467,635,000 5,333,816,000 SHAREHOLDERS' EQUITY Common stock 303,463,000 299,705,000 298,704,000 Retained earnings 382,679,000 334,646,000 320,722,000 Accumulated other comprehensive income/(loss) (28,512,000) (49,825,000) (36,115,000) Total shareholders' equity 657,630,000 584,526,000 583,311,000 Total liabilities and shareholders' equity $ 6,308,487,000 $ 6,052,161,000 $ 5,917,127,000 Mercantile Bank Corporation Third Quarter 2025 Results MERCANTILE BANK CORPORATION CONSOLIDATED REPORTS OF INCOME (Unaudited) THREE MONTHS ENDED THREE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 INTEREST INCOME Loans, including fees $ 75,040,000 $ 75,316,000 $ 220,994,000 $ 219,405,000 Investment securities 6,300,000 4,196,000 17,572,000 11,242,000 Interest-earning deposits 4,303,000 3,900,000 9,374,000 8,369,000 Total interest income 85,643,000 83,412,000 247,940,000 239,016,000 INTEREST EXPENSE Deposits 26,817,000 27,588,000 77,735,000 74,522,000 Short-term borrowings 1,974,000 2,219,000 5,656,000 5,631,000 Federal Home Loan Bank advances 2,895,000 3,218,000 8,689,000 9,868,000 Other borrowed money 1,955,000 2,095,000 5,831,000 6,270,000 Total interest expense 33,641,000 35,120,000 97,911,000 96,291,000 Net interest income 52,002,000 48,292,000 150,029,000 142,725,000 Provision for credit losses 200,000 1,100,000 3,900,000 5,900,000 Net interest income after provision for credit losses 51,802,000 47,192,000 146,129,000 136,825,000 NONINTEREST INCOME Service charges on accounts 2,064,000 1,753,000 5,871,000 4,976,000 Mortgage banking income 3,066,000 3,325,000 9,686,000 8,690,000 Credit and debit card income 2,371,000 2,257,000 6,922,000 6,644,000 Interest rate swap income 377,000 389,000 1,687,000 2,494,000 Payroll services 825,000 713,000 2,648,000 2,295,000 Earnings on bank owned life insurance 858,000 449,000 1,961,000 2,058,000 Other income 827,000 781,000 1,777,000 3,060,000 Total noninterest income 10,388,000 9,667,000 30,552,000 30,217,000 NONINTEREST EXPENSE Salaries and benefits 21,094,000 20,292,000 61,362,000 56,442,000 Occupancy 2,122,000 2,146,000 6,395,000 6,655,000 Furniture and equipment 846,000 938,000 2,458,000 2,790,000 Data processing costs 3,945,000 3,437,000 11,315,000 10,142,000 Charitable foundation contributions 300,000 0 306,000 707,000 Acquisition costs 606,000 0 628,000 0 Other expense 5,837,000 5,490,000 16,769,000 15,247,000 Total noninterest expense 34,750,000 32,303,000 99,233,000 91,983,000 Income before federal income tax expense 27,440,000 24,556,000 77,448,000 75,059,000 Federal income tax expense 3,682,000 4,938,000 11,535,000 15,092,000 Net Income $ 23,758,000 $ 19,618,000 $ 65,913,000 $ 59,967,000 Basic earnings per share $1.46 $1.22 $4.06 $3.72 Diluted earnings per share $1.46 $1.22 $4.06 $3.72 Average basic shares outstanding 16,249,267 16,138,320 16,229,243 16,126,706 Average diluted shares outstanding 16,249,267 16,138,320 16,229,243 16,126,706 Mercantile Bank Corporation Third Quarter 2025 Results MERCANTILE BANK CORPORATION CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) Quarterly Year-To-Date (dollars in thousands except per share data) 2025 2025 2025 2024 2024 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2025 2024 EARNINGS Net interest income $ 52,002 49,479 48,548 48,361 48,292 150,029 142,725 Provision for credit losses $ 200 1,600 2,100 1,500 1,100 3,900 5,900 Noninterest income $ 10,388 11,462 8,702 10,172 9,667 30,552 30,217 Noninterest expense $ 34,750 33,379 31,104 33,806 32,303 99,233 91,983 Net income before federal income tax expense $ 27,440 25,962 24,046 23,227 24,556 77,448 75,059 Net income $ 23,758 22,618 19,537 19,626 19,618 65,913 59,967 Basic earnings per share $ 1.46 1.39 1.21 1.22 1.22 4.06 3.72 Diluted earnings per share $ 1.46 1.39 1.21 1.22 1.22 4.06 3.72 Average basic shares outstanding 16,249,267 16,239,919 16,197,978 16,142,578 16,138,320 16,229,243 16,126,706 Average diluted shares outstanding 16,249,267 16,239,919 16,197,978 16,142,578 16,138,320 16,229,243 16,126,706 PERFORMANCE RATIOS Return on average assets 1.50 % 1.50 % 1.32 % 1.30 % 1.35 % 1.44 % 1.43 % Return on average equity 14.72 % 14.72 % 13.34 % 13.36 % 13.73 % 14.28 % 14.66 % Net interest margin (fully tax-equivalent) 3.50 % 3.49 % 3.47 % 3.41 % 3.52 % 3.49 % 3.62 % Efficiency ratio 55.70 % 54.77 % 54.33 % 57.76 % 55.73 % 54.95 % 53.19 % Full-time equivalent employees 683 692 662 668 653 683 653 YIELD ON ASSETS / COST OF FUNDS Yield on loans 6.38 % 6.32 % 6.31 % 6.41 % 6.69 % 6.33 % 6.66 % Yield on securities 3.04 % 2.97 % 2.79 % 2.62 % 2.43 % 2.97 % 2.31 % Yield on interest-earning deposits 4.33 % 4.36 % 4.40 % 4.66 % 5.37 % 4.36 % 5.34 % Yield on total earning assets 5.75 % 5.77 % 5.74 % 5.81 % 6.08 % 5.76 % 6.06 % Yield on total assets 5.41 % 5.44 % 5.42 % 5.49 % 5.73 % 5.43 % 5.72 % Cost of deposits 2.20 % 2.24 % 2.23 % 2.36 % 2.52 % 2.22 % 2.40 % Cost of borrowed funds 3.61 % 3.61 % 3.62 % 3.73 % 3.75 % 3.62 % 3.60 % Cost of interest-bearing liabilities 3.06 % 3.09 % 3.08 % 3.30 % 3.53 % 3.08 % 3.40 % Cost of funds (total earning assets) 2.25 % 2.28 % 2.27 % 2.40 % 2.56 % 2.27 % 2.44 % Cost of funds (total assets) 2.12 % 2.15 % 2.14 % 2.27 % 2.41 % 2.14 % 2.30 % MORTGAGE BANKING ACTIVITY Total mortgage loans originated $ 136,840 141,921 100,396 121,010 160,944 379,157 363,602 Purchase mortgage loans originated $ 107,993 111,247 81,494 82,212 122,747 300,734 284,354 Refinance mortgage loans originated $ 28,847 30,674 18,902 38,798 38,197 78,423 79,248 Mortgage loans originated with intent to sell $ 111,334 112,323 80,453 100,628 128,678 304,110 279,448 Income on sale of mortgage loans $ 3,482 3,219 2,455 3,768 3,376 9,156 7,927 CAPITAL Tangible equity to tangible assets 9.72 % 9.49 % 9.17 % 8.91 % 9.10 % 9.72 % 9.10 % Tier 1 leverage capital ratio 10.90 % 10.93 % 10.75 % 10.60 % 10.68 % 10.90 % 10.68 % Common equity risk-based capital ratio 11.33 % 10.90 % 10.90 % 10.66 % 10.53 % 11.33 % 10.53 % Tier 1 risk-based capital ratio 12.20 % 11.75 % 11.78 % 11.54 % 11.42 % 12.20 % 11.42 % Total risk-based capital ratio 14.87 % 14.37 % 14.44 % 14.17 % 14.13 % 14.87 % 14.13 % Tier 1 capital $ 685,440 666,068 647,795 633,134 618,038 685,440 618,038 Tier 1 plus tier 2 capital $ 835,263 814,796 794,143 777,857 764,653 835,263 764,653 Total risk-weighted assets $ 5,617,005 5,670,571 5,499,046 5,487,886 5,411,628 5,617,005 5,411,628 Book value per common share $ 40.46 38.87 37.47 36.20 36.14 40.46 36.14 Tangible book value per common share $ 37.41 35.82 34.42 33.14 33.07 37.41 33.07 Cash dividend per common share $ 0.38 0.37 0.37 0.36 0.36 1.12 1.06 ASSET QUALITY Gross loan charge-offs $ 172 38 63 3,787 10 273 51 Recoveries $ 726 147 175 150 92 1,048 827 Net loan charge-offs (recoveries) $ (554) (109) (112) 3,637 (82) (775) (776) Net loan charge-offs to average loans (0.05 %) (0.01 %) (0.01 %) 0.31 % (0.01 %) (0.02 %) (0.02 %) Allowance for credit losses $ 59,129 58,375 56,666 54,454 56,590 59,129 56,590 Allowance to loans 1.28 % 1.24 % 1.22 % 1.18 % 1.24 % 1.28 % 1.24 % Nonperforming loans $ 9,844 9,743 5,361 5,743 9,877 9,844 9,877 Other real estate/repossessed assets $ 0 0 0 0 0 0 0 Nonperforming loans to total loans 0.21 % 0.21 % 0.12 % 0.12 % 0.22 % 0.21 % 0.22 % Nonperforming assets to total assets 0.16 % 0.16 % 0.09 % 0.09 % 0.17 % 0.16 % 0.17 % NONPERFORMING ASSETS - COMPOSITION Residential real estate: Land development $ 69 73 95 97 100 69 100 Construction $ 0 0 0 0 0 0 0 Owner occupied / rental $ 2,735 2,411 2,968 2,878 3,008 2,735 3,008 Commercial real estate: Land development $ 0 0 0 0 0 0 0 Construction $ 5,532 5,532 0 0 0 5,532 0 Owner occupied $ 0 0 41 42 0 0 0 Non-owner occupied $ 0 0 0 0 0 0 0 Non-real estate: Commercial assets $ 1,508 1,727 2,257 2,726 6,769 1,508 6,769 Consumer assets $ 0 0 0 0 0 0 0 Total nonperforming assets $ 9,844 9,743 5,361 5,743 9,877 9,844 9,877 NONPERFORMING ASSETS - RECON Beginning balance $ 9,743 5,361 5,743 9,877 9,129 5,743 3,615 Additions $ 426 5,792 423 224 906 6,641 8,278 Return to performing status $ (27) 0 0 (102) 0 (27) 0 Principal payments $ (222) (1,385) (744) (515) (158) (2,351) (1,816) Sale proceeds $ 0 0 0 0 0 0 (200) Loan charge-offs $ (76) (25) (61) (3,741) 0 (162) 0 Valuation write-downs $ 0 0 0 0 0 0 0 Ending balance $ 9,844 9,743 5,361 5,743 9,877 9,844 9,877 LOAN PORTFOLIO COMPOSITION Commercial: Commercial & industrial $ 1,337,729 1,375,368 1,314,383 1,287,308 1,312,774 1,337,729 1,312,774 Land development & construction $ 70,806 67,520 68,790 66,936 66,374 70,806 66,374 Owner occupied comm'l R/E $ 729,451 725,106 705,645 748,837 746,714 729,451 746,714 Non-owner occupied comm'l R/E $ 1,091,210 1,134,012 1,183,728 1,128,404 1,095,988 1,091,210 1,095,988 Multi-family & residential rental $ 521,111 519,152 479,045 475,819 426,438 521,111 426,438 Total commercial $ 3,750,307 3,821,158 3,751,591 3,707,304 3,648,288 3,750,307 3,648,288 Retail: 1-4 family mortgages & home equity $ 780,917 799,426 817,212 827,597 844,093 780,917 844,093 Other consumer $ 83,936 77,435 67,746 65,880 60,637 83,936 60,637 Total retail $ 864,853 876,861 884,958 893,477 904,730 864,853 904,730 Total loans $ 4,615,160 4,698,019 4,636,549 4,600,781 4,553,018 4,615,160 4,553,018 END OF PERIOD BALANCES Loans $ 4,615,160 4,698,019 4,636,549 4,600,781 4,553,018 4,615,160 4,553,018 Securities $ 876,651 847,928 809,096 751,865 724,888 876,651 724,888 Interest-earning deposits $ 418,426 197,172 315,140 336,019 240,780 418,426 240,780 Total earning assets (before allowance) $ 5,910,237 5,743,119 5,760,785 5,688,665 5,518,686 5,910,237 5,518,686 Total assets $ 6,308,487 6,180,988 6,141,200 6,052,161 5,917,127 6,308,487 5,917,127 Noninterest-bearing deposits $ 1,182,775 1,180,801 1,173,499 1,264,523 1,182,219 1,182,775 1,182,219 Interest-bearing deposits $ 3,629,038 3,529,671 3,508,286 3,433,843 3,273,679 3,629,038 3,273,679 Total deposits $ 4,811,813 4,710,472 4,681,785 4,698,366 4,455,898 4,811,813 4,455,898 Total borrowed funds $ 739,688 740,685 749,711 649,528 778,669 739,688 778,669 Total interest-bearing liabilities $ 4,368,726 4,270,356 4,257,997 4,083,371 4,052,348 4,368,726 4,052,348 Shareholders' equity $ 657,630 631,519 608,346 584,526 583,311 657,630 583,311 AVERAGE BALANCES Loans $ 4,668,173 4,695,367 4,629,098 4,565,837 4,467,365 4,664,356 4,387,958 Securities $ 863,367 824,777 784,608 742,145 699,872 824,539 658,352 Interest-earning deposits $ 389,033 193,637 266,871 330,490 284,187 283,628 205,972 Total earning assets (before allowance) $ 5,920,573 5,713,781 5,680,577 5,638,472 5,451,424 5,772,523 5,252,282 Total assets $ 6,294,841 6,061,819 6,018,158 5,967,036 5,781,111 6,125,953 5,567,133 Noninterest-bearing deposits $ 1,215,918 1,152,631 1,144,781 1,188,561 1,191,642 1,171,789 1,169,220 Interest-bearing deposits $ 3,610,600 3,463,067 3,443,770 3,335,477 3,145,799 3,506,005 2,965,035 Total deposits $ 4,826,518 4,615,698 4,588,551 4,524,038 4,337,441 4,677,794 4,134,255 Total borrowed funds $ 749,679 749,811 738,628 770,838 796,077 746,080 804,470 Total interest-bearing liabilities $ 4,360,279 4,212,878 4,182,398 4,106,315 3,941,876 4,252,085 3,769,505 Shareholders' equity $ 640,495 616,229 594,145 582,829 566,852 617,126 545,046 SOURCE Mercantile Bank Corporation WANT YOUR COMPANY'S NEWS FEATURED ON 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Mercantile Bank Corporation Announces Strong Third Quarter 2025 Results

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