Annual Report of Employee Stock Purchase/Savings Plan Form 11 K

mbwm20231231c_11k.htm

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

☑ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended

December 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from__________________________to__________________________

Commission file number 000-26719

Mercantile Bank 401(k) Plan

Mercantile Bank Corporation

(Name of issuer of the securities held pursuant to the plan)

310 Leonard Street NW, Grand Rapids, Michigan, 49504

(full address of the executive office)

REQUIRED INFORMATION

THE MERCANTILE BANK 401(K) PLAN IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (ERISA). IN LIEU OF THE REQUIREMENTS OF ITEMS 1, 2 AND 3 OF FORM 11-K FOR ANNUAL REPORTS, THE FINANCIAL STATEMENTS AND SCHEDULES OF THE PLAN FOR THE TWO YEARS ENDED DECEMBER 31, 2023 AND 2022, WHICH HAVE BEEN PREPARED IN ACCORDANCE WITH THE FINANCIAL REPORTING REQUIREMENTS OF ERISA, ARE INCLUDED IN THIS REPORT.

Mercantile Bank 401(k) Plan

Financial Statements and Supplemental Schedule

Years Ended December 31, 2023 and 2022

Mercantile Bank 401(k) Plan

Contents

Reports of Independent Registered Public Accounting Firms	3-5
Financial Statements
Statements of Net Assets Available for Benefits as of December 31, 2023 and 2022	6
Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2023 and 2022	7
Notes to Financial Statements	8-12
ERISA-RequiredSupplemental Schedule	13
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2023	14-15
Exhibit List	16
Signatures	17
Consents of Independent Registered Public Accounting Firms

Report of Independent Registered Public Accounting Firm

To the Plan Administrator and Plan Participants

Mercantile Bank 401(k) Plan

Opinion on the Financial Statements

We have audited the accompanying statement of net assets available for benefits of the Mercantile Bank 401(k) Plan (the "Plan") as of December 31, 2023, and the related statement of changes in net assets available for benefits for the year ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the net assets of the Plan as of December 31, 2023, and the changes in its net assets for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The Plan's management is responsible for these financial statements. Our responsibility is to express an opinion on the Plan's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Supplemental Information

The supplemental information in the accompanying schedule of assets held at end of year as of December 31, 2023 has been subjected to audit procedures performed in conjunction with the audit of the Plan's financial statements. The supplemental information is the responsibility of the Plan's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with Department of Labor's Rules and Regulations for Reporting under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.

/s/ Plante & Moran, PLLC

We have served as the Plan's auditor since 2024.

Cleveland, Ohio

June 26, 2024

Report of Independent Registered Public Accounting Firm

Plan Administrator

Mercantile Bank of Michigan 401(k) Plan

Grand Rapids, Michigan

Opinion on the Financial Statements

We have audited the accompanying statement of net assets available for benefits of the Mercantile Bank of Michigan 401(k) Plan (n/k/a Mercantile Bank 401(k) Plan) (the "Plan") as of December 31, 2022 and the related notes (collectively, the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on the Plan's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risk of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by the Plan's management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

(Signed BDO USA, P.C.)

We began serving as the Plan's auditor in 2006 and became the predecessor auditor in 2023.

Grand Rapids, Michigan

June 23, 2023

Mercantile Bank 401(k) Plan

Statements of Net Assets Available for Benefits

December 31,		2023			2022
Investments, at fair value		$	100,091,942			$	80,278,723
Notes Receivable from Participants			749,206				719,883
Accrued Investment Income			36,987				23,941
Net Assets Available for Benefits		$	100,878,135			$	81,022,547

See accompanying notes to financial statements.

Mercantile Bank 401(k) Plan

Statements of Changes in Net Assets Available for Benefits

Year Ended December 31,		2023			2022
Additions
Investment income (loss):
Net appreciation (depreciation) in fair value of investments		$	12,725,272			$	(16,422,916	)
Interest and dividends			3,048,602				3,530,206
Total Investment Income (Loss)			15,773,874				(12,892,710	)
Contributions:
Employer			2,318,204				2,246,889
Employee			4,443,575				3,875,276
Rollover			1,859,067				542,320
Total Contributions			8,620,846				6,664,485
Interest from notes receivable			43,653				36,556
Total Additions - Net of Investment Income (Loss)			24,438,373				(6,191,669	)
Deductions
Benefits paid to participants			4,353,099				6,483,229
Administrative expenses			229,686				223,813
Total Deductions			4,582,785				6,707,042
Net Increase (Decrease)			19,855,588				(12,898,711	)
Net Assets Available for Benefits, beginning of year			81,022,547				93,921,258
Net Assets Available for Benefits, end of year		$	100,878,135			$	81,022,547

See accompanying notes to financial statements.

Mercantile Bank 401(k) Plan

Notes to Financial Statements

1. Plan Description

The following description of Mercantile Bank 401(k) Plan (Plan) provides only general information. 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 (Bank), a wholly owned subsidiary of Mercantile Bank Corporation, effective January 1, 1998. The Plan was amended and restated effective January 1, 2019. Effective September 1, 2023, the Plan, previously named the Mercantile Bank of Michigan 401(k) Plan, was renamed the Mercantile Bank 401(k) Plan pursuant to the Second Amendment to the Plan. The Plan is subject to the Employee Retirement Income Security Act of 1974 (ERISA).

Eligibility and Enrollment

The Plan is a defined contribution plan covering eligible employees who have completed a minimum of one hour of service. Eligible employees can enter the Plan on the first day of the month following date of hire. For newly eligible employees, the Plan provides automatic enrollment for the employee at an amount equal to 5% of compensation, until such time as the employee elects a different percentage or elects no contributions.

Contributions

Elective deferrals by participants under the Plan provisions are based on a percentage of their compensation, subject to certain limitations as defined by the Plan Agreement. Participants may also make after tax Roth contributions and may roll over account balances from other qualified defined benefit or defined contribution plans into their account.

The Bank makes safe harbor matching contributions equal to 100% of the first 5% of compensation deferred by each participant subject to certain limitations as specified in the Plan Document. The Bank may also make a discretionary profit-sharing contribution subject to certain limitations as specified in the Plan Agreement. There were no profit-sharing contributions in 2023 or 2022.

Participant Accounts

Each participant's account is credited with the participant's contributions, allocations of the Bank's matching contribution, and Plan earnings. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. Participants may direct the investment of their account balances into various investment options offered by the Plan or elect to have a segregated managed account in order to direct their investments. Segregated managed accounts are subject to the terms and conditions established by Greenleaf Trust, the Plan's trustee and recordkeeper, in connection with delivery of its Investment Management Services and subject to the participant's appointment of Greenleaf Trust as their Investment Advisor.

Vesting

Participants are immediately vested in their elective deferrals and all employer contributions and earnings thereon.

Mercantile Bank 401(k) Plan

Notes to Financial Statements

Notes Receivable from Participants

Participants may borrow from their accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their account balance. The notes are secured by the balance in the participant's account and bear interest at rates that are commensurate with local borrowing rates. Interest rates on notes receivable outstanding as of December 31, 2023 ranged from 4.25% to 9.50%. Principal and interest is paid ratably through payroll deductions over a period not to exceed five years, unless the notes were used to purchase a primary residence, in which case the note terms shall not exceed ten years.

Payment of Benefits

Upon separation of service, death, disability or retirement, a participant or his or her beneficiary will receive a distribution of the participant's account as a lump-sum amount or an installment option. A participant may receive the portion of his or her account invested in Mercantile Bank Corporation common stock in either common shares or cash. Additionally, under certain circumstances of financial hardship, participants are allowed to withdraw funds from the Plan.

Administrative Expenses

Certain administrative expenses are paid by the Plan Sponsor. Certain fees incurred as a result of participant-directed transactions (e.g., participant loan origination and distribution fees) are passed on to the participant. A trustee fee is paid to Greenleaf Trust, which is calculated quarterly based on the market value of the Plan assets and allocated to participant accounts on a quarterly basis.

2. Significant Accounting Policies

Basis of Accounting

The accompanying financial statements are prepared under the accrual method of accounting.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets and changes therein. Actual results could differ from those estimates.

Mercantile Bank 401(k) Plan

Notes to Financial Statements

Risks and Uncertainties

The Plan invests in various investment securities. 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 participants' account balances and the amounts reported in the financial statements.

Concentration of Credit Risk

At December 31, 2023 and 2022, approximately 18% and 19%, respectively, of the Plan's assets were invested in Mercantile Bank Corporation common stock. A significant decline in the market value of the common stock would significantly affect the net assets available for benefits.

Investment Valuation and Income Recognition

The Plan's investments are stated at estimated fair value. Fair value is the price that would be received to sell an asset (an exit price) in the principal or most advantageous market for the asset in an orderly transaction between market participants on the measurement date. See Note 3 for a discussion of fair value measurements.

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. Net appreciation (depreciation) includes the Plan's gains and losses on investments bought and sold as well as held during the year.

Notes Receivable -Participant Loans

Participant loans are classified as notes receivable from participants, and are measured at the unpaid principal balance plus unpaid accrued interest. Defaulted loans, if any, are reclassified as distributions based upon the terms of the Plan Document.

Payment of Benefits

Benefits are recorded when paid.

3. Investments

In accordance with ASC 820, Fair Value Measurements and Disclosures, the Plan utilizes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The three levels of the fair value hierarchy are described as follows:

Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets in active markets.

Mercantile Bank 401(k) Plan

Notes to Financial Statements

Level 2 - Inputs to the valuation methodology include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in inactive markets, and other inputs that are observable or can be corroborated by observable market data.

Level 3 - Inputs to the valuation methodology are both significant to the fair value measurement and unobservable.

The following valuation methodologies were used to measure the fair value of the Plan's investments. There were no changes in the methodologies used at December 31, 2023 or 2022.

Money Market and Mutual Funds - Valued at quoted market prices in an exchange and active market, which represent the net asset value of shares held by the Plan.

Mercantile Bank Corporation Common Stock or Other Common Stock - Valued at the closing price reported on the active market on which the security is traded.

The Plan's valuation methods may result in a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Although Plan management believes the valuation methods are appropriate and consistent with the market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The tables below set forth by level within the fair value hierarchy the Plan's investments.

December 31, 2023
		Level 1			Level 2			Level 3			Total
Mutual funds		$	78,231,044			$	-			$	-			$	78,231,044
Common stock			18,669,688				-				-				18,669,688
Money market fund			3,191,210				-				-				3,191,210
Investments, at fair value		$	100,091,942			$	-			$	-			$	100,091,942

December 31, 2022
		Level 1			Level 2			Level 3			Total
Mutual funds		$	62,062,422			$	-			$	-			$	62,062,422
Common stock			15,782,639				-				-				15,782,639
Money market fund			2,433,662				-				-				2,433,662
Investments, at fair value		$	80,278,723			$	-			$	-			$	80,278,723

4. Related Party Transactions

Parties-in-interest are defined under Department of Labor regulations as any fiduciary of the Plan, any party rendering service to the Plan, the employer and certain other parties. Professional fees for the administration and audit of the Plan are paid by the Bank. Notes receivable from participants are also considered party-in interest transactions.

Mercantile Bank 401(k) Plan

Notes to Financial Statements

The 460,139 and 471,405 shares of Mercantile Bank Corporation common stock held by the Plan as of December 31, 2023 and 2022, respectively, represent 2.85% and 2.95% of the Corporation's outstanding shares as of December 31, 2023 and 2022, respectively.

Cash dividends of $610,199 and $581,960 were paid to the Plan by Mercantile Bank Corporation during 2023 and 2022, respectively. During 2023, the Plan purchased 40,721 shares of Mercantile Bank Corporation's stock at a cost of $1,312,990, and the Plan sold 54,239 shares of Mercantile Bank Corporation's stock with proceeds of $1,812,758.

5. Plan Termination

Although it has not expressed any intent to do so, the Bank has the right under the Plan to terminate the Plan, subject to the provisions of ERISA.

6. Tax Status

The Internal Revenue Service (IRS) determined and informed the Bank by a letter dated August 7, 2014 that the amended and restated Plan effective January 1, 2013 and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan has been amended since receiving the determination letter; however, the Plan Administrator believes that the Plan is designed and is being operated in compliance with the applicable requirements of the IRC. The related trust, therefore, is not subject to tax under present tax law.

Accounting principles generally accepted in the United States of America require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan is subject to routine audits by taxing jurisdictions; however, there currently are no audits for any tax periods in progress.

ERISA-Required Supplemental Schedule

Mercantile Bank 401(k) Plan

Schedule H, Line 4i - Schedule of Assets (Held at End of Year)

EIN: 38-3360868

Plan Number: 001

December 31, 2023
(a)		(b)		(c)		(d)		(e)
		Identity of Issuer, Borrower, Lessor, or Similar Party		Description of Investment, Including Maturity Date, Rate of Interest, Collateral, Par, or Maturity Value**		Cost**		Current Value
		Mutual Funds		Shares
		Blackrock Equity Dividend Fund		180,116		**		$	3,451,016
		Delaware Small Cap Value R6		14,248		**			997,663
		Delaware Emerging Market		28,785		**			560,724
		Hartford International Opportunity R6		72,741		**			1,311,523
		iShares Convertible Bond ETF		161		**			12,653
		iShares Core MSCI EAFE ETF		942		**			66,270
		iShares Core S&P 500 Index		893		**			426,525
		iShares Core S&P Midcap 400 Index		227		**			62,913
		iShares S&P Scmallcap 600 Index		393		**			42,542
		iShares Preferred & Income Securities ETF		390		**			12,164
		JPMorgan Mid Cap Value R6		31,046		**			1,114,855
		Matthews Pacific Tiger Fund		22,305		**			415,095
		Pear Tree Polaris Foreign Value Fund R6		33		**			52,209
		Pimco Total Return Fund		4,083		**			35,316
		T Rowe Price Mid Cap Growth Fund		28,382		**			2,845,255
		T Rowe Price Retirement Balanced I Fund		100,513		**			1,130,773
		T Rowe Price Retirement 2010 Fund		5,971		**			69,383
		T Rowe Price Retirement 2015 Fund		26,769		**			324,448
		T Rowe Price Retirement 2020 Fund		243,978		**			3,113,163
		T Rowe Price Retirement 2030 Fund		642,824		**			9,385,227
		T Rowe Price Retirement 2040 Fund		689,989		**			11,039,828
		T Rowe Price Retirement 2045 Fund		278,439		**			4,591,454
		T Rowe Price Retirement 2050 Fund		296,372		**			4,890,146
		T Rowe Price Retirement 2060 Fund		88,077		**			1,495,552
		T Rowe Price Spectrum Conservative Allocation Fund		55,207		**			1,036,784
		Vanguard 500 Index Admiral Shares		25,889		**			11,390,859
		Vanguard Mid Cap Index Admiral Shares		10,536		**			3,035,101
		Vanguard Small Cap Index Admiral Shares		25,798		**			2,636,248
		Vanguard Intermediate Term Corporate Bond Index		214		**			17,394
		Vanguard Intermediate Term Treasury Admiral		23,437		**			302,084
		Vanguard Short Term Treasury Admiral		38,926		**			384,586
		Vanguard Short Term Invest Grade Fund Admiral		122,805		**			1,256,290
		Vanguard Total Bond Market Admiral		270,515		**			2,626,703
		Vanguard Total International Index Admiral		90,239		**			2,809,128
		Vanguard Short Term Corp Bond Index Admiral		165		**			76,547
		Vanguard Short Term Inflation Protected Sec Admiral		95		**			8,590
		Virtus AlphaSimplex Managed Futures R6		8,220		**			34,497
		Wasatch Cor Growth Institutional		14,621		**			1,286,053
		WCM Focused International Growth Fund		2,123		**			48,322
		William Blair Large Cap RY		155,648		**			3,835,161
		Total Mutual Funds							78,231,044

*	Party-in-interest, as defined by ERISA.

**	The cost of participant-directed investments is not required to be disclosed.

Mercantile Bank 401(k) Plan

Schedule H, Line 4i - Schedule of Assets (Held at End of Year) - Continued

EIN: 38-3360868

Plan Number: 001

December 31, 2023
(a)		(b)		(c)		(d)		(e)
		Identity of Issuer, Borrower, Lessor, or Similar Party		Description of Investment, Including Maturity Date, Rate of Interest, Collateral, Par, or Maturity Value**		Cost**		Current Value
		Common Stock
*		Mercantile Bank Corporation		460,139		**			18,489,477
		Adobe Systems Inc		12		**			7,159
		Alphabet Inc. Class C		105		**			14,798
		Amazon.com Inc		96		**			14,586
		American Tower Corporation		64		**			13,816
		Apple Inc.		24		**			4,621
		Berkshire Hathaway Class B		31		**			11,056
		Booking Holdings Inc		2		**			7,094
		Canadian Pacific Kanasas City Ltd		79		**			6,245
		Danaher Corporation		16		**			3,701
		Dollar General Corp		29		**			3,943
		Honeywell International Inc		24		**			5,033
		Meta Platforms Inc. Class A		25		**			8,849
		Microsoft Corporation		25		**			9,401
		Mondelez International Inc. Class A		93		**			6,736
		Nextle SA ADR		28		**			3,244
		Nike Inc Class B		31		**			3,366
		Paypal Holdings Inc		64		**			3,930
		Roper Technologies Inc.		10		**			5,452
		S&P Global Inc.		21		**			9,251
		Salesforce, Inc.		26		**			6,842
		Starbucks Corp		49		**			4,705
		Stryker Corporation		11		**			3,294
		Taiwan Semiconductor Mfg Co ADR		33		**			3,432
		TJX Companies, Inc		68		**			6,379
		Visa Inc - Class A		51		**			13,278
		Total Common Stock							18,669,688
		Money Market Fund
		Northern Institutional Treasury Portfolio		3,191,210		**			3,191,210
		Total Investments, at fair value							100,091,942
*		Participant Loans		Interest rates from 4.25% to 9.50%, maturing at various dates through 2028				$	749,206

*	Party-in-interest, as defined by ERISA.

**	The cost of participant-directed investments is not required to be disclosed.

Exhibit to Report on Form 11-K

Exhibit No.

Description

23.1	Consent of Plante & Moran, PLLC.
23.2	Consent of BDO USA, P.C.

Signature

The Plan. 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 401(k) Plan /s/Brett Hoover Brett Hoover, Plan Administrator

Date: June 26, 2024

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