XML 64 R28.htm IDEA: XBRL DOCUMENT

Note 20 - Subordinated Debentures

12 Months Ended

Dec. 31, 2014

NOTE 20 – SUBORDINATED DEBENTURES

We have five business trusts that are wholly-owned subsidiaries of Mercantile, four of which were assumed by Mercantile in conjunction with the Firstbank merger. A fair value discount of $15.0 million was recorded at the time of the merger, which is being amortized at $0.7 million annually over the next 21.5 years. Each of the trusts was formed to issue Preferred Securities that were sold in private sales, as well as selling Common Securities to Mercantile. The proceeds from the Preferred and Common Securities sales were used by the trusts to purchase Floating Rate Notes issued by Mercantile. The rates of interest, interest payment dates, call features and maturity dates of each Floating Rate Note are identical to its respective Preferred Securities. The net proceeds from the issuance of the Floating Rate Notes were used for a variety of purposes, including contributions to the Bank as capital to provide support for asset growth and the funding of stock repurchase programs and certain acquisitions.

The only significant assets of our trusts are the Floating Rate Notes, and the only significant liabilities of our trusts are the Preferred Securities. The Floating Rate Notes are categorized on our Consolidated Balance Sheets as subordinated debentures and the interest expense is recorded on our Consolidated Statements of Income under interest expense on other borrowings.

The following table depicts our five business trusts as of December 31, 2014:

	Preferred Securities
Trust Name	Outstanding	Interest Rate	Maturity Date

Mercantile Bank Capital Trust I	$32,000,000	3 Month Libor + 218 bps	September 16, 2034

Firstbank Capital Trust I	$10,000,000	3 Month Libor + 199 bps	October 18, 2034

Firstbank Capital Trust II	$10,000,000	3 Month Libor + 127 bps	April 7, 2036

Firstbank Capital Trust III	$7,500,000	3 Month Libor + 135 bps	July 30, 2037

Firstbank Capital Trust IV	$7,500,000	3 Month Libor + 135 bps	July 30, 2037

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References+ Details