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Significant Accounting Policies (Policies)
 3 Months Ended
Mar. 31, 2019
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]
Basis of Presentation
: The unaudited financial statements for the
three
months ended
March 31, 2019
include the consolidated results of operations of Mercantile Bank Corporation and its consolidated subsidiaries. These subsidiaries include Mercantile Bank of Michigan (“our bank”) and our bank’s
two
subsidiaries, Mercantile Bank Real Estate Co., LLC (“our real estate company”) and Mercantile Insurance Center, Inc. (“our insurance center”). These consolidated financial statements have been prepared in accordance with the instructions for Form
10
-Q and Item
303
(b) of Regulation S-K and do
not
include all disclosures required by accounting principles generally accepted in the United States of America for a complete presentation of our financial condition and results of operations. In the opinion of management, the information reflects all adjustments (consisting only of normal recurring adjustments) which are necessary in order to make the financial statements
not
misleading and for a fair presentation of the results of operations for such periods. The results for the period ended
March 31, 2019
should
not
be considered as indicative of results for a full year. For further information, refer to the consolidated financial statements and footnotes included in our annual report on Form
10
-K for the year ended
December 
31,
2018.
 
We have
five
separate business trusts that were formed to issue trust preferred securities. Subordinated debentures were issued to the trusts in return for the proceeds raised from the issuance of the trust preferred securities. The trusts are
not
consolidated, but instead we report the subordinated debentures issued to the trusts as a liability.
Earnings Per Share, Policy [Policy Text Block]
Earnings Per Share
: Basic earnings per share is based on the weighted average number of common shares and participating securities outstanding during the period. Diluted earnings per share include the dilutive effect of additional potential common shares issuable under our stock-based compensation plans and are determined using the treasury stock method. Our unvested restricted shares, which contain non-forfeitable rights to dividends whether paid or accrued (i.e., participating securities), are included in the number of shares outstanding for both basic and diluted earnings per share calculations. In the event of a net loss, our unvested restricted shares are excluded from the calculation of both basic and diluted earnings per share.
 
Approximately
263,000
unvested restricted shares were included in determining both basic and diluted earnings per share for the
three
months ended
March 31, 2019.
In addition, stock options for approximately
12,000
shares of common stock were included in determining diluted earnings per share for the
three
months ended
March 31, 2019.
Stock options for approximately
7,000
shares of common stock were antidilutive and
not
included in determining diluted earnings per share for the
three
months ended
March 31, 2019.
 
Approximately
236,000
unvested restricted shares were included in determining both basic and diluted earnings per share for the
three
months ended
March 31, 2018.
In addition, stock options for approximately
17,000
shares of common stock were included in determining diluted earnings per share for the
three
months ended
March 31, 2018.
Stock options for approximately
7,000
shares of common stock were antidilutive and
not
included in determining diluted earnings per share for the
three
months ended
March 31, 2018.
Marketable Securities, Policy [Policy Text Block]
Securities
: Debt securities classified as held to maturity are carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available for sale when they might be sold prior to maturity. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax. Federal Home Loan Bank stock is carried at cost.
 
Interest income includes amortization of purchase premiums and accretion of discounts. Premiums and discounts on securities are amortized or accreted on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.
 
Declines in the fair value of debt securities below their amortized cost that are other-than-temporary impairment (“OTTI”) are reflected in earnings or other comprehensive income, as appropriate. For those debt securities whose fair value is less than their amortized cost, we consider our intent to sell the security, whether it is more likely than
not
that we will be required to sell the security before recovery and whether we expect to recover the entire amortized cost of the security based on our assessment of the issuer’s financial condition. In analyzing an issuer’s financial condition, we consider whether the securities are issued by the federal government or its agencies, and whether downgrades by bond rating agencies have occurred. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do
not
meet the aforementioned criteria, the amount of impairment is split into
two
components as follows:
1
) OTTI related to credit loss, which must be recognized in the income statement, and
2
) OTTI related to other factors, such as liquidity conditions in the market or changes in market interest rates, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost.
Financing Receivable, Held-for-investment [Policy Text Block]
Loans
: Loans that we have the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs and an allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments.
 
Interest income on commercial loans and mortgage loans is discontinued at the time the loan is
90
days delinquent unless the loan is well-secured and in process of collection. Consumer and credit card loans are typically charged-off
no
later than when they are
120
days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal and interest is considered doubtful.
 
All interest accrued but
not
received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
Financing Receivable, Held-for-sale [Policy Text Block]
Loans Held for Sale
: Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings. As of
March 31, 2019
and
December 31, 2018,
we determined that the fair value of our mortgage loans held for sale approximated the recorded cost of
$1.8
million and
$1.1
million, respectively. Loans held for sale are reported as part of our total loans on the balance sheet.
 
Mortgage loans held for sale are generally sold with servicing rights retained. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold, which is reduced by the cost allocated to the servicing right. We generally lock in the sale price to the purchaser of the mortgage loan at the same time we make an interest rate commitment to the borrower. These mortgage banking activities are
not
designated as hedges and are carried at fair value. The net gain or loss on mortgage banking derivatives is included in the gain on sale of loans. Mortgage loans serviced for others totaled approximately
$616
million as of
March 31, 2019.
Mortgage Banking Activity [Policy Text Block]
Mortgage Banking Activities
: Mortgage loan servicing rights are recognized as assets based on the allocated value of retained servicing rights on mortgage loans sold. Mortgage loan servicing rights are carried at the lower of amortized cost or fair value and are expensed in proportion to, and over the period of, estimated net servicing revenues. Impairment is evaluated based on the fair value of the rights using groupings of the underlying mortgage loans as to interest rates. Any impairment of a grouping is reported as a valuation allowance.
 
Servicing fee income is recorded for fees earned for servicing mortgage loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. Amortization of mortgage loan servicing rights is netted against mortgage loan servicing income and recorded in mortgage banking activities in the income statement.
Troubled Debt Restructuring [Policy Text Block]
Troubled Debt Restructurings
: A loan is accounted for as a troubled debt restructuring if we, for economic or legal reasons, grant a concession to a borrower considered to be experiencing financial difficulties that we would
not
otherwise consider. A troubled debt restructuring
may
involve the receipt of assets from the debtor in partial or full satisfaction of the loan, or a modification of terms such as a reduction of the stated interest rate or balance of the loan, a reduction of accrued interest, an extension of the maturity date or renewal of the loan at a stated interest rate lower than the current market rate for a new loan with similar risk, or some combination of these concessions. Troubled debt restructurings can be in either accrual or nonaccrual status. Nonaccrual troubled debt restructurings are included in nonperforming loans. Accruing troubled debt restructurings are generally excluded from nonperforming loans as it is considered probable that all contractual principal and interest due under the restructured terms will be collected.
 
In accordance with current accounting guidance, loans modified as troubled debt restructurings are, by definition, considered to be impaired loans. Impairment for these loans is measured on a loan-by-loan basis similar to other impaired loans as described below under “Allowance for Loan Losses.” Certain loans modified as troubled debt restructurings
may
have been previously measured for impairment under a general allowance methodology (i.e., pooling), thus at the time the loan is modified as a troubled debt restructuring the allowance will be impacted by the difference between the results of these
two
measurement methodologies. Loans modified as troubled debt restructurings that subsequently default are factored into the determination of the allowance in the same manner as other defaulted loans.
Loans and Leases Receivable, Allowance for Loan Losses Policy [Policy Text Block]
Allowance for Loan Losses
: The allowance for loan losses (“allowance”) is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when we believe the uncollectability of a loan is confirmed. Subsequent recoveries, if any, are credited to the allowance. We estimate the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. Allocations of the allowance
may
be made for specific loans, but the entire allowance is available for any loan that, in our judgment, should be charged-off.
 
 
A loan is considered to be impaired when, based on current information and events, it is probable we will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Factors considered in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are
not
classified as impaired. We determine the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of delay, the reasons for delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment.
Derivatives, Policy [Policy Text Block]
Derivatives
: Derivative financial instruments are recognized as assets or liabilities at fair value. The accounting for changes in the fair value of derivatives depends on the use of the derivatives and whether the derivatives qualify for hedge accounting. Used as part of our asset and liability management to help manage interest rate risk, our derivatives have generally consisted of interest rate swap agreements that qualified for hedge accounting. We do
not
use derivatives for trading purposes.
 
Changes in the fair value of derivatives that are designated, for accounting purposes, as a hedge of the variability of cash flows to be received on various assets and liabilities and are effective are reported in other comprehensive income. They are later reclassified into earnings in the same periods during which the hedged transaction affects earnings and are included in the line item in which the hedged cash flows are recorded. If hedge accounting does
not
apply, changes in the fair value of derivatives are recognized immediately in current earnings as interest income or expense.
 
If designated as a hedge, we formally document the relationship between derivatives as hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions. This documentation includes linking cash flow hedges to specific assets and liabilities on the balance sheet. If designated as a hedge, we also formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in cash flows of the hedged items. Ineffective hedge gains and losses are recognized immediately in current earnings as noninterest income or expense. We discontinue hedge accounting when we determine the derivative is
no
longer effective in offsetting changes in the cash flows of the hedged item, the derivative is settled or terminates, or treatment of the derivative as a hedge is
no
longer appropriate or intended.
Goodwill and Intangible Assets, Policy [Policy Text Block]
Goodwill and Core Deposit Intangible
: Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment and any such impairment is recognized in the period identified. A more frequent assessment is performed should events or changes in circumstances indicate the carrying value of the goodwill
may
not
be recoverable. We
may
elect to perform a qualitative assessment for the annual impairment test. If the qualitative assessment indicates it is more likely than
not
that the fair value of a reporting unit is less than its carrying amount, or if we elect
not
to perform a qualitative assessment, then we would be required to perform a quantitative test for goodwill impairment. If the estimated fair value of the reporting unit is less than the carrying value, goodwill is impaired and is written down to its estimated fair value. In
2017
and
2018,
we elected to perform a qualitative assessment for our annual impairment test and concluded it is more likely than
not
our fair value was greater than its carrying amount; therefore,
no
further testing was required.
 
The core deposit intangible that arose from the Firstbank Corporation acquisition was initially measured at fair value and is being amortized into noninterest expense over a
ten
-year period using the sum-of-the-years-digits methodology.
Revenue from Contract with Customer [Policy Text Block]
Revenue from Contracts with Customers
: We record revenue from contracts with customers in accordance with Accounting Standards Codification Topic
606,
“Revenue from Contracts with Customers”
(“Topic
606”
). Under Topic
606,
we must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) we satisfy a performance obligation. Significant revenue has
not
been recognized in the current reporting period that results from performance obligations satisfied in previous periods.
 
Our primary sources of revenue are derived from interest and dividends earned on loans, securities and other financial instruments that are
not
within the scope of Topic
606.
We have evaluated the nature of our contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Condensed Consolidated Statements of Income was
not
necessary. We generally satisfy our performance obligations on contracts with customers as services are rendered, and the transaction prices are typically fixed and charged either on a periodic basis (generally monthly) or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic
606
that significantly affects the determination of the amount and timing of revenue from contracts with customers.
New Accounting Pronouncements, Policy [Policy Text Block]
Adoption of New Accounting Standards:
In
February 2016,
the FASB issued ASU
2016
-
02,
Leases
. This ASU (as subsequently amended by ASU
2018
-
01,
ASU
2018
-
10,
ASU
2018
-
11
and ASU
2018
-
20
) establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than
12
months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The ASU is effective for annual and interim periods beginning after
December 15, 2018.
The adoption of this new standard as of
January 1, 2019
resulted in the recording of a ROU asset and associated lease liability of approximately
$1.3
million. The ROU asset is included in other assets and the lease liability is included in other liabilities in the
March 31, 2019
consolidated balance sheet.
 
In
June 2016,
the FASB issued ASU
No.
2016
-
13,
Measurement of Credit Losses on Financial Instruments
. This ASU (as subsequently amended by ASU
2018
-
19
) significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are
not
measured at fair value through net income. The standard will replace the current “incurred loss” approach with an “expected loss” model. The new model, referred to as the current expected credit loss (“CECL”) model, will apply to: (i) financial assets subject to credit losses and measured at amortized cost, and (ii) certain off-balance sheet credit exposures. This includes, but is
not
limited to, loans, leases, held-to-maturity securities, loan commitments and financial guarantees. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans, and expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. This ASU is effective for interim and annual reporting periods beginning after
December 15, 2019,
and early adoption is permitted for interim and annual reporting periods beginning after
December 15, 2018.
Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the
first
reporting period in which the guidance is effective (i.e., modified retrospective approach). We are currently evaluating the provisions of this ASU to determine the potential impact the new standard will have on our consolidated financial statements. We have selected a software vendor for applying this new standard, and are currently working on the framework and assumptions. We expect to have our initial CECL model operational during the
second
quarter of
2019,
and plan to run the new model alongside our current incurred loss methodology for the remainder of
2019.