Mercantile Bank Corporation · NASDAQ:MBWM
Mercantile Bank — Q3 2025 Earnings Presentation
42 slides from Mercantile Bank's earnings presentation, Oct 21, 2025
Slide 1: Investor Presentation October 2025
Investor Presentation October 2025
Slide 2: Forward-Looking Statements
Investor Presentation Forward-Looking Statements This presentation contains statements or volatility; demand for products and services; information that may constitute forward-looking climate impact; labor markets; the degree of statements within the meaning of the Private competition by traditional
Slide 3: Executive Management Team
Investor Presentation Executive Management Team RAYMOND REITSMA CHARLES CHRISTMAS PRESIDENT AND EVP, CHIEF FINANCIAL OFFICER, CHIEF EXECUTIVE OFFICER AND TREASURER Mr. Reitsma was appointed Mr. Christmas has served as Chief President and Chief Executive Financial Officer at Mercantile since Officer
Slide 4: Financial Performance Third Quarter 2025
Financial Performance Third Quarter 2025
Slide 5: Third Quarter Performance Highlights
Financial Performance • 20% quarter-over-quarter EPS growth • EPS of $1.46 in 3Q25 versus $1.22 in 3Q24 EARNINGS • 1.50% ROAA and 14.72% ROAE in 3Q25 • Stable net interest margin of 3.50% in 3Q25 versus 3.52% in 3Q24 – despite lower interest rate environment • Lower earning asset yield attributed to
Slide 6: Profitability Trends: ROAA and ROAE
Financial Performance 2025 YTD: Continued stability in profitability metrics driven by asset growth, margin stability, and prudent tax strategies 2024: Shift in profitability metrics driven by significant growth in higher cost deposits due to strategic initiative to reduce loan to deposit ratio. The
Slide 7: Shareholder Value Peer Comparison
Financial Performance MBWM TBVPS 5-Year TBV CAGR vs. Proxy Peer 8.4% 5-Year CAGR Group 33.09 NIC $35 MBWM 29.31 OSBC $30 IBCP 25.61 24.47 23.86 SRCE $25 22.12 SYBT BY $20 HBNC CTBI $15 LKFN MSBI $10 GABC THFF $5 FMBH Shareholder Value $0 2019 2020 2021 2022 2023 2024 PEBO FMNB Peer Comparison -10% 0
Slide 8: Loan to Deposit Ratio
Financial Performance 110% $5,000 Loan to Deposit 105% $4,500 Ratio* (In millions) 102.2% Multi year strategic initiative to 100% 99.7% $4,000 reduce loan-to-deposit ratio • Reduced to 96% from 102% over 99.0% last twelve months with the peak at 110% at the end of Q4 2023 97.9% 95.9% 95% $3,500 3Q24
Slide 9: Net Interest Income and Margin
Financial Performance Stable margin in declining Change in asset mix as on interest rate environment balance sheet liquidity grows $5.9 $52mm $5.6 $5.7 $5.7 $49mm $5.5 $6B $50mm $48mm $48mm $49mm 6% $90mm $80mm $8.1 $8.7 $8.0 $10.6 $8.3 $5B $40mm $70mm Interest Income 5.31% 5% $60mm $4B Assets $30mm
Slide 10: Net Interest Margin and Earning Asset Yields
Financial Performance 7.0% $55 $52.0 6.5% $49.5 $48.3 $48.4 $48.5 $50 Net Interest Income 6.0% 6.08% Net Interest Margin, 5.5% 5.81% 5.74% 5.77% 5.75% $45 fully tax equivalent Earning Asset Yield 5.0% 5.31% In millions $40 Cost of Funds Net Interest Margin 4.5% 4.69% SOFR 90-Day 4.35% 4.34% 4.35% $3
Slide 11: Interest Rate Scenarios
Financial Performance $50 20% $40 15% $30 10% $20 % Change in NII $ Change in millions 5% $10 Interest Rate $0 0% Scenarios* (5%) ($10) (10%) ($20) Improved asymmetry in results ($30) (15%) driven by strategy to reduce loan to deposit ratio ($40) (20%) Down Down Down Down Up Up Up • Excess deposits
Slide 12: Noninterest Income
Financial Performance Other income (+6%) Earnings on bank owned life insurance (+91%) Interest rate swap income (-3%) Payroll services (+16%) Credit and debit card income (+5%) Mortgage banking income (-8%) Service charges on accounts (+18%) $12mm $10mm Noninterest Income* $8mm 7.5% increase in fee
Slide 13: Mortgage Loan Activity
Financial Performance MORTGAGE LOAN ORIGINATIONS $180,000 $160,000 $140,000 (In thousands) $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Mortgage Loan 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 2024 2024 2025 2025 2025 Activity Purchase mortgage loans originated Refinance mortgage loans originat
Slide 14: Noninterest Expense
Financial Performance 57.8% $40mm 55.7% 54.3% 54.8% 55.7% 60% 50% $30mm 40% $20mm 30% 20% $10mm Noninterest 10% Expense $0mm 3Q24 4Q24 1Q25 2Q25 3Q25 0% Other expense Acquisition Costs Data processing costs Furniture and equipment Occupancy Salaries and benefits Efficiency Ratio Overall stable cost
Slide 15: Transferable Energy Tax Credits
Financial Performance Transferable Energy Tax Credits Closed two transferable tax credit deals for a tax benefit of $1.0 million $15.8mm in the third quarter of 2025 $14.8mm • Advanced Manufacturing - Batteries – $0.7 million tax benefit • Solar Production - $0.3 million tax benefit • Investment off
Slide 16: Loan Growth
Financial Performance Quarterly core commercial loan growth trends $3.9B $3.82B $3.8B $3.75B $3.75B $3.71B $3.7B $3.65B $3.6B Loan Growth $3.5B Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Consistent Fundings • Commercial loan focused • Solid annual growth Total Loan Portfolio Growth Trends • Top tier asset q
Slide 17: Asset Quality
Financial Performance Quarterly Asset Quality Metrics 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr ($ in thousands) 2024 2024 2025 2025 2025 Gross loan charge-offs $ 0 3,800 100 0 200 Recoveries $ 100 200 200 100 700 Asset Quality Net loan charge-offs (recoveries) $ (100) 3,600 (100) (100) (500) Net loan
Slide 18: Loan Repricing Composition
Financial Performance Total Loan Portfolio Total Loan Portfolio Rate Type Repricing Breakdown $3.0B $2.5B 0 – 12 Months $2.0B 1 – 5 Years Fixed Rate Loans: 22% $1.5B Over 5 Years $1.0B $0.5B $0.0B Loan repricing Retail Retail Commercial Commercial compositions Variable Rate Loans: 78% designed to ma
Slide 19: Investment Portfolio
Financial Performance Total Investment Portfolio Composition As of September 30, 2025 As of December 31, 2024 $700mm $600mm Unrealized Losses $600mm Unrealized Gains $500mm $500mm Amortized Cost $400mm Fair Value $400mm $300mm $300mm $200mm $200mm Investment $100mm $100mm Portfolio $0mm ($100mm) ($1
Slide 20: Deposits and Sweep Accounts
Financial Performance Deposits and Sweep Accounts* $5.0B $4.0B $3.0B $2.0B $1.0B $0.0B 3Q24 4Q24 1Q25 2Q25 3Q25 Money Market (+16%) Noninterest-Bearing Checking (+0.1%) Interest-Bearing Checking (+7%) Savings (-7%) Local Time $100,000 & Over (+5%) Local Time Under $100,000 (+7%) Sweep Accounts (+14%
Slide 21: Deposit Balances
Financial Performance Personal 33% Business 67% Deposit Balances* September 30, ($ in thousands) September 30, 2024 Deposits comprised primarily of 2025 business accounts Personal Business Personal Business Noninterest-Bearing Checking $ 186,800 996,000 191,700 990,500 Interest Checking $ 171,200 59
Slide 22: Stable Large Depositors
Financial Performance Stable Large Depositors Depositors with over $5 million as of September 30, 2025 Total – 89 relationships aggregating $1.7 billion Business/Individual – 64 relationships aggregating $1.5 billion Governmental – 25 relationships aggregating $0.2 billion Large Depositors (Includes
Slide 23: Regulatory Capital Ratios
Financial Performance As Reported Total Risk- 14% Based Capital Ratio 12% As Reported Tier 1 Leverage Capital Ratio 10% Total Risk-Based Capital 8% Regulatory Capital Requirement 6% Tier 1 Leverage Capital Ratios 4% Requirement Adjusted Total Risk-Based (Mercantile Bank Data) 2% Capital Ratio 0% Adj
Slide 24: Sources of Liquidity
Financial Performance Availability Sources of Source ($ in thousands) Liquidity* Unsecured Federal Funds Lines of Credit $ 70,000 FHLB of Indianapolis Advance Program $ 724,000 Unpledged Investments $ 355,000 Federal Reserve Discount Window $ 156,000 *As of September 30, 2025 24
Slide 25: Thoughts on Remainder of 2025
Financial Performance Thoughts on Remainder of 2025 PRIME / SOFR RATES • 0.25% reduction effective October 29, 2025 PERFORMANCE METRICS 4TH QUARTER Loan Growth 5.00%-7.00% (annualized) Net Interest Margin 3.40%-3.50% Fee Income $9.5MM – $10.5MM Overhead Costs1 $34.5MM – $35.5MM Federal Tax Rate2 15%
Slide 26: Loan Portfolio Characteristics
Loan Portfolio Characteristics Strong Credit Culture Diversified Lending
Slide 27: Total Loans
Strong Credit Culture Total Loans* ($ in thousands) Balance Percentage COMMERCIAL LOANS Commercial and Industrial $ 1,337,700 29% Real Estate – NonOwner Occupied $ 1,091,200 24% Real Estate – Owner Occupied $ 729,500 16% Real Estate – Multi-Family & Residential Rental $ 521,100 11% Real Estate – Lan
Slide 28: Asset Quality Metrics
Strong Credit Culture Asset Quality Metrics Quarter Trends ($ in thousands) • Continued strong asset quality metrics • 16 basis points nonperforming assets to total assets as of September 30, 2025 9/30/24 12/31/24 3/31/25 6/30/25 9/30/25 Net loan charge-offs (recoveries) $ (100) 3,600 (100) (100) (5
Slide 29: Lending Commitments
Strong Credit Culture Lending Commitments ($ in millions) *Commitments to make loans generally reflect our binding obligations to existing and prospective commercial customers to extend credit, including line of credit facilities secured by accounts receivable and inventory, and term debt secured by
Slide 30: Composition – Commercial Loans
Strong Credit Culture Composition – Commercial Loans* Commercial Wholesale Trade Real Estate - 5% Retail Trade 6% Multi-Family & Transportation & Commercial Residential Manufacturing Warehousing 2% Real Estate - Rental 13% 18% Information Non-Owner Occupied <1% 29% Finance & Construction Insurance 3
Slide 31: Rate Type – Commercial Loans
Strong Credit Culture 23% 77% Floating Rate Commercial Loans Fixed Rate Commercial Loans Rate Type – Commercial Loans* RATE TYPE BREAKDOWN ($ in millions) Balance Floating Rate Commercial Loans $ 2,885,400 Fixed Rate Commercial Loans $ 864,900 Total Commercial Loans $ 3,750,300 *As of September 30,
Slide 32: Past Due Loans
Strong Credit Culture Past Due Loans Commercial and Retail Past Due Loans* ($ in millions) Recorded 30–59 60–89 > 89 Balance > Days Past Days Past Days Total Total 89 Days & Due Due Past Due Past Due Current Loans Accruing Commercial and – – 0.3 0.3 1,337.4 1,337.7 – Industrial $ Vacant Land, Land D
Slide 33: Past Due Loans as % of Total Loans
Strong Credit Culture $8.0 16 bps* $7.0 $6.0 as % of Total Loans $5.0 $4.0 Past Due Loans Millions $3.0 $2.0 $1.0 $0.0 30-89 Days Past Due 90 Days & Over Past Due Over 89 Days Past Due & Accruing *As of September 30, 2025 33
Slide 34: FDIC Commercial Real Estate Lending Concentration Guideline
Strong Credit Culture FDIC Commercial Real Estate Lending 300% Concentration 290% Guideline 280% 270% 260% Commercial Real Estate Loans / 250% Total Regulatory Capital 240% Generally not to exceed 300% 230% 220% 210% 200% 9/30/2024 12/31/2024 3/31/2025 6/30/2025 9/30/2025 34
Slide 35: Non-Owner Occupied Commercial Real Estate Lending
Strong Credit Culture Non-Owner Occupied Commercial Current NOO CRE Composition Real Estate Lending* Industrial 7% 6% Office 5% • 86% of office NOO CRE is located in Michigan Retail 3% 2% • 33% of office is medical Hotel 1% • Increase in nonperforming NOO CRE loans related to Assisted Living one com
Slide 36: Company Overview
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Slide 37: The largest bank founded, headquartered, and serving in Michigan
Company Overview The largest bank founded, headquartered, and MBWM EFIN (1) serving in Michigan. OVERVIEW • Founded in 1997 in Grand Rapids, MI. • $6.3 billion in total assets. • Acquisition of Eastern Michigan Financial Corporation expected to close Q4 2025 • More than 650 employees and over 40 loc
Slide 38: Acquisition of Eastern Michigan Financial Corporation: Pro Forma Impacts
Company Overview Pro Forma Financial Impacts Cons. & Other Loan Composition Farm & Ag. 3% Resi. RE 1% 19% ~11% ~12% C& I 25% Pro Forma Fully Phased-In Fully Phased-In $4.9B Const. & Land GAAP EPS Accretion Cash EPS Accretion Total 11% Loans Multi. 5% Acquisition of CRE CRE (OO) 15% Eastern Michigan
Slide 39: Historical Trends and Shareholder Value
Company Overview Total Assets Total Loans 10.7% CAGR 10.0% CAGR $8 $5 4.6 4.3 6.1 3.9 $6 5.3 5.4 $4 3.2 3.5 4.9 2.9 4.4 Billions Billions 3.6 $3 $4 $2 $2 $1 $0 $0 Historical Trends 2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024 and Shareholder Total Deposits TBVPS Value 11.8% CAGR 8.4%
Slide 40: Strategic Areas of Focus
Company Overview Strategic Areas of Focus CLIENT EXPERIENCE • Expand presence in Southeast • Explore use cases for artificial • Deploy new client onboarding and Michigan intelligence deployment servicing technologies • Deploy new and upgraded • Enhance existing technology PEOPLE AND CULTURE software
Slide 41: Product Offering
Company Overview Product Offering Highly competitive commercial and retail capabilities. PEER PRODUCT MBWM BAC JPM FITB CMA Autobooks for Small Business with Electronic Invoicing and Receivables Bill Payment and ACH Cash Management Credit Card Rewards Electric Vehicle
Slide 42: YIN INN INN
YIN INN INN A Mercantile Bank’