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 [NO FEE REQUIRED]
For the fiscal year ended December 31, 2004
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
310 LEONARD STREET, NW
WYOMING, MICHIGAN 49504
(616) 406-3777
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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, 2004 and 2003, and the related statement of changes in net assets available
for benefits for the year ended December 31, 2004. 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 the standards of the Public Company
Accounting Oversight Board. 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, 2004 and 2003, and the changes in net assets available for benefits
for the year ended December 31, 2004 in conformity with U.S. 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 schedule of assets (held
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 supplemental 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 2004 financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic 2004 financial
statements as a whole.
/s/ Crowe Chizek and Company LLC
---------------------------------
Crowe Chizek and Company LLC
Oak Brook, Illinois
May 16, 2005
1.
MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2004 and 2003
2004 2003
------------ ------------
ASSETS
Investments, at fair value (Note 4)
Common stock $ 5,899,167 $ 4,507,385
Mutual funds 3,097,138 2,035,644
Money market fund 56,316 53,717
Participant loans 66,677 14,085
------------ ------------
9,119,298 6,610,831
Cash/cash equivalents 45,443 34,513
------------ ------------
Total assets 9,164,741 6,645,344
LIABILITIES
Due to custodian for securities purchased 20,540 -
Other - 442
------------ ------------
Total liabilities 20,540 442
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 9,144,201 $ 6,644,902
============ ============
See accompanying notes to financial statements.
2.
MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2004
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income
Net appreciation in fair value of investments (Note 4) $ 781,766
Dividends - cash 86,133
Dividends - stock 228,846
------------
Total income 1,096,745
Contributions
Employer 413,116
Participants 687,588
Rollovers from other plans 445,434
------------
Total contributions 1,546,138
------------
Total additions 2,642,883
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 143,584
------------
NET INCREASE 2,499,299
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 6,644,902
------------
End of year $ 9,144,201
============
See accompanying notes to financial statements.
3.
MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
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 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 2004, the Bank made matching contributions equal
to 100% of the first 5% 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 an allocation of (a) the Bank's contributions
and (b) Plan earnings. Allocations are based on participant earnings,
contributions 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. Each participant directs the
investment of his or her account to any of the investment options available
under the Plan.
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 a
distribution of the participant's account balance in a lump sum. A participant
may receive the portion of his or her account invested in Mercantile Bank
Corporation in either common shares or cash.
Loan Provisions: The Plan provides that participants can borrow funds against
their account balances up to 50% of their vested balance, or $50,000, whichever
is less.
(Continued)
4.
MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
Expenses: All administrative expenses are paid by the Plan sponsor.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting: The financial statements of the Plan are prepared under the
accrual method of accounting in accordance with U.S. generally accepted
accounting principles.
Investment Valuation and Income Recognition: The Plan's investments are stated
at fair value. Mutual fund shares and Mercantile Bank Corporation common stock
are traded on national exchanges or quotation exchanges and are valued at the
last sales price on the date of valuation. Participant loans are stated at cost
which approximates fair value. 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 U.S.
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.
Risks and Uncertainties for Investments: The Plan has investments in mutual
funds and stocks. These investment securities are exposed to various risks, such
as interest rate, market and credit risks. Due to the level of risk associated
with certain investment securities, it is at least reasonably possible that
changes in the values of investment securities will occur in the near term and
that such changes could materially affect the amounts reported in the statements
of net assets available for benefits and participants' individual account
balances.
Concentration of Credit Risk: At December 31, 2004 and 2003 approximately 65%
and 68% of the Plan's assets were invested in Mercantile Bank Corporation common
stock.
Payment of Benefits: Benefits are recorded when paid.
Reclassifications: Certain prior year amounts have been reclassified to conform
to the current year presentation.
(Continued)
5.
MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
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. In the event of the Plan's termination,
participants will be 100% vested in their accounts.
NOTE 4 - INVESTMENTS
The following presents investments that represent 5% or more of the Plan's net
assets at quoted market prices.
2004 2003
----------------------- ----------------------
Number of Fair Number of Fair
Shares Value Shares Value
--------- ----------- --------- ----------
MUTUAL FUNDS
Mutual Beacon fund 54,833 $ 870,193 43,946 $ 629,743
COMMON STOCK
Mercantile Bank Corporation
common stock 149,346 $ 5,899,167 123,490 4,507,385
During 2004, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value by
$781,766 as follows:
Mutual funds $ 320,465
Common stock 461,301
---------
$ 781,766
=========
(Continued)
6.
MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
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 149,346 and 123,490 shares of Mercantile Bank Corporation common stock held
by the Plan as of December 31, 2004 and 2003 represents approximately 2.1% and
1.8% of the Corporation's outstanding shares as of December 31, 2004 and 2003.
Cash dividends of $49,680 were paid to the Plan by Mercantile Bank Corporation
during 2004. A 5% stock dividend was declared and paid by Mercantile Bank
Corporation during 2004. As a result of this stock dividend, Mercantile Bank
Corporation issued 6,450 additional shares of Mercantile Bank Corporation common
stock to the Plan.
As of December 31, the Plan held the following party-in-interest investments (at
fair value):
2004 2003
----------- -----------
Mercantile Bank Corporation common stock; 149,346
and 123,490 shares in 2004 and 2003, respectively $ 5,899,167 $ 4,507,385
Participant loans 66,677 14,085
NOTE 6 - TAX STATUS
The Internal Revenue Service has determined and informed the Bank by letter
dated June 1, 2001, that the Plan and related trusts are designed in accordance
with the applicable sections of the Internal Revenue Code (IRC) for tax exempt
status. The Plan has been amended since receiving the determination letter.
However, the Plan administrator believes that the plan is designed and is
currently being administered in accordance with applicable provisions of the
IRC.
NOTE 7 - TERMINATED PARTICIPANTS
Included in net assets available for benefits are amounts allocated to
individuals who have elected to withdraw from the Plan, but who have not yet
been paid. Plan assets allocated to these participants were $10,038 and $54,861
at December 31, 2004 and 2003, respectively.
(Continued)
7.
MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2004
Name of plan sponsor: Mercantile Bank of West Michigan
Employer identification number: 38-3360868
Three-digit plan number: 001
(c)
Description of
Investment Including
(b) Maturity Date, Rate
Identity of Issuer, of Interest, Collateral, (e)
Borrower, Lessor, Par, or (d) Current
(a) or Similar Party Maturity Value Cost Value
---- ------------------------------ ----------------------------- ---- ------------
MUTUAL FUNDS
Franklin Templeton Investments Franklin Growth fund,
10,116 shares # $ 341,924
Franklin Templeton Investments Franklin Small Mid Cap Growth
fund, 13,085 shares # 446,991
Franklin Templeton Investments Franklin U.S. Government
fund, 17,357 shares # 115,600
Franklin Templeton Investments Franklin Blue Chip fund,
17,926 shares # 262,434
Franklin Templeton Investments Franklin Capital Growth fund,
11,554 shares # 127,785
Franklin Templeton Investments Franklin Balance Sheet fund,
3,405 shares # 198,396
Franklin Templeton Investments Templeton Foreign fund,
28,951 shares # 356,098
Franklin Templeton Investments Templeton Growth fund,
16,501 shares # 377,717
Franklin Templeton Investments Mutual Beacon fund,
54,833 shares # 870,193
------------
3,097,138
MONEY MARKET
Heritage Heritage Cash Trust,
56,316 shares # 56,316
COMMON STOCK
* Mercantile Bank Corporation Common stock,
149,346 shares # 5,899,167
PARTICIPANT LOANS
* Participants loans Bearing interest at 4.25%
to 5.00% 66,677
------------
$ 9,119,298
============
* Party in interest
# Investments are participant directed, therefore historical cost is not
required.
8.
EXHIBITS TO REPORT ON FORM 11-K:
Exhibit No. Exhibit Description
23 Consent of Independent Public Accountants
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 13, 2005 /s/ Gerald R. Johnson, Jr.
-------------------------------
Gerald R. Johnson, Jr., Trustee
EXHIBIT INDEX
Exhibit No. Exhibit Description
23 Consent of Independent Public Accountants