Mercantile Bank Corporation · NASDAQ:MBWM
Mercantile Bank — Q2 2025 Earnings Presentation
40 slides from Mercantile Bank's earnings presentation, Jul 22, 2025
Slide 1: Investor Presentation July 2025
Investor Presentation July 2025
Slide 2: Forward-Looking Statements
Investor Presentation – July 2025 Forward-Looking Statements This presentation contains statements or information that regulation or actions by bank regulators; changes in tax may constitute forward-looking statements within the laws and other laws and regulations applicable to us; meaning of the Pr
Slide 3: Executive Management Team
Investor Presentation – July 2025 Executive Management Team RAYMOND REITSMA CHARLES CHRISTMAS PRESIDENT AND EVP, CHIEF FINANCIAL OFFICER, CHIEF EXECUTIVE OFFICER AND TREASURER Mr. Reitsma was appointed President and Mr. Christmas has served as Chief Financial Chief Executive Officer of Mercantile Of
Slide 4: Financial Performance Second Quarter 2025
Financial Performance Second Quarter 2025
Slide 5: Second Quarter Performance Highlights
Financial Performance EARNINGS • Net income of $22.6mm in 2Q25 versus $18.8mm in 2Q24 • EPS of $1.39 in 2Q25 versus $1.17 in 2Q24 NET INTEREST • Net interest margin of 3.49% in 2Q25 versus 3.63% in 2Q24 MARGIN AND NET • Lower earning asset yield attributed to lower interest rate environment but INTE
Slide 6: Shareholder Value Peer Comparison
Financial Performance MBWM TBVPS 5-Year TBV CAGR vs. Proxy Peer Group 8.4% 5-Year CAGR 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% -
Slide 7: Loan to Deposit Ratio
Financial Performance 110% $5,000 107.0% Loan to Deposit 105% $4,500 Ratio* (In millions) 102.2% Reduction from 107% to less than 100% over last twelve months 100% $4,000 99.7% • Driven by robust local deposit growth 99.0% • Includes solid loan growth and seasonal 97.9% declines in deposits in the f
Slide 8: Net Interest Income
Financial Performance Net Interest Income $50 $45 $47.1 $48.3 $48.4 $48.5 $49.5 $90mm $5.2 $5.5 $5.6 $5.7 $5.7 6% $80mm $8 $9 $8 $8 $5B $6 $40 Interest Income $70mm Stable net interest income in a $35 $4B 5% $60mm dynamic interest rate $in millions $30 5.35% 5.31% $50mm Assets $25 $3B environment 4.
Slide 9: Net Interest Margin
Financial Performance Net Interest Income Net Interest Margin, fully tax equivalent Earning Asset Yield Cost of Funds $49.5 $50mm $48.3 $48.4 $48.5 7.0% $47.1 6.0% $45mm 6.07% 6.08% Net Interest Margin 5.81% 5.74% 5.77% 5.0% $40mm 4.0% $35mm Stabilizing net interest margin 3.63% 3.52% 3.41% 3.47% 3.
Slide 10: Interest Rate Scenarios
Financial Performance $50 20% $40 15% $30 % Change in NII 10% $ Change in millions $20 Interest Rate $10 5% Scenarios* $0 0% (5%) ($10) (10%) ($20) Improved asymmetry in results driven by strategy to reduce loan ($30) (15%) to deposit ratio ($40) (20%) • Excess deposits used to build investment Down
Slide 11: Noninterest Income
Financial Performance Service charges on accounts (+16%) Mortgage banking income (+31%) Credit and debit card income (+4%) Payroll services (+14%) Interest rate swap income (+60%) Earnings on bank owned life insurance (+28%) Other income (-26%) $12mm $10mm Noninterest Income* $8mm Solid 18% increase
Slide 12: 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 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 2024 2024 2024 2025 2025 Activity Purchase mortgage loans originated Refinance mortgage loans originat
Slide 13: Noninterest Expense
Financial Performance 58% $40mm 56% 54% 55% 60% 52% 50% $30mm 40% $20mm 30% 20% $10mm Noninterest 10% Expense $0mm 2Q24 3Q24 4Q24 1Q25 2Q25 0% Other expense Data processing costs Furniture and equipment Occupancy Salaries and benefits Efficiency Ratio Overall stable cost structure • Quarter-over-qua
Slide 14: Transferable Energy Tax Credits
Financial Performance Transferable Energy Tax Credits $19.9mm Closed two transferable tax credit $18.4mm deals for a tax benefit of $1.5 million in the second quarter of 2025 • 2024 Solar Project: $750,000 tax benefit • 2024 Battery Project: $750,000 tax benefit • Investment offsets estimated Federa
Slide 15: Asset Quality
Financial Performance Average Loans $4.7B $4.6B $4.6B $4.5B $4.4B Asset Quality 2nd Qtr 2024 3rd Qtr 2024 4th Qtr 2024 1st Qtr 2025 2nd Qtr 2025 Asset quality measures remain strong ASSET QUALITY METRICS 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr ($ in thousands) • Reflects ongoing commitment to soundl
Slide 16: Loan Repricing
Financial Performance Total Loan Portfolio Total Loan Portfolio Rate Type Repricing Breakdown Loan Repricing* Over 5 Years 9% Fixed Rate Loans: 22% 1 – 5 Years The majority of loans have a 22% floating rate, shortening balance sheet duration and aligning with Variable Rate funding sources to mitigat
Slide 17: Investment Portfolio
Financial Performance Total Investment Portfolio Composition As of June 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 $100mm $100mm Investment $0mm $0mm Portfolio ($100mm) ($1
Slide 18: Regulatory Capital Ratios
Financial Performance 14% As Reported Total Risk-Based Capital Ratio 12% As Reported Tier 1 Leverage Capital 10% Ratio 8% Total Risk-Based Capital Requirement 6% Tier 1 Leverage Capital Requirement 4% Regulatory Capital 2% Adjusted Total Risk-Based Capital Ratio Ratios 0% Adjusted Tier 1 Leverage Ca
Slide 19: Stable Large Depositors
Financial Performance Stable Large Depositors Depositors with over $5 million as of June 30, 2025 Total – 80 relationships aggregating $1.5 billion Business/Individual – 63 relationships aggregating $1.3 billion Governmental – 17 relationships aggregating $0.2 billion Large Depositors (Includes Swee
Slide 20: Deposits and Sweep Accounts
Financial Performance Deposits and Sweep Accounts* $5.0B $4.5B $4.0B $3.5B $3.0B $2.5B $2.0B $1.5B $1.0B $0.5B $0.0B 2Q24 3Q24 4Q24 1Q25 2Q25 Money Market (+26%) Noninterest-Bearing Checking (+5%) Interest-Bearing Checking (+10%) Savings (-10%) Local Time $100,000 & Over (+14%) Local Time Under $100
Slide 21: Deposit Balances
Financial Performance Personal 34% Business 66% Deposit Balances* ($ in thousands) June 30, 2025 June 30, 2024 Deposits comprised primarily of business accounts Personal Business Personal Business Noninterest-Bearing Checking $ 189,100 991,700 198,600 921,300 Interest Checking $ 183,600 522,200 176,
Slide 22: 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 $ 698,000 Unpledged Investments $ 369,000 Federal Reserve Discount Window $ 153,000 *As of June 30, 2025 22
Slide 23: Thoughts on Remainder of 2025
Financial Performance Thoughts on Remainder of 2025 PRIME / SOFR RATES • No Change 2025 PERFORMANCE METRICS 3RD QUARTER 4TH QUARTER Loan Growth 1.00% – 2.00%1 3.00% – 5.00% Net Interest Margin 3.50% – 3.60% 3.55% – 3.65% Fee Income $9.0MM – $10.0MM $9.0MM – $10.0MM Overhead Costs $32.5MM – $33.5MM $
Slide 24: Strong Credit Culture: Diversified Lending
Strong Credit Culture Diversified Lending
Slide 25: Total Loans
Strong Credit Culture Total Loans* ($ in thousands) Balance Percentage COMMERCIAL LOANS Commercial and Industrial $ 1,375,400 29% Real Estate – NonOwner Occupied $ 1,134,000 24% Real Estate – Owner Occupied $ 725,100 16% Real Estate – Multi-Family & Residential Rental $ 519,200 11% Real Estate – Lan
Slide 26: 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 June 30, 2025 6/30/24 9/30/24 12/31/24 3/31/25 6/30/25 Net loan charge-offs (recoveries) $ (300) (100) 3,600 (100) (100) N
Slide 27: Core Commercial Loan Growth
Strong Credit Culture FIVE QUARTER LOAN GROWTH TRENDS Core Commercial Loans $3,900 $3,821 $3,800 $3,752 7% $3,700 $3,707 $3,648 Commercial loan growth in $3,600 $3,533 2Q25 $3,500 (annualized) Core Commercial $3,400 Loan Growth $3,300 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 ($ in millions) FIVE YEAR ANNU
Slide 28: 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 29: Composition – Commercial Loans
Strong Credit Culture Composition – Commercial Loans* Commercial Real Wholesale Trade Estate - Multi- 5% Retail Trade 6% Family & Transportation & Commercial Real Residential Rental Manufacturing Warehousing 2% Estate - Non- 13% 18% Information Owner Occupied <1% 30% Finance & Insurance 3% Construct
Slide 30: Rate Type – Commercial Loans
Strong Credit Culture 24% 76% Floating Rate Commercial Loans Fixed Rate Commercial Loans Rate Type – Commercial Loans RATE TYPE BREAKDOWN ($ in millions) Balance Floating Rate Commercial Loans $ 2,917,200 Fixed Rate Commercial Loans $ 904,000 Total Commercial Loans $ 3,821,200 *As of June 30, 2025 3
Slide 31: Past Due Loans
Strong Credit Culture Past Due Loans Commercial and Retail Past Due Loans* ($ in millions) Recorded > 89 Balance > 89 30–59 Days 60–89 Days Days Total Days & Past Due Past Due Past Due Past Due Current Total Loans Accruing Commercial and Industrial $ – 1.3 0.4 1.7 1,373.7 1,375.4 – Vacant Land, Land
Slide 32: Past Due Loans (Millions)
Strong Credit Culture $8.0 6 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 June 30, 2025 32
Slide 33: 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% 6/30/2024 9/30/2024 12/31/2024 3/31/2025 6/30/2025 33
Slide 34: Non-Owner Occupied Commercial Real Estate Lending
Strong Credit Culture Non-Owner Occupied Commercial Current NOO CRE Composition Real Estate Lending* Industrial 8% 5% Office 5% • 87% of office NOO CRE is located in Michigan Retail 3% • 36% of office is medical 2% 1% Hotel • Increase in nonperforming NOO CRE loans related to one commercial loan rel
Slide 35: Company Overview
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Slide 36: The largest bank founded, headquartered, and serving in Michigan
Company Overview The largest bank founded, headquartered, and serving in Michigan. • Founded in 1997 in Grand Rapids, MI. WE INVEST IN OUR COMMUNITIES BY: • $6.2 billion in total assets. • Volunteering more than 24,000 hours • More than 650 employees and over 40 supporting more than 900 locations. o
Slide 37: 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 $3 Billions Billions 3.6 $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 38: Strategic Areas of Focus
Company Overview Strategic Areas of Focus CLIENT EXPERIENCE PEOPLE AND CULTURE RISK MANAGEMENT • Deploy new client onboarding and servicing • Foster culture where all employees feel • Maintain and enhance existing credit technologies valued and empowered culture • Enhance existing technology solutio
Slide 39: 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 40: YIN INN INN
YIN INN INN A Mercantile Bank’