Note 7 - Other Borrowings |
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| Debt Disclosure [Text Block] |
7. OTHER BORROWINGS
FHLBI bullet advances totaled $280 million at June 30, 2026, and were scheduled to mature at varying dates from September 2026 through April 2031, with fixed rates of interest from 0.95% to 4.50% and averaging 3.41%. FHLBI bullet advances totaled $300 million at December 31, 2025, and were scheduled 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%.
Maturities of FHLBI bullet advances as of June 30, 2026, were as follows:
FHLBI amortizing advances totaled $25.3 million as of June 30, 2026, with an average rate of 2.52% and with final maturities in 2042. FHLBI amortizing advances totaled $26.2 million as of December 31, 2025, with an average rate of 2.52% and with final 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 June 30, 2026, were as follows:
Each advance is payable at its maturity date and 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 June 30, 2026, totaled $1.16 billion, with remaining availability based on collateral of $847 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 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 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.
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 note 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. Principal shall be paid in quarterly installments of $2.5 million each. The term note matures on December 24, 2028. Mercantile is permitted to prepay the term note in full or in part at any time without indemnity, premium or penalty.
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