Mercantile Bank (MBWM) investor relations material

Executive summary

• Achieved strong Q3 2025 results with net income of $23.8 million ($1.46 per share), up from $19.6 million ($1.22) in Q3 2024, and return on average assets of 1.5% and return on average equity of 14.72%.

• Maintained stable net interest margin at 3.50% in Q3 2025 despite a lower interest rate environment.

• Asset quality remains robust, with low nonperforming asset ratios and allowance for credit losses at 1.28% of loans.

• Announced acquisition of Eastern Michigan Financial Corporation, expected to close in Q4 2025, to enhance financial metrics and strategic goals.

• Deposit and loan growth rates remain strong, with a focus on commercial expertise and fee income expansion.

Financial highlights

• Net income for Q3 2025 was $23.8 million ($1.46 per diluted share), up from $19.6 million ($1.22) in Q3 2024; nine-month net income reached $65.9 million ($4.06 per share), up from $60 million ($3.72) in 2024.

• Net interest income increased by $3.7 million in Q3 and $7.3 million year-to-date; noninterest income rose 7.5% to $10.4 million, with treasury management and payroll services fees up 11% and 16%, respectively.

• Tangible book value per share increased 13% year-over-year to $37.41.

• Average loans grew 4% year-over-year to $4.6 billion; average deposits grew 11% to $4.83 billion.

• Effective tax rate dropped to 13.4% from 20.1% due to energy tax credits and tax credit investments.

Outlook and guidance

• Projecting 5% to 7% annualized loan growth in Q4 2025, with net interest margin guidance of 3.40%-3.50%.

• Federal tax rate forecasted at 15% for Q4 2025, reflecting anticipated energy tax credits.

• Non-interest expense guidance for Q4 includes $1 million in acquisition costs; overhead costs expected at $34.5MM-$35.5MM.

• Management expects continued opportunities for commercial loan originations and local deposit growth.