1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission File Number: 000-26719
MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
MERCANTILE BANK CORPORATION
216 NORTH DIVISION AVENUE
GRAND RAPIDS, MICHIGAN 49503
(616) 242-9000
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REPORT OF INDEPENDENT AUDITORS
Plan Administrator of
Mercantile Bank of West Michigan 401(k) Plan
Grand Rapids, Michigan
We have audited the accompanying statements of net assets available for benefits
of the Mercantile Bank of West Michigan 401(k) Plan ("the Plan") as of December
31, 1999 and 1998 and the related statement of changes in net assets available
for benefits for the year ended December 31, 1999. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1999 and 1998, and the changes in net assets available for benefits
for the year ended December 31, 1999 in conformity with generally accepted
accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes at end of year is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements as a whole.
Crowe, Chizek and Company LLP
Grand Rapids, Michigan
May 11, 2000
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MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1999 and 1998
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1999 1998
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ASSETS
Investments, at fair value
Common stock $ 457,455 $ 318,059
Mutual funds 882,616 616,083
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1,340,071 934,142
Receivables
Employer contribution 3,779
Participant contributions 7,457
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11,236
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NET ASSETS AVAILABLE FOR BENEFITS $ 1,351,307 $ 934,142
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See accompanying notes to financial statements.
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MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 1999
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ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income
Net depreciation in fair value of investments $ (1,285)
Dividends 15,546
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Total income 14,261
Contributions
Employer 87,931
Participants 315,636
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Total contributions 403,567
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Total additions 417,828
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 663
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Total deductions 663
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NET INCREASE 417,165
Net assets available for benefits
Beginning of year 934,142
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End of year $ 1,351,307
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See accompanying notes to financial statements.
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MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
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NOTE 1 - DESCRIPTION OF PLAN
The following description of the Mercantile Bank of West Michigan 401(k) Plan
(the Plan) is provided for general information purposes only. Participants
should refer to the Plan agreement for a more complete description of the Plan's
provisions.
General: The Plan was established by the plan sponsor, Mercantile Bank of West
Michigan (the Bank), effective January 1, 1998. The Bank acts as trustee for the
Plan assets. The Plan is a defined contribution plan which covers all employees
who have completed one hour of service. The Plan has a contributory 401(k)
portion based on elective contributions from participants in the Plan. The Plan
is subject to the provisions of the Employee Retirement Income Security Act of
1974 (ERISA).
Contributions: Elective deferrals by participants under the 401(k) provisions
are based on a percentage of their compensation as defined in the Plan agreement
which are subject to certain limitations. Employees also may rollover account
balances from other plans into their account. The Bank may, at the sole
discretion of the Board of Directors, contribute to each participant's account a
matching contribution which is a percentage of the participant's elective
contribution for the year. For 1999, the Bank made matching contributions equal
to 100% of the first 4% of the compensation deferred by each 401(k) participant
subject to certain limitations as specified in the Plan agreement.
Participant Accounts: Each participant's account is credited with the
participant's contributions and allocation of (a) the Bank's contributions and
(b) Plan earnings. Allocations are based on participant earnings or account
balances, as defined. The benefit to which a participant is entitled is the
aggregate of the participants' deferrals and rollovers and employer matching
contributions.
Investment options: Participants may direct, on a quarterly basis, the trustee
to invest their elective 401(k) contributions as well as employer matching
contributions to the Plan in any of the available investment options.
Participants can individually determine their investment options based on
desired level of risk and return for all contributions (employer and employee)
to the Plan. Each participant has a self-directed account in addition to the
investment options offered by the Plan. This gives participants the option to
invest their contributions (employer and employee) to purchase common stock of
Mercantile Bank Corporation or any other stock. As of December 31, 1999 and
1998, all Plan participants had opted to invest in Mercantile Bank Corporation
common stock within their self-directed accounts.
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(Continued)
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MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
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NOTE 1 - DESCRIPTION OF PLAN (Continued)
Retirement, Death and Disability: A participant is entitled to 100% of his or
her account balance upon retirement, death or disability while employed.
Vesting: Participants are immediately vested in their elective and employer
contributions plus actual earnings thereon.
Payment of Benefits: A participant or his or her beneficiary receives the vested
portion in the participant's account in a lump sum. A participant may receive
the portion of his or her account invested in Mercantile Bank Corporation in
stock or cash.
Loan Provisions: The Plan provides that participants can borrow funds against
their account balances up to 50% of their vested account balance, or $50,000,
whichever is less.
Expenses: Substantially all administrative expenses are paid by the Plan
sponsor.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principles and policies which significantly affect the determination of net
assets and results of operations are summarized below.
Investment Valuation and Income Recognition: Investments are stated at fair
value. Mutual fund shares and Mercantile Bank Corporation common stock are
traded on national exchanges and are valued at the last sales price on the date
of valuation. Purchases and sales of securities are recorded on a trade-date
basis. Interest income is recorded on the accrual basis. Dividends are recorded
on the ex-dividend date.
Estimates: The preparation of financial statements in conformity with generally
accepted accounting principles requires the plan administrator to make estimates
and assumptions that affect certain reported amounts and disclosures, and actual
results may differ from these estimates. It is at least reasonably possible that
a significant change may occur in the near term for the estimates of investment
valuation.
Payment of Benefits: Benefits are recorded when paid.
New Accounting Standard: During 1999, the Plan adopted the requirements of the
American Institute of Certified Public Accountants Statement of Position 99-3,
Accounting and Reporting of Certain Defined Contribution Plan Investments and
Other Disclosure Matters. The 1998 financial statement has been reclassified to
be comparative.
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(Continued)
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MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
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NOTE 3 - PLAN TERMINATION
Although it has not expressed any intent to do so, the Bank has the right under
the Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA and its related regulations.
NOTE 4 - INVESTMENTS
The following presents investments that represent 5% or more of the Plan's net
assets.
December 31,
1999 1998
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INVESTMENTS, AS DETERMINED BY
QUOTED MARKET PRICE
Franklin Growth fund, 4,310 and 3,428 shares, respectively $ 147,421 $ 106,652
Franklin Small Cap Growth Fund, 1,687 and 1,075 shares,
respectively 73,624 24,201
Mutual Beacon fund, 25,241 and 15,532 shares, respectively 347,939 266,426
Templeton Growth fund, 12,079 and 9,989 shares,
respectively 238,085 161,337
Mercantile Bank Corporation common stock, 35,543 shares
and 18,280 shares, respectively 457,455 318,059
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) depreciated in value by
$(1,285) as follows:
Mutual funds $ 122,712
Common stock (123,997)
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$ (1,285)
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NOTE 5 - PARTY-IN-INTEREST TRANSACTIONS
Parties-in-interest are defined under Department of Labor (DOL) regulations as
any fiduciary of the Plan, any party rendering service to the Plan, the
employer, and certain others. Professional fees for the administration and audit
of the Plan are paid by the Bank.
The 35,543 and 18,280 shares of Mercantile Bank Corporation common stock held by
the Plan as of December 31, 1999 and 1998 represents approximately 1.44% and
0.74% of the Corporation's outstanding shares as of December 31, 1999 and 1998.
No cash dividends were paid to the Plan by Mercantile Bank Corporation during
1999 and 1998.
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(Continued)
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MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
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NOTE 5 - PARTY-IN-INTEREST TRANSACTIONS (Continued)
As of December 31, the Plan held the following party-in-interest investments (at
fair value):
1999 1998
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Stifel, Nicolaus Money Market fund $ 1,422
Roney & Co. Money Market fund $ 411
Mercantile Bank Corporation common stock;
35,543 shares and 18,280 shares in 1999 and 1998, respectively 457,455 318,059
NOTE 6 - TAX STATUS
The Mercantile Bank of West Michigan 401(k) Plan is a prototype plan, and uses a
standardized Plan document developed by Roney & Co. No amendments have been made
to the Plan. The Internal Revenue Service has determined and informed Roney &
Co. by letter dated April 19, 1993, that the prototype plan is designed in
accordance with the applicable sections of the Internal Revenue Code (IRC) for
tax exempt status. Management of the Corporation and its tax counsel believe the
Plan is being operated in accordance with the terms of the Plan document.
NOTE 7 - TERMINATED PARTICIPANTS
Included in net assets available for benefits are amounts allocated to
individuals who have withdrawn from the Plan. Amounts allocated to these
participants were $9,846 at December 31, 1999 and $0 at December 31, 1998.
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(Continued)
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MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
December 31, 1999
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Attachment to Form 5500, Schedule H, Part IV, Line 4i
Name of plan sponsor: Mercantile Bank of West Michigan.
Employer identification number: 38-3360868
Three-digit plan number: 001
(C)
Description of Investment
(B) Including Maturity Date,
Identity of Issuer, Rate of Interest, (D)
Borrower, Lessor, Collateral, Par or Current
(A) or Similar Party Maturity Value Value
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Franklin Growth 4,310 shares $ 147,421
Franklin Small Cap 1,687 73,624
Mutual Beacon 25,241 347,939
Templeton Foreign 1,740 19,540
Templeton Growth 12,079 238,085
Franklin U.S. Government 8,361 54,585
* Stifel, Nicolaus Money Market 1,422 1,422
* Mercantile Bank Corporation
common stock 35,543 457,455
* Party in interest
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
MERCANTILE BANK OF WEST MICHIGAN
401(K) PLAN
Date: June 26, 2000 /s/ Gerald R. Johnson, Jr.
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Gerald R. Johnson, Jr., Trustee
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated May 11, 2000, included in this Form 11-K, into the Company's
previously filed Form S-8 Registration Statement, file No. 333-75521.
Crowe, Chizek and Company LLP
Grand Rapids, Michigan
June 26, 2000