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, 2002
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
5650 BYRON CENTER AVENUE, S.W.
WYOMING, MICHIGAN 49509
(616) 406-3777
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, 2002 and 2001, and the related statement of changes in net assets available
for benefits for the year ended December 31, 2002. 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 auditing standards generally accepted
in the United States of America. 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, 2002 and 2001, and the changes in net assets available for benefits
for the year ended December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America.
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 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 LLC
Grand Rapids, Michigan
April 17, 2003
1.
MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2002 and 2001
2002 2001
---- ----
ASSETS
Investments, at fair value (Note 4)
Common stock $ 2,353,435 $ 1,342,468
Mutual funds 1,347,004 1,233,154
--------------- ----------------
3,700,439 2,575,622
Receivables
Employer contribution 19,288 7,391
Participant contributions 32,967 12,265
--------------- ----------------
52,255 19,656
--------------- ----------------
Total assets 3,752,694 2,595,278
LIABILITIES
Due to custodian for securities purchased 22,826 0
--------------- ----------------
NET ASSETS AVAILABLE FOR BENEFITS $ 3,729,868 $ 2,595,278
=============== ================
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, 2002
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income
Net appreciation in fair value of investments (Note 4) $ 302,410
Dividends - cash 16,508
Dividends - stock 71,001
-------------
Total income 389,919
Contributions
Employer 239,082
Participants 400,362
Rollovers from other plans 145,047
-------------
Total contributions 784,491
-------------
Total additions 1,174,410
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 39,820
-------------
Total deductions 39,820
-------------
NET INCREASE 1,134,590
Net assets available for benefits
Beginning of year 2,595,278
-------------
End of year $ 3,729,868
=============
See accompanying notes to financial statements.
3.
MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
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 2002, 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 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. Each participant directs the investment of their 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 stock 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.
Expenses: Substantially all administrative expenses are paid by the Plan
sponsor.
(Continued)
4.
MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. 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 accounting
principles generally accepted in the United States of America 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.
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.
NOTE 4 - INVESTMENTS
The following presents investments that represent 5% or more of the Plan's net
assets.
2 0 0 2 2 0 0 1
------- -------
Number of Fair Number of Fair
Shares Value Shares Value
------ ----- ------ -----
MUTUAL FUNDS
Franklin Growth fund 6,670 $ 158,751 6,760 $ 213,020
Franklin Small Cap Growth fund 6,859 150,545 5,121 159,617
Mutual Beacon fund 41,074 462,905 32,987 429,162
Templeton Foreign fund 21,406 177,881 17,895 165,533
COMMON STOCK
Mercantile Bank Corporation common stock 99,511 2,353,435 79,414 1,342,468
(Continued)
5.
MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
NOTE 4 -- INVESTMENTS (Continued)
During 2002, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value by
$302,410 as follows:
Mutual funds $ (226,717)
Common stock 529,127
------------
$ 302,410
============
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.
As of March 31, 2002, the plan trustee resolved to change the custodian of the
Plan from Stifel, Nicolaus and Company, Inc. to Raymond James & Associates, Inc.
The 99,511 and 79,414 shares of Mercantile Bank Corporation common stock held by
the Plan as of December 31, 2002 and 2001 represents approximately 1.84% and
1.47% of the Corporation's outstanding shares as of December 31, 2002 and 2001.
No cash dividends were paid to the Plan by Mercantile Bank Corporation during
2002. A 5% stock dividend was declared and paid by Mercantile Bank Corporation
during 2002. As a result of this stock dividend, Mercantile Bank Corporation
issued 3,807 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):
2002 2001
---- ----
Stifel, Nicolaus Money Market fund $ 0 $ 6,243
Mercantile Bank Corporation common stock; 99,511
and 79,414 shares in 2002 and 2001, respectively 2,353,435 1,342,468
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.
(Continued)
6.
MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
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 $663 and $5,747 at
December 31, 2002 and 2001, respectively.
7.
MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2002
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 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,
6,670 shares $ 158,751
Franklin Templeton Investments Franklin Small Cap Growth
fund, 6,859 shares 150,545
Franklin Templeton Investments Franklin U.S. Government
fund, 10,659 shares 74,616
Franklin Templeton Investments Franklin Blue Chip fund,
7,799 shares 82,905
Franklin Templeton Investments Franklin Large Cap fund,
5,931 shares 41,398
Franklin Templeton Investments Franklin Balance Sheet fund,
1,529 shares 56,702
Franklin Templeton Investments Templeton Foreign fund,
21,406 shares 177,881
Franklin Templeton Investments Templeton Growth fund,
7,718 shares 122,941
Franklin Templeton Investments Mutual Beacon fund,
41,074 shares 462,905
Franklin Templeton Investments Franklin Templeton Money
Market fund , 18,360 shares 18,360
COMMON STOCK
* Mercantile Bank Corporation Common stock,
99,511 shares 2,353,435
------------
$ 3,700,439
============
* Party in interest
(d) Investments are participant directed, therefore historical cost is not
required.
8.
MERCANTILE BANK
EXHIBITS TO REPORT ON FORM 11-K:
Exhibit No. Exhibit Description
23 Consent of Independent Public Accountants
99.1 Certification of chief executive officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification of chief financial officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
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, 2003 /s/ Gerald R. Johnson, Jr.
---------------------------------
Gerald R. Johnson, Jr., Trustee
EXHIBIT INDEX
Exhibit No. Exhibit Description
23 Consent of Independent Public Accountants
99.1 Certification of chief executive officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification of chief financial officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.