Mercantile Bank (MBWM) AI Stock Analysis

• Market Cap: $729.89M
• Dividend Yield: 3.29%
• Average Volume (3M): 51.25K
• Price to Earnings (P/E): 8.9
• Beta (1Y): 0.98
• Revenue Growth: 8.72%
• EPS Growth: -0.45%
• Country: US
• Employees: 662
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): 1.39
• Shares Outstanding: 16,248,613
• 10 Day Avg. Volume: 63,792
• 30 Day Avg. Volume: 51,250
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.92
• Enterprise Value/Revenue: 3.80
• Enterprise Value/Gross Profit: 6.12
• Enterprise Value/Ebitda: 13.21
• 1Y Price Target: $55.67
• Price Target Upside: 23.71% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 70 Outperform
• Price Target: $50.00 ▲(11.11% Upside)

Mercantile Bank's strong financial performance and attractive valuation are key strengths, supported by consistent revenue growth and a low P/E ratio. However, technical indicators suggest bearish momentum, and there are concerns about operational efficiency and cash flow management. The strategic partnership with Eastern Michigan Bank offers potential growth opportunities.

Mercantile Bank Business Overview & Revenue Model

Company Description

Mercantile Bank Corporation (MBWM) is a regional financial institution based in Michigan, primarily engaged in providing a wide array of banking and financial services to individuals, businesses, and communities. With a focus on commercial and retail banking, MBWM offers products such as loans, deposits, and treasury management services, catering to both personal and commercial clients. The bank operates through a network of branches and provides a range of digital banking solutions, emphasizing community engagement and customer service.

How the Company Makes Money

Mercantile 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 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

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

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

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	368.20M	361.89M	303.50M	213.92M	198.66M	193.49M
Gross Profit	228.38M	224.07M	217.99M	183.77M	183.52M	153.37M
EBITDA	105.88M	108.79M	114.19M	88.73M	87.39M	64.27M
Net Income	81.40M	79.59M	82.22M	61.06M	59.02M	44.14M
Balance Sheet
Total Assets	6.18B	6.05B	5.35B	4.87B	5.26B	4.44B
Cash, Cash Equivalents and Short-Term Investments	925.32M	1.12B	747.63M	699.71M	1.57B	1.01B
Total Debt	739.16M	648.25M	836.26M	640.19M	693.35M	559.93M
Total Liabilities	5.55B	5.48B	4.83B	4.43B	4.80B	4.00B
Stockholders Equity	631.52M	584.53M	522.14M	441.41M	456.56M	441.55M
Cash Flow
Free Cash Flow	30.89M	92.59M	59.93M	116.84M	58.97M	28.89M
Operating Cash Flow	40.99M	101.12M	66.61M	119.86M	64.57M	37.88M
Investing Cash Flow	-434.12M	-425.44M	-395.93M	-555.00M	-495.51M	-398.81M
Financing Cash Flow	491.57M	586.79M	363.08M	-443.25M	780.09M	753.20M

Mercantile Bank Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 45.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 45 is below the 20-day moving average (MA) of 47.14, below the 50-day MA of 46.89, and below the 200-day MA of 45.14, indicating a bearish trend. The MACD of -0.57 indicates Positive momentum. The RSI at 35.33 is Neutral, neither overbought nor oversold. The STOCH value of 9.02 is Positive, 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
MCBS	75 Outperform	$715.57M	10.90	15.15%	3.39%	4.92%	20.83%
CCBG	73 Outperform	$712.36M	12.23	10.68%	2.32%	9.68%	13.46%
TRST	72 Outperform	$689.38M	13.01	7.72%	4.02%	5.39%	8.80%
HAFC	72 Outperform	$743.51M	11.44	8.50%	4.29%	3.34%	-1.93%
MBWM	70 Outperform	$729.89M	8.93	13.77%	3.29%	8.72%	-0.45%
CCNE	67 Neutral	$720.08M	10.28	8.94%	2.98%	7.40%	2.01%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%

Mercantile Bank Corporate Events

Mercantile Bank Announces Merger with Eastern Michigan Financial

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.

Mercantile Bank Shareholders Approve Key Governance Matters

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.