“Mercantile Bank Corporation has declared a higher regular quarterly cash dividend of $0.39 per common share, marking a 2.6 percent increase from the fourth quarter of 2025 and a 5.4 percent increase from the first quarter of 2025, payable to shareholders of record as of March 6, 2026. This move underscores the company’s robust 2025 financial results, including net income of $88.8 million or $5.47 per diluted share, up from $79.6 million or $4.93 per diluted share in 2024, driven by net interest income growth of about 5 percent, stable net interest margin, and increases in key fee income categories. The acquisition of Eastern Michigan Financial Corporation further strengthens its market presence in Michigan, with total assets reaching $6.84 billion.”
Dividend Announcement and Shareholder Value Enhancement
Mercantile Bank Corporation, a prominent Michigan-based financial institution, has elevated its regular quarterly cash dividend to $0.39 per common share. This adjustment represents a strategic effort to deliver enhanced returns to shareholders amid a backdrop of solid operational performance and balance sheet resilience. The dividend is set for payment on March 18, 2026, to those holding shares at the close of business on March 6, 2026.
The increased payout is 2.6 percent above the dividend distributed in the fourth quarter of 2025 and 5.4 percent higher than that of the first quarter of 2025. Based on the current stock price of approximately $50.24, this translates to an annualized dividend yield of roughly 3.1 percent, positioning the company competitively within the regional banking sector for income-focused investors.
Executive leadership emphasized the commitment to shareholder value, noting that the dividend hike aligns with sustained earnings strength and asset quality. The board’s decision reflects confidence in the firm’s ability to maintain capital levels while supporting future growth initiatives.
Financial Performance Overview for 2025
The dividend increase coincides with strong fourth quarter and full-year 2025 results, highlighting Mercantile’s adaptability in a fluctuating interest rate landscape. Net income for the fourth quarter stood at $22.8 million, or $1.40 per diluted share, compared to $19.6 million, or $1.22 per diluted share, in the same period of 2024. For the entire year, net income rose to $88.8 million, or $5.47 per diluted share, from $79.6 million, or $4.93 per diluted share, in 2024.
Return on average assets was 1.4 percent for the year, while return on average equity reached 14.1 percent, demonstrating efficient capital utilization. Tangible book value per common share climbed to $36.78 by year-end, an increase of about 11 percent from the prior year.
Net revenue for the fourth quarter totaled $62.1 million, a 6.0 percent rise from $58.5 million in the prior-year quarter. Full-year net revenue grew 4.8 percent to $243 million from $231 million in 2024.
Net Interest Income and Margin Analysis
Net interest income expanded to $51.0 million in the fourth quarter, up 5.5 percent from $48.4 million a year earlier, fueled by earning asset growth and a marginally improved net interest margin of 3.43 percent, compared to 3.41 percent previously. For the full year, net interest income increased 5.2 percent to $201 million from $191 million, with the margin at 3.47 percent versus 3.58 percent in 2024.
The yield on average earning assets dipped to 5.52 percent in the fourth quarter from 5.80 percent, primarily due to lower loan yields amid federal funds rate reductions. Loan yields fell to 6.12 percent from 6.38 percent, influenced by variable-rate commercial loans comprising about 75 percent of the portfolio. Securities yields improved to 2.96 percent from 2.54 percent, benefiting from reinvestments.
Cost of funds declined to 2.09 percent in the quarter from 2.39 percent, reflecting adjustments in deposit rates following rate cuts. Annually, the cost of funds dropped to 2.22 percent from 2.43 percent.
Noninterest Income Growth Drivers
| Period | NetInterestIncome($millions) | NetInterestMargin(%) | YieldonEarningAssets(%) | CostofFunds(%) |
|---|---|---|---|---|
| Q42025 | 51.0 | 3.43 | 5.52 | 2.09 |
| Q42024 | 48.4 | 3.41 | 5.80 | 2.39 |
| FullYear2025 | 201 | 3.47 | 5.69 | 2.22 |
| FullYear2024 | 191 | 3.58 | 6.01 | 2.43 |
Noninterest income rose 8.7 percent to $11.1 million in the fourth quarter from $10.2 million, and 3.0 percent annually to $41.6 million from $40.4 million. Key contributors included treasury management fees up 11 percent, mortgage banking income up 6 percent, and payroll services fees up 14 percent, driven by new client relationships and expanded product adoption.
Bank owned life insurance income also bolstered results, with death benefit claims adding $1.0 million for the year. Excluding one-time items, core noninterest income showed steady gains from operational efficiencies and marketing initiatives.
Provision for Credit Losses and Asset Quality
A negative provision for credit losses of $0.7 million was recorded in the fourth quarter, versus a positive $1.5 million in the prior year. Full-year provision expense fell to $3.2 million from $7.4 million, reflecting improved economic forecasts, loan mix shifts, and reduced specific allocations.
Asset quality remained strong, with low nonperforming assets, past due loans, and charge-offs. The allowance for credit losses adjusted downward due to faster prepayment speeds in residential and consumer portfolios and baseline loss rate changes.
Balance Sheet Expansion and Liquidity Management
Total assets grew to $6.84 billion by December 31, 2025, an increase of $783 million from the prior year-end, incorporating the acquisition of Eastern Michigan Financial Corporation, which added $572 million in assets and expanded the footprint in East and Southeast Michigan.
The loan-to-deposit ratio improved to 95 percent from 98 percent, further reducing to 91 percent post-acquisition, thanks to robust local deposit growth. This enhanced liquidity supports anticipated loan expansion while maintaining a conservative funding profile.
Commercial loan pipelines stayed healthy, signaling potential for continued balance sheet growth. Regulatory capital ratios remained solid, well above required minimums, affirming the bank’s financial stability.
Noninterest Expense and Tax Efficiency
Noninterest expense increased to $36.7 million in the fourth quarter from $33.8 million, and to $136 million annually from $126 million, attributed to higher salary and benefit costs, acquisition-related expenses, data processing fees, and reserves for unfunded commitments.
Federal income tax expense decreased to $3.2 million in the quarter from $3.6 million, and to $14.7 million for the year from $18.7 million, yielding an effective tax rate of 14.2 percent down from 19.0 percent. This improvement stemmed from transferable energy tax credits and investments in tax-advantaged structures, providing aggregate benefits of $5.3 million.
Strategic Initiatives and Community Impact
The acquisition of Eastern Michigan Financial Corporation, completed on December 31, 2025, integrates complementary operations and broadens service offerings to clients in new markets. This move aligns with Mercantile’s growth strategy, emphasizing relationship-based banking and innovative financial solutions.
Additionally, contributions of $1.1 million to The Mercantile Bank Foundation underscore the company’s dedication to community development and philanthropy.
Key Financial Metrics Comparison
| Metric | Q42025 | Q42024 | Change(%) | FullYear2025 | FullYear2024 | Change(%) |
|---|---|---|---|---|---|---|
| NetIncome($millions) | 22.8 | 19.6 | 16.3 | 88.8 | 79.6 | 11.6 |
| DilutedEPS($) | 1.40 | 1.22 | 14.8 | 5.47 | 4.93 | 10.9 |
| NetRevenue($millions) | 62.1 | 58.5 | 6.0 | 243 | 231 | 4.8 |
| NoninterestIncome($millions) | 11.1 | 10.2 | 8.7 | 41.6 | 40.4 | 3.0 |
| NoninterestExpense($millions) | 36.7 | 33.8 | 8.6 | 136 | 126 | 7.9 |
| EffectiveTaxRate(%) | N/A | N/A | N/A | 14.2 | 19.0 | -25.3 |