MERCANTILE BANK CORP Debt Disclosure

NOTE 8 - OTHER BORROWINGS

 

FHLBI bullet advances totaled $300 million at December 31, 2025, and were expected to mature at varying dates from January 2026 through June 2030, with fixed rates of interest from 0.90% to 4.50% and averaging 3.27%. FHLBI bullet advances totaled $360 million at December 31, 2024, and were expected to mature at varying dates from January 2025 through January 2029, with fixed rates of interest from 0.70% to 4.54% and averaging 3.10%.

 

Maturities of FHLBI bullet advances as of December 31, 2025 were as follows:

 

(Dollars in thousands)
2026		$	80,000
2027			100,000
2028			90,000
2029			10,000
2030			20,000
Thereafter			0

 

FHLBI amortizing advances totaled $26.2 million and $27.1 million as of December 31, 2025 and 2024, respectively, with an average fixed rate of 2.52% and maturities in 2042. FHLBI amortizing advances are obtained periodically to assist in managing interest rate risk associated with certain longer-term fixed rate commercial loans, with annual principal payments that closely align with the scheduled amortization of the underlying commercial loans.

 

Scheduled principal payments on FHLBI amortizing advances as of December 31, 2025 were as follows:

 

(Dollars in thousands)
2026		$	900
2027			938
2028			979
2029			1,022
2030			1,065
Thereafter			21,317

 

Each advance is payable at its maturity date, and is subject to a prepayment fee if paid prior to the maturity date. The 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 as of December 31, 2025 totaled $1.08 billion, with remaining availability based on collateral of $777 million.

 

On December 15, 2021, we entered into Subordinated Note Purchase Agreements with certain institutional accredited investors pursuant to which we issued and sold $75.0 million in aggregate principal amount of 3.25% fixed-to-floating rate subordinated notes (“Notes”). The Notes have a stated maturity of January 30, 2032, and are redeemable by us at our option, in whole or in part, on or after January 30, 2027 on any interest payment date at a redemption of price of 100% of the principal amount of the Notes being redeemed. The Notes are not subject to redemption at the option of the holder. The Notes will bear interest at a fixed rate of 3.25% per year until January 29, 2027. Commencing on January 30, 2027 and through the stated maturity date of January 30, 2032, the interest rate will reset quarterly at a variable rate equal to the then-current Three-Month Term SOFR plus 212 basis points. On December 15, 2021, we injected $70.0 million of the issuance proceeds into Mercantile Bank as an increase to equity capital.

 

On January 14, 2022, we issued an additional $15.0 million of Notes to certain institutional accredited investors, reflecting an expansion of the $75.0 million issuance completed on December 15, 2021. The additional $15.0 million issuance was completed on the same terms as the prior offering and under the existing indenture. On January 14, 2022, we injected $15.0 million of the issuance proceeds into Mercantile Bank as an increase to equity capital.

 

Our unamortized debt issuance costs were $0.3 million and $0.7 million as of December 31, 2025 and 2024, respectively. 

 

On December 24, 2025, we entered into a credit agreement with U.S. Bank National Association for a $30.0 million term note. The term loan bears interest at an annual rate equal to 1.70% plus the greater of (a) zero percent (0.0%) and (b) the one-month forward-looking term rate based on SOFR. Interest and principal are payable beginning March 15, 2026, and on the same date of each third month thereafter, plus a final payment equal to all unpaid interest and principal. Principal shall be paid in installments of $2.5 million each. The term loan matures on December 24, 2028. Mercantile is permitted to prepay the term note evidencing the term loan in full or in part at any time without indemnity, premium or penalty.