Strong 2Q & Outlook w/ Add'l NIM Expansion & Solid B/S Growth Expected; Adj Est

研报英文原文证据摘录

Strong 2Q & Outlook w/ Add'l NIM Expansion & Solid B/S Growth Expected; Adj Est

C O M P A NY N O TE

J u l y 2 1 , 2 0 2 6

 Mgmt. reiterated 2H26 loan growth guidance in the 5%-7% LQA range as origination

activity remains well-distributed across the footprint both across MBWM’s more mature

West/Central/Northern Michigan markets and amid the early-innings (but rapidly scaling)

expansion in Southeast Michigan.

 Commitments to fund new commercial loans ($224M) and existing construction ($283M)

both were at or near five-quarter highs, which underscores MBWM’s strong pipeline.

 This setup may drive upside to our 5% YoY forecast for 2026. We also anticipate MBWM

will deliver MSD loan growth next year (PSCe = +6% YoY in 2027) as it continues to pull

market share via MBWM’s recent production talent additions and advantageous positioning

in Michigan to capitalize on potential M&A-related disruption.

 EOP core deposits (ex. CDs) were down 4% LQA largely due to some seasonal declines

in checking (-27% LQA), and MM (-15%). Higher NIB (+27%) was only a partial offset.

 We expect MBWM’s success on the core deposit gathering front to be evident going

forward via share gains in Southeast Michigan build-out and with its more holistic model.

 We model deposit gathering to keep pace with loan growth, which translates with the L/D

remaining near the 2Q level (92%) as MBWM continues to capture full relationships.

Benign Credit Metrics Persist in 2Q; Expect Superior Credit Quality to Continue

 MBWM’s credit metrics remained benign in 2Q given net recoveries (of $0.5M or 4 bps vs.

NCO expectations at 8 bps) and as NPLs fell 23% LQ to $5.8M (-4 bps LQ to 0.12% of

loans). MBWM has recorded net recoveries in nine of the last eleven quarters.

 MBWM had -$1.8M LLP release (vs.