Mercantile Bank Corporation Announces Robust Third Quarter 2026 Results

Lower funding costs lifted net interest margin, while higher expenses and taxes accompanied a decline in quarterly diluted earnings.

Rhea-AI Summary

Mercantile Bank (NASDAQ: MBWM) reported third-quarter 2026 net income of $24.1 million, slightly above the prior-year quarter.

Diluted earnings fell to $1.39 from $1.46. Net revenue rose 17.3% to $73.2 million, including net interest income of $60.9 million, up 17.1%. Net interest margin increased to 3.73% from 3.49%, as funding costs declined. Noninterest income grew 18.4% to $12.3 million, while noninterest expense increased to $43.6 million from $34.8 million.

First-nine-month net income reached $72.7 million, versus $65.9 million a year earlier. Local deposits grew $438 million during that period, and the loan-to-deposit ratio declined to 88.3% at September 30 from 91.2% at year-end. Third-quarter loans increased $37.4 million despite elevated commercial loan payoffs and paydowns. Mercantile expects its core and digital banking system conversion in the first quarter of 2027.

22 points · 0 major

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0 major · 11 points

Hollow bars mark forward-looking points. How the balance works

Positive

• Moderate pointFirst-nine-month net income increased to $72.7 million from $65.9 million; diluted EPS rose to $4.21 from $4.06.
• Moderate pointNet revenue increased 17.3% year over year to $73.2 million in the third quarter.
• Moderate pointNet interest margin increased to 3.73% from 3.49% in the prior-year third quarter.
• Moderate pointTotal assets increased $328 million from December 31, 2025, to $7.16 billion at September 30.
• Moderate pointTotal loans grew $37.4 million in the third quarter and $131 million in the first nine months.
• Moderate pointTotal deposits reached $5.61 billion at September 30, versus $5.28 billion at December 31, 2025.

16 minor points

• Minor pointThird-quarter net income rose to $24.1 million from $23.8 million a year earlier.
• Minor pointAdjusted first-nine-month diluted EPS increased 7.8% to $4.41, excluding non-recurring costs and other one-time items.
• Minor pointNet interest income rose 17.1% year over year to $60.9 million in the third quarter.
• Minor pointCost of funds declined to 1.79% from 2.25% in the prior-year third quarter.
• Minor pointSecurities yield rose to 3.43% from 2.90% in the prior-year third quarter.
• Minor pointNoninterest income increased 18.4% year over year to $12.3 million in the third quarter.
• Minor pointTreasury management fees increased approximately 28% compared with the prior-year third quarter.
• Minor pointTangible book value per common share reached $37.81, up nearly 4% annualized since December 31, 2025.
• Minor pointCommercial loans expanded $20.4 million in the third quarter and $152 million in the first nine months.
• Minor pointResidential mortgage loans increased $13.2 million during the third quarter.
• Minor pointOther consumer loans increased $3.8 million in the third quarter and $6.1 million in the first nine months.
• Minor pointLocal deposits grew $438 million, or an annualized 11.4%, during the first nine months.
• Minor pointBrokered deposits decreased $110 million in the first nine months, leaving $20.1 million scheduled to mature in late 2026.
• Minor pointLoan-to-deposit ratio declined to 88.3% from 91.2% at year-end and 92.8% at June 30.
• Minor pointAsset quality included net loan recoveries and continued low nonperforming assets during the third quarter.
• Minor point. Forward-looking: it has not happened yet and may not happen.Banking system conversion is expected in the first quarter of 2027; personnel investments also support Southeast Michigan expansion.

Negative

• Moderate pointThird-quarter diluted EPS fell to $1.39 from $1.46 a year earlier.
• Moderate pointNoninterest expense increased to $43.6 million from $34.8 million in the prior-year third quarter.
• Moderate pointCommercial loan payoffs and paydowns totaled $147 million in the third quarter, above the approximately $50 million historical quarterly average.
• Minor pointAdjusted third-quarter diluted EPS declined to $1.42 from $1.50, excluding non-recurring costs and other one-time items.
• Minor pointCredit-loss provision increased to $0.7 million from $0.2 million in the prior-year third quarter.

6 minor points

• Minor pointFederal income tax expense rose to $4.9 million from $3.7 million; effective tax rate increased to 16.8% from 13.4%.
• Minor pointEarning-asset yield declined to 5.52% from 5.74% in the prior-year third quarter.
• Minor pointLoan yield fell to 6.12% from 6.35%, mainly reflecting lower rates on variable-rate commercial loans.
• Minor pointResidential mortgage loans declined $27.1 million during the first nine months of 2026.
• Minor pointSecurities available for sale fell $4.2 million in the first nine months, mainly reflecting increased net unrealized losses.
• Minor pointUnfunded construction commitments totaled $266 million commercial and $43.9 million residential at September 30.

News Explained

As of September 30, 2026, Mercantile reported $266 million in unfunded commercial construction and development loan commitments, expected to fund over 12 to 18 months, and $43.9 million in residential construction commitments, expected to be largely funded within 12 months.

Key Figures

Q3 net income: $24.1 million vs. $23.8 million Diluted EPS: $1.39 vs. $1.46 Nine-month net income: $72.7 million vs. $65.9 million +5 more

Q3 net income

$24.1 million vs. $23.8 million

Third quarter 2026 vs. third quarter 2025

Diluted EPS

$1.39 vs. $1.46

Third quarter 2026 vs. third quarter 2025

Nine-month net income

$72.7 million vs. $65.9 million

First nine months of 2026 vs. first nine months of 2025

Adjusted diluted EPS increase

$0.32, or 7.8%

First nine months of 2026 vs. respective 2025 period

Net revenue

$73.2 million, up $10.8 million or 17.3%

Third quarter 2026 vs. prior-year third quarter

Net interest margin

3.73% vs. 3.49%

Third quarter 2026 vs. prior-year third quarter

Local deposit growth

$438 million, or an annualized 11.4%

First nine months of 2026

Loan-to-deposit ratio

88.3% vs. 91.2%

September 30, 2026 vs. December 31, 2025

Previous Earnings Reports

3 past events · Latest: Jul 21

Same Type 3 events

1. Jul 21

   Quarterly earnings

   24h Move

   +3.5%

   Reported Q2 net income growth, adjusted EPS increase, and net revenue expansion.

2. Apr 21

   Quarterly earnings

   24h Move

   -3.4%

   Reported Q1 net income of $22.7 million and net revenue growth exceeding 18%.

3. Oct 21

   Quarterly earnings

   24h Move

   +0.6%

   Reported year-over-year Q3 net income growth and net interest income expansion.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

non-gaap, net interest margin, loan-to-deposit ratio, interest rate swap

4 terms

non-gaap financial

"adjusted net income was $24.5 million"

Non-GAAP refers to financial measures that companies use to show their earnings or performance without including certain expenses or income that are often added back to give a different picture. It matters because it can make a company's results look better or more favorable, but it may also hide important costs, so investors need to look at both GAAP (official rules) and non-GAAP numbers to get a full understanding.

View in glossary

net interest margin financial

"The net interest margin was 3.73 percent"

Net interest margin measures how much a bank earns from lending and investing compared with what it pays for funding, expressed as a percentage of its interest-earning assets. Think of it like a grocery store’s markup: it shows the gap between buying cost and selling price per dollar of goods — here, the cost is interest paid and the sale is interest received. Investors watch it because a higher margin usually means a bank is more profitable and better at managing interest rate and credit conditions.

loan-to-deposit ratio financial

"The loan-to-deposit ratio equaled 88.3 percent"

Loan-to-deposit ratio measures how much a bank has lent out compared with the money customers have deposited, expressed as a percentage. Think of it like the share of a household’s savings that has been loaned to others: a higher ratio can boost earnings but reduce cash on hand and increase risk, while a lower ratio means more liquidity but potentially lower returns—key for investors assessing a bank’s balance of profit and safety.

interest rate swap financial

"increases in treasury management fees, interest rate swap income"

An interest rate swap is a financial agreement where two parties exchange interest payments on a set amount of money over time. Typically, one side pays a fixed interest rate, while the other pays a variable rate that can change with market conditions. This helps investors manage or reduce their exposure to interest rate fluctuations, much like locking in a mortgage rate to avoid future cost increases.

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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

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were Mercantile Bank's third-quarter 2026 earnings?

Mercantile Bank earned $24.1 million, or $1.39 per diluted share, compared with $23.8 million, or $1.46 per diluted share, in the third quarter of 2025. Adjusted earnings, excluding non-recurring acquisition and banking conversion costs and other one-time items, were $24.5 million, or $1.42 per diluted share.

When does Mercantile Bank expect to fund its construction loan commitments?

Mercantile expects its $266 million of unfunded commercial construction and development commitments to be funded over the next 12 to 18 months. Its $43.9 million of residential construction commitments are expected to be largely funded over the next 12 months. Both balances were measured as of September 30, 2026.