- Mercantile Bank Corporation (MBWM, Financial) posts a Q1 2025 net income of $19.5 million, reflecting a 9.7% decrease from the previous year.
- Net interest income rises by 2.5% to $48.6 million, but noninterest income declines to $8.7 million.
- Asset quality remains strong, with nonperforming assets below 0.1% of total assets, and the bank maintains a well-capitalized status with a 14.0% risk-based capital ratio.
Mercantile Bank Corporation (MBWM) has reported its financial results for the first quarter of 2025, showcasing a net income of $19.5 million, equating to $1.21 per diluted share. This figure represents a downturn from the $21.6 million, or $1.34 per diluted share, recorded in the first quarter of 2024.
The bank experienced a 2.5% increase in net interest income, reaching $48.6 million, despite a decline in the net interest margin from 3.74% to 3.47%. This margin contraction is largely attributed to reduced yields on variable-rate commercial loans following three Federal Reserve rate cuts totaling 100 basis points in late 2024.
Total assets climbed to $6.14 billion, with total deposits slightly decreasing to $4.68 billion. The loan-to-deposit ratio rose marginally to 99% from 98% at the end of 2024, driven by growth in commercial loans at an annualized rate of 4.8%.
However, noninterest income fell to $8.7 million from $10.9 million, impacted by lower levels of interest rate swap income and bank-owned life insurance income. Despite these challenges, mortgage banking income saw substantial growth, driven by a 26% increase in loan origination volumes.
Maintaining strong asset quality, the bank reported nonperforming assets at less than 0.1% of total assets, bolstered by net loan recoveries during the period. The total risk-based capital ratio stands at a robust 14.0%, providing a cushion of $217 million above the regulatory requirement for a "well-capitalized" institution.
According to Ray Reitsma, the President and CEO of Mercantile, "We continue to demonstrate resilience in managing challenges from the current economic environment while focusing on strengthening our core revenue engines and maintaining the quality of our assets."
