Mercantile Bank (MBWM) AI Stock Analysis

• Market Cap: $625.55M
• Dividend Yield: 3.74%
• Average Volume (3M): 67.92K
• Price to Earnings (P/E): 7.8
• Beta (1Y): 1.03
• Revenue Growth: 19.24%
• EPS Growth: -3.88%
• Country: US
• Employees: 648
• Sector: Financial
• Sector Strength: 84
• Industry: Banks - Regional
• EPS (TTM): 4.93
• Shares Outstanding: 16,235,384
• 10 Day Avg. Volume: 65,318
• 30 Day Avg. Volume: 67,915
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.21
• Price to Cash Flow (P/CF): 3.00
• P/FCF Ratio: 1.30
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $55.50
• Price Target Upside: 44.04% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

Mercantile Bank's overall score reflects strong financial performance with robust revenue growth and operational efficiency. However, potential liquidity challenges, weak technical indicators, and mixed earnings call results temper the outlook. Valuation suggests the stock may be undervalued, but market concerns about future growth remain.

Mercantile Bank Business Overview & Revenue Model

Company Description

Mercantile Bank Corporation operates as the bank holding company for Mercantile Bank of Michigan that provides commercial and retail banking services to small- to medium-sized businesses and individuals in the United States. It accepts various deposit products, including checking, savings, and term certificate accounts; time deposits; and certificates of deposit. The company also offers commercial and industrial loans; vacant land, land development, and residential construction loans; owner and non-owner-occupied real estate loans; multi-family and residential rental property loans; single-family residential real estate loans; home equity line of credit programs; and consumer loans, such as new and used automobile and boat loans, and credit cards, as well as overdraft protection services; and residential mortgage and instalment loans. In addition, it provides courier services and safe deposit facilities; and insurance products, such as private passenger automobile, homeowners, personal inland marine, boat owners, recreational vehicle, dwelling fire, umbrella policies, small business, and life insurance products, as well as owns 22 automated teller machines and 19 video banking machines. As of January 18, 2022, the company operated 44 banking offices. Mercantile Bank Corporation was incorporated in 1997 and is headquartered in Grand Rapids, Michigan.

How the Company Makes Money

Mercantile Bank makes money through a diverse set of revenue streams primarily centered around its banking operations. The company earns interest income from loans and mortgages provided to individuals and businesses. It also generates revenue from fees associated with account maintenance, transactional services, and specialized financial services such as wealth management and treasury solutions. Additionally, Mercantile Bank benefits from partnerships with financial technology providers that enhance its service offerings and customer reach, contributing to its overall earnings. The bank's focus on community engagement and relationship banking helps in maintaining a strong customer base, which is pivotal for its financial performance.

Mercantile Bank Financial Statement Overview

Summary

Mercantile Bank shows strong revenue growth and operational efficiency, with improvements in EBIT and ROE metrics. The balance sheet indicates reduced leverage and a solid equity base, enhancing financial stability. However, cash flow analysis reveals potential liquidity challenges, requiring strategic attention despite overall strong financial health.

Income Statement

Mercantile Bank has demonstrated strong revenue growth with a 47.5% increase from 2023 to 2024. The gross profit margin remains at 100%, reflecting stable operations. However, the net profit margin slightly decreased to 24.8%, indicating potential cost pressures or increased expenses. The EBIT margin improved significantly to 99.5%, showcasing operational efficiency. Despite the absence of EBITDA data for 2024, the overall income statement reflects a robust performance with a strong growth trajectory.

Balance Sheet

The debt-to-equity ratio decreased to 0.15 in 2024 from the previous year, indicating an improved financial structure with lower leverage. Return on equity is strong at 53.2%, reflecting effective utilization of shareholder funds. The equity ratio improved to 27.9%, highlighting a solid capital base. Despite the improvements, the overall liabilities remain significant, implying ongoing financial obligations that need careful management.

Cash Flow

Free cash flow decreased significantly by 66.5% from 2023 to 2024, highlighting potential challenges in cash generation. The operating cash flow to net income ratio is low at 0.25, suggesting limited cash conversion efficiency. However, the free cash flow to net income ratio stands at 0.25, indicating some level of cash generation relative to net income. Overall, the cash flow statement suggests potential liquidity constraints that could impact future operations.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
321.50M	217.99M	190.32M	179.22M	167.42M
	Gross Profit
321.50M	217.99M	190.32M	179.22M	167.42M
	EBIT
319.90M	102.70M	99.39M	73.72M	54.85M
	EBITDA
0.00	114.19M	88.73M	87.39M	64.27M
	Net Income Common Stockholders
79.59M	82.22M	61.06M	59.02M	44.14M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
60.22M	130.53M	699.71M	1.57B	1.01B
	Total Assets
5.35B	5.35B	4.87B	5.26B	4.44B
	Total Debt
224.90M	606.52M	445.85M	495.89M	441.56M
	Net Debt
164.67M	475.99M	349.08M	-479.27M	-184.44M
	Total Liabilities
3.85B	4.83B	4.43B	4.80B	4.00B
	Stockholders Equity
1.50B	522.14M	441.41M	456.56M	441.55M
Cash Flow		Free Cash Flow
20.06M	59.93M	116.84M	58.97M	28.89M
	Operating Cash Flow
20.06M	66.61M	119.86M	64.57M	37.88M
	Investing Cash Flow
-425.44M	-395.93M	-555.00M	-495.51M	-398.81M
	Financing Cash Flow
-21.61M	363.08M	-443.25M	780.09M	753.20M

Mercantile Bank Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 38.53
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MBWM, the sentiment is Negative. The current price of 38.53 is below the 20-day moving average (MA) of 42.72, below the 50-day MA of 45.44, and below the 200-day MA of 44.75, indicating a bearish trend. The MACD of -0.71 indicates Positive momentum. The RSI at 38.24 is Neutral, neither overbought nor oversold. The STOCH value of 30.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MBWM.

Mercantile Bank Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ESQ	73 Outperform	$649.56M	14.98	20.04%	0.81%	17.55%	5.05%
HAFC	71 Outperform	$618.28M	9.98	8.60%	4.99%	8.33%	-21.76%
BFST	68 Neutral	$638.47M	9.57	9.02%	2.59%	18.42%	-12.79%
MBWM	65 Neutral	$625.55M	7.81	14.38%	3.74%	19.24%	-3.88%
CPF	65 Neutral	$651.32M	12.21	10.25%	4.37%	6.13%	-9.06%
MCBS	64 Neutral	$655.90M	10.24	16.07%	3.33%	11.80%	24.53%
Sector *	64 Neutral	$13.34B	9.25	9.42%	4.85%	16.07%	-8.44%

Mercantile Bank Corporate Events

Mercantile Bank Adopts New Executive Bonus Plan

On March 20, 2025, Mercantile Bank Corporation’s Board of Directors adopted a new executive officer bonus plan for 2025. The plan outlines cash bonuses for key executives based on performance metrics such as earnings per share and return on assets. The bonus pool is determined by achieving specific targets, with the potential for increased bonuses if performance exceeds these targets. The plan aims to align executive incentives with company performance, impacting the company’s operational focus and stakeholder interests.

Mercantile Bank Introduces New Vesting Strategy for 2025

On February 6, 2025, Mercantile Bank Corporation’s Compensation Committee granted restricted stock to its executive officers, continuing a strategy initiated in 2018 of using performance metrics for vesting. However, for the 2025 grants, the Committee introduced a time-based vesting component, where 35% of the shares will vest after three years irrespective of performance. The remaining 65% will vest based on performance goals compared to a new Comparative Index of similar-sized bank holding companies, with metrics including total shareholder return, return on average assets, and earnings per share changes. Executive officers’ potential awards are calculated based on their base salary and the company’s performance relative to these goals, with the possibility of earning between 0% and 150% of the target award.

Mercantile Bank Reports 2024 Financial Performance Highlights

On January 21, 2025, Mercantile Bank Corporation announced its financial results for the fourth quarter and full year of 2024, highlighting a net income of $19.6 million for the fourth quarter and $79.6 million for the full year. Despite a slight decrease in net income compared to the previous year, the company reported strong commercial loan and local deposit growth, an increase in noninterest income, and strategic initiatives to lower the loan-to-deposit ratio and increase liquidity. The company’s efforts in strengthening its financial standing position it to effectively meet challenges in changing operating environments.