Mercantile Bank Corporation Reports $19.5 Million Net Income in Q1 2025

Mercantile Bank Corporation reported a net income of $19.5 million, or $1.21 per diluted share, for the first quarter of 2025, a decrease from $21.6 million, or $1.34 per diluted share, in the same period of 2024. The decline in net income was attributed to lower noninterest income, increased noninterest expenses, and a higher provision for credit losses, despite a rise in net interest income. Total interest income increased by $3.6 million to $80.3 million, driven by growth in average earning assets, while interest expense rose by $2.4 million to $31.8 million, resulting in a net interest income of $48.5 million, up $1.2 million from the previous year.

The bank's total assets increased by $89 million to $6.14 billion as of March 31, 2025. Total loans rose by $35.8 million, reaching $4.64 billion, with commercial loans accounting for $3.75 billion, or 80.9% of total loans. Notably, non-owner occupied commercial real estate loans grew by $55.3 million, while owner-occupied commercial real estate loans decreased by $43.2 million. The overall quality of the loan portfolio remained strong, with nonperforming loans at just 0.12% of total loans.

Deposits decreased by $16.6 million to $4.68 billion, primarily due to a reduction in business noninterest-bearing checking accounts, which was expected during the early part of the year. However, there was growth in interest-bearing deposit types, including a $121 million increase in sweep accounts. The bank's provision for credit losses was $2.1 million, reflecting an increased allocation due to changes in the economic forecast and loan growth.

Looking ahead, Mercantile Bank Corporation remains focused on maintaining a strong loan portfolio and managing interest rate risk. The bank's management noted a robust pipeline of commercial loan opportunities, although the "committed and accepted" segment is currently low due to economic uncertainties. The bank's capital ratios indicate a well-capitalized status, with total risk-based capital at 14.0% as of March 31, 2025, exceeding the minimum requirements for regulatory capital.