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Mercantile Bank Corp. (MBWM)
NASDAQ:MBWM
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Mercantile Bank (MBWM) AI Stock Analysis

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MBWM

Mercantile Bank

(NASDAQ:MBWM)

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Outperform 74 (OpenAI - 4o)
Rating:74Outperform
Price Target:
$50.00
â–²(11.33% Upside)
Mercantile Bank's strong earnings call performance and attractive valuation are key strengths, contributing positively to the overall score. Financial performance is solid but could improve with better cash flow management. Technical analysis suggests a bearish trend, which slightly offsets the positive aspects.

Mercantile Bank (MBWM) vs. SPDR S&P 500 ETF (SPY)

Mercantile Bank Business Overview & Revenue Model

Company DescriptionMercantile 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 MoneyMercantile Bank generates revenue primarily through interest income from loans and fees associated with various banking services. The bank lends money to consumers and businesses, earning interest on these loans, which constitutes a significant portion of its revenue. Key revenue streams include commercial loans, residential mortgages, and consumer loans. Additionally, MBWM earns non-interest income through service fees, transaction fees, and treasury management services offered to business clients. The bank may also benefit from partnerships with local businesses and community organizations to enhance its service offerings and expand its customer base, contributing positively to its earnings.

Mercantile Bank Earnings Call Summary

Earnings Call Date:Oct 21, 2025
(Q3-2025)
|
% Change Since: |
Next Earnings Date:Jan 20, 2026
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance with significant growth in deposits, fee income, and earnings per share. Asset quality remained robust, and there was an improvement in the loan-to-deposit ratio. However, there were some challenges, such as loan contraction in Q3 and increased non-interest expenses.
Q3-2025 Updates
Positive Updates
Strong Net Interest Margin and Asset Quality
Despite a 96 basis point drop in the SOFR ninety-day average rate, the net interest margin only decreased by two basis points to 3.5%. Asset quality remained strong with past due loans at 16 basis points and non-performing loans at 13 basis points of total loans.
Improved Loan-to-Deposit Ratio
The loan-to-deposit ratio improved to 96% from 102% in 2024 and 110% in 2023, supported by a deposit mix of 25% non-interest-bearing deposits and 20% lower-cost deposits.
Growth in Key Fee Income Categories
Commercial deposit relationships led to an 18% increase in service charges, a 15% growth in payroll service offerings, and a 12% increase in mortgage banking income year-over-year.
Earnings and Book Value Growth
Earnings per share grew by 20% quarter-over-quarter. Tangible book value per share increased by 13% over the last four quarters, with a five-year compounded annual growth rate of 8.4%.
Deposit and Loan Growth
Annualized deposit growth was 9% for 2025, with a compounded annual growth rate of 11.8% over six years. Loans had a compounded annual growth rate of 10% over the same period.
Negative Updates
Loan Contraction in Q3
Loans contracted at an annualized rate of 7% in the third quarter due to anticipated loan paydowns, which are expected to be a one-quarter anomaly.
Higher Non-Interest Expenses
Non-interest expenses increased by $2.4 million in Q3 2025 compared to the prior year, driven by higher salary and benefit costs and increased data processing costs.
Impact of Lower Yield on Loans
Despite loan growth, the yield on loans was 31 basis points lower than in 2024, mainly due to a decline in the federal funds rate.
Company Guidance
During the Mercantile Bank Corporation's third-quarter 2025 earnings call, the company provided detailed guidance on various financial metrics. The bank highlighted a strong and stable net interest margin, which decreased only two basis points to 3.5% over the past five quarters despite a 96 basis point decline in the SOFR ninety-day average rate. Asset quality remained robust, with past due loans at 16 basis points and an allowance for credit losses at 1.28% of total loans as of September 30, 2025. The bank's loan-to-deposit ratio improved to 96%, and it achieved a 9% annualized deposit growth rate for 2025. Furthermore, the bank reported a 20% increase in quarter-over-quarter earnings per share, a 1.5% return on average assets, and a 14.7% return on average equity for the year. The upcoming acquisition of Eastern Michigan Financial Corporation is expected to contribute positively to these metrics, with projected double-digit earnings accretion and a mid-three-year earn-back period. The bank also noted strong growth in fee income categories, such as treasury management services, payroll services, and mortgage banking income, and maintained a disciplined approach to commercial loan portfolio management.

Mercantile Bank Financial Statement Overview

Summary
Mercantile Bank demonstrates solid financial performance with consistent revenue growth and profitability. The balance sheet shows a balanced approach to leveraging, though the low equity ratio warrants caution. Cash flow management appears to be an area for improvement, particularly in enhancing cash conversion efficiency.
Income Statement
75
Positive
Mercantile Bank shows a consistent revenue growth trajectory with a TTM revenue growth rate of 1.34% and a strong gross profit margin of 62.03%. The net profit margin is healthy at 22.11%, indicating efficient cost management. However, there is a slight decline in EBIT and EBITDA margins over the years, suggesting potential pressure on operational efficiency.
Balance Sheet
70
Positive
The bank maintains a moderate debt-to-equity ratio of 1.17, which is typical for the industry but indicates a reliance on debt financing. The return on equity is solid at 13.52%, reflecting effective use of equity capital. However, the equity ratio is relatively low, which could pose risks in economic downturns.
Cash Flow
65
Positive
Cash flow analysis reveals a decline in free cash flow growth, with a negative rate of -37.34% in the TTM period. The operating cash flow to net income ratio is low at 0.81%, indicating potential challenges in converting income into cash. Despite this, the free cash flow to net income ratio remains robust at 75.36%, suggesting good cash generation relative to profits.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue368.20M361.89M303.50M213.92M198.66M193.49M
Gross Profit228.38M224.07M217.99M183.77M183.52M153.37M
EBITDA105.88M108.79M114.19M88.73M87.39M64.27M
Net Income81.40M79.59M82.22M61.06M59.02M44.14M
Balance Sheet
Total Assets6.18B6.05B5.35B4.87B5.26B4.44B
Cash, Cash Equivalents and Short-Term Investments925.32M1.12B747.63M699.71M1.57B1.01B
Total Debt739.16M648.25M836.26M640.19M693.35M559.93M
Total Liabilities5.55B5.48B4.83B4.43B4.80B4.00B
Stockholders Equity631.52M584.53M522.14M441.41M456.56M441.55M
Cash Flow
Free Cash Flow30.89M92.59M59.93M116.84M58.97M28.89M
Operating Cash Flow40.99M101.12M66.61M119.86M64.57M37.88M
Investing Cash Flow-434.12M-425.44M-395.93M-555.00M-495.51M-398.81M
Financing Cash Flow491.57M586.79M363.08M-443.25M780.09M753.20M

Mercantile Bank Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price44.91
Price Trends
50DMA
46.63
Negative
100DMA
46.22
Negative
200DMA
45.11
Negative
Market Momentum
MACD
-0.60
Negative
RSI
46.81
Neutral
STOCH
43.24
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MBWM, the sentiment is Neutral. The current price of 44.91 is below the 20-day moving average (MA) of 45.02, below the 50-day MA of 46.63, and below the 200-day MA of 45.11, indicating a bearish trend. The MACD of -0.60 indicates Negative momentum. The RSI at 46.81 is Neutral, neither overbought nor oversold. The STOCH value of 43.24 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for MBWM.

Mercantile Bank Risk Analysis

Mercantile Bank disclosed 29 risk factors in its most recent earnings report. Mercantile Bank reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Mercantile Bank Peers Comparison

Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
$672.41M10.1615.62%3.59%0.54%11.11%
75
Outperform
$684.10M12.497.93%4.02%5.39%8.80%
74
Outperform
$725.18M8.6713.77%3.30%8.72%-0.45%
71
Outperform
$713.00M10.189.27%2.97%7.40%2.01%
71
Outperform
$726.04M11.178.82%4.34%3.34%-1.93%
68
Neutral
$18.00B11.429.92%3.81%9.73%1.22%
66
Neutral
$699.56M12.0111.69%2.41%9.68%13.46%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
MBWM
Mercantile Bank
44.91
2.39
5.62%
CCBG
Capital City Bank
40.17
6.04
17.70%
CCNE
Cnb Financial
24.21
-0.42
-1.71%
HAFC
Hanmi Financial
24.45
5.22
27.15%
TRST
TrustCo Bank
36.21
4.13
12.87%
MCBS
MetroCity Bankshares
26.20
-3.46
-11.67%

Mercantile Bank Corporate Events

M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
Mercantile Bank Announces Merger with Eastern Michigan Financial
Positive
Jul 22, 2025

On July 22, 2025, Mercantile Bank Corporation announced a merger agreement with Eastern Michigan Financial Corporation, valued at approximately $95.8 million. The merger, expected to close in the fourth quarter of 2025, will initially result in a two-bank holding structure, with plans to consolidate by 2027. This strategic move aims to strengthen Mercantile’s market position and achieve strategic goals such as lowering the loan-to-deposit ratio and expanding its regional presence. Mercantile also reported robust financial results for the second quarter of 2025, with a net income of $22.6 million, reflecting growth in net interest income and noninterest income, despite a declining net interest margin. The bank’s strong performance was supported by commercial loan expansion, improved asset quality metrics, and a reduced federal income tax expense.

Shareholder MeetingsBusiness Operations and Strategy
Mercantile Bank Shareholders Approve Key Governance Matters
Positive
May 22, 2025

At the annual meeting held on May 22, 2025, Mercantile Bank‘s shareholders voted on several key matters, including the election of eleven directors for a one-year term, the implementation of an Employee Stock Purchase Plan (ESPP) with a 5% discount, the ratification of Plante & Moran, PLLC as the independent registered public accounting firm for 2025, and advisory votes on executive compensation and its frequency. The votes resulted in the approval of all proposed matters, reflecting shareholder support for the company’s governance and strategic initiatives.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Oct 21, 2025