11-K 1 k70325e11vk.txt ANNUAL REPORT ON FORM 11-K 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, 2001 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 SW WYOMING, MICHIGAN 49509 (616) 406-3777 MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN Grand Rapids, Michigan FINANCIAL STATEMENTS December 31, 2001 and 2000 CONTENTS REPORT OF INDEPENDENT AUDITORS............................................ 1 FINANCIAL STATEMENTS STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS...................... 2 STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS............ 3 NOTES TO FINANCIAL STATEMENTS........................................ 4 SUPPLEMENTAL SCHEDULE SCHEDULE OF ASSETS (HELD AT END OF YEAR)............................. 7 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, 2001 and 2000, and the related statement of changes in net assets available for benefits for the year ended December 31, 2001. 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, 2001 and 2000, and the changes in net assets available for benefits for the year ended December 31, 2001 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 LLP Grand Rapids, Michigan April 17, 2002 1. MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN FINANCIAL STATEMENTS December 31, 2001 and 2000 MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS December 31, 2001 and 2000
2001 2000 ---- ---- ASSETS Investments, at fair value Common stock $1,342,468 $ 658,694 Mutual funds 1,233,154 1,064,773 ---------- ---------- 2,575,622 1,723,467 Receivables Employer contribution 7,391 5,315 Participant contributions 12,265 8,445 ---------- ---------- 19,656 13,760 ---------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $2,595,278 $1,737,227 ========== ==========
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, 2001 ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income Net appreciation in fair value of investments (Note 4) $ 290,699 Dividends - cash 8,361 Dividends - stock 39,760 ------------ Total income 338,820 Contributions Employer 173,066 Participants 280,670 Rollovers from other plans 99,012 ------------ Total contributions 552,748 ------------ Total additions 891,568 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefits paid to participants 33,517 ------------ Total deductions 33,517 ------------ NET INCREASE 858,051 Net assets available for benefits Beginning of year 1,737,227 ------------ End of year $ 2,595,278 ============
See accompanying notes to financial statements. 3. MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN NOTES TO FINANCIAL STATEMENTS December 31, 2001 and 2000 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 2001 and 2000, 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, 2001 and 2000 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 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. 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 1 2 0 0 0 ------- ------- Number of Fair Number of Fair Shares Value Shares Value ------ ----- ------ ----- Franklin Growth fund 6,760 $ 213,020 4,227 $ 148,067 Franklin Small Cap Growth fund 5,121 159,617 4,192 164,884 Mutual Beacon fund 32,987 429,162 26,924 359,171 Templeton Growth fund 5,596 100,723 5,588 102,763 Templeton Foreign fund 17,895 165,533 14,195 146,777 Mercantile Bank Corporation common stock 75,632 1,342,468 58,242 658,694
During 2001, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $290,699 as follows: Mutual funds $ (56,398) Common stock 347,097 --------- $ 290,699 =========
(Continued) 5. MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN NOTES TO FINANCIAL STATEMENTS December 31, 2001 and 2000 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. Certain Plan investments are shares of mutual funds managed by Stifel, Nicolaus and Company, Inc. Stifel Nicolaus and Company, Inc. is the custodian as defined by the Plan and therefore, these transactions qualify as party-in-interest transactions. Professional fees for the administration and audit of the Plan are paid by the Bank. The 75,632 and 58,242 shares of Mercantile Bank Corporation common stock held by the Plan as of December 31, 2001 and 2000 represents approximately 1.47% and 2.14% of the Corporation's outstanding shares as of December 31, 2001 and 2000. No cash dividends were paid to the Plan by Mercantile Bank Corporation during 2001. A 5% stock dividend was declared and paid by Mercantile Bank Corporation during 2001. As a result of this stock dividend, Mercantile Bank Corporation issued 2,802 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):
2001 2000 ---- ---- Stifel, Nicolaus Money Market fund $ 6,243 $ 3,143 Mercantile Bank Corporation common stock; 75,632 and 58,242 shares in 2001 and 2000, respectively 1,342,468 658,694
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. 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 $5,747 and $9,481 at December 31, 2001 and 2000, respectively. 6. SUPPLEMENTAL SCHEDULE MERCANTILE BANK OF WEST MICHIGAN 401(k) PLAN SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2001 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, 6,760 shares $ 213,020 Franklin Templeton Investments Franklin Small Cap Growth fund, 5,121 shares 159,617 Franklin Templeton Investments Franklin U.S. Government fund, 2,258 shares 15,419 Franklin Templeton Investments Franklin Blue Chip fund, 4,844 shares 66,465 Franklin Templeton Investments Franklin Large Cap fund, 2,616 shares 25,694 Franklin Templeton Investments Franklin Balance Sheet fund, 1,281 shares 51,278 Franklin Templeton Investments Templeton Foreign fund, 17,895 shares 165,533 Franklin Templeton Investments Templeton Growth fund, 5,596 shares 100,723 Franklin Templeton Investments Mutual Beacon fund, 32,987 shares 429,162 * Stifel, Nicolaus & Co., Inc. Stifel, Nicolaus Money Market fund 6,243 shares 6,243 COMMON STOCK * Mercantile Bank Corporation Common stock, 75,632 shares 1,342,468 ---------- $2,575,622 ==========
* Party in interest (d) Investment is participant directed, therefore historical cost is not required. 7. 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 25, 2002 /s/ Gerald R. Johnson, Jr. ------------------------------- Gerald R. Johnson, Jr., Trustee INDEX TO EXHIBITS
Exhibit Number Description 23.1 Consent of Independent Public Accountants