Mercantile Bank Q3 net income rises to $24.1 million

Mercantile Bank Corporation reported net income of $24.1 million, or $1.39 per diluted share, for the third quarter of 2026, a slight increase from the $23.8 million, or $1.46 per diluted share, reported in the same period last year. The company, headquartered in Grand Rapids, Michigan, stated that these results were driven by net interest income growth, loan portfolio expansion, and strong local deposit generation.

After adjusting for one-time expenses linked to the Eastern Michigan Financial Corporation deal and the migration of its banking systems, adjusted net income stood at $24.5 million, or $1.42 per diluted share. On a trailing nine-month basis, adjusted earnings per diluted share increased by $0.32, or 7.8 percent, compared to the 2025 period. Ray Reitsma, President and Chief Executive Officer of Mercantile, attributed the performance to solid earning asset growth and a higher net interest margin.

Net revenue for the third quarter reached $73.2 million, up 17.3 percent from $62.4 million in the prior-year period. This growth was supported by net interest income of $60.9 million, which rose 17.1 percent, and noninterest income of $12.3 million, which increased 18.4 percent. A significant portion of the noninterest income growth came from a 28 percent increase in treasury management fees.

The net interest margin improved to 3.73 percent in the third quarter of 2026 from 3.49 percent in the third quarter of 2025. This improvement reflected a lower cost of funds and commercial loan growth, despite a decrease in the yield on average earning assets to 5.52 percent from 5.74 percent the previous year. The decline in asset yield was primarily due to lower interest rates on variable-rate commercial loans following Federal Open Market Committee rate cuts in September, October, and December 2025.

The cost of funds fell to 1.79 percent from 2.25 percent a year earlier, driven by lower rates on money market accounts and time deposits. Mercantile also noted a substantial reduction in its loan-to-deposit ratio, which dropped from approximately 96 percent as of September 30, 2025, to approximately 88 percent as of September 30, 2026. This change resulted from solid local deposit generation and the onboarding of Eastern Michigan Bank’s deposit portfolio.

Brokered deposits decreased by $110 million during the first nine months of 2026, leaving a balance of $20.1 million scheduled to mature in late 2026. The company reported tangible book value per common share of $37.81 as of September 30, 2026, an increase of nearly 4 percent on an annualized basis since December 31, 2025.

Mercantile indicated that its banking system conversion is expected to occur in the first quarter of 2027. The company stated it has made investments to expand its presence in Southeast Michigan to gain market share.