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Note 20 - Regulatory Matters | 12 Months Ended
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Dec. 31, 2024
Notes to Financial Statements |
Regulatory Capital Requirements under Banking Regulations [Text Block] | NOTE 20 - REGULATORY MATTERS We are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors, and the regulators can lower classifications in certain cases. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the financial statements. The prompt corrective action regulations provide five classifications, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If an institution is not well capitalized, regulatory approval is required to accept brokered deposits. Subject to limited exceptions, no institution may make a capital distribution if, after making the distribution, it would be undercapitalized. If an institution is undercapitalized, it is subject to close monitoring by its principal federal regulator, its asset growth and expansion are restricted, and plans for capital restoration are required. In addition, further specific types of restrictions may be imposed on the institution at the discretion of the federal regulator. At year-end 2024 and 2023, our bank was in the well capitalized category under the regulatory framework for prompt corrective action. There are no conditions or events since December 31, 2024 that we believe have changed our bank’s categorization. Our actual capital levels and minimum required levels at year-end 2024 and 2023 were:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Minimum Required |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | to be Well |
|  |  |  |  |  |  |  |  |  | Minimum Required |  |  | Capitalized Under |
|  |  |  |  |  |  |  |  |  | for Capital |  |  | Prompt Corrective |
|  | Actual |  |  | Adequacy Purposes |  |  | Action Regulations |
(Dollars in thousands) |  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |
2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total capital (to risk weighted assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  | $ | 777,857 |  |  |  | 14.2 | % |  | $ | 439,031 |  |  |  | 8.0 | % |  | $ | NA |  |  |  | NA | %
Bank |  |  | 759,146 |  |  |  | 13.9 |  |  |  | 435,793 |  |  |  | 8.0 |  |  |  | 544,741 |  |  |  | 10.0 |
Tier 1 capital (to risk weighted assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  |  | 633,134 |  |  |  | 11.5 |  |  |  | 329,274 |  |  |  | 6.0 |  |  |  | NA |  |  |  | NA |
Bank |  |  | 703,737 |  |  |  | 12.9 |  |  |  | 326,845 |  |  |  | 6.0 |  |  |  | 435,793 |  |  |  | 8.0 |
Common equity (to risk weighted assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  |  | 584,879 |  |  |  | 10.7 |  |  |  | 246,955 |  |  |  | 4.5 |  |  |  | NA |  |  |  | NA |
Bank |  |  | 703,737 |  |  |  | 12.9 |  |  |  | 245,134 |  |  |  | 4.5 |  |  |  | 354,082 |  |  |  | 6.5 |
Tier 1 capital (to average assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  |  | 633,134 |  |  |  | 10.6 |  |  |  | 238,934 |  |  |  | 4.0 |  |  |  | NA |  |  |  | NA |
Bank |  |  | 703,737 |  |  |  | 11.9 |  |  |  | 237,447 |  |  |  | 4.0 |  |  |  | 296,808 |  |  |  | 5.0 |
2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total capital (to risk weighted assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  | $ | 710,905 |  |  |  | 13.7 | % |  | $ | 415,841 |  |  |  | 8.0 | % |  | $ | NA |  |  |  | NA | %
Bank |  |  | 694,431 |  |  |  | 13.4 |  |  |  | 414,019 |  |  |  | 8.0 |  |  |  | 517,524 |  |  |  | 10.0 |
Tier 1 capital (to risk weighted assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  |  | 570,730 |  |  |  | 11.0 |  |  |  | 311,881 |  |  |  | 6.0 |  |  |  | NA |  |  |  | NA |
Bank |  |  | 643,227 |  |  |  | 12.4 |  |  |  | 310,514 |  |  |  | 6.0 |  |  |  | 414,019 |  |  |  | 8.0 |
Common equity (to risk weighted assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  |  | 523,160 |  |  |  | 10.1 |  |  |  | 233,911 |  |  |  | 4.5 |  |  |  | NA |  |  |  | NA |
Bank |  |  | 643,227 |  |  |  | 12.4 |  |  |  | 232,886 |  |  |  | 4.5 |  |  |  | 336,391 |  |  |  | 6.5 |
Tier 1 capital (to average assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  |  | 570,730 |  |  |  | 10.8 |  |  |  | 210,527 |  |  |  | 4.0 |  |  |  | NA |  |  |  | NA |
Bank |  |  | 643,227 |  |  |  | 12.2 |  |  |  | 210,427 |  |  |  | 4.0 |  |  |  | 263,034 |  |  |  | 5.0 |
Under the final BASEL III capital rules that became effective on January 1, 2015, there is a requirement for a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets which is in addition to the other minimum risk-based capital standards in the rule. Institutions that do not meet this required capital buffer will become subject to progressively more stringent limitations on the percentage of earnings that can be paid out in cash dividends or used for stock repurchases and on the payment of discretionary bonuses to senior executive management. The capital buffer requirement was phased in over three years beginning in 2016. The capital buffer requirement raised the minimum required common equity Tier 1 capital ratio to 7.0%, the Tier 1 capital ratio to 8.5% and the total capital ratio to 10.5% on a fully phased-in basis on January 1, 2019. We believe that, as of December 31, 2024, our bank meets all capital adequacy requirements under the BASEL III capital rules on a fully phased-in basis. Federal and state banking laws and regulations place certain restrictions on the amount of dividends our bank can transfer to Mercantile and on the capital levels that must be maintained. At year-end 2024, under the most restrictive of these regulations, our bank could distribute $130 million to Mercantile as dividends without prior regulatory approval. Our and our bank’s ability to pay cash and stock dividends is subject to limitations under various laws and regulations and to prudent and sound banking practices. On January 11, 2024, our Board of Directors declared a cash dividend on our common stock in the amount of $0.35 per share that was paid on March 13, 2024 to shareholders of record as of March 1, 2024. On April 11, 2024, our Board of Directors declared a cash dividend on our common stock in the amount of $0.35 per share that was paid on June 19, 2024 to shareholders of record as of June 7, 2024. On July 11, 2024, our Board of Directors declared a cash dividend on our common stock in the amount of $0.36 per share that was paid on September 18, 2024 to shareholders of record as of September 6, 2024. On October 10, 2024, our Board of Directors declared a cash dividend on our common stock in the amount of $0.36 per share that was paid on December 18, 2024 to shareholders of record as of December 6, 2024. As of December 31, 2024, we had the ability to repurchase up to $6.8 million in common stock shares from time to time in open market transactions at prevailing market prices or by other means in accordance with applicable regulations as part of a $20.0 million common stock repurchase program announced in May 2021. No shares were repurchased during 2024 or 2023. Historically, stock repurchases have been funded from cash dividends paid to us from our bank. Additional repurchases may be made in future periods under the authorized plan or a new plan, which would also likely be funded from cash dividends paid to us from our bank. The actual timing, number and value of shares repurchased will be determined by us in our discretion and will depend on a number of factors, including the stock price, capital position, financial performance, general market and economic conditions, alternative uses of capital and applicable legal requirements. Our consolidated capital levels as of December 31, 2024 and 2023 include $48.3 million and $47.6 million, respectively, of trust preferred securities. Under applicable Federal Reserve guidelines, the trust preferred securities constitute a restricted core capital element. The guidelines provide that the aggregate amount of restricted core capital elements that may be included in Tier 1 capital must not exceed 25% of the sum of all core capital elements, including restricted core capital elements, net of goodwill less any associated deferred tax liability. Our ability to include the trust preferred securities in Tier 1 capital in accordance with the guidelines is not affected by the provision of the Dodd-Frank Act generally restricting such treatment, because (i) the trust preferred securities were issued before May 19, 2010, and (ii) our total consolidated assets as of December 31, 2009 were less than $15.0 billion. At December 31, 2024 and 2023, all $48.3 million and $47.6 million, respectively, of the trust preferred securities were included as Tier 1 capital of Mercantile.

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- Definition The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 942 -SubTopic 505 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a)(1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477270/942-505-50-1 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 942 -SubTopic 505 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477270/942-505-50-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 942 -SubTopic 505 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477270/942-505-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 942 -SubTopic 505 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (c)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477270/942-505-50-1 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 942 -SubTopic 505 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477270/942-505-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 942 -SubTopic 505 -Name Accounting Standards Codification -Section 50 -Paragraph 1D -Publisher FASB -URI https://asc.fasb.org/1943274/2147477270/942-505-50-1D Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 942 -SubTopic 505 -Name Accounting Standards Codification -Section 50 -Paragraph 1A -Publisher FASB -URI https://asc.fasb.org/1943274/2147477270/942-505-50-1A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 942 -SubTopic 505 -Name Accounting Standards Codification -Section 50 -Paragraph 1F -Publisher FASB -URI https://asc.fasb.org/1943274/2147477270/942-505-50-1F + Details
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