UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 15, 2021
____________________
Mercantile Bank Corporation
(Exact name of registrant as specified in its charter)
| Michigan | 000-26719 | 38-3360865 |
| (State or other jurisdiction | (Commission File | (IRS Employer |
| of incorporation) | Number) | Identification Number) |
| | | |
| 310 Leonard Street NW, Grand Rapids, Michigan | | 49504 |
| (Address of principal executive offices) | | (Zip Code) |
| | | |
| Registrant's telephone number, including area code | | 616-406-3000 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock | MBWM | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 | Entry into a Material Definitive Agreement. |
On December 15, 2021, Mercantile Bank Corporation (the “Company”) entered into Subordinated Note Purchase Agreements (collectively, the “Purchase Agreement”) with certain institutional accredited investors (the “Purchasers”) pursuant to which the Company issued and sold $75.0 million in aggregate principal amount of its 3.25% fixed-to-floating rate subordinated notes due 2032 (the “Notes”). The Notes were issued and sold by the Company to the Purchasers at a price equal to 100% of their face amount. The Company intends to use the net proceeds it received from the sale of the Notes for general corporate purposes, including providing capital to support the organic growth of its bank subsidiary, Mercantile Bank of Michigan.
The Purchase Agreement contains certain customary representations, warranties and covenants made by the Company, on the one hand, and the Purchasers, severally and not jointly, on the other hand.
The Notes were issued under an Indenture, dated December 15, 2021, as amended from time to time (the “Indenture”), by and between the Company and Wilmington Trust, National Association, as trustee (the “Trustee”). The Notes are not subject to any sinking fund and are not convertible into or exchangeable, other than pursuant to the Exchange Offer (as defined below), for any other securities or assets of the Company or any of its subsidiaries.
The Notes have a stated maturity of January 30, 2032, are redeemable by the Company at its option, in whole or in part, on or after January 30, 2027, and in whole but not in part, at any time upon the occurrences of certain events set forth in the Indenture. Prior to January 30, 2027, the Company may redeem the Notes, in whole but not in part, only under certain limited circumstances set forth in the Indenture. On or after January 30, 2027, the Company may redeem the Notes, in whole or in part, at its option, on any interest payment date. Any redemption by the Company would be at a redemption price equal to 100% of the principal amount of the Notes being redeemed, together with any accrued and unpaid interest on the Notes being redeemed to but excluding the date of redemption. 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, from and including December 15, 2021 to, but excluding, January 30, 2027. During this period, interest accrued on the Notes will be paid semi-annually in arrears on January 30 and July 30 of each year, commencing on July 30, 2022. From and including January 30, 2027 to, but excluding, the maturity date or early redemption date (the “Floating Rate Period”), the interest rate will reset quarterly at a variable rate equal to the then-current Three-Month Term SOFR (as defined in the Indenture) plus 212 basis points. As provided in the Notes, the interest rate on the Notes during the applicable floating rate period may be determined based on a rate other than three-month term SOFR. Interest payable on the Notes during the Floating Rate Period will be paid quarterly in arrears on January 30, April 30, July 30, and October 30.
Principal and interest on the Notes are subject to acceleration only in limited circumstances. The Notes are general unsecured, subordinated obligations of the Company, are not obligations of, and are not guaranteed by, any subsidiary of the Company, and rank junior in right of payment to the Company’s current and future senior indebtedness. The Notes will be equal in right of payment with any of the Company’s existing and future subordinated indebtedness. The Notes are intended to qualify as Tier 2 capital of the Company for regulatory capital purposes.
The Notes were offered and sold by the Company in a private placement transaction in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder. On December 15, 2021, in connection with the sale and issuance of the Notes and the entry into the Purchase Agreement with the Purchasers, the Company also entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Purchasers. Under the terms of the Registration Rights Agreement, the Company has agreed to take certain actions to provide for the exchange of the Notes for subordinated notes that are registered under the Securities Act and have substantially the same terms as the Notes (the “Exchange Offer”). Under certain circumstances, if the Company fails to meet its obligations under the Registration Rights Agreement, it will be required to pay additional interest to the holders of the Notes.
The form of Purchase Agreement, the form of Registration Rights Agreement, the Indenture and the form of Note are attached as Exhibits 10.1, 10.2, 4.1 and 4.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. The foregoing descriptions of the Purchase Agreement, the Registration Rights Agreement, the Indenture and the Notes are summaries and are qualified in their entirety by reference to the full text of such documents.
Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth under Item 1.01 above is incorporated by reference into this Item 2.03.
Item 7.01. | Regulation FD Disclosure. |
On December 15, 2021, the Company issued a press release announcing the completion of the offering of the Notes, a copy of which is furnished herewith as Exhibit 99.1.
In connection with the offering of the Notes, the Company delivered an investor presentation to potential investors on a confidential basis, which contemplated an anticipated offering of $75.0 million of the Notes, a copy of which is furnished herewith as Exhibit 99.2.
The information contained in this Item 7.01 and Exhibits 99.1 and 99.2 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
Cautionary Note Regarding Forward-Looking Statements
This report contains statements or information that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will,” and similar references to future periods. Any such statements are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; increasing rates of inflation and slower growth rates; significant declines in the value of commercial real estate; market volatility; demand for products and services; the degree of competition by traditional and nontraditional financial services companies; changes in banking regulation or actions by bank regulators; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; potential cyber-attacks, information security breaches and other criminal activities; our participation in the Paycheck Protection Program administered by the Small Business Administration; litigation liabilities; governmental and regulatory policy changes; the outcomes of existing or future contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; damage to our reputation resulting from adverse publicity, regulatory actions, litigation, operational failures, and the failure to meet client expectations and other facts; changes in the method of determining Libor and the phase-out of Libor; changes in the national and local economies, including the ongoing disruption to financial markets and other economic activity caused by the COVID-19 pandemic; and other factors, including those expressed as risk factors, disclosed from time to time in filings made by Mercantile with the Securities and Exchange Commission. Mercantile undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise. Investors are cautioned not to place undue reliance on any forward-looking statements contained herein.
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Mercantile Bank Corporation | |
| | | |
| | | |
| By: | /s/ Charles E. Christmas | |
| | Charles E. Christmas | |
| | Executive Vice President, Chief | |
| | | Financial Officer and Treasurer | |
December 16, 2021
Exhibit Index
| 4.1 | Subordinated Indenture, dated December 15, 2021, by and between Mercantile Bank Corporation and Wilmington Trust, National Association, as trustee. |
| 4.2 | First Supplemental Indenture to Subordinated Indenture, dated December 15, 2021, by and between Mercantile Bank Corporation and Wilmington Trust, National Association, as trustee. |
| 4.3 | Form of 3.25% Fixed-to-Floating Rate Subordinated Note due 2032. |
| 10.1 | Form of Subordinated Note Purchase Agreement dated December 15, 2021, by and among Mercantile Bank Corporation and the Purchasers. |
| 10.2 | Form of Registration Rights Agreement dated December 15, 2021, by and among Mercantile Bank Corporation and the Purchasers. |
| 99.1 | Press Release issued by Mercantile Bank Corporation dated December 15, 2021. |
| 99.2 | Investor Presentation of Mercantile Bank Corporation. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
