GRAND RAPIDS, Mich., Dec. 31, 2025 /PRNewswire/ -- Mercantile Bank Corporation (NASDAQ: MBWM) ("Mercantile") announced today the completion of its previously announced merger with Eastern Michigan Financial Corporation ("Eastern"). This strategic combination brings together two financial institutions with shared values and deep commitments to serving Michigan's families, businesses and communities. The newly acquired Eastern Michigan Bank will operate alongside Mercantile's existing bank, Mercantile Bank, ...

GRAND RAPIDS, Mich., Dec. 16, 2025 /PRNewswire/ -- Mercantile Bank Corporation ("Mercantile") (NASDAQ: MBWM) and Eastern Michigan Financial Corporation ("Eastern") (OTCID: EFIN) today jointly announced that the Federal Reserve Bank of Chicago has approved the proposed merger of Mercantile and Eastern. As previously announced, Mercantile and Eastern entered into an Agreement and Plan of Merger (as amended by the First Amendment dated October 5, 2025, the "Merger Agreement"), pursuant to which Eastern will me ...

Financial Performance - Net income for Q3 2025 was $23.8 million, or $1.46 per diluted share, compared to $19.6 million, or $1.22 per diluted share in Q3 2024, reflecting a growth of 21.4%[205] - Net income for the first nine months of 2025 was $65.9 million, or $4.06 per share, compared to $60.0 million, or $3.72 per share, for the same period in 2024[253] - Income before federal income tax for Q3 2025 was $27.5 million, up from $24.5 million in Q3 2024, with a total of $77.4 million for the first nine months of 2025 compared to $75.1 million in 2024[269] - Federal income tax expense decreased to $3.7 million in Q3 2025 from $4.9 million in Q3 2024, with an effective tax rate of 13.4%[214] - The effective tax rate improved to 13.4% in Q3 2025 from 20.1% in Q3 2024, largely due to tax benefits from transferable energy tax credits[270] Asset and Deposit Growth - Total assets increased by $256 million during the first nine months of 2025, reaching $6.31 billion as of September 30, 2025[216] - Total deposits increased by $113 million during the first nine months of 2025, with money market deposit accounts growing by $149 million[210] - Uninsured deposits reached approximately $2.6 billion, or about 54% of total deposits, as of September 30, 2025, compared to approximately $2.2 billion, or 46% of total deposits, as of December 31, 2024[238] - Sweep accounts increased by $130 million during the first nine months of 2025, with an average balance of $239 million[245] Loan Performance - Commercial loans increased by $43.0 million in the first nine months of 2025, resulting in an annualized growth rate of approximately 2%[206] - As of September 30, 2025, total commercial loans amounted to $3.75 billion, representing 81.3% of total loans, up from $3.71 billion or 80.6% as of December 31, 2024[217] - Residential mortgage loans totaled $781 million, or 16.9% of total loans, with a decrease of $46.7 million during the first nine months of 2025[219] - Nonperforming loans represented 0.21% of total loans as of September 30, 2025, indicating strong loan portfolio quality[208] - Nonperforming loans totaled $9.8 million, or 0.2% of total loans, compared to $5.7 million, or 0.1% of total loans, as of December 31, 2024[223] Income and Expense Analysis - Net interest income rose by $3.7 million in Q3 2025 compared to Q3 2024, driven by solid loan growth despite a decline in net interest margin[211] - Noninterest income totaled $10.4 million in Q3 2025, up from $9.7 million in Q3 2024, primarily due to increased service charges and payroll services income[212] - Noninterest income increased to $10.4 million in Q3 2025, up $0.7 million or 7.5% from $9.7 million in Q3 2024, driven by growth in treasury management and payroll services fees[266] - Noninterest expense rose to $34.8 million in Q3 2025 from $32.3 million in Q3 2024, and totaled $99.2 million for the first nine months of 2025, compared to $92.0 million in 2024, primarily due to higher salary and benefit costs[268] Interest Income and Margin - Interest income for the third quarter of 2025 was $85.6 million, an increase of $2.2 million, or 2.7%, from the prior year[255] - Interest income for the first nine months of 2025 was $248 million, an increase of $8.9 million, or 3.7%, from $239 million in the same period of 2024[256] - The yield on average earning assets decreased to 5.75% in the third quarter of 2025 from 6.08% in the prior year, primarily due to lower interest rates on variable-rate commercial loans[255] - The net interest margin decreased to 3.49% in the first nine months of 2025, down from 3.62% in the same period of 2024[261] - The yield on loans was 6.33% during the first nine months of 2025, down from 6.66% in the same period of 2024[261] Credit Losses and Provisions - The allowance for credit losses is maintained at a level deemed adequate to absorb estimated credit losses, reflecting ongoing evaluations based on economic conditions[200] - The company recorded provision expense of $3.9 million during the first nine months of 2025, primarily due to specific allocations related to a commercial construction loan[208] - Provisions for credit losses were $0.2 million in Q3 2025, compared to $1.1 million in Q3 2024, with total provisions for the first nine months of 2025 at $3.9 million versus $5.9 million in 2024[265] Capital and Equity - Shareholders' equity increased by $73.1 million, totaling $658 million as of September 30, 2025, driven by net income of $65.9 million and a $21.3 million increase in market value of available-for-sale securities[241] - The total regulatory capital increased by $33.4 million during the first nine months of 2025, totaling $793 million, which is $236 million above the 10% minimum requirement[252] Interest Rate Risk Management - The company recorded a net asset GAP of $291.4 million within three months as of September 30, 2025, indicating a positive interest rate risk position[275] - Interest rate risk management includes GAP analysis and net interest income simulation analysis, with the latter being the primary measurement technique[278] - Under various interest rate scenarios, a 400 basis point decrease in rates could lead to a $31.7 million or 14.0% decline in net interest income[281] - Future net interest income is influenced by loan growth, economic conditions, and client preferences, among other factors[282]

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Financial Data and Key Metrics Changes - The company reported net income of $23.8 million or $1.46 per diluted share for Q3 2025, compared to $19.6 million or $1.22 per diluted share for Q3 2024, reflecting a strong year-over-year growth [8] - Net income for the first nine months of 2025 totaled $65.9 million or $4.06 per diluted share, up from $60 million or $3.72 per diluted share in the same period of 2024 [8] - The return on average assets was 1.5% and return on average equity was 14.7% for Q3 2025, with a 20% quarter-over-quarter earnings per share growth [7][8] Business Line Data and Key Metrics Changes - Annualized deposit growth for Q3 2025 was 9%, with a compounded annual growth rate of 11.8% over the last six year-end periods [5] - Loan growth contracted an annualized 7% in Q3 2025, attributed to anticipated loan paydowns, but commitments to make loans totaled $307 million, an all-time high [5][6] - Mortgage banking income grew by 12% during the first nine months of 2025 compared to the same period in 2024 [6] Market Data and Key Metrics Changes - Average loans totaled $4.6 billion in Q3 2025, an increase of $201 million or over 4% from Q3 2024 [9] - Average deposits increased to $4.83 billion in Q3 2025, up $489 million or over 11% from Q3 2024 [11] - The loan-to-deposit ratio improved to 96% from 102% a year earlier, indicating better liquidity management [4] Company Strategy and Development Direction - The company is focused on maintaining a strong and stable net interest margin, with a current margin of 3.5% despite a decline in the SOFR rate [3] - The planned acquisition of Eastern Michigan Financial Corporation is expected to positively impact net interest margin and overall financial metrics [7][20] - The company aims to manage its balance sheet to minimize the impact of changing interest rate environments on net interest margin [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges faced by financial institutions, highlighting strong asset quality and a commitment to excellence in underwriting [22] - The company projects loan growth in the range of 5% to 7% annualized for Q4 2025, despite potential headwinds from federal funds rate cuts [21] - Management anticipates that net interest margin will remain steady, supported by strategic initiatives and the upcoming acquisition [30] Other Important Information - The company recorded a provision expense of $0.2 million for Q3 2025, reflecting strong credit quality and net recoveries [16] - Non-interest expenses increased by $2.4 million in Q3 2025, primarily due to higher salary and benefit costs [18] - The effective tax rate for Q3 2025 was 13%, influenced by the acquisition of transferable energy tax credits [19] Q&A Session Summary Question: Inquiry on credit quality and normalized charge-off ratio - Management noted a conservative approach to charge-offs and a typical budget of 5% to 10% for net charge-offs [26][27] Question: Discussion on net interest margin and future rate cuts - Management acknowledged that while rate cuts may pose a headwind, the acquisition will provide benefits to net interest margin [28][30] Question: Clarification on loan paydowns and growth guidance - Management explained that paydowns were recognized in Q3 and indicated that loan growth guidance remains at 5% to 7% for Q4 [38][41] Question: Inquiry on expense expectations and acquisition costs - Management confirmed that the guidance for Q4 includes about $1 million in acquisition costs, with other expenses expected to stabilize [42][70] Question: Discussion on fee income growth and commercial card programs - Management highlighted strong growth in debit and credit card income, driven by increased transaction volumes [71][73]

Financial Data and Key Metrics Changes - The company reported net income of $23.8 million or $1.46 per diluted share for Q3 2025, compared to $19.6 million or $1.22 per diluted share for Q3 2024, reflecting a strong performance [8] - Net income for the first nine months of 2025 totaled $65.9 million or $4.06 per diluted share, up from $60 million or $3.72 per diluted share in the prior year [8] - The return on average assets was 1.5% and return on average equity was 14.7% for Q3 2025, with a 20% quarter-over-quarter earnings per share growth [7][8] Business Line Data and Key Metrics Changes - Annualized deposit growth was 9% for Q3 2025, with a compounded annual growth rate of 11.8% over the last six year-end periods [5] - Loan growth contracted an annualized 7% in Q3 2025, attributed to anticipated paydowns, but commitments to make loans totaled $307 million, an all-time high [5][6] - Mortgage banking income grew by 12% during the first nine months of 2025 compared to the same period in 2024 [6] Market Data and Key Metrics Changes - Average loans totaled $4.6 billion in Q3 2025, an increase of $201 million or over 4% from Q3 2024 [9] - Average deposits increased to $4.83 billion in Q3 2025, up $489 million or over 11% from the prior year [11] - The loan-to-deposit ratio improved to 96% from 102% a year earlier, indicating better liquidity management [4] Company Strategy and Development Direction - The company is focused on maintaining a strong and stable net interest margin, which stood at 3.5% despite a decline in the SOFR rate [3][4] - The planned acquisition of Eastern Michigan Financial Corporation is expected to positively impact various financial metrics, including earnings accretion and tangible book value [7] - The company aims to manage its balance sheet to minimize the impact of changing interest rate environments on its net interest margin [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges faced by financial institutions, highlighting strong asset quality and a robust pipeline for loan growth [22] - The company anticipates loan growth in the range of 5% to 7% annualized for Q4 2025, with expectations for continued strong performance in non-interest income [21][41] - Management noted that the effective tax rate for Q3 2025 was 13%, with projections for a similar rate in the future, depending on the acquisition of transferable energy tax credits [19][51] Other Important Information - The company recorded a provision expense of $0.2 million for Q3 2025, reflecting strong credit quality and net recoveries [16] - Non-interest expenses increased by $2.4 million in Q3 2025, primarily due to higher salary and benefit costs [18] - The total risk-based capital ratio was 14.3% as of September 30, 2025, indicating a well-capitalized position [20] Q&A Session Summary Question: Inquiry about credit quality and normalized charge-off ratio - Management noted a conservative approach to charge-offs and typically budgets between 5% and 10% in net charge-offs [26][27] Question: Discussion on net interest margin and future expectations - Management indicated that the acquisition will benefit the net interest margin, despite potential headwinds from rate cuts [28][30] Question: Clarification on loan paydowns and growth guidance - Management explained that paydowns recognized in Q3 were anticipated, and they expect continued mid-single-digit loan growth [39][41] Question: Inquiry about expense expectations and acquisition costs - Management confirmed that the guidance for Q4 includes about $1 million in acquisition costs, with no income statement impact from Eastern until the merger is finalized [44][70] Question: Discussion on fee income growth and expectations - Management highlighted strong growth in the commercial card program, attributing it to increased volume and customer engagement [71]

Financial Data and Key Metrics Changes - The company reported net income of $23.8 million or $1.46 per diluted share for Q3 2025, compared to $19.6 million or $1.22 per diluted share for Q3 2024, reflecting a strong year-over-year growth [9] - Net income for the first nine months of 2025 totaled $65.9 million or $4.06 per diluted share, up from $60 million or $3.72 per diluted share in the prior year [9] - The return on average assets was 1.5% and return on average equity was 14.7% for Q3 2025, with a 20% quarter-over-quarter earnings per share growth [8] Business Line Data and Key Metrics Changes - Annualized deposit growth for Q3 2025 was 9%, with a compounded annual growth rate of 11.8% over the last six year-end periods [5] - Loan growth contracted an annualized 7% in Q3 2025, attributed to anticipated loan paydowns, but commitments to make loans totaled $307 million, an all-time high [5][8] - Mortgage banking income grew by 12% during the first nine months of 2025 compared to the same period in 2024 [7] Market Data and Key Metrics Changes - Average loans totaled $4.6 billion in Q3 2025, an increase of $201 million or over 4% from Q3 2024 [10] - Average deposits increased to $4.83 billion in Q3 2025, up $489 million or over 11% from the prior year [12] - The loan-to-deposit ratio improved to 96% from 102% a year earlier, indicating better liquidity management [4] Company Strategy and Development Direction - The company is focused on maintaining a strong net interest margin, which stood at 3.5%, despite a decline in the SOFR rate [3] - The planned acquisition of Eastern Michigan Financial Corporation is expected to positively impact key financial metrics, including earnings accretion and tangible book value [8] - The company aims to manage its balance sheet to minimize the impact of changing interest rate environments on its net interest margin [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges faced by financial institutions and highlighted a strong pipeline for loan growth [24] - The company anticipates loan growth in the range of 5% to 7% annualized for Q4 2025, despite potential headwinds from rate cuts [23] - Management noted that credit quality remains strong, with expectations for continued net recoveries [29] Other Important Information - The company’s total risk-based capital ratio was 14.3% as of September 30, 2025, indicating a well-capitalized position [22] - The effective tax rates for Q3 and year-to-date 2025 were 13% and 15%, respectively, benefiting from transferable energy tax credits [20] Q&A Session Summary Question: Credit quality and normalized charge-off ratio - Management noted net recoveries in seven of the past eight quarters and budgeted for net charge-offs between 5% and 10% historically [29][31] Question: Net interest margin outlook - Management indicated that the acquisition will benefit the net interest margin, despite potential headwinds from rate cuts [32][34] Question: Loan growth guidance and paydowns - Management clarified that paydowns recognized in Q3 were anticipated and that loan growth guidance remains at 5% to 7% for Q4 2025 [42][45] Question: Expense expectations - Management confirmed that the expense guidance for Q4 includes merger charges but not operational costs from the acquisition [46][75] Question: Tax rate expectations for 2026 - Management projected a tax rate of around 17.5% to 18% without additional energy tax credits, but closer to 16% if credits are maximized [57] Question: Credit trends and provision expectations - Management suggested that the provision for Q4 could be similar to earlier quarters, given strong credit quality [59]

Financial Data and Key Metrics Changes - The company reported net income of $23.8 million or $1.46 per diluted share for Q3 2025, compared to $19.6 million or $1.22 per diluted share for Q3 2024, reflecting a strong performance [12] - Year-to-date net income for 2025 totaled $65.9 million or $4.06 per diluted share, up from $60 million or $3.72 per diluted share in the prior year [12] - The return on average assets was 1.5% and return on average equity was 14.7% for 2025, with a 20% quarter-over-quarter growth in earnings per share [10][11] Business Line Data and Key Metrics Changes - Loans contracted an annualized 7% in Q3 2025, attributed to anticipated paydowns, but commitments to make loans reached an all-time high of $307 million, exceeding the average of the prior four quarters by 32% [8][10] - Deposit growth for 2025 was annualized at 9%, with a compounded annual growth rate of 11.8% over the last six years [7] - Service charges on accounts increased by 18% during the first nine months of 2025, driven by growth in commercial deposit relationships [9] Market Data and Key Metrics Changes - The loan-to-deposit ratio improved to 96% as of Q3 2025, down from 102% a year prior, indicating better liquidity management [6] - Average loans increased to $4.6 billion in 2025, a growth of over 4% from $4.47 billion in 2024 [13] - Average deposits grew to $4.83 billion in 2025, up by $489 million or over 11% from the previous year [14] Company Strategy and Development Direction - The company is focused on maintaining a stable net interest margin, which stood at 3.5%, despite a decline in the SOFR rate [4][17] - The planned acquisition of Eastern Michigan Financial Corporation is expected to contribute positively to the company's financial metrics, including earnings accretion and tangible book value [11][22] - The company aims to manage its balance sheet effectively to minimize the impact of changing interest rate environments on its net interest margin [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges faced by financial institutions and highlighted a strong pipeline for loan growth [23] - The company projects loan growth in the range of 5% to 7% annualized for Q4 2025, despite potential headwinds from federal rate cuts [22] - The effective tax rate for 2025 is projected at 15%, with expectations for continued tax benefits from energy tax credits [20][56] Other Important Information - The company’s total risk-based capital ratio was 14.3% as of Q3 2025, significantly above the minimum threshold for well-capitalized status [21] - Tangible book value per common share increased by 13% during the first nine months of 2025, reflecting retained earnings growth [21][22] Q&A Session Summary Question: Credit quality and normalized charge-off ratio - Management noted net recoveries in seven of the past eight quarters and budgeted for net charge-offs between five and ten basis points [28][29] Question: Net interest margin outlook - Management indicated that the acquisition will benefit the interest margin, and despite rate cuts, they expect the net interest margin to remain steady [31][32] Question: Loan paydowns and growth guidance - Management confirmed that paydowns recognized in Q3 were anticipated and indicated that loan growth could be higher than the 5% to 7% guidance for Q4 [39][43] Question: Expense expectations for Q4 - Management clarified that the Q4 guidance includes acquisition costs but not operational expenses from Eastern Michigan [44][71] Question: Tax rate expectations for 2026 - Management projected a tax rate of around 17.5% to 18% without additional energy credits, but with potential credits, it could be closer to 16% [56][57]

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Financial Performance & Profitability - Mercantile achieved a 20% quarter-over-quarter EPS growth, with EPS reaching $1.46 in 3Q25 compared to $1.22 in 3Q24[11] - The company reported a Return on Average Assets (ROAA) of 1.50% and a Return on Average Equity (ROAE) of 14.72% in 3Q25[11] - Mercantile maintained a stable net interest margin of 3.50% in 3Q25, slightly down from 3.52% in 3Q24, despite a lower interest rate environment[11] - Tangible book value per share increased by 13% to $37.41 at the end of 3Q25, compared to $33.07 at the end of 3Q24[11] Loan & Deposit Portfolio - Commercial loans contracted by 7% (annualized) in 3Q25, attributed to large and anticipated paydowns[11] - Total deposits grew by 9% (annualized) in 3Q25[11] - The loan-to-deposit ratio decreased to 96% at the end of 3Q25, compared to 102% at the end of 3Q24[11] Asset Quality & Capital - The nonperforming assets to total assets ratio was 0.16% at the end of 3Q25[11] - Net loan charge-offs to average loans were (0.05)% annualized in 3Q25[11] - The CET1 capital ratio was 11.4% at the end of 3Q25, up from 10.5% at the end of 3Q24[11] Strategic Initiatives & Outlook - The company expects loan growth between 5% and 7% (annualized) for the fourth quarter[92] - Mercantile anticipates a net interest margin between 3.40% and 3.50% for the fourth quarter[92] - The acquisition of Eastern Michigan Financial Corporation (EFIN) is expected to close in Q4 2025, projecting approximately 11% fully phased-in GAAP EPS accretion[127, 129]