Mercantile Bank (MBWM) investor relations material

Executive summary

• Net income for Q1 2026 was $22.7 million ($1.32 per diluted share), up from $19.5 million ($1.21 per share) in Q1 2025, driven by higher net interest and noninterest income and a negative provision for credit losses, offsetting increased noninterest expense.

• Adjusted net income, excluding one-time acquisition and system conversion costs, was $25.2 million ($1.46 per share), a 21% year-over-year increase.

• Achieved strong first quarter 2026 results, building on commercial expertise and strategic objectives, including the successful acquisition of Eastern Michigan at year-end 2025.

• Demonstrated top-quartile return on assets and equity, with robust deposit and loan growth, stable net interest margin, and strong asset quality.

• The quarter included the first full period of Eastern Michigan Bank's operating results, supporting deposit growth and operational expansion.

Financial highlights

• Net revenue grew 18.1% year-over-year to $67.6 million; net interest income rose 15.1% to $55.9 million, with a net interest margin of 3.55% (up from 3.47%).

• Noninterest income increased 34.3% to $11.7 million, led by treasury management, swap, and mortgage banking fees.

• Noninterest expense increased $11 million year-over-year to $42.1 million, with $3.2 million attributed to one-time core system conversion and acquisition costs.

• Negative provision for credit losses of $1.8 million, reflecting improved economic outlook and loan mix.

• Tangible book value per share rose to $37.34 at Q1 2026, up 8% year-over-year.

Outlook and guidance

• Projecting 5%-7% annualized loan growth per quarter for the remainder of 2026, supported by a strong commercial loan pipeline and fewer payoffs.

• Net interest margin expected to remain stable, with guidance of 3.50–3.70% for the next three quarters.

• Effective tax rate forecasted at 17% for 2026, reflecting ongoing tax credit activities.

• Overhead costs projected at $39–40 million per quarter, excluding core conversion costs.

• Strategic focus remains on balance sheet growth, cost control, and expanding client relationships.