<PAGE> 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, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
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
<PAGE> 2
MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
Grand Rapids, Michigan
FINANCIAL STATEMENTS
December 31, 1998
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
REPORT OF INDEPENDENT AUDITORS............................................... 1
FINANCIAL STATEMENTS
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH
FUND INFORMATION..................................................... 2
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS WITH FUND INFORMATION....................................... 3
NOTES TO FINANCIAL STATEMENTS.......................................... 4
SUPPLEMENTAL SCHEDULES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES............. 9
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS.........................10
</TABLE>
<PAGE> 3
REPORT OF INDEPENDENT AUDITORS
Plan Administrator of
Mercantile Bank of West Michigan 401(k) Plan
Grand Rapids, Michigan
We have audited the accompanying statement of net assets available for benefits
of the Mercantile Bank of West Michigan 401(k) Plan (the "Plan") as of December
31, 1998 and the related statement of changes in net assets available for
benefits for the year ended December 31, 1998. 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 audit.
We conducted our audit 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 audit provides 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, 1998, and the changes in net assets available for benefits for the
year ended December 31, 1998 in conformity with generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are 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 Fund Information in the
statement of net assets available for benefits and statement of changes in net
assets available for benefits is presented for purposes of additional analysis
rather than to present the net assets available for plan benefits and changes in
net assets available for Plan benefits of each fund. The supplemental schedules
and Fund Information have been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements as
a whole.
Crowe, Chizek and Company LLP
Grand Rapids, Michigan
April 21, 1999
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3.
<PAGE> 4
MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
December 31, 1998
- --------------------------------------------------------------------------------
- ----------------------------------Participant Directed--------------------------
<TABLE>
<CAPTION>
Franklin
Franklin Franklin Mutual Templeton Templeton U.S.
Growth Small Cap Beacon Foreign Growth Government
------ --------- ------ ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
(Notes 2 and 4)
Common stock
Mutual funds $ 106,652 $ 24,201 $ 266,426 $ 8,540 $ 161,337 $ 48,486
----------- ------------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $ 106,652 $ 24,201 $ 266,426 $ 8,540 $ 161,337 $ 48,486
=========== ============= =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Mercantile
Roney Bank
Money Corporation
Market Stock Total
------ ----- -----
<S> <C> <C> <C>
ASSETS
Investments, at fair value
(Notes 2 and 4)
Common stock $ 318,059 $ 318,059
Mutual funds $ 441 $ 616,083
----------- ------------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $ 441 $ 318,059 $ 934,142
=========== ============= ===========
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
4.
<PAGE> 5
MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
Year ended December 31, 1998
- --------------------------------------------------------------------------------
- -------------------------Participant Directed-----------------------------------
<TABLE>
<CAPTION>
Franklin Franklin Mutual Templeton Templeton
Growth Small Cap Beacon Foreign Growth
------ --------- ------ ------- ------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment income (loss)
Net appreciation (depreciation) in fair
value of investments (Note 4) $ 5,904 $ (1,709) $ (30,282) $ (2,184) $ (35,721)
Dividends 1,675 206 16,596 854 16,916
----------- ----------- ---------- ----------- -----------
Total income (loss) 7,579 (1,503) (13,686) (1,330) (18,805)
Contributions
Employer 1,626 1,714 5,087 516 2,573
Employee 3,993 3,129 73,249 1,289 6,313
Employee rollovers 93,454 20,861 198,388 8,065 167,868
----------- ----------- ---------- ----------- -----------
Total contributions 99,073 25,704 276,724 9,870 176,754
----------- ----------- ---------- ----------- -----------
Total additions 106,652 24,201 263,038 8,540 157,949
DEDUCTIONS FROM NET ASSETS ATTRIBUTABLE TO:
Benefits paid to participants ----------- ----------- ---------- ----------- -----------
NET INCREASE PRIOR TO TRANSFERS 106,652 24,201 263,038 8,540 157,949
Interfund transfers 3,388 3,388
----------- ----------- ---------- ----------- -----------
NET INCREASE 106,652 24,201 266,426 8,540 161,337
Net assets available for benefits
Beginning of year (Note 1)
End of year $ 106,652 $ 24,201 $ 266,426 $ 8,540 $ 161,337
=========== =========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Mercantile
Franklin Roney Bank
U.S. Money Corporation
Government Market Stock Total
---------- ------ ----- -----
<S> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment income (loss)
Net appreciation (depreciation) in fair
value of investments (Note 4) $ 9,367 $ (54,625)
Dividends $ 1,717 $ 184 38,148
---------- ----------- --------- -----------
Total income (loss) 1,717 184 9,367 (16,477)
Contributions
Employer 1,036 28 43,165 55,745
Employee 2,816 318 22,368 113,475
Employee rollovers 39,529 10,075 243,159 781,399
----------- ----------- ----------- -----------
Total contributions 43,381 10,421 308,692 950,619
----------- ----------- ----------- -----------
Total additions 45,098 10,605 318,059 934,142
DEDUCTIONS FROM NET ASSETS ATTRIBUTABLE TO:
Benefits paid to participants ---------- ----------- ----------- -----------
NET INCREASE PRIOR TO TRANSFERS 45,098 10,605 318,059 934,142
Interfund transfers 3,388 (10,164)
---------- ----------- ----------- -----------
NET INCREASE 48,486 441 318,059 934,142
Net assets available for benefits ---------- ----------- ----------- -----------
Beginning of year (Note 1)
End of year $ 48,486 $ 441 $ 318,059 $ 934,142
========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
5.
<PAGE> 6
MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
- --------------------------------------------------------------------------------
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 1998, the Company 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 roll-overs 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 traded over-the-counter. As of
December 31, 1998, all Plan participants had opted to invest in Mercantile Bank
Corporation stock within their self-directed accounts.
- --------------------------------------------------------------------------------
(Continued)
6.
<PAGE> 7
MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
- --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF PLAN (Continued)
The participant directed investment choices during 1998 were:
FRANKLIN GROWTH: The Franklin Growth Fund seeks capital appreciation. This
fund offers investors a diversified portfolio primarily of established,
growth companies. It adheres to a long-term, "buy and hold" investment
philosophy.
FRANKLIN SMALL CAP: Franklin Small Cap Growth Fund seeks long-term capital
growth by investing primarily in stocks of small companies with market
capitalizations of less than $1 billion, that managers believe are
positioned for rapid growth.
MUTUAL BEACON: This fund seeks capital appreciation; income is a secondary
objective. Portfolio managers target securities trading at a discount to
the value of a company's assets, and search for opportunities among
companies involved in mergers, spin-offs, financial reorganizations, and
bankruptcies.
TEMPLETON FOREIGN: Templeton Foreign Fund seeks long-term capital growth
through a flexible policy of investing in stocks and debt obligations of
companies and governments outside of the United States.
TEMPLETON GROWTH: This is a global growth fund, which invests in stock and
bonds of companies and governments of any nation.
FRANKLIN U.S. GOVERNMENT: The Franklin U.S. Government Securities Fund
offers investors the opportunity to earn high, current income with a high
degree of credit safety from a conservatively managed portfolio of U.S.
Government securities. Since 1983, the fund has invested primarily in
Ginnie Mae securities.
RONEY U.S. GOVERNMENT: Investments in U.S. Treasury obligations, directly
or through repurchase agreements.
MERCANTILE BANK CORPORATION STOCK: Shares of Mercantile Bank Corporation
stock are traded in the over-the-counter market. The range of high and low
bid prices for 1998 was $19.00 - $10.25.
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.
- --------------------------------------------------------------------------------
(Continued)
7.
<PAGE> 8
MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
- --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF PLAN (Continued)
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 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.
Basis of Accounting: Plan transactions are recorded on the accrual method of
accounting.
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.
Investments: Investments are stated at fair value. Mutual fund shares are traded
on national exchanges and are valued at the last sales price on the date of
valuation. Mercantile Bank Corporation common stock is traded over-the-counter
and is valued based on an average of the stock's bid and ask prices on the date
of valuation.
Payment of Benefits: Benefits are recorded when paid.
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.
- --------------------------------------------------------------------------------
(Continued)
8.
<PAGE> 9
MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
- --------------------------------------------------------------------------------
NOTE 4 - INVESTMENTS
The following table presents the fair values of investments. Investments that
represent 5% or more of the Plan's net assets are separately identified. The
investment accounts include cash in short-term money market funds, which has
been designated to be invested in the common stock or mutual funds.
<TABLE>
<CAPTION>
Number of
Shares/Units Value
------------ -----
<S> <C> <C>
INVESTMENTS, AS DETERMINED BY
QUOTED MARKET PRICE
Franklin Growth 3,428 $ 106,652
Mutual Beacon 15,532 266,426
Templeton Growth 9,989 161,337
Franklin U.S. Government 7,013 48,486
Mercantile Bank Corporation stock 18,280 318,059
Other investments 2,538 33,182
------------
Total investments, at fair value $ 934,142
============
</TABLE>
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 18,280 shares of Mercantile Bank Corporation common stock held by the Plan
as of December 31, 1998 represents approximately 0.74% of the Corporation's
outstanding shares as of December 31, 1998.
As of December 31, the Plan held the following party-in-interest investments (at
fair value):
<TABLE>
<S> <C>
Roney Money Market $ 411
Mercantile Bank Corporation Common Stock;
18,280 shares in 1998 318,059
------------
$ 318,470
============
</TABLE>
No cash dividends were paid to the Plan by Mercantile Bank Corporation during
1998.
- --------------------------------------------------------------------------------
9.
<PAGE> 10
MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
10.
<PAGE> 11
SUPPLEMENTAL SCHEDULES
<PAGE> 12
MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1998
- --------------------------------------------------------------------------------
Name of plan sponsor: Mercantile Bank of West Michigan.
Employer identification number: 38-3360868
Three-digit plan number: 001
<TABLE>
<CAPTION>
(C)
Description of Investment
(B) Including Maturity Date,
Identity of Issuer, Rate of Interest, (E)
Borrower, Lessor, Collateral, Par or (D) Current
(A) or Similar Party Maturity Value Cost Value
<S> <C> <C> <C> <C>
Franklin Growth 3,428 $ 100,748 $ 106,652
Franklin Small Cap 1,075 25,910 24,201
Mutual Beacon 15,532 296,708 266,426
Templeton Foreign 1,022 10,724 8,540
Templeton Growth 9,989 197,058 161,337
Franklin U.S. Government 7,013 46,769 48,486
* Roney Money Market 441 441 441
* Mercantile Bank Corporation Stock 18,280 308,692 318,059
* Party in interest
</TABLE>
- --------------------------------------------------------------------------------
12.
<PAGE> 13
MERCANTILE BANK OF WEST MICHIGAN 401(K) PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
December 31, 1998
- --------------------------------------------------------------------------------
Name of plan sponsor: Mercantile Bank of West Michigan
Employer identification number: 38-3360868
Three-digit plan number: 001
<TABLE>
<CAPTION>
(F)
(A) Expense
Identify of (B) (C) (D) (E) Incurred
Party Description Purchase Selling Lease with
Involved of Asset Price Price Rental Transaction
-------- -------- ----- ----- ------ -----------
<S> <C> <C> <C> <C> <C>
Franklin Templeton Mutual Beacon Fund
31 purchases $ 296,708
Franklin Templeton Small Cap Fund
28 purchases 25,910
Roney & Co. Money Market Fund
37 purchases 775,043
18 sales $ 774,602
Franklin Templeton Templeton Growth Fund
33 purchases 197,058
Franklin Templeton Franklin Growth Fund
27 purchases 100,748
Mercantile Bank Mercantile Bank Corporation
Corporation Stock
283 purchases 308,854
1 sale 162
Franklin Templeton Franklin U.S. Government
Securities
28 purchases 46,769
Franklin Templeton Templeton Foreign Fund
26 purchases 10,724
</TABLE>
<TABLE>
<CAPTION>
(H)
Current
(G) Value of Asset (I)
Cost on Transaction Net Gain
of Asset Date or (Loss)
-------- ---- ---------
<S> <C> <C>
$ 296,708 $ 296,708
25,910 25,910
775,043 775,043
774,602 774,602
197,058 197,058
100,748 100,748
308,854 308,854
162 162
46,769 46,769
10,724 10,724
</TABLE>
- --------------------------------------------------------------------------------
13.
<PAGE> 14
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: July 23, 1999 /s/ Gerald R. Johnson, Jr.
-------------------------- --------------------------------
Gerald R. Johnson, Jr., Trustee
<PAGE> 15
Exhibit Index
-------------
Exhibit No. Description
- ----------- -----------
23 Consent of Independent Public Accountants
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated April 21, 1999, included in this Form 11-K, into the Company's
previously filed Form S-8 Registration Statement, file No. 333-75521.
/s/Crowe, Chizek and Company LLP
---------------------------------
Crowe, Chizek and Company LLP
July 23, 1999
Grand Rapids, Michigan
