MERCANTILE BANK CORP
For the period ended Sep 30, 2026. Filed Oct 30, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Oct 30, 2026
MBWM$60.57+0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-07-31.
0001437749-26-025168
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-10-30.
0001437749-26-034072
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 82 previous paragraphs and 83 current paragraphs.
26 unchanged; 55 reworded; 1 added; 1 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (1)
Current report
We recorded provisions for credit losses of positive $0.7 million and negative $2.9 million during the third quarter and first nine months of 2026, respectively, and positive provisions for credit losses of $0.2 million and $3.9 million during the respective 2025 periods. The positive provision expense recorded during the third quarter of 2026 primarily reflected increases in specific and qualitative factor allocations of $1.7 million and $0.7 million, respectively, along with allocations of $0.6 million necessitated by net loan growth. These factors were partially offset by decreases in the required reserve of $1.5 million and $0.7 million stemming from an increase in residential mortgage and consumer loan prepayment speeds and a decline in baseline loss allocations, respectively. The negative provision expense recorded during the first nine months of 2026 primarily reflected an increase in residential mortgage and consumer loan prepayment speeds that decreased the required reserve by $1.5 million, a decline in specific allocations of $1.4 million, a lower calculated baseline loss allocation of $1.2 million, and $1.1 million in net loan recoveries. These factors were partly offset by increases in the required reserve of $1.2 million for changes in qualitative factors and $1.2 million necessitated by net loan growth. The positive provision expense recorded during the third quarter of 2025 mainly reflected a $2.9 million net increase in specific allocations, largely reflecting a $3.1 million increase in the specific allocation for a commercial construction loan relationship that was placed on nonaccrual during the second quarter of 2025, and a $0.9 million net increase in qualitative factor allocations resulting from changes in the composition of the loan portfolio. The impacts of these factors were partially offset by $2.3 million and $0.9 million reductions in the reserve related to faster residential mortgage and consumer loan prepayment speeds and the associated shortened average lives of the portfolios and a net decline in the loan portfolio, respectively. The positive provision expense recorded during the first nine months of 2025 primarily reflected a $4.6 million net increase in specific allocations driven by $5.5 million in total allocations for the aforementioned commercial construction loan, a $1.9 million reserve increase related to changes to the economic forecast, and a $1.7 million net increase in qualitative factors stemming from changes in the makeup of the loan portfolio. The impacts of these factors were partially offset by $2.3 million and $1.2 million reductions in the reserve related to faster residential mortgage and consumer loan prepayment speeds and the associated reduced average lives of the portfolios and changes in baseline loss rates, respectively.
Removed paragraphs (1)
Previous report
We recorded negative provisions for credit losses of $1.8 million and $3.6 million during the second quarter and first six months of 2026, respectively, and positive provisions for credit losses of $1.6 million and $3.7 million during the respective 2025 periods. The negative provision expense recorded during the current-year second quarter mainly reflected the elimination of a $2.7 million specific allocation associated with the resolution of a nonperforming commercial construction loan, which was partially offset by changes in the economic forecast, allocations necessitated by net loan growth, and an increase in qualitative factor allocations. The negative provision expense recorded during the first six months of 2026 primarily reflected a decline in specific allocations and changes in loan mix, which more than offset allocations necessitated by changes in qualitative factors and net loan growth. The positive provision expense recorded during the second quarter of 2025 mainly reflected an individual allocation of $2.5 million associated with a commercial construction loan relationship that was placed on nonaccrual during the quarter and allocations of $0.7 million necessitated by net loan growth, which more than offset an aggregate reduction of $1.0 million in individual allocations related to nonperforming loan relationships resulting from full payoffs and partial paydowns. The positive provision expense recorded during the first six months of 2025 primarily reflected a net increase in individual allocations driven by the aforementioned commercial construction loan that was placed on nonaccrual during the second quarter, allocations necessitated by net loan growth, and the net impact of changes to the economic forecast.
Reworded paragraphs (55)
Previous wording
This report contains certain non-GAAP financial measures, including adjusted net income, adjusted noninterest expense, and adjusted diluted earnings per share, each of which excludes after-tax costs associated with (i) Mercantile’s acquisition of Eastern Michigan Financial Corporation that was completed during the fourth quarter of 2025 ($0.1 million and $0.4 million during the second quarter and first six months of 2026, respectively) , and (ii) the previously announced core and digital banking system conversion ($0.5 million and $3.5 million during the second quarter and first six months of 2026, respectively). These non-GAAP financial measures are identified in this report where they appear. We believe that presenting these non-GAAP financial measures provides investors, analysts, and other interested parties with meaningful supplementary information to assess Mercantile’s underlying operational performance by removing the effect of costs we consider to be non-recurring in nature and not reflective of Mercantile’s core operating results. These non-GAAP financial measures are used by management to evaluate Mercantile’s ongoing operations, for internal planning and forecasting purposes, and to assess period-over-period comparability. Management believes it is useful for the reader to review these non-GAAP adjusted measures alongside the GAAP measures. Our definition of these adjusted financial measures may differ from similarly named measures used by others. These non-GAAP measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for our GAAP measures.
Current wording
This report contains certain non-GAAP financial measures, including adjusted net income, adjusted noninterest expense, and adjusted diluted earnings per share, each of which excludes after-tax costs associated with (i) Mercantile’s acquisition of Eastern Michigan Financial Corporation ("Eastern Michigan") that was completed during the fourth quarter of 2025 ($0.2 million and $0.5 million during the third quarter and first nine months of 2026, respectively) , and (ii) the previously announced core and digital banking system conversions ($0.4 million and $3.9 million during the third quarter and first nine months of 2026, respectively). These non-GAAP financial measures are identified in this report where they appear. We believe that presenting these non-GAAP financial measures provides investors, analysts, and other interested parties with meaningful supplementary information to assess Mercantile’s underlying operational performance by removing the effect of costs we consider to be non-recurring in nature and not reflective of Mercantile’s core operating results. These non-GAAP financial measures are used by management to evaluate Mercantile’s ongoing operations, for internal planning and forecasting purposes, and to assess period-over-period comparability. Management believes it is useful for the reader to review these non-GAAP adjusted measures alongside the GAAP measures. Our definition of these adjusted financial measures may differ from similarly named measures used by others. These non-GAAP measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for our GAAP measures.
Previous wording
The following discussion compares the financial condition of Mercantile Bank Corporation and its consolidated subsidiaries, including Mercantile Bank, Eastern Michigan Bank (collectively “our banks”), Mercantile Community Partners, LLC ("MCP"), and Mercantile Insurance Center, Inc., a subsidiary of Mercantile Bank, at June 30, 2026, and December 31, 2025, and the results of operations for the three and six months ended June 30, 2026, and 2025. This discussion should be read in conjunction with the interim consolidated financial statements and footnotes included in this report. Unless the text clearly suggests otherwise, references in this report to “us,” “we,” “our” or “the Company” include Mercantile Bank Corporation and its consolidated subsidiaries referred to above.
Current wording
The following discussion compares the financial condition of Mercantile Bank Corporation and its consolidated subsidiaries, including Mercantile Bank, Eastern Michigan Bank (collectively “our banks”), Mercantile Community Partners, LLC ("MCP"), and Mercantile Insurance Center, Inc., a subsidiary of Mercantile Bank, at September 30, 2026, and December 31, 2025, and the results of operations for the three and nine months ended September 30, 2026 and 2025. This discussion should be read in conjunction with the interim consolidated financial statements and footnotes included in this report. Unless the text clearly suggests otherwise, references in this report to “us,” “we,” “our” or “the Company” include Mercantile Bank Corporation and its consolidated subsidiaries referred to above.
Previous wording
Core Deposit Intangible: In whole bank or bank branch acquisitions, the primary identifiable intangible asset recorded is the value of core deposit intangibles, representing the estimated value of long-term deposit relationships acquired. The determination involves assumptions and estimates, typically determined through discounted cash flow analysis, considering customer attrition/runoff, alternative funding costs, deposit servicing costs, and discount rates. Amortization of core deposit intangibles occurs over estimated useful lives reviewed periodically for reasonableness. These estimated useful lives, typically ranging from seven to 10 years with an accelerated rate of amortization, are periodically reviewed for reasonableness. Identifiable intangible assets, including core deposit intangibles, are assessed for impairment when events or changes suggest the carrying value may not be recoverable. Our policy dictates recognition of an impairment loss equal to the difference between the asset’s carrying amount and fair value if the expected undiscounted future cash flows are less than the carrying amount. Estimating future cash flows involves multiple estimates and assumptions, as previously mentioned.
Current wording
Core Deposit Intangible: In whole bank or bank branch acquisitions, the primary identifiable intangible asset recorded is the value of core deposit intangibles, representing the estimated value of long-term deposit relationships acquired. The determination involves assumptions and estimates, typically determined through discounted cash flow analysis, considering customer attrition/runoff, alternative funding costs, deposit servicing costs, and discount rates. Amortization of core deposit intangibles occurs over estimated useful lives reviewed periodically for reasonableness. These estimated useful lives, typically ranging from seven to ten years with an accelerated rate of amortization, are periodically reviewed for reasonableness. Identifiable intangible assets, including core deposit intangibles, are assessed for impairment when events or changes suggest the carrying value may not be recoverable. Our policy dictates recognition of an impairment loss equal to the difference between the asset’s carrying amount and fair value if the expected undiscounted future cash flows are less than the carrying amount. Estimating future cash flows involves multiple estimates and assumptions, as previously mentioned.
Previous wording
On December 31, 2025, we consummated the acquisition of Eastern Michigan Financial Corporation (“Eastern Michigan”), and its wholly owned banking subsidiary, Eastern Michigan Bank, headquartered in Crosswell, Michigan. Eastern Michigan Bank will operate alongside Mercantile Bank until the first quarter of 2027 at which time we plan to consolidate Eastern Michigan Bank into Mercantile Bank in conjunction with the completion of the conversion of our core operating system to a new provider. The first six months of 2026 represented the initial period of financial performance that included Eastern Michigan Bank’s operating results.
Current wording
On December 31, 2025, we consummated the acquisition of Eastern Michigan, and its wholly owned banking subsidiary, Eastern Michigan Bank, headquartered in Croswell, Michigan. Eastern Michigan Bank will operate alongside Mercantile Bank until the first quarter of 2027, at which time we plan to consolidate Eastern Michigan Bank into Mercantile Bank in conjunction with the completion of the conversion of our core operating system to a new provider. The first nine months of 2026 represented the initial period of financial performance that included Eastern Michigan Bank’s operating results.
Previous wording
We reported net income of $25.9 million, or $1.50 per diluted share, for the second quarter of 2026, compared with net income of $22.6 million, or $1.39 per diluted share, during the second quarter of 2025. Net income during the first six months of 2026 totaled $48.6 million, or $2.82 per diluted share, compared to $42.2 million, or $2.60 per diluted share, during the first six months of 2025. Growth in net income during both time periods primarily reflected increased net interest income and lower provision expense that more than offset higher noninterest expense costs and federal income tax expense.
Current wording
We reported net income of $24.1 million, or $1.39 per diluted share, during the third quarter of 2026, compared with net income of $23.8 million, or $1.46 per diluted share, during the third quarter of 2025. Net income during the first nine months of 2026 totaled $72.7 million, or $4.21 per diluted share, compared to $65.9 million, or $4.06 per diluted share, during the first nine months of 2025. Growth in net income during both time periods primarily reflected increased net interest income and noninterest income that more than offset higher noninterest expenses and federal income tax expense.
Previous wording
Excluding after-tax one-time costs associated with the year-end 2025 acquisition of Eastern Michigan and previously announced core and digital banking system conversion (a non-GAAP measurement), net income improved to $26.4 million, or $1.53 per diluted share, for the second quarter of 2026, and $51.7 million, or $2.99 per diluted share, for the first six months of 2026. Earnings increased $0.14 per diluted share, or approximately 10%, in the second quarter of 2026 compared to the second quarter of 2025, and $0.39 per diluted share, or approximately 15%, during the first six months of 2026 compared to the first six months of 2025. We believe using these non-GAAP measurements reflects our core earnings performance and provides for more accurate current-period versus prior-period comparisons.
Current wording
Excluding after-tax one-time costs associated with the year-end 2025 acquisition of Eastern Michigan, the ongoing core and digital banking system conversions and the impacts of bank owned life insurance benefit claims, net income improved to $24.5 million, or $1.42 per diluted share, for the third quarter of 2026, $24.3 million, or $1.50 per diluted share, for the third quarter of 2025, $76.1 million, or $4.41 per diluted share, for the first nine months of 2026, and $66.4 million, or $4.09 per diluted share, for the first nine months of 2025. Using these non-GAAP measures, adjusted earnings per share decreased $0.08 per diluted share, or approximately 5%, in the third quarter of 2026 compared to the third quarter of 2025, and increased $0.32 per diluted share, or approximately 8%, during the first nine months of 2026 compared to the first nine months of 2025. We believe using these non-GAAP measurements reflects our core earnings performance and provides for more accurate current-period versus prior-period comparisons.
Previous wording
Commercial loans increased $132 million during the first six months of 2026, providing for an annualized growth rate of approximately 7%. As had been the case during most of 2025, commercial loan growth during the first six months of 2026 was negatively impacted by a higher than typical level of payoffs and line of credit paydowns. Commercial loan payoffs, largely reflecting business sales, sales of assets and secondary market refinancings, and line of credit paydowns on larger commercial loan relationships, totaled $121 million and $180 million during the second and first quarters of 2026, respectively, after aggregating $363 million, or an average of $91 million per quarter, in 2025. Our typical level of such payoffs and line paydowns average around $50 million per quarter. As a percentage of total commercial loans, commercial and industrial and owner-occupied commercial real estate (“CRE”) loans equaled 57.8% as of June 30, 2026, compared to 55.0% as of December 31, 2025. The commercial loan pipeline remains strong, and as of June 30, 2026, we had $236 million in unfunded loan commitments on commercial construction and development loans that are in the construction phase.
Current wording
Commercial loans increased $152 million during the first nine months of 2026, providing for an annualized growth rate of approximately 5%. As had been the case during 2025, commercial loan growth during the first nine months of 2026 was negatively impacted by a higher than typical level of payoffs and line of credit paydowns. Commercial loan payoffs, largely reflecting business sales, sales of assets and secondary market refinancings, and line of credit paydowns on larger commercial loan relationships totaled $448 million during the first nine months of 2026, or an average of $149 million per quarter, after aggregating $363 million, or an average of $91 million per quarter, in 2025. Our typical level of such payoffs and line paydowns averages approximately $50 million per quarter. As a percentage of total commercial loans, commercial and industrial and owner-occupied commercial real estate (“CRE”) loans equaled 55.4% as of September 30, 2026, compared to 55.0% as of December 31, 2025. The commercial loan pipeline remains strong, and as of September 30, 2026, we had $266 million in unfunded loan commitments on commercial construction and development loans that were in the construction phase.
Previous wording
Residential mortgage loans decreased $40.3 million during the first six months of 2026, as aggregate payoffs and scheduled monthly payments exceeded new loans added to the portfolio during the quarter. Residential mortgage loan originations totaled $287 million during the first six months of 2026, reflecting an increase of over 18% compared to the first six months of 2025. Approximately 74% of the residential mortgage loans originated during the first six months of 2026 were with the intent to sell, compared to approximately 80% during the first six months of 2025. Combined with increased prepayment speeds of our residential mortgage loan portfolio during the past two years, the relatively high percentage of loans sold has resulted in a declining portfolio balance. The increased volume of residential mortgage loans originated and sold has had a positive impact on mortgage banking income.
Current wording
Residential mortgage loans decreased $27.1 million during the first nine months of 2026, as aggregate payoffs and scheduled monthly payments exceeded new loans added to the portfolio during the period. Residential mortgage loan originations totaled $429 million during the first nine months of 2026, reflecting an increase of approximately 13% compared to the first nine months of 2025. Approximately 71% of the residential mortgage loans originated during the first nine months of 2026 were with the intent to sell, compared to approximately 80% during the first nine months of 2025. Combined with increased prepayment speeds on our residential mortgage loan portfolio during the past two years, the relatively high percentage of loans sold has resulted in a declining portfolio balance. The increased volume of residential mortgage loans originated and sold has had a positive impact on mortgage banking income.
Previous wording
The overall quality of our loan portfolio remains strong, with nonperforming loans totaling $5.8 million, or 0.1% of total loans, as of June 30, 2026. Accruing loans past due 30 to 89 days remain very low with no foreclosed properties at quarter-end. Gross loan charge-offs were nominal during the first six months of 2026, while recoveries of prior period loan charge-offs aggregated $0.9 million, providing for a net loan recovery of $0.9 million.
Current wording
The overall quality of our loan portfolio remains strong, with nonperforming loans totaling $9.7 million, or 0.2% of total loans, as of September 30, 2026. Accruing loans past due 30 to 89 days remain very low with foreclosed properties at quarter-end equaling less than $0.1 million. Gross loan charge-offs were less than $0.1 million during the first nine months of 2026, while recoveries of prior period loan charge-offs aggregated $1.2 million, providing for a net loan recovery of $1.1 million.
Previous wording
Interest-earning deposits, a vast majority of which is comprised of funds on deposit with the Federal Reserve Bank of Chicago (“FRB Chicago”), averaged $391 million during the first six months of 2026, compared to $230 million during the first six months of 2025. The higher average balance primarily reflects strong deposit growth during the first six months of 2026 and our strategy to reduce the loan-to-deposit ratio via local deposit growth exceeding loan and investment growth.
Current wording
Interest-earning deposits, a vast majority of which is comprised of funds on deposit with the Federal Reserve Bank of Chicago (“FRB Chicago”), averaged $385 million during the first nine months of 2026, compared to $283 million during the first nine months of 2025. The higher average balance primarily reflects the year-end 2025 Eastern Michigan acquisition, strong local deposit growth during the first nine months of 2026, and our strategy to reduce the loan-to-deposit ratio via local deposit growth exceeding loan growth.
Previous wording
Total deposits increased $11.9 million during the first six months of 2026, consisting of a $122 million increase in local deposits and $110 million reduction in out-of-area deposits. The increase in local deposits occurred despite seasonal and customary customers’ tax and bonus payments and partnership distributions during that time period. Securities sold under agreements to repurchase (“sweep accounts”) decreased $14.8 million and Federal Home Loan Bank of Indianapolis (“FHLBI”) advances declined $20.9 million during the first six months of 2026. Wholesale funds, comprised of out-of-area deposits and FHLBI advances, totaled $325 million, or approximately 6% of total funds, as of June 30, 2026, compared to $457 million, or approximately 8% of total funds, as of December 31, 2025.
Current wording
Total deposits increased $328 million during the first nine months of 2026, consisting of a $438 million increase in local deposits and $110 million reduction in out-of-area deposits. Securities sold under agreements to repurchase (“sweep accounts”) decreased $34.8 million, and Federal Home Loan Bank of Indianapolis (“FHLBI”) advances declined $20.9 million during the first nine months of 2026. Wholesale funds, comprised of out-of-area deposits and FHLBI advances, totaled $325 million, or approximately 5% of total funds, as of September 30, 2026, compared to $457 million, or approximately 8% of total funds, as of December 31, 2025.
Previous wording
Net interest income grew $7.8 million and $15.1 million during the second quarter and first six months of 2026, respectively, compared to the prior-year time periods, reflecting the combined impact of $4.7 million and $9.8 million increases in interest income and $3.1 million and $5.3 million decreases in interest expense, during the respective time periods. Our net interest margin during the second quarter of 2026 was eleven basis points higher than during the second quarter of 2025 and was eight basis points higher during the first six months of 2026 compared to the first six months of 2025. Although our yield on earning assets declined during the 2026 time periods compared to the respective 2025 time periods, largely reflecting the aggregate 75 basis point reduction in the federal funds rate during the last four months of 2025, our cost of funds declined more primarily due to the decline in the interest rate environment and the onboarding of Eastern Michigan Bank’s relative low-cost deposit base. Also contributing to higher net interest income was growth in earning assets. Average earning assets during the first six months of 2026 totaled $6.42 billion, compared to $5.72 billion during the first six months of 2025. Eastern Michigan Bank’s net interest income totaled $5.9 million and $11.7 million during the second quarter and first six months of 2026, respectively.
Current wording
Net interest income grew $8.9 million and $24.0 million during the third quarter and first nine months of 2026, respectively, compared to the same prior-year time periods, reflecting the combined impact of $4.6 million and $14.5 million increases in interest income and $4.3 million and $9.6 million reductions in interest expense during the respective time periods. Our net interest margin during the third quarter of 2026 was 24 basis points higher than during the third quarter of 2025 and was 14 basis points higher during the first nine months of 2026 compared to the first nine months of 2025. Although our yield on earning assets declined during the 2026 time periods compared to the respective 2025 time periods, largely reflecting the aggregate 75 basis point reduction in the federal funds rate during the last four months of 2025, our cost of funds declined by a larger amount primarily due to the decline in the interest rate environment and the onboarding of Eastern Michigan Bank’s relatively low-cost deposit base. Growth in earning assets also contributed to the higher level of net interest income. Average earning assets during the first nine months of 2026 totaled $6.46 billion, compared to $5.79 billion during the first nine months of 2025. Eastern Michigan Bank’s net interest income totaled $5.8 million and $17.5 million during the third quarter and first nine months of 2026, respectively.
Previous wording
We recorded negative provisions for credit losses of $1.8 million and $3.6 million during the second quarter and first six months of 2026, respectively, compared to positive provisions for credit losses of $1.6 million and $3.7 million during the respective time periods in 2025. We eliminated a $2.7 million specific reserve and recorded a $0.2 million recovery associated with the resolution of a nonperforming commercial construction loan during the second quarter of 2026. The recording of net loan recoveries and sustained strength in loan quality metrics positively impacted necessary provision levels and helped to mitigate required provision levels from loan growth.
Current wording
We recorded provisions for credit losses of positive $0.7 million and negative $2.9 million during the third quarter and first nine months of 2026, respectively, compared to positive provisions for credit losses of $0.2 million and $3.9 million during the respective time periods in 2025. During the third quarter of 2026, additions to the allowance balance included a net increase of $1.7 million in specific allocations and $0.6 million associated with net loan growth, which were partially offset by a $1.5 million reduction resulting from faster prepayment speeds on the residential mortgage loan portfolio. The recording of net loan recoveries and sustained strength in loan quality metrics positively impacted necessary provision levels and helped to mitigate required provision levels from net loan growth.
Previous wording
Noninterest income totaled $11.5 million and $23.2 million during the second quarter and first six months of 2026, respectively, compared to $11.5 million and $20.2 million during the respective time periods in 2025. We recorded strong growth in treasury management fees, card income, and payroll service fees, but lower mortgage banking and interest rate swap income. Eastern Michigan Bank’s noninterest income totaled $0.6 million and $1.1 million during the second quarter and first six months of 2026, respectively. We also recorded $0.4 million in interest from the Internal Revenue Service on federal income tax payments made during 2024 that were subsequently refunded due to offsetting purchased energy tax credits during the first quarter of 2026.
Current wording
Noninterest income totaled $12.3 million and $35.4 million during the third quarter and first nine months of 2026, respectively, compared to $10.4 million and $30.6 million during the respective time periods in 2025. We recorded strong growth in treasury management fees and payroll service fees, along with improved interest rate swap income. Eastern Michigan Bank’s noninterest income totaled $0.5 million and $1.6 million during the third quarter and first nine months of 2026, respectively.
Previous wording
Noninterest expense totaled $39.4 million and $81.5 million during the second quarter and first six months of 2026, respectively, compared to $33.4 million and $64.5 million during the respective time periods in 2025. Excluding one-time costs aggregating related to the core and digital banking system conversions and the acquisition of Eastern Michigan, noninterest expense increased $5.4 million and $13.1 million during the second quarter and first six months of 2026, respectively, compared to the respective time periods in 2025. Eastern Michigan Bank’s noninterest expense totaled $4.0 million and $8.0 million during the second quarter and first six months of 2026, respectively. Increases in noninterest expenses during the two periods largely reflect higher salary and benefit costs and the impact of a larger balance sheet and branch network.
Current wording
Noninterest expense totaled $43.6 million and $125 million during the third quarter and first nine months of 2026, respectively, compared to $34.8 million and $99.2 million during the respective time periods in 2025. Excluding one-time costs related to the core and digital banking system conversions and the acquisition of Eastern Michigan, noninterest expense increased $8.8 million and $21.9 million during the third quarter and first nine months of 2026 respectively, compared to same respective time periods in 2025. Eastern Michigan Bank’s noninterest expense totaled $4.1 million and $12.1 million during the third quarter and first nine months of 2026, respectively. Increases in noninterest expenses during the two periods largely reflect higher salary and benefit costs, including expenses associated with personnel investments in Southeast Michigan and incentive accruals related to the core and digital banking system conversions and the integration of Eastern Michigan Bank, along with impacts from inflationary pressures and an increased number of accounts and transactions.
Previous wording
Federal income tax expense totaled $5.3 million and $9.9 million during the second quarter and first six months of 2026, respectively, compared to $3.3 million and $7.9 million during the respective time periods in 2025. The increases during the 2026 time periods largely reflect growth in income before federal income tax expense. The effective tax rate was 16.9% in both the second quarter and first six months of 2026, compared to 12.9% and 15.7% during the respective time periods in 2025. The higher effective tax rate in the 2026 time periods primarily reflects lower tax benefits from the acquisition of transferrable energy tax credits due to lower activity levels.
Current wording
Federal income tax expense totaled $4.9 million and $14.7 million during the third quarter and first nine months of 2026, respectively, compared to $3.7 million and $11.5 million during the respective time periods in 2025. The increases during the 2026 time periods largely reflect growth in income before federal income tax expense and lower levels of net benefits from transferable energy tax credits. The effective tax rate was 16.8% in both the third quarter and first nine months of 2026, compared to 13.4% and 14.9% during the respective time periods in 2025. The higher effective tax rates in the 2026 time periods primarily reflect lower tax benefits from the acquisition of transferrable energy tax credits due to lower activity levels.
Previous wording
Total assets decreased $15.7 million during the first six months of 2026, totaling $6.82 billion as of June 30, 2026. Total loans increased $93.7 million and securities available for sale grew $23.3 million, while interest-earning deposit balances declined $147 million during the first six months of 2026. Total deposits increased $11.9 million, while sweep accounts declined $14.8 million and FHLBI advances were down $20.9 million during the first six months of 2026.
Current wording
Total assets increased $328 million during the first nine months of 2026, totaling $7.16 billion as of September 30, 2026. Total loans increased $131 million and interest-earning deposit balances and federal funds sold were up $154 million, while securities available for sale declined $4.2 million during the first nine months of 2026. Deposits increased $328 million, while sweep accounts declined $34.8 million and FHLBI advances were down $20.9 million during the first nine months of 2026.
Previous wording
Our loan portfolio has historically been primarily comprised of commercial loans. Commercial loans totaled $4.05 billion, or 82.4% of total loans, as of June 30, 2026. Commercial loans increased $132 million during the first six months of 2026, providing for an annualized growth rate of approximately 7%. As had been the case during most of 2025, commercial loan growth during the first six months of 2026 was negatively impacted by a higher than typical level of payoffs and line of credit paydowns. Commercial loan payoffs, largely reflecting business sales, sales of assets and secondary market refinancings, and line of credit paydowns on larger commercial loan relationships, totaled $121 million and $180 million during the second and first quarters of 2026, respectively, after aggregating $363 million, or an average of $91 million per quarter, in 2025. Our typical level of such payoffs and line paydowns average around $50 million per quarter. As a percentage of total commercial loans, commercial and industrial and owner-occupied CRE loans equaled 57.8% as of June 30, 2026, compared to 55.0% as of December 31, 2025.
Current wording
Our loan portfolio has historically been primarily comprised of commercial loans. Commercial loans increased $152 million during the first nine months of 2026, providing for an annualized growth rate of approximately 5%. As had been the case during 2025, commercial loan growth during the first nine months of 2026 was negatively impacted by a higher than typical level of payoffs and line of credit paydowns. Commercial loan payoffs, largely reflecting business sales, sales of assets and secondary market refinancings, and line of credit paydowns on larger commercial loan relationships totaled $448 million during the first nine months of 2026, or an average of $149 million per quarter, after aggregating $363 million, or an average of $91 million per quarter, in 2025. Our typical level of such payoffs and line paydowns averages approximately $50 million per quarter.
Previous wording
Commercial and industrial loans increased $163 million, owner-occupied CRE loans were up $25.0 million and land development and construction loans expanded by $2.0 million, while multi-family and residential rental property loans declined $39.0 million and non-owner occupied CRE loans were down $18.8 million during the first six months of 2026.
Current wording
Commercial and industrial loans increased $125 million, nonowner-occupied CRE loans were up $49.0 million and multi-family and residential rental property loans grew by $4.8 million, while owner-occupied CRE loans were down $21.5 million and land development and construction loans declined $4.7 million, during the first nine months of 2026. As a percentage of total commercial loans, commercial and industrial and owner-occupied CRE loans equaled 55.4% as of September 30, 2026, compared to 55.0% as of December 31, 2025.
Previous wording
Availability on commercial construction and development loans that are in the construction phase totaled $236 million as of June 30, 2026, with most of the funds expected to be drawn over the next 12 to 18 months. Our current pipeline reports indicate continued strong commercial loan funding opportunities in future periods, including $234 million in committed and accepted new lending commitments, a majority of which we expect to be accepted and funded over the next 12 to 18 months. Our commercial bankers also report additional opportunities they are currently discussing with existing borrowers and potential new customers. We remain committed to prudent underwriting standards that provide for an appropriate yield and risk relationship, as well as concentration limits we have established within our commercial loan portfolio. Usage of existing commercial lines of credit averaged approximately 41% during the first six months of 2026, compared to approximately 44% during all of 2025.
Current wording
Availability on commercial construction and development loans that are in the construction phase totaled $266 million as of September 30, 2026, with most of the funds expected to be drawn over the next 12 to 18 months. Our current pipeline reports indicate continued strong commercial loan funding opportunities in future periods, including $288 million in committed and accepted new lending commitments, a majority of which we expect to be accepted and funded over the next 12 to 18 months. Our commercial bankers also report additional opportunities they are currently discussing with existing borrowers and potential new customers. We remain committed to prudent underwriting standards that provide for an appropriate yield and risk relationship, as well as concentration limits we have established within our commercial loan portfolio. Usage of existing commercial lines of credit averaged approximately 42% during the first nine months of 2026, compared to approximately 44% during all of 2025.
Previous wording
Residential mortgage loans totaled $751 million, or 15.3% of total loans, as of June 30, 2026. Residential mortgage loans decreased $40.3 million during the first six months of 2026, as aggregate payoffs and scheduled monthly payments exceeded new loans added to the portfolio during the quarter. Residential mortgage loan originations totaled $287 million during the first six months of 2026, reflecting an increase of over 18% compared to the first six months of 2025. Approximately 74% of the residential mortgage loans originated during the first six months of 2026 were with the intent to sell, compared to approximately 80% during the first six months of 2025. Combined with increased prepayment speeds of our residential mortgage loan portfolio during the past two years, the relatively high percentage of loans sold has resulted in a declining portfolio balance. The increased volume of residential mortgage loans originated and sold has had a positive impact on mortgage banking income.
Current wording
Residential mortgage loans decreased $27.1 million during the first nine months of 2026, as aggregate payoffs and scheduled monthly payments exceeded new loans added to the portfolio during the period. Residential mortgage loan originations totaled $429 million during the first nine months of 2026, reflecting an increase of approximately 13% compared to the first nine months of 2025. Approximately 71% of the residential mortgage loans originated during the first nine months of 2026 were with the intent to sell, compared to approximately 80% during the first nine months of 2025. Combined with increased prepayment speeds on our residential mortgage loan portfolio during the past two years, the relatively high percentage of loans sold has resulted in a declining portfolio balance. The increased volume of residential mortgage loans originated and sold has had a positive impact on mortgage banking income.
Previous wording
Other consumer-related loans totaled $115 million, or 2.3% of total loans, as of June 30, 2026. We expect this loan portfolio segment to remain relatively stable in dollar amount but decline as a percentage of total loans in future periods as the commercial loan segment grows. Home equity lines of credit comprised approximately 79% of other consumer-related loans as of June 30, 2026.
Current wording
Other consumer-related loans totaled $118 million, or 2.4% of total loans, as of September 30, 2026, with home equity lines of credit comprising approximately 81% of that total balance. We expect this loan portfolio segment to remain relatively stable in dollar amount but decline as a percentage of total loans in future periods as the commercial loan segment grows.
Previous wording
The overall quality of our loan portfolio remains strong, with nonperforming loans totaling $5.8 million, or 0.1% of total loans, as of June 30, 2026. The volume of nonperforming loans has remained under 0.3% of total loans since year-end 2015 and has averaged 0.1% over the past seven years. Accruing loans past due 30 to 89 days remain very low with no foreclosed properties at quarter-end. Gross loan charge-offs were nominal during the first six months of 2026, while recoveries of prior period loan charge-offs aggregated $0.9 million, providing for a net loan recovery of $0.9 million. We continue our collection efforts on charged-off loans and expect to record recoveries in future periods; however, given the nature of these efforts, it is not practical to forecast the dollar amount and timing of the recoveries.
Current wording
The overall quality of our loan portfolio remains strong, with nonperforming loans totaling $9.7 million, or 0.2% of total loans, as of September 30, 2026. The volume of nonperforming loans has remained under 0.3% of total loans since year-end 2015 and has averaged 0.1% over the past seven years. Accruing loans past due 30 to 89 days remain very low, with foreclosed properties equaling less than $0.1 million at quarter-end. Gross loan charge-offs totaled less than $0.1 million during the first nine months of 2026, while recoveries of prior period loan charge-offs aggregated $1.2 million, providing for a net loan recovery of $1.1 million. We continue our collection efforts on charged-off loans and expect to record recoveries in future periods; however, given the nature of these efforts, it is not practical to forecast the dollar amount and timing of the recoveries.
Previous wording
The allowance equaled $55.4 million, or 1.13% of total loans and 955% of nonperforming loans, as of June 30, 2026. The allowance was comprised of $54.5 million in general reserves relating to performing loans and $0.9 million in specific reserves on other loans, primarily nonperforming loans, as of June 30, 2026. Loans with an aggregate carrying value of $0.6 million as of June 30, 2026, had been subject to previous partial charge-offs aggregating $0.2 million over the past several years. There were no specific reserves allocated to loans that had been subject to a previous partial charge-off as of June 30, 2026.
Current wording
The allowance equaled $56.4 million, or 1.14% of total loans and 579% of nonperforming loans, as of September 30, 2026. The allowance was comprised of $53.8 million in general reserves relating to performing loans and $2.6 million in specific reserves on other loans, primarily nonperforming loans, as of September 30, 2026. Loans with an aggregate carrying value of $0.5 million as of September 30, 2026, had been subject to previous partial charge-offs aggregating $0.1 million, primarily during 2025. There were no specific reserves allocated to loans that had been subject to a previous partial charge-off as of September 30, 2026.
Previous wording
The following table reflects the composition of our allowance for credit losses, nonaccrual loans, and net charge-offs as of and for the six months ended June 30, 2026.
Current wording
The following table reflects the composition of our allowance for credit losses, nonaccrual loans, and net charge-offs as of and for the nine months ended September 30, 2026.
Previous wording
Securities available for sale increased $23.3 million during the first six months of 2026, totaling $1.13 billion as of June 30, 2026. There were no purchases or maturities of U.S. Treasury securities during the first six months of 2026. Purchases of U.S. Government agency bonds during the first six months of 2026 aggregated $68.1 million, while proceeds from maturities totaled $18.0 million. There were no purchases of U.S. Government agency guaranteed mortgage-backed securities during the first six months of 2026, while proceeds from principal paydowns aggregated $9.3 million. Purchases of municipal bonds totaled $13.2 million during the first six months of 2026, while proceeds from maturities and calls aggregated $17.4 million. As of June 30, 2026, the portfolio was primarily comprised of U.S. Treasury and U.S. Government agency bonds (66%), municipal bonds (24%), U.S. Government agency guaranteed mortgage-backed securities (7%) and other bonds (3%). All of our securities are currently designated as available for sale and are therefore stated at fair value. The fair value of securities designated as available for sale totaled $1.13 billion as of June 30, 2026, including a net unrealized loss of $40.5 million. The net unrealized loss equaled $30.4 million as of December 31, 2025. After we considered whether the securities were issued by the federal government or its agencies and whether downgrades by bond rating agencies had occurred, we determined that the unrealized losses were due to changing interest rate environments. We maintain the securities portfolio at levels to provide adequate pledging and secondary liquidity for our daily operations. In addition, the securities portfolio serves a primary interest rate risk management function. We expect any upcoming purchases to generally consist of U.S. Government agency bonds and municipal bonds, with the securities portfolio maintained at the current level of approximately 16% of total assets.
Current wording
As of September 30, 2026, the portfolio was primarily comprised of U.S. Treasury and U.S. Government agency bonds (67%), municipal bonds (24%), U.S. Government agency guaranteed mortgage-backed securities (6%) and domestic corporate bonds (3%). All of our securities are currently designated as available for sale and are therefore stated at fair value. The fair value of securities designated as available for sale totaled $1.10 billion as of September 30, 2026, including a net unrealized loss of $78.2 million. The net unrealized loss equaled $30.4 million as of December 31, 2025. After we considered whether the securities were issued by the federal government or its agencies and whether downgrades by bond rating agencies had occurred, we determined that the unrealized losses were due to changing interest rate environments. We maintain the securities portfolio at levels to provide adequate pledging and secondary liquidity for our daily operations. In addition, the securities portfolio serves a primary interest rate risk management function. We expect any upcoming purchases to generally consist of U.S. Government agency bonds and municipal bonds, with the securities portfolio maintained at the current level of approximately 15% of total assets.
Previous wording
Interest-earning deposits, a vast majority of which are comprised of funds on deposit with the Federal Reserve Bank of Chicago, totaled $267 million as of June 30, 2026. Interest-earning deposits averaged $391 million during the first six months of 2026, compared to $230 million during the first six months of 2025. The higher average balance primarily reflects strong local deposit growth throughout 2025 and into 2026, and our strategy to reduce the loan-to-deposit ratio via local deposit growth exceeding loan and investment growth. Strong commercial loan growth and out-of-area deposit maturities during the second quarter of 2026 were largely funded by monies on deposit with the Federal Reserve Bank of Chicago, resulting in a June 30, 2026, balance that was lower than the average during the first six months of 2026.
Current wording
Interest-earning deposits, a vast majority of which are comprised of funds on deposit with the FRB Chicago, totaled $567 million as of September 30, 2026. Interest-earning deposits averaged $385 million during the first nine months of 2026, compared to $283 million during the first nine months of 2025. The higher average balance primarily reflects the year-end 2025 Eastern Michigan acquisition, strong local deposit growth during the first nine months of 2026, and our strategy to reduce the loan-to-deposit ratio via local deposit growth exceeding loan growth.
Previous wording
Net premises and equipment equaled $60.7 million as of June 30, 2026, compared to $62.5 million as of December 31, 2025. Depreciation expense totaled $2.9 million during the first six months of 2026, while investments associated with renovations of existing facilities and equipment purchases aggregated $1.1 million.
Current wording
Net premises and equipment equaled $60.8 million as of September 30, 2026, compared to $62.5 million as of December 31, 2025. Depreciation expense totaled $4.4 million during the first nine months of 2026, while investments associated with renovations of existing facilities and equipment purchases aggregated $2.7 million.
Previous wording
Total deposits increased $11.9 million during the first six months of 2026, consisting of a $122 million increase in local deposits and $110 million reduction in out-of-area deposits. The increase in local deposits occurred despite seasonal and customary customers’ tax and bonus payments and partnership distributions during that time period. Noninterest-bearing checking accounts increased $80.9 million, money market accounts were up $41.6 million, and savings deposits grew $11.2 million, while interest-bearing checking accounts decreased $10.6 million and local time deposits declined $0.8 million. The deposit balance increases reflect new deposit account relationships and additional funds from existing deposit customers, largely from business and public units.
Current wording
Total deposits increased $328 million during the first nine months of 2026, consisting of a $438 million increase in local deposits and $110 million reduction in out-of-area deposits. Noninterest-bearing checking accounts increased $107 million, money market accounts were up $203 million, interest-bearing checking accounts grew $177 million, and savings deposits increased $15.1 million, while local time deposits declined $63.5 million. The deposit balance increases generally reflect new deposit account relationships and additional funds from existing deposit customers, largely from business and public units, with the decline in time deposit balances primarily reflecting the withdrawal of funds by one customer.
Previous wording
Uninsured deposits totaled approximately $3.01 billion, or about 57% of total deposits, as of June 30, 2026, compared to approximately $2.91 billion, or about 54% of total deposits, as of December 31, 2025. The uninsured amounts are estimates based on the methodologies and assumptions we use for regulatory reporting requirements. Our level of uninsured deposits, which has remained relatively steady as a percentage of total deposits, is generally higher than banking industry averages given our commercial lending focus.
Current wording
Uninsured deposits totaled approximately $3.35 billion, or about 60% of total deposits, as of September 30, 2026, compared to approximately $2.91 billion, or about 54% of total deposits, as of December 31, 2025. The uninsured amounts are estimates based on the methodologies and assumptions we use for regulatory reporting requirements. Our level of uninsured deposits, which has remained relatively steady as a percentage of total deposits, is generally higher than banking industry averages given our commercial lending focus.
Previous wording
Sweep accounts decreased $14.8 million during the first six months of 2026, totaling $217 million as of June 30, 2026. The aggregate balance of this funding type can be subject to relatively large daily fluctuations given the nature of the customers utilizing this product and the sizable balances that several of the customers maintain. The average balance of sweep accounts equaled $223 million during the first six months of 2026, with a high daily balance of $257 million and a low daily balance of $211 million. Our sweep account program entails transferring collected funds from certain business noninterest-bearing checking accounts and savings deposits into overnight interest-bearing repurchase agreements. Such sweep accounts are not deposit accounts and are not afforded federal deposit insurance. All of our repurchase agreements are accounted for as secured borrowings.
Current wording
Sweep accounts decreased $34.8 million during the first nine months of 2026, totaling $197 million as of September 30, 2026. The aggregate balance of this funding type can be subject to relatively large daily fluctuations given the nature of the customers utilizing this product and the sizable balances that several of the customers maintain. The average balance of sweep accounts equaled $217 million during the first nine months of 2026, with a high daily balance of $257 million and a low daily balance of $189 million. Our sweep account program entails transferring collected funds from certain business noninterest-bearing checking accounts and savings deposits into overnight interest-bearing repurchase agreements. Such sweep accounts are not deposit accounts and are not afforded federal deposit insurance. All of our repurchase agreements are accounted for as secured borrowings.
Previous wording
FHLBI advances declined $20.9 million during the first six months of 2026, totaling $305 million as of June 30, 2026. Bullet advances aggregating $30.0 million were obtained during the first six months of 2026, while bullet advance maturities aggregated $50.0 million. Payments on amortizing FHLBI advances totaled $0.9 million. Bullet FHLBI advances are generally obtained to provide funds for loan growth and are used to assist in managing interest rate risk, while amortizing FHLBI advances are generally acquired to match-fund specific longer-term fixed rate commercial loans, with the dollar amount and amortization structure of the underlying advances reflective of the associated commercial loans. FHLBI advances are collateralized by residential mortgage loans, first mortgage liens on multi-family residential property loans, first mortgage liens on commercial real estate property loans, and substantially all other assets of our bank, under a blanket lien arrangement. Our borrowing line of credit totaled $1.16 billion, with remaining availability based on collateral equaling $847 million, as of June 30, 2026.
Current wording
FHLBI advances declined $20.9 million during the first nine months of 2026, totaling $305 million as of September 30, 2026. Bullet advances aggregating $40.0 million were obtained during the first nine months of 2026, while bullet advance maturities aggregated $60.0 million. Payments on amortizing FHLBI advances totaled $0.9 million. Bullet FHLBI advances are generally obtained to provide funds for loan growth and are used to assist in managing interest rate risk, while amortizing FHLBI advances are generally acquired to match-fund specific longer-term fixed rate commercial loans, with the dollar amount and amortization structure of the underlying advances reflective of the associated commercial loans. FHLBI advances are collateralized by residential mortgage loans, first mortgage liens on multi-family residential property loans, first mortgage liens on commercial real estate property loans, and substantially all other assets of Mercantile Bank, under a blanket lien arrangement. Our borrowing line of credit totaled $1.24 billion, with remaining availability based on collateral equaling $929 million, as of September 30, 2026.
Previous wording
Shareholders’ equity increased $30.2 million during the first six months of 2026, equaling $755 million as of June 30, 2026. Positively impacting shareholders’ equity during the first six months of 2026 was net income of $48.6 million, which was partially offset by the payment of cash dividends totaling $13.3 million. Activity relating to the issuance and sale of common stock through various stock-based compensation programs and our dividend reinvestment plan positively impacted shareholders’ equity by $2.9 million. An $8.0 million after-tax decrease in the market value of our available for sale securities portfolio, generally reflecting an increase in market interest rates, negatively impacted shareholders’ equity during the first six months of 2026.
Current wording
Shareholders’ equity increased $19.0 million during the first nine months of 2026, equaling $744 million as of September 30, 2026. Positively impacting shareholders’ equity during the first nine months of 2026 was net income of $72.7 million, which was partially offset by the payment of cash dividends totaling $20.1 million. Activity relating to the issuance and sale of common stock through various stock-based compensation programs and our dividend reinvestment plan positively impacted shareholders’ equity by $4.1 million. A $37.8 million after-tax decrease in the market value of our available for sale securities portfolio, generally reflecting an increase in market interest rates during the third quarter, negatively impacted shareholders’ equity during the first nine months of 2026.
Previous wording
Liquidity is measured by our ability to raise funds through deposits, borrowed funds, and capital, or cash flow from the repayment of loans and securities. These funds are used to fund loans, meet deposit withdrawals, and operate our company. Liquidity is primarily achieved through local and out-of-area deposits and liquid assets such as securities available for sale, matured, and called securities, federal funds sold and interest-earning deposits. Asset and liability management is the process of managing our balance sheet to achieve a mix of earning assets and liabilities that maximize profitability, while providing adequate liquidity.
Current wording
Liquidity is measured by our ability to raise funds through deposits, borrowed funds, and capital, or cash flow from the repayment of loans and securities. These funds are used to fund loans, meet deposit withdrawals, and operate our company. Liquidity is primarily achieved through local and out-of-area deposits and liquid assets such as securities available for sale, matured and called securities, federal funds sold and interest-earning deposits. Asset and liability management is the process of managing our balance sheet to achieve a mix of earning assets and liabilities that maximizes profitability, while providing adequate liquidity.
Previous wording
To assist in providing needed funds and managing interest rate risk, we periodically obtain monies from wholesale funding sources. Wholesale funds, comprised of out-of-area deposits and FHLBI advances, totaled $325 million, or approximately 6% of total funds, as of June 30, 2026, compared to $457 million, or approximately 8% of total funds, as of December 31, 2025.
Current wording
To assist in providing needed funds and managing interest rate risk, we periodically obtain monies from wholesale funding sources. Wholesale funds, comprised of out-of-area deposits and FHLBI advances, totaled $325 million, or approximately 5% of total funds, as of September 30, 2026, compared to $457 million, or approximately 8% of total funds, as of December 31, 2025.
Previous wording
Sweep accounts decreased $14.8 million during the first six months of 2026, totaling $217 million as of June 30, 2026. The aggregate balance of this funding type can be subject to relatively large daily fluctuations given the nature of the customers utilizing this product and the sizable balances that several of the customers maintain. The average balance of sweep accounts equaled $223 million during the first six months of 2026, with a high daily balance of $257 million and a low daily balance of $211 million. Our sweep account program entails transferring collected funds from certain business noninterest-bearing checking accounts and savings deposits into overnight interest-bearing repurchase agreements. Such sweep accounts are not deposit accounts and are not afforded federal deposit insurance. All our repurchase agreements are accounted for as secured borrowings.
Current wording
Sweep accounts decreased $34.8 million during the first nine months of 2026, totaling $197 million as of September 30, 2026. The aggregate balance of this funding type can be subject to relatively large daily fluctuations given the nature of the customers utilizing this product and the sizable balances that several of the customers maintain. The average balance of sweep accounts equaled $217 million during the first nine months of 2026, with a high daily balance of $257 million and a low daily balance of $189 million. Our sweep account program entails transferring collected funds from certain business noninterest-bearing checking accounts and savings deposits into overnight interest-bearing repurchase agreements. Such sweep accounts are not deposit accounts and are not afforded federal deposit insurance. All of our repurchase agreements are accounted for as secured borrowings.
Previous wording
Information regarding our repurchase agreements as of June 30, 2026, and during the first six months of 2026 is as follows:
Current wording
Information regarding our repurchase agreements as of September 30, 2026, and during the first nine months of 2026 is as follows:
Previous wording
FHLBI advances declined $20.9 million during the first six months of 2026, totaling $305 million as of June 30, 2026. Bullet advances aggregating $30.0 million were obtained during the first six months of 2026, while bullet advance maturities aggregated $50.0 million. Payments on amortizing FHLBI advances totaled $0.9 million. Bullet FHLBI advances are generally obtained to provide funds for loan growth and are used to assist in managing interest rate risk, while amortizing FHLBI advances are generally acquired to match-fund specific longer-term fixed rate commercial loans, with the dollar amount and amortization structure of the underlying advances reflective of the associated commercial loans. FHLBI advances are collateralized by residential mortgage loans, first mortgage liens on multi-family residential property loans, first mortgage liens on commercial real estate property loans, and substantially all other assets of our bank, under a blanket lien arrangement. Our borrowing line of credit totaled $1.16 billion, with remaining availability based on collateral equaling $847 million, as of June 30, 2026.
Current wording
FHLBI advances declined $20.9 million during the first nine months of 2026, totaling $305 million as of September 30, 2026. Bullet advances aggregating $40.0 million were obtained during the first nine months of 2026, while bullet advance maturities aggregated $60.0 million. Payments on amortizing FHLBI advances totaled $0.9 million. Bullet FHLBI advances are generally obtained to provide funds for loan growth and are used to assist in managing interest rate risk, while amortizing FHLBI advances are generally acquired to match-fund specific longer-term fixed rate commercial loans, with the dollar amount and amortization structure of the underlying advances reflective of the associated commercial loans. FHLBI advances are collateralized by residential mortgage loans, first mortgage liens on multi-family residential property loans, first mortgage liens on commercial real estate property loans, and substantially all other assets of Mercantile Bank, under a blanket lien arrangement. Our borrowing line of credit totaled $1.24 billion, with remaining availability based on collateral equaling $929 million, as of September 30, 2026.
Previous wording
We also have the ability to borrow up to $50.0 million on a daily basis through a correspondent bank using an unsecured federal funds purchased line of credit. Our average balance was nominal during the first six months of 2026. In contrast, our interest-earning deposit balance with the Federal Reserve Bank of Chicago averaged $369 million during the first six months of 2026. We also have a line of credit through the Discount Window of the Federal Reserve Bank of Chicago. Using certain municipal bonds as collateral, we could have borrowed up to $149 million as of June 30, 2026. We did not utilize this line of credit during the first six months of 2026 or at any time during the previous 17 fiscal years, and do not plan to access this line of credit in future periods.
Current wording
We also have the ability to borrow up to $50.0 million on a daily basis through a correspondent bank using an unsecured federal funds purchased line of credit. Our average balance was nominal during the first nine months of 2026. In contrast, our interest-earning deposit balance with the Federal Reserve Bank of Chicago averaged $359 million during the first nine months of 2026. We also have a line of credit through the Discount Window of the Federal Reserve Bank of Chicago. Using certain municipal bonds as collateral, we could have borrowed up to $140 million as of September 30, 2026. We did not utilize this line of credit during the first nine months of 2026 or at any time during the previous 17 fiscal years, and do not plan to access this line of credit in future periods.
Previous wording
The balance of certificates of deposit exceeding the FDIC insured limit and their maturity profile as of June 30, 2026, and December 31, 2025, were as follows:
Current wording
The balance of certificates of deposit exceeding the Federal Deposit Insurance Corporation insured limit and their maturity profile as of September 30, 2026, and December 31, 2025, were as follows:
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Current report — wording carried from elsewhere
Securities available for sale decreased $4.2 million during the first nine months of 2026, totaling $1.10 billion as of September 30, 2026. There were no purchases of U.S. Treasury securities during the first nine months of 2026, while proceeds from maturities totaled $4.0 million. Purchases of U.S. Government agency bonds during the first nine months of 2026 aggregated $101 million, while proceeds from maturities totaled $40.0 million. Purchases of U.S. Government agency guaranteed mortgage-backed securities during the first nine months of 2026 aggregated $7.3 million, while proceeds from principal paydowns aggregated $12.1 million. Purchases of municipal bonds totaled $15.6 million during the first nine months of 2026, while proceeds from maturities and calls aggregated $20.5 million. There were no purchases of domestic corporate bonds; maturities aggregated $10.5 million.