Mercantile Bank (MBWM) investor relations material

Executive summary

• Achieved strong financial performance in Q2 2026, with net income of $25.9M ($1.50/diluted share), up from $22.6M ($1.39/share) in Q2 2025, driven by commercial expertise, strategic execution, and the acquisition of Eastern Michigan at year-end 2025.

• EPS grew 8% year-over-year in Q2 2026, with adjusted net income (excluding non-recurring costs) at $26.4M ($1.53/share).

• Net interest margin improved to 3.59% in Q2 2026 from 3.48% in Q2 2025, supported by lower funding costs and commercial loan growth.

• Integration of Eastern Michigan progressing well, supporting deposit and loan growth.

• Asset quality remained strong, with nonperforming assets at 0.09% of total assets and net loan recoveries at 0.04%.

Financial highlights

• Net revenue for Q2 2026 was $68.8M, up 12.8% year-over-year; net interest income rose 15.7% to $57.3M.

• Noninterest income and fee categories saw strong growth, with service charges up 35% and card income up 24% in the first half of 2026.

• Noninterest expense rose, mainly due to higher salaries/benefits and core conversion costs.

• Loans-to-deposit ratio improved to 93% at June 30, 2026, from 100% a year earlier.

• Tangible book value per share increased to $38.42, up over 7% year-over-year.

Outlook and guidance

• Projecting loan growth of 5%-7% annualized per quarter for the remainder of 2026.

• Net interest margin projected at 3.60–3.70% for the remainder of 2026.

• Fee income expected between $10.5M and $12.0M per quarter; overhead costs forecasted at $41–42M.

• Forecasting a federal tax rate of 17% for the remainder of 2026.

• Non-interest expense projections reflect ongoing personnel investments and operational expansion.