Mercantile Bank (MBWM) AI Stock Analysis

• Market Cap: $812.19M
• Dividend Yield: 3.05%
• Average Volume (3M): 62.10K
• Price to Earnings (P/E): 9.1
• Beta (1Y): 0.90
• Revenue Growth: 5.64%
• EPS Growth: 6.24%
• Country: US
• Employees: 662
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): 1.40
• Shares Outstanding: 16,253,600
• 10 Day Avg. Volume: 75,592
• 30 Day Avg. Volume: 62,105
• PEG Ratio: -2.31
• Price to Book (P/B): 1.23
• Price to Sales (P/S): 1.98
• P/FCF Ratio: 7.75
• Enterprise Value/Market Cap: 1.46
• Enterprise Value/Revenue: 3.20
• Enterprise Value/Gross Profit: 5.08
• Enterprise Value/Ebitda: 11.05
• 1Y Price Target: $56.00
• Price Target Upside: 12.07% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 77 Outperform
• Price Target: $58.00 ▲(16.07% Upside)

MBWM scores well on fundamentals and valuation: strong income-statement performance and an attractive P/E plus dividend yield are the biggest positives. Technicals also support the stock (above major moving averages with positive MACD), though near-overbought signals temper upside. The earnings call was constructive with modest margin improvement and loan-growth guidance, but near-term headwinds (rate-driven loan yield pressure, elevated payoffs, higher expenses, and provision variability) keep the overall score in the upper-70s rather than higher.

Positive Factors

Capital Strength

Regulatory capital well above minimums and rising tangible book value give the bank a durable buffer to absorb credit stress, support dividend policy, fund the Eastern Michigan acquisition and allow organic lending growth without near‑term capital raises.

Earnings and Fee Diversification

Sustained net income growth driven by net interest income plus meaningful treasury, mortgage and payroll fee expansion creates a more resilient revenue mix, reducing sole dependence on interest rate moves and supporting earnings stability over the next several quarters.

Stable Deposit Funding

Consistent deposit growth, a higher share of noninterest‑bearing balances and an improved loan‑to‑deposit ratio (91%) provide durable low‑cost funding, lowering volatility in liquidity and enabling financed loan growth and margin support over the medium term.

Negative Factors

Loan Yield Pressure

Material loan yield compression following late‑2025 rate cuts creates structural NIM pressure as fixed‑rate assets and securities reprice slowly; absent faster repricing or favorable loan mix change, net interest income growth may lag lending growth in coming quarters.

Elevated Operating Costs & Integration Spend

Significant near‑term expense increases from headcount, data processing, acquisition and planned digital/core conversions will keep efficiency ratios elevated; management expects most cost saves only in 2027, pressuring margins and ROA in the interim.

Concentrated Construction Commitments and Credit Volatility

Heavy exposure to construction commitments combined with a recent $5.5M allocation for a commercial construction nonaccrual increases concentration risk and reserve volatility, potentially amplifying loss severity and capital sensitivity if localized construction stress emerges.

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 generates revenue primarily through net interest income, which is the difference between the interest earned on loans and the interest paid on deposits. Key revenue streams include commercial loans, consumer loans, and mortgage loans, which comprise a significant portion of the bank's loan portfolio. Additionally, the bank earns non-interest income through fees for services such as account maintenance, overdraft fees, and transaction fees from treasury management services. Partnerships with local businesses and community organizations enhance MBWM's reach and customer base, contributing to its overall profitability. The bank's prudent risk management practices and focus on community-oriented lending further bolster its financial performance.

Mercantile Bank Financial Statement Overview

Summary

Income statement strength (82) reflects strong multi-year revenue growth and healthy profitability, but some margin compression. Balance sheet is solid (68) with consistent ROE and steady asset growth, though leverage analysis is clouded by an apparent debt-to-equity data inconsistency in TTM. Cash flow is the main offset (62) due to volatility and a decline in operating/free cash flow in TTM versus 2024.

Income Statement

Results show strong top-line momentum and solid profitability. Revenue increased from $193.5M (2020) to $361.9M (2024) and is $371.1M in TTM (Trailing-Twelve-Months), with the latest period showing very strong reported revenue growth. Profitability remains healthy with net margins generally in the low-to-high 20% range (TTM net margin ~23.9%), though margins are below the peak levels seen in 2021–2023, indicating some recent compression.

Balance Sheet

The balance sheet has grown steadily (assets rising from $4.44B in 2020 to $6.05B in 2024 and $6.31B in TTM), and returns on equity are consistently solid (roughly 13%–16%, ~13.5% in TTM). Leverage is the main watch item: debt-to-equity ran around ~1.0–1.6 historically (2023 the highest), while the TTM debt-to-equity is shown as 0.0, which appears inconsistent with the reported debt and equity levels and reduces confidence in leverage-based conclusions for the latest period.

Cash Flow

Cash generation is positive, with free cash flow covering most of earnings across periods (free cash flow to net income ~0.90–0.97; ~0.90 in TTM). However, operating and free cash flow are volatile: operating cash flow fell from $101.1M (2024) to $72.2M in TTM, and free cash flow declined from $92.6M (2024) to $65.1M in TTM. The latest free cash flow growth is reported as extremely high, but the multi-year pattern is choppy, and the operating cash flow coverage ratio is inconsistent across periods (including 0.0 in TTM), suggesting variability and/or data noise.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	371.15M	361.89M	303.50M	213.92M	198.66M	193.49M
Gross Profit	233.71M	224.07M	217.99M	183.77M	183.52M	153.37M
EBITDA	107.44M	108.79M	114.19M	88.73M	87.39M	64.27M
Net Income	85.54M	79.59M	82.22M	61.06M	59.02M	44.14M
Balance Sheet
Total Assets	6.31B	6.05B	5.35B	4.87B	5.26B	4.44B
Cash, Cash Equivalents and Short-Term Investments	1.07B	1.12B	747.63M	699.71M	1.57B	1.01B
Total Debt	738.13M	648.25M	836.26M	640.19M	693.35M	559.93M
Total Liabilities	5.65B	5.47B	4.83B	4.43B	4.80B	4.00B
Stockholders Equity	657.63M	584.53M	522.14M	441.41M	456.56M	441.55M
Cash Flow
Free Cash Flow	65.06M	92.59M	59.93M	116.84M	58.97M	28.89M
Operating Cash Flow	72.18M	101.12M	66.61M	119.86M	64.57M	37.88M
Investing Cash Flow	-216.62M	-425.44M	-395.93M	-555.00M	-495.51M	-398.81M
Financing Cash Flow	292.91M	586.79M	363.08M	-443.25M	780.09M	753.20M

Mercantile Bank Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 49.97
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 Positive. The current price of 49.97 is below the 20-day moving average (MA) of 50.02, above the 50-day MA of 48.37, and above the 200-day MA of 45.79, indicating a bullish trend. The MACD of 0.82 indicates Positive momentum. The RSI at 57.62 is Neutral, neither overbought nor oversold. The STOCH value of 32.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MBWM.

Mercantile Bank Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MBWM	77 Outperform	$812.19M	9.14	13.79%	3.05%	5.64%	6.24%
TRST	75 Outperform	$779.52M	13.02	8.35%	3.48%	5.75%	20.52%
CCBG	73 Outperform	$685.65M	11.16	11.90%	2.33%	9.43%	17.64%
HAFC	69 Neutral	$741.99M	9.87	9.49%	3.82%	3.34%	15.52%
MCBS	69 Neutral	$768.30M	10.29	15.62%	3.55%	-0.23%	10.95%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
CCNE	66 Neutral	$791.44M	10.71	6.51%	2.68%	11.13%	-15.28%

Mercantile Bank Corporate Events

Mercantile Bank Posts Strong 2025 Results, Completes Acquisition

On January 20, 2025, Mercantile Bank Corporation reported strong fourth-quarter and full-year 2025 results, with fourth-quarter net income rising to $22.8 million, or $1.40 per diluted share, from $19.6 million a year earlier, and full-year 2025 net income increasing to $88.8 million, or $5.47 per diluted share, from $79.6 million in 2024. The bank’s performance was underpinned by approximately 5% growth in net interest income, higher treasury management, mortgage banking and payroll services fees, and a significant reduction in its effective tax rate, while maintaining robust asset quality, solid capital levels, and improved funding metrics, including a lower loan-to-deposit ratio supported by strong local deposit growth. Mercantile also completed its acquisition of Eastern Michigan Financial Corporation on December 31, 2025, adding $572 million in assets and further strengthening its franchise in East and Southeast Michigan, a move that, alongside steady returns on assets and equity and rising tangible book value, reinforces the bank’s competitive positioning and capacity to fund future asset growth despite a lower interest-rate environment.

The most recent analyst rating on (MBWM) stock is a Buy with a $56.00 price target. To see the full list of analyst forecasts on Mercantile Bank stock, see the MBWM Stock Forecast page.

Mercantile Bank Completes Eastern Michigan Financial Acquisition

On December 24, 2025, Mercantile Bank Corporation entered into a $30 million term loan agreement with U.S. Bank National Association to help fund the purchase price and related expenses of its merger with Eastern Michigan Financial Corporation and for working capital, with the facility maturing on December 24, 2028 and subject to customary covenants on asset quality, capital ratios, and profitability that allow continued dividends and share repurchases so long as the bank remains well-capitalized and in compliance. On December 31, 2025, Mercantile completed the acquisition of Eastern Michigan Financial Corporation and its subsidiary Eastern Michigan Bank, appointed long-time Michigan finance executive and community leader Steve Schweihofer as an independent director and audit committee member, and outlined plans to operate Eastern Michigan Bank alongside Mercantile Bank until a planned consolidation in the first quarter of 2027, a combination that expands Mercantile’s presence in eastern Michigan and strengthens its position in the state’s banking market while providing Eastern shareholders with a mix of cash and stock consideration.

The most recent analyst rating on (MBWM) stock is a Buy with a $56.00 price target. To see the full list of analyst forecasts on Mercantile Bank stock, see the MBWM Stock Forecast page.

Mercantile Bank shareholders approve Eastern Michigan Financial merger

On December 19, 2025, shareholders of Eastern Michigan Financial Corporation approved a merger agreement under which the company will be acquired by Mercantile Bank Corporation via a subsidiary, Shamrock Merger Sub LLC. The transaction, expected to close on December 31, 2025 subject to customary closing conditions, will expand Mercantile’s footprint by integrating EFIN’s operations, with implications for both organizations’ customers, employees, and regional market presence as they prepare for combined operations.

The most recent analyst rating on (MBWM) stock is a Buy with a $56.00 price target. To see the full list of analyst forecasts on Mercantile Bank stock, see the MBWM Stock Forecast page.

Mercantile Bank Gains Approval for Merger Deal

On December 16, 2025, Mercantile Bank Corporation and Eastern Michigan Financial Corporation announced they had received all necessary regulatory approvals for their merger, initially agreed upon in July 2025. The merger, which is pending Eastern shareholder approval, is expected to close on December 31, 2025, positioning Mercantile as a two-bank holding company until the projected consolidation of Eastern Michigan Bank into Mercantile Bank by 2027. This strategic combination aims to enhance service offerings and create value for stakeholders, with leaders from both companies expressing optimism about the merger’s opportunities.

The most recent analyst rating on (MBWM) stock is a Buy with a $53.00 price target. To see the full list of analyst forecasts on Mercantile Bank stock, see the MBWM Stock Forecast page.