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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)

Rating:76Outperform
Price Target:
$50.00
â–²(6.04% Upside)
Mercantile Bank's strong financial performance and attractive valuation are the primary drivers of its score. The strategic merger and positive earnings call sentiment further enhance its outlook. Technical indicators suggest a neutral to slightly bearish short-term trend, but the overall fundamentals remain robust.

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

Mercantile Bank Business Overview & Revenue Model

Company DescriptionMercantile 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 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:Jul 22, 2025
(Q2-2025)
|
% Change Since: -3.28%|
Next Earnings Date:Oct 21, 2025
Earnings Call Sentiment Positive
The earnings call demonstrates a generally positive outlook for Mercantile Bank, with significant growth in commercial loans, mortgage banking income, and deposits. The strategic partnership with Eastern Michigan Bank is expected to enhance growth and liquidity. However, challenges such as a decline in loan yields, increased noninterest expenses, and a decrease in net interest margin are noted. Despite these challenges, the positive aspects, particularly the strategic partnership and growth in key areas, outweigh the negatives.
Q2-2025 Updates
Positive Updates
Commercial Loan Growth
Commercial loan growth for the first 6 months of 2025 was $114 million, an annualized rate of 6.2%, despite customer reductions in loan balances due to asset sales totaling $154 million.
Increase in Mortgage Banking Income
Mortgage banking income grew 23.4% for the first 6 months of 2025 compared to the same period in 2024, despite challenges from high interest rates.
Strong Asset Quality
Nonperforming assets totaled $9.7 million at June 30, 2025, representing 16 basis points of total assets. Past due loans represented 6 basis points of total loans.
Deposit Growth
Local deposits increased by 13% as of June 30, 2025, compared with the same date in 2024, reducing the loan-to-deposit ratio from 107% to just under 100%.
Strategic Partnership with Eastern Michigan Bank
The partnership is expected to lower the loan-to-deposit ratio, reduce the pro forma cost of funds, and enhance balance sheet liquidity, with entry into new markets.
Net Income Increase
Net income for Q2 2025 was $22.6 million or $1.39 per diluted share, compared to $18.8 million or $1.17 per diluted share in Q2 2024.
Negative Updates
Decline in Loan Yield
Yield on loans during Q2 2025 was 32 basis points lower than Q2 2024, due to an aggregate 100 basis point decline in the federal funds rate during late 2024.
Increased Noninterest Expenses
Noninterest expenses were $3.6 million and $4.8 million higher during Q2 and the first 6 months of 2025 compared to the same periods in 2024, largely due to higher salary and benefit costs.
Net Interest Margin Decline
Net interest margin declined by 14 basis points during Q2 2025 compared to Q2 2024, largely due to the decline in the federal funds rate.
Company Guidance
During the Mercantile Bank Corporation's Second Quarter 2025 Earnings Conference Call, the company provided guidance on several key financial metrics. They reported a strong commercial loan growth of $114 million at an annualized rate of 6.2% for the first half of 2025 and projected loan growth of 1% to 2% in the third quarter and 3% to 5% in the fourth quarter. Mortgage banking income increased by 23.4% for the first six months of 2025 compared to the same period in 2024, while nonperforming assets totaled $9.7 million, representing 16 basis points of total assets. Net income for the second quarter of 2025 was $22.6 million or $1.39 per diluted share, reflecting growth in net interest income and reduced federal income tax expense. The call also highlighted a 13% increase in local deposits and a strategic partnership with Eastern Michigan Bank, expected to enhance liquidity and reduce the loan-to-deposit ratio. Net interest margin guidance was set at 3.50% to 3.60% for the third quarter and 3.55% to 3.65% for the fourth quarter, with no anticipated changes in the federal funds rate.

Mercantile Bank Financial Statement Overview

Summary
Mercantile Bank demonstrates solid financial health with consistent revenue growth and strong cash flow generation. The company maintains a good balance between equity and debt, although careful monitoring of debt levels is advisable. Profitability remains strong despite minor fluctuations in margins. The bank is well-positioned for future growth, provided it continues to manage its resources prudently and adapts to evolving market conditions.
Income Statement
78
Positive
Mercantile Bank has shown impressive revenue growth over the past years, with a notable increase from 2022 to TTM 2025. The gross profit margin remains strong, indicating effective cost management. However, the net profit margin has slightly decreased in TTM 2025, reflecting potential cost pressures or increased expenses. Overall, profitability is commendable with stable EBIT and EBITDA margins, although there is a small decline in EBIT performance in the latest period.
Balance Sheet
70
Positive
The company's balance sheet reveals a stable financial structure with a modest debt-to-equity ratio, suggesting a balanced approach to leverage. Stockholders' equity has consistently grown, contributing to a favorable equity ratio. However, the slight increase in total debt in TTM 2025 may indicate a reliance on borrowed funds, which could pose risks if not managed carefully. Overall, the balance sheet reflects a sound financial position with room for improvement in debt management.
Cash Flow
82
Very Positive
Mercantile Bank's cash flow performance is robust, as illustrated by the positive free cash flow growth from 2024 to TTM 2025. The operating cash flow to net income ratio has decreased, suggesting efficiency in converting income into cash, but still reflects a healthy cash-generating capability. The free cash flow to net income ratio is strong, supporting the company's ability to sustain operations and pursue growth opportunities without relying heavily on external financing.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue361.89M303.50M213.92M198.66M193.49M
Gross Profit224.07M217.99M183.77M183.52M153.37M
EBITDA108.79M114.19M88.73M87.39M64.27M
Net Income79.59M82.22M61.06M59.02M44.14M
Balance Sheet
Total Assets6.05B5.35B4.87B5.26B4.44B
Cash, Cash Equivalents and Short-Term Investments1.12B747.63M699.71M1.57B1.01B
Total Debt648.25M836.26M640.19M693.35M559.93M
Total Liabilities5.48B4.83B4.43B4.80B4.00B
Stockholders Equity584.53M522.14M441.41M456.56M441.55M
Cash Flow
Free Cash Flow92.59M59.93M116.84M58.97M28.89M
Operating Cash Flow101.12M66.61M119.86M64.57M37.88M
Investing Cash Flow-425.44M-395.93M-555.00M-495.51M-398.81M
Financing Cash Flow586.79M363.08M-443.25M780.09M753.20M

Mercantile Bank Technical Analysis

Technical Analysis Sentiment
Positive
Last Price47.15
Price Trends
50DMA
46.37
Positive
100DMA
44.49
Positive
200DMA
45.38
Positive
Market Momentum
MACD
-0.29
Negative
RSI
55.01
Neutral
STOCH
96.89
Negative
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 47.15 is above the 20-day moving average (MA) of 46.48, above the 50-day MA of 46.37, and above the 200-day MA of 45.38, indicating a bullish trend. The MACD of -0.29 indicates Negative momentum. The RSI at 55.01 is Neutral, neither overbought nor oversold. The STOCH value of 96.89 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MBWM.

Mercantile Bank Risk Analysis

Mercantile Bank disclosed 25 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
79
Outperform
$835.75M18.1019.30%0.66%16.76%12.84%
76
Outperform
$755.24M9.2413.77%3.10%8.72%-0.45%
74
Outperform
$723.54M9.6910.18%2.27%16.88%3.07%
72
Outperform
$756.29M12.5511.16%3.69%2.81%6.88%
71
Outperform
$722.12M11.118.82%4.37%3.34%-1.93%
70
Outperform
$733.44M11.1715.67%3.23%4.92%20.83%
68
Neutral
$17.50B11.6610.42%3.82%9.93%1.59%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
MBWM
Mercantile Bank
47.13
5.61
13.51%
CPF
Central Pacific Financial
28.71
3.85
15.49%
HAFC
Hanmi Financial
24.16
6.41
36.11%
ESQ
Esquire Financial Holdings
98.79
42.47
75.41%
BFST
Business First Bancshares
24.35
2.58
11.85%
MCBS
MetroCity Bankshares
28.79
2.35
8.89%

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.

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.

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.

The most recent analyst rating on (MBWM) stock is a Buy with a $51.00 price target. To see the full list of analyst forecasts on Mercantile Bank stock, see the MBWM Stock Forecast page.

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: Aug 13, 2025