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GRAND RAPIDS, Mich., Sept. 30, 2025 /PRNewswire/ -- Mercantile Bank Corporation(NASDAQ: MBWM) will host a conference call and webcast at 10 a.m. ET on Tuesday, October 21, 2025, to discuss third quarter 2025 financial results. The Company's third quarter 2025 earnings release will be released before markets open on Tuesday, October 21, 2025, and available in the "Investor Relations" section of the Company's website, ir.mercbank.com. Participants may access the live conference call on October 21, 2025, at 10 ...

Core Insights - Mercantile Bank, Michigan's largest community bank with approximately $6.2 billion in assets, has selected Jack Henry to enhance its technology infrastructure and support long-term growth strategies [1][6]. - The partnership aims to streamline operations, automate manual processes, and improve system integration through Jack Henry's core processing platform and Enterprise Workflow solution [3][4]. Company Overview - Mercantile Bank, founded in 1997, operates nearly 50 locations across Michigan and offers a diverse range of banking services, including commercial, consumer, municipal, nonprofit, and agricultural banking [2][6]. - Jack Henry, an S&P 500 company, provides financial technology solutions to approximately 7,400 clients, focusing on innovation, collaboration, and user-centric services [5]. Strategic Goals - The collaboration with Jack Henry is expected to facilitate Mercantile Bank's organic growth, market expansion, and strategic acquisitions [4]. - The technology upgrade is designed to enhance customer service and operational efficiency, aligning with Mercantile's mission-driven approach and commitment to community service [4][6].

Company Overview - Mercantile Bank (MBWM) is headquartered in Grand Rapids and operates in the Finance sector, with a stock price change of 8.65% since the beginning of the year [3]. Dividend Information - The company currently pays a dividend of $0.38 per share, resulting in a dividend yield of 3.14%, which is higher than the Banks - Midwest industry's yield of 2.94% and the S&P 500's yield of 1.49% [3]. - The annualized dividend of $1.52 represents a 7% increase from the previous year, with a historical average annual increase of 6.33% over the last five years [4]. - The current payout ratio is 29%, indicating that the company pays out 29% of its trailing 12-month earnings per share as dividends [4]. Earnings Growth Expectations - For the fiscal year, MBWM anticipates solid earnings growth, with the Zacks Consensus Estimate for 2025 at $5.23 per share, reflecting a 6.09% increase from the previous year [5]. Investment Appeal - Dividends are favored by investors as they enhance stock investing profits, reduce overall portfolio risk, and offer tax advantages [5]. - MBWM is characterized as an attractive dividend play and a compelling investment opportunity, holding a Zacks Rank of 1 (Strong Buy) [6].

Company Overview - Mercantile Bank (MBWM) is headquartered in Grand Rapids and has experienced a price change of 0.09% this year [3] - The company currently pays a dividend of $0.37 per share, resulting in a dividend yield of 3.32%, which is higher than the Banks - Midwest industry's yield of 3.19% and the S&P 500's yield of 1.53% [3] Dividend Performance - The annualized dividend of Mercantile Bank is $1.48, reflecting a 4.2% increase from the previous year [4] - Over the past 5 years, the company has increased its dividend 5 times, achieving an average annual increase of 6.33% [4] - The current payout ratio is 29%, indicating that the company pays out 29% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for Mercantile Bank's earnings in 2025 is $5.23 per share, with an expected increase of 6.09% from the previous year [5] - The company is viewed as an attractive dividend play and a compelling investment opportunity, holding a Zacks Rank of 1 (Strong Buy) [6]

Part I. Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Mercantile Bank Corporation as of June 30, 2025, and for the three and six-month periods then ended [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$6.18 billion** from **$6.05 billion** at year-end 2024, driven by growth in loans and securities available for sale Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$6,180,988** | **$6,052,161** | | Loans, net | $4,639,644 | $4,546,327 | | Securities available for sale | $826,415 | $730,352 | | Total cash and cash equivalents | $296,072 | $393,010 | | **Total Liabilities** | **$5,549,469** | **$5,467,635** | | Total deposits | $4,710,472 | $4,698,366 | | Federal Home Loan Bank advances | $356,221 | $387,083 | | **Total Shareholders' Equity** | **$631,519** | **$584,526** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) For the second quarter of 2025, net income was **$22.6 million**, an increase from **$18.8 million** in Q2 2024, driven by higher net interest income and lower provision for credit losses Key Income Statement Data (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $49,479 | $47,072 | $98,027 | $94,434 | | Provision for credit losses | $1,600 | $3,500 | $3,700 | $4,800 | | **Net Income** | **$22,618** | **$18,786** | **$42,155** | **$40,348** | | Diluted EPS | $1.39 | $1.17 | $2.60 | $2.50 | [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Comprehensive income for the first six months of 2025 was **$56.2 million**, a significant increase from **$37.6 million** in the same period of 2024, primarily due to higher net income and positive changes in unrealized gains on securities Comprehensive Income (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $22,618 | $18,786 | $42,155 | $40,348 | | Other comprehensive income (loss), net of tax | $4,901 | $(269) | $14,059 | $(2,757) | | **Comprehensive Income (Loss)** | **$27,519** | **$18,517** | **$56,214** | **$37,591** | [Consolidated Statements of Changes in Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) Shareholders' equity increased from **$584.5 million** at the beginning of 2025 to **$631.5 million** at June 30, 2025, primarily due to **$42.2 million** in net income and a **$14.1 million** positive change in accumulated other comprehensive income, partially offset by **$11.8 million** in cash dividends - Key drivers for the increase in shareholders' equity in the first six months of 2025 were net income and a favorable change in net unrealized gains on securities available for sale[21](index=21&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities was **$10.8 million**, and net cash used in investing activities was **$177.3 million**, primarily due to loan originations and securities purchases, resulting in a net decrease in cash and cash equivalents of **$96.9 million** Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from (for) operating activities | $(10,781) | $49,349 | | Net cash for investing activities | $(177,287) | $(168,605) | | Net cash from financing activities | $91,130 | $186,352 | | **Net change in cash and cash equivalents** | **$(96,938)** | **$67,096** | [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, financial components, and a significant subsequent merger event, highlighting a **$3.7 million** provision for credit losses in H1 2025, a **$45.3 million** net unrealized loss on securities, and the bank's 'well capitalized' regulatory status - The provision for credit losses was **$3.7 million** for the first six months of 2025, primarily reflecting a net increase in individual allocations, net loan growth, and changes in the economic forecast[60](index=60&type=chunk) - As of June 30, 2025, the bank was categorized as 'well capitalized' under the regulatory framework for prompt corrective action[182](index=182&type=chunk) - On July 22, 2025, the company entered into a definitive merger agreement to acquire Eastern Michigan Financial Corporation (EFIN) for an aggregate transaction value of approximately **$95.8 million**[192](index=192&type=chunk)[193](index=193&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=54&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong H1 2025 performance to increased net interest income, lower provision expense, and reduced federal income tax, with total assets growing to **$6.18 billion**, commercial loans increasing by **$114 million**, and nonperforming loans at **0.21%** of total loans, while highlighting the pending merger with Eastern Michigan Financial Corporation - Net income for Q2 2025 was **$22.6 million** (**$1.39** per diluted share), up from **$18.8 million** (**$1.17** per diluted share) in Q2 2024, with H1 2025 net income at **$42.2 million**, up from **$40.3 million** in H1 2024[204](index=204&type=chunk) - Commercial loans grew by **$114 million** in the first six months of 2025, an annualized rate of about **6%**, with a strong commercial loan pipeline of **$237 million** in unfunded commitments[205](index=205&type=chunk) - The overall quality of the loan portfolio remains strong, with nonperforming loans at **0.21%** of total loans as of June 30, 2025[207](index=207&type=chunk) - The effective tax rate for H1 2025 was **15.7%**, down from **20.1%** in H1 2024, primarily due to a **$1.5 million** benefit from the acquisition of transferable energy tax credits[214](index=214&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, managed through GAP analysis and NII simulation, which indicates a **2.7%** increase in NII for a **100 basis point** rate rise and a **2.9%** decrease for a **100 basis point** rate drop over 12 months - The primary market risk exposure is identified as interest rate risk, with all transactions denominated in U.S. dollars[268](index=268&type=chunk) Net Interest Income Sensitivity Analysis (as of June 30, 2025) | Interest Rate Scenario | Dollar Change (in thousands) | Percent Change | | :--- | :--- | :--- | | Down 400 bps | $(29,500) | (13.1)% | | Down 200 bps | $(15,000) | (6.6)% | | Down 100 bps | $(6,600) | (2.9)% | | Up 100 bps | $6,200 | 2.7% | | Up 200 bps | $12,800 | 5.7% | | Up 300 bps | $19,000 | 8.4% | [Item 4. Controls and Procedures](index=73&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of June 30, 2025[280](index=280&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[281](index=281&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=74&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no involvement in any legal proceedings considered material to its financial condition - The company is not involved in any material legal proceedings[283](index=283&type=chunk) [Item 1A. Risk Factors](index=74&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors to include those related to the definitive merger agreement with Eastern Michigan Financial Corporation, covering potential non-consummation, integration difficulties, business uncertainties, and substantial transaction costs - On July 22, 2025, Mercantile announced a definitive merger agreement to acquire Eastern Michigan Financial Corporation[285](index=285&type=chunk) - Risks associated with the merger include: - The merger may not be consummated due to failure to meet closing conditions, such as shareholder and regulatory approvals[286](index=286&type=chunk) - Integration may be more difficult, costly, or time-consuming than expected, and anticipated benefits may not be realized[288](index=288&type=chunk) - Uncertainty about the merger's effect could adversely impact business relationships and employee retention[290](index=290&type=chunk) - Substantial non-recurring transaction costs are expected, regardless of whether the merger is completed[292](index=292&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or share repurchases occurred in Q2 2025, with **$6.8 million** remaining available under the existing stock repurchase program - No unregistered sales of equity securities were made in Q2 2025[293](index=293&type=chunk) - No shares were repurchased during the second quarter of 2025. As of June 30, 2025, **$6.8 million** remains available under the existing stock repurchase program[294](index=294&type=chunk)[296](index=296&type=chunk) [Item 6. Exhibits](index=77&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, security holder rights instruments, CEO/CFO certifications, and Inline XBRL financial statements

Core Viewpoint - Mercantile Bank (MBWM) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][4][6]. Earnings Estimates and Ratings - The Zacks rating system is solely based on a company's changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2]. - The Zacks rating upgrade for Mercantile Bank reflects an improvement in its earnings outlook, which is expected to positively impact its stock price [4][6]. Impact of Earnings Estimate Revisions - There is a strong correlation between changes in earnings estimates and near-term stock price movements, with institutional investors using these estimates to determine fair value [5][7]. - For Mercantile Bank, a 5.4% increase in the Zacks Consensus Estimate over the past three months indicates a positive trend in earnings expectations [9]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [8]. - The upgrade of Mercantile Bank to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10][11].

Group 1: Edenred SE (EDNMY) - Edenred is a digital platform for services and payments for companies, employees, and merchants [1] - The company has a Zacks Rank of 1 and a Value Score of B [1] - The Zacks Consensus Estimate for its current year earnings has increased by 2.9% over the last 60 days [1] - Edenred has a price-to-earnings ratio (P/E) of 11.12, significantly lower than the industry average of 32.80 [1] Group 2: Tenet Healthcare Corporation (THC) - Tenet Healthcare is a diversified healthcare services company [2] - The company holds a Zacks Rank of 1 and a Value Score of A [2] - The Zacks Consensus Estimate for its current year earnings has increased nearly 3% over the last 60 days [2] - Tenet Healthcare has a price-to-earnings ratio (P/E) of 12.11, compared to 23.85 for the S&P 500 [2] Group 3: Mercantile Bank Corporation (MBWM) - Mercantile Bank is a bank holding company for Mercantile Bank of Michigan [3] - The company carries a Zacks Rank of 1 and a Value Score of B [3] - The Zacks Consensus Estimate for its current year earnings has increased by 2.9% over the last 60 days [3] - Mercantile Bank has a price-to-earnings ratio (P/E) of 9.81, which is lower than the S&P 500 average of 23.85 [3]

Core Viewpoint - Mercantile Bank Corporation is conducting its Q2 2025 earnings conference call to discuss financial results and future projections [1][3]. Group 1: Company Overview - The conference call features key participants including Nichole Kladder (Chief Marketing Officer), Raymond Reitsma (President and CEO), and Charles Christmas (Executive VP and CFO) [1][3]. - The agenda includes prepared remarks from the CEO and CFO, followed by a Q&A session [4]. Group 2: Financial Results Discussion - The company will present its financial results for the second quarter of 2025, with a focus on revenue, earnings, and capital structure [4].

Financial Data and Key Metrics Changes - The company reported net income of $22.6 million or $1.39 per diluted share for Q2 2025, compared to $18.8 million or $1.17 per diluted share for Q2 2024, reflecting a strong year-over-year growth [13] - Net income for the first half of 2025 totaled $42.2 million or $2.6 per diluted share, compared to $40.3 million or $2.5 per diluted share for the same period in 2024 [13] - Interest income on loans increased by $3.1 million during Q2 2025 compared to the prior year, driven by strong loan growth [15] - Average loans grew to $4.7 billion in Q2 2025, a nearly 7% increase from $4.4 billion in Q2 2024 [14] - The net interest margin declined by 14 basis points in 2025 compared to Q2 2024, impacted by a 100 basis point decline in the federal funds rate [17] Business Line Data and Key Metrics Changes - Mortgage banking income increased by 23.4% in 2025 compared to 2024, with a significant reduction of $50 million in residential mortgages on the balance sheet [6][8] - Service charges on accounts grew by 18.1%, reflecting growth in the deposit base and increased activity levels [8] - Payroll services revenue increased by 15.2%, indicating a successful high-service model [8] - Credit and debit card income grew by 3.7%, while interest rate swap income recovered significantly in Q2 2025 compared to Q1 2025 [9] Market Data and Key Metrics Changes - The company experienced a 13% increase in local deposits as of June 30, 2025, compared to the same date in 2024, which helped reduce the loan-to-deposit ratio from 107% to just under 100% [9] - The strategic partnership with Eastern Michigan Bank is expected to enhance deposit gathering activities and provide entry into new markets [10] Company Strategy and Development Direction - The company announced a strategic partnership with Eastern Michigan Bank, which is expected to provide cost savings and enhance balance sheet liquidity [10][11] - The transition to a new core provider, Jack Henry, is scheduled for early 2027, with expected cost savings and improved service delivery [11] - The company aims to grow its loan portfolio, particularly in mortgage banking and larger commercial loans, leveraging the strengths of Eastern Michigan Bank [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current economic uncertainty, with expectations of loan growth of 1% to 2% in Q3 and 3% to 5% in Q4 2025 [21] - The company is focused on maintaining a strong balance sheet and minimizing the impact of changing interest rates on net interest margin [18] - Management noted that customers continue to report strong results despite the challenging operating environment [8] Other Important Information - The company recorded a provision expense of $1.6 million in Q2 2025, reflecting increased allocations on specific financially stressed lending relationships [18] - The effective tax rate for Q2 2025 was about 13%, significantly lower than the projected rate of 19%, due to the acquisition of transferable energy tax credits [19] - The total risk-based capital ratio was 13.9% as of June 30, 2025, indicating a well-capitalized position [20] Q&A Session Summary Question: Can you provide details on cost savings related to the core system change? - Management expects cost savings of approximately $5.5 million, with about 50% realized in 2026 and over 90% in 2027, following the core conversion [28][30] Question: What are the growth opportunities in the Eastern Michigan loan portfolio? - The loan book is of high quality, and management sees opportunities to grow in mortgage banking and larger commercial loans [34] Question: How does the company plan to manage deposit and loan growth? - The company aims for loan growth of 5% to 8% annually and will continue to focus on local deposit growth to support this [42][44] Question: What is the outlook for fee income in the second half of the year? - Management anticipates a step down in fee income from strong Q2 results, particularly in mortgage banking and interest rate swaps [54] Question: What is the expected timing for the closing of the Eastern Michigan Bank acquisition? - The acquisition is expected to close in the back half of Q4 2025, likely around November 30 or year-end, pending regulatory approval [55] Question: Are there additional M&A opportunities on the horizon? - Management remains open to pursuing additional M&A opportunities if they find a partner with similar strengths as Eastern Michigan Bank [64]