Mercantile Bank merges with Firstbank


The headquarters of Mercantile Bank of Michigan is in northwest Grand Rapids. Photo via

Grand Rapids-based Mercantile Bank Corporation and Alma-based Firstbank Corporation jointly announced today the signing of a merger agreement, which they say will create one of the largest banking institutions headquartered in Michigan.

The new company will use the Mercantile name and be headquartered in Grand Rapids.

The banks said the combined company will have total assets of $2.8 billion, deposits of $2.3 billion and loans of $2.0 billion, making it the third-largest bank headquartered in Michigan by market capitalization and deposit market share.

Statewide footprint

The new bank will have 53 branches statewide, a more diversified loan portfolio and greater origination capabilities, according to the announcement.

Mercantile Bank (NASDAQ: MBWM) has seven full-service banking offices in the Grand Rapids area, Holland and Lansing.

Firstbank (NASDAQ: FBMI) has 46 banking offices in the lower peninsula.

Ted Fuger, a Chartered Financial Analyst with Calder Investment Advisors in Grand Rapids, said both banks come from a position of strength.

A "true merger"

Mercantile’s “very strong point,” he said, is its “excellent loaning structure” it has built up since it was founded in 1997.

Fuger said Firstbank’s strong point is its number of branches, which he said gives it “a strong presence in the mid-Michigan markets and southern Michigan.”

“So the merger makes a lot of sense,” Fuger said. “It will bring a lot of deposits growth to Mercantile.”

“This must be a really good deal for Mercantile,” said Gregg Dimkoff, a finance professor at GVSU who has studied publicly held companies in West Michigan for more than 25 years — particularly banks.

Mercantile executives “know what they are doing,” said Dimkoff, adding it is a “true merger, not an acquisition.”

“Nothing will change on the surface for people around here in GR,” Dimkoff added. “It will still be called Mercantile and still be headquartered on Leonard Street.”

Dimkoff also noted the benefit to Mercantile of the many additional branches Firstbank brings to the deal. Up to now, he said, Mercantile “has kept its branches to a minimum.”


The combined company's leadership team will be executives from both organizations, with Michael Price, now CEO of Mercantile Bank, serving as the president and CEO.

Price said the merger is “an exciting opportunity for our customers, our shareholders and our employees to create the premier Michigan community banking franchise."

Thomas Sullivan, CEO of Firstbank, said the two banks have “similar cultures and complementary geographies and service strengths” that will “make this transaction a natural fit.”

The deal

In the merger, Firstbank shareholders will receive a fixed ratio of 1 share of Mercantile common stock for each share of Firstbank common stock, which implies a transaction value per share of $18.77, or approximately $151.5 million in the aggregate, based on Mercantile's closing price of $18.77 on Wednesday.

Upon closing of the deal at the year’s end, Mercantile shareholders will own approximately 52 percent of the stock in the combined company. Firstbank shareholders will own approximately 48 percent.

As part of the merger, Mercantile expects to pay a special cash dividend of $2 per share to Mercantile shareholders, prior to the closing of the merger.

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