What changed in this filing

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Item 1. Business

2026-02-27 compared with 2025-03-03 · 67 added, 70 removed, 188 unchanged (42% of the section changed)

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As a bank holding company, we are subject to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”).

We were organized on July 15, 1997, under the laws of the State of Michigan, primarily for the purpose of holding all of the stock of Mercantile Bank (“our bank”), and of such other subsidiaries as we may acquire or establish.

Our bank commenced business on December 15, 1997.

We were organized on July 15, 1997, under the laws of the State of Michigan, primarily for the purpose of holding all of the stock of Mercantile Bank, and of such other subsidiaries as we may acquire or establish.

Mercantile Bank commenced business on December 15, 1997.

During the third quarter of 2013, we filed an election to become a financial holding company, which election became effective April 14, 2014.

Mercantile Insurance Center, Inc.

(“our insurance company”), a subsidiary of our bank, commenced operations during 2002 to offer insurance products.

(“our insurance company”), a subsidiary of Mercantile Bank, commenced operations during 2002 to offer insurance products.

Mercantile Community Partners ("MCP"), our subsidiary, began operations during 2023 to invest in community development tax credit investments.

Our expenses have generally been paid using cash dividends from our bank.

Our principal source of future operating funds is expected to be dividends from our bank.

Our bank is a state banking company that operates under the laws of the State of Michigan, pursuant to a charter issued by the Michigan Department of Insurance and Financial Services.

Our bank’s deposits are insured to the maximum extent permitted by law by the Federal Deposit Insurance Corporation (“FDIC”).

Our bank, through its 43 office locations, provides commercial banking services primarily to small- to medium-sized businesses and retail banking services.

Our bank’s main office is located in Grand Rapids, Michigan, and our operations are centered around the West and Central portions of Michigan.

We also have banking offices located in the metropolitan Detroit, Michigan area, Traverse City, Michigan, Petoskey, Michigan, Saginaw, Michigan, and Midland, Michigan.

Our bank makes secured and unsecured commercial, construction, mortgage and consumer loans, and accepts checking, savings and time deposits.

Our bank owns 11 automated teller machines ("ATM") and 33 video banking machines at a majority of our office locations that participate in the ACCEL/EXCHANGE and PLUS regional network systems, as well as other ATM networks throughout the country.

Our bank also enables customers to conduct certain loan and deposit transactions by personal computer and through mobile applications.

On July 22, 2025, we entered into a merger agreement with Eastern Michigan Financial Corporation, the bank holding company for Eastern Michigan Bank.

Eastern Michigan Financial Corporation shareholders had the right to receive 0.7116 shares of Mercantile Bank Corporation stock and $32.32 in exchange for each share of Eastern Michigan Financial Corporation stock they owned.

The merger was completed on December 31, 2025, and Eastern Michigan Bank operates alongside Mercantile Bank Corporation’s existing bank, Mercantile Bank (collectively, “our banks”).

We plan for our banks to operate alongside each other until the conversion of our core processor is completed in the first quarter of 2027, at which time we plan to consolidate Eastern Michigan Bank into Mercantile Bank.

Prior to completing the merger, we were required to obtain approval from the Federal Reserve Board, which we did on December 16, 2025.

See Note 17 – Business Combinations for additional information regarding the merger.

Our expenses have generally been paid using cash dividends from Mercantile Bank.

Our principal source of future operating funds is expected to be dividends from our banks.

Our banks are state banking companies that operate under the laws of the State of Michigan, pursuant to charters issued by the Michigan Department of Insurance and Financial Services.

Our banks' deposits are insured to the maximum extent permitted by law by the Federal Deposit Insurance Corporation (“FDIC”).

Our banks, through their combined 54 office locations, provide commercial banking services, primarily to small- to medium-sized businesses, and retail banking services.

Mercantile Bank’s main office is located in Grand Rapids, Michigan, and its operations are centered around the West and Central portions of Michigan.

Mercantile Bank also has banking offices located in the metropolitan Detroit area, Traverse City, Petoskey, and Midland.

Eastern Michigan Bank's main office is located in Croswell, Michigan, and its operations are centered around Eastern Michigan.

Our banks make secured and unsecured commercial, construction, mortgage and consumer loans, and accept checking, savings and time deposits.

Our banks collectively own 16 automated teller machines ("ATM") and 37 video banking machines, which are located at our office locations that participate in the ACCEL/EXCHANGE and PLUS regional network systems, as well as other ATM networks throughout the country.

Our banks also enable their customers to conduct certain loan and deposit transactions by personal computer and through mobile applications.

Courier service is provided to certain commercial customers, and safe deposit boxes are available at a vast majority of our office locations.

Our bank does not have trust powers.

Our banks do not have trust powers.

Our Insurance Company

Our insurance company acquired an existing shelf insurance agency effective April 15, 2002.

An Agency and Institution Agreement was entered into among our insurance company, our bank and Hub International for the purpose of providing programs of mass marketed personal lines of insurance.

An Agency and Institution Agreement was entered into among our insurance company, Mercantile Bank and Hub International for the purpose of providing programs of mass marketed personal lines of insurance.

Insurance product offerings include private passenger automobile, homeowners, personal inland marine, boat owners, recreational vehicle, dwelling fire, umbrella policies, small business and life insurance products, all of which are provided by and written through companies that have appointed Hub International as their agent.

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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 our bank as capital to provide support for asset growth and the funding of stock repurchase programs and certain acquisitions.

The net proceeds from the issuance of the floating rate notes were used for a variety of purposes, including contributions to Mercantile 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.

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Regulation and Supervision

Banks and bank holding companies, like many other financial institutions, are regulated under a variety of federal and state statutes and the regulations that implement those statutes.

These statutes include, among others, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”), the Truth in Lending Act, the Truth in Savings Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Expedited Funds Availability Act, the Community Reinvestment Act, the Real Estate Settlement Procedures Act, the USA PATRIOT Act, the FACT Act, the Gramm-Leach-Bliley Act, the Sarbanes Oxley Act, the Bank Secrecy Act, electronic funds transfer laws, redlining laws, predatory lending laws, antitrust laws, environmental laws, money laundering laws, privacy laws, state usury statutes, and statutes relating to fiduciaries.

Bank holding companies and banks, like many other financial institutions, are regulated under a variety of federal and state statutes and the regulations that implement those statutes.

These statutes include, among others, the Bank Holding Company Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”), the Truth in Lending Act, the Truth in Savings Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Expedited Funds Availability Act, the Community Reinvestment Act, the Real Estate Settlement Procedures Act, the FACT Act, the Gramm-Leach-Bliley Act, the Sarbanes Oxley Act, the Bank Secrecy Act of 1970, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, electronic funds transfer laws, redlining laws, predatory lending laws, antitrust laws, environmental laws, anti-money laundering laws, privacy laws, state usury statutes, and statutes relating to fiduciaries.

Our growth and earnings performance may be impacted by the statutes administered by, and the regulations and policies of, various governmental regulatory authorities.

Those regulatory authorities include, but are not limited to, the Federal Reserve Board, the FDIC, the Michigan Department of Insurance and Financial Services, the Internal Revenue Service and state taxing authorities.

Those regulatory authorities include, but are not limited to, the FDIC, the Michigan Department of Insurance and Financial Services, the Internal Revenue Service and state taxing authorities.

The effect of such statutes, regulations and policies, and any changes thereto, may significantly impact our business, which cannot necessarily be predicted.

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We are also subject to periodic examinations by the Federal Reserve Board.

The Bank Holding Company Act limits the activities of bank holding companies to banking and the management of banking organizations and to certain permitted non-banking activities.

The permitted non-banking activities generally include those limited activities that the Federal Reserve Board has determined, by order or regulation as of the day prior to enactment of the Gramm-Leach-Bliley Act, to be so closely related to banking as to be a proper incident to banking.

The Bank Holding Company Act limits the activities of bank holding companies and their subsidiaries to banking and the management of banks and to certain permitted non-banking activities.

The permitted non-banking activities generally include limited activities that the Federal Reserve Board has determined, by order or regulation as of the day prior to enactment of the Gramm-Leach-Bliley Act, to be so closely related to banking as to be a proper incident to banking.

These permitted non-banking activities include, among other things:

operating a mortgage company, finance company, or factoring company;

operating a mortgage company (engaged in certain limited functions), finance company, or factoring company;

performing certain data processing operations;

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On April 14, 2014, our election to become a financial holding company, as permitted by the Bank Holding Company Act, as amended by Title I of the Gramm-Leach-Bliley Act, was accepted and made effective by the Federal Reserve Board.

In order to maintain our status as a financial holding company, we and our bank must satisfy statutory requirements regarding capitalization, management and compliance with the Community Reinvestment Act.

As a financial holding company, we are permitted to engage in a broader range of activities under the Bank Holding Company Act that are permitted for bank holding companies.

In order to maintain our status as a financial holding company, we, Mercantile Bank, and Eastern Michigan Bank, must satisfy statutory requirements regarding capitalization, management and compliance with the Community Reinvestment Act.

As a financial holding company, we are permitted to engage in a broader range of activities under the Bank Holding Company Act than are permitted for bank holding companies.

Those expanded activities include any activity which the Federal Reserve Board (in certain instances in consultation with the Department of the Treasury) determines, by order or by regulation, to be financial in nature or incidental to such financial activity, or to be complementary to a financial activity, and not to pose a substantial risk to the safety and soundness of depository institutions or the financial system generally.

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While our insurance company is permitted to engage in the insurance agency activities described above by virtue of our financial holding company status, neither we nor any of our subsidiaries currently engage in these expanded activities.

Our bank is subject to restrictions imposed by federal and state laws and regulations.

Among other things, these restrictions limit the transactions our bank conducts with us, our other subsidiaries or other affiliates, limit our securities borrowing or lending, derivatives, and repurchase transactions with us, our other subsidiaries or other affiliates, limit investments in stock or other securities that we issue, limit the taking of such stock or securities as collateral for loans to any borrower, and limit acquisitions of assets or services from, and sales of certain types of assets to, us, our other subsidiaries or other affiliates.

Mercantile Bank and Eastern Michigan Bank are subject to restrictions imposed by federal and state laws and regulations.

Among other things, these restrictions limit the transactions Mercantile Bank and Eastern Michigan Bank conduct with us, our other subsidiaries or other affiliates, limit our securities borrowing or lending, derivatives, and repurchase transactions with us, our other subsidiaries or other affiliates, limit investments in stock or other securities that we issue, limit the taking of such stock or securities as collateral for loans to any borrower, and limit acquisitions of assets or services from, and sales of certain types of assets to, us, our other subsidiaries or other affiliates.

Michigan banking laws place additional restrictions on various aspects of banking, including branching, payment of dividends, and loan interest rates, in addition to capital and surplus requirements.

Federal law restricts our ability to borrow from our bank by limiting the aggregate amount we may borrow and by requiring that all loans to us be secured in designated amounts by specified forms of collateral.

Federal law restricts our ability to borrow from our banks by limiting the aggregate amount we may borrow and by requiring that all loans to us be secured in designated amounts by specified forms of collateral.

With respect to the acquisition of banking organizations, we are generally required to obtain the prior approval of the Federal Reserve Board before we can acquire all or substantially all of the assets of any bank, or acquire ownership or control of any voting shares of any bank or bank holding company, if, after the acquisition, we would own or control more than 5% of the voting shares of the bank or bank holding company.

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However, on May 24, 2018, EGRRCPA amended certain provisions of the Dodd-Frank Act to tailor them to the specific circumstances of various categories of financial institutions and transactions.

Many of the statutes and regulations under which we and our bank operate may change in the future, which may significantly impact our business.

Many of the statutes and regulations under which we and our banks operate may change in the future, which may significantly impact our business.

As a member bank of the Federal Reserve System, Eastern Michigan Bank is subject to comprehensive regulation and supervision by the Federal Reserve Board and, as applicable, state banking authorities.

Eastern Michigan Bank's operations are governed by the Federal Reserve Act and related regulations, including capital adequacy, liquidity, affiliate transaction, insider lending, and safety and soundness requirements.

It is also subject to applicable federal and state consumer protection laws, the Bank Secrecy Act and anti-money laundering regulations, and, as an FDIC-insured institution, deposit insurance assessments and related requirements.

These regulatory requirements may affect Eastern Michigan Bank's business operations, growth strategies, and financial performance.

We face substantial competition in all phases of our operations from a variety of different competitors.

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We hire people who connect with, listen to and deliver the best solutions to customers and team members.

Through a personalized and systematic recruiting process, our experienced team of Human Resources Business Partners are devoted to working with Hiring Managers and matching candidate skills and experience to a position where they can thrive.

Through a personalized and systematic recruiting process, our experienced team of Human Resources Business Partners is devoted to working with Hiring Managers and matching candidate skills and experience to a position where they can thrive.

Hiring long-term successful team members is critical to our success.

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All of our new construction and renovation projects include low-flow devices as well as LED lighting to enhance our efficiency of utility usage.

Over the past five years, we have reduced our use of natural gas by 35% and electricity by 40%.

All renovation and expansion projects involve the donation of former office furniture to non-profit organizations.

When applicable, renovation and expansion projects involve the donation of former office furniture to non-profit organizations.

We continue to strive for the reduction of mail and paper usage through the promotion of customer eStatement adoption.

The eStatement adoption rate continues to grow, and we were approaching above 61% adoption at year-end 2024.

Our online accounts payable system has also enabled us to significantly reduce paper and printing, and saves time.

Every effort is made to recycle all paper, and we continue to offer community paper shredding events.

Additionally, we have implemented recycling stations at all of our office locations to divert cardboard, plastic and metal items from landfills.

The eStatement adoption rate is holding steady at 61% as of year-end 2025.

Our online accounts payable system has also enabled us to significantly reduce paper and printing and save time.

Every effort is made to recycle all paper, and we continue to offer periodic community secure paper shredding events.

Additionally, we have implemented an employee battery recycling program at larger office locations and recycling stations at many of our office locations to divert cardboard, plastic, and metal items from landfills.

Water bottle refill stations also aid to reduce plastic bottle usage.

Our Sustainability Committee supports our ongoing commitment to environmental, health and safety, corporate social responsibility, corporate governance, sustainability, and other public policy matters relevant to our organization.

The Sustainability Committee is a cross-functional management committee, with oversight from the Governance and Nominating Committee and the Board of Directors, that assists us in:

(1) setting general strategies relating to ESG matters;

(2) developing, implementing, and monitoring initiatives and policies based on those strategies;

(3) recommending communications with employees, investors, and shareholders with respect to ESG matters;

and (4) monitoring and assessing developments relating to, and improving our understanding of, ESG matters.

The committee met three times during 2024.

Highlights for 2024 included expanding the impact of Mercantile Community Partners LLC to facilitate low-income housing tax credits, completion and posting of the 2024 Corporate Sustainability Report, hiring a fulltime Director of Enterprise Excellence at the end of 2024 to oversee all ongoing ESG and sustainability efforts, implementation of a sustainability reporting platform, increased support of first-time home buyers mortgage programs, and over 27,500 hours of volunteering in the community completed by employees.

Our bank maintains a Clawback Policy;

an Insider Trading Policy;

Code of Ethics;

Corporate Governance Guidelines;

an Anti-Bribery and Anti-Corruption Policy;

an Anti-Money Laundering, Bank Secrecy Act, Customer Identification and Due Diligence Programs Letter;

Vendor and Supplier Code of Conduct;

Environmental Policy;

Human Rights Policy;

and Supplier Diversity Program Policy, which are reviewed and approved by our Board of Directors at least annually and can be found on our website.

Our Enterprise Excellence Committee supports our ongoing commitment to environmental, health and safety, corporate social responsibility, corporate governance, sustainability, and other public policy matters relevant to our organization.

The Enterprise Excellence Committee is a cross-functional management committee, with oversight from the Governance and Nominating Committee and the Board of Directors, that assists us in:

(1) establishing a cadence of improvement throughout our banks for process efficiency and effectiveness, (2) monitoring and assessing developments related to improving our banks' understanding and execution of governance, environment, and community matters, and (3) recommending communications with employees, investors and stakeholders with respect to governance, environment, and community matters.

The Enterprise Excellence Committee met three times during 2025.

Highlights for 2025 included continued growth of MCP to facilitate low-income housing tax credits and our investment in energy tax credits, completion of the Enterprise Excellence Report, full utilization of a sustainability reporting platform for data tracking, continued support of first-time home buyer mortgage programs, and over 28,000 hours of volunteering in the community completed by employees.

Lending Policy

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In addition, the policy provides general guidelines as to environmental analysis, loans to employees, executive officers and directors, problem loan identification, maintenance of an allowance for credit losses, loan review and grading, mortgage and consumer lending, and other matters relating to our lending practices.

The Board of Directors has delegated significant lending authority to officers of our bank.

The Board of Directors has delegated significant lending authority to officers of our banks.

The Board of Directors believes this empowerment, supported by our strong credit culture and the significant experience of our commercial lending staff, enables us to be responsive to our customers.

The loan policy specifies lending authority for our lending officers with amounts based on the experience level and ability of each lender.

Our loan policies specify lending authority for our lending officers with amounts based on the experience level and ability of each lender.

Our loan officers and loan managers are generally able to approve loans ranging from $0.25 million to $2.5 million.

We have established higher approval limits for our bank’s President and Chief Executive Officer and Chief Lending Officer, ranging from $4.0 million up to $10.0 million.

We have established higher approval limits for Mercantile Bank's President and Chief Executive Officer and Mercantile Bank's Chief Commercial Banking Officer, ranging from $4.0 million up to $10.0 million.

These lending authorities, however, are typically used only in rare circumstances where timing is of the essence.

Loan requests exceeding $5.0 million require approval by the Officers Loan Committee, and loan requests exceeding $15.0 million, up to the legal lending limit of $101.4 million, require approval by our bank’s Board of Directors.

We generally apply an in-house lending limit that is significantly less than our bank’s legal lending limit.

At Mercantile Bank, loan requests exceeding $5.0 million require approval by the Officers Loan Committee, and loan requests exceeding $15.0 million, up to Mercantile Bank's legal lending limit of $101.4 million, require approval by Mercantile Bank's Board of Directors.

At Eastern Michigan Bank, loan requests exceeding $1.5 million require approval by the Officers Credit Committee, and loan requests exceeding $6.0 million, up to Eastern Michigan Bank's legal lending limit of $23.9 million, require approval by Eastern Michigan Bank's Board of Directors.

We generally apply in-house lending limits that are significantly less than our banks' legal lending limits.

Lending Activity

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Consumer loans generally have shorter terms and higher interest rates and usually involve more credit risk than single-family residential real estate loans because of the type and nature of the collateral.

Our bank has a home equity line of credit program.

Our banks have a home equity line of credit program.

Home equity lines of credit are generally secured by either a first or second mortgage on the borrower’s primary residence.

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The loan review program is an integral part of maintaining our strong asset quality culture.

The loan review function works closely with senior management, although it functionally reports to the Board of Directors.

Using a risk-based approach to selecting credits for review, our loan review program covered approximately 65% of total commercial loans outstanding during 2025.

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Bank Holding Company Investments .

The principal investments of our bank holding company are the investments in the common stock of our bank, the common securities of our trusts, and the community development tax credit investments made by MCP.

The principal investments of our bank holding company are the investments in the common stocks of our banks, the common securities of our trusts, and the community development tax credit investments made by MCP.

Other funds of our bank holding company may be invested from time to time in various debt instruments.

Subject to the limitations of the Bank Holding Company Act, we are also permitted to make portfolio investments in equity securities and to make equity investments in subsidiaries engaged in a variety of non-banking activities, which include real estate-related activities such as community development, real estate appraisals, arranging equity financing for commercial real estate, and owning and operating real estate used substantially by our bank or acquired for its future use.

MCP invests as a limited liability member in real estate entities engaged in community development.

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Our Bank s' Investments .

Our bank may invest its funds in a wide variety of debt instruments and may participate in the federal funds market with other depository institutions.

Subject to certain exceptions, our bank is prohibited from investing in equity securities.

Among the equity investments permitted for our bank under various conditions and subject in some instances to amount limitations, are shares of a subsidiary insurance agency, mortgage company, real estate company, or Michigan business and industrial development company, such as our insurance company.

Under another such exception, in certain circumstances and with prior notice to or approval of the FDIC, our bank could invest up to 10% of its total assets in the equity securities of a subsidiary corporation engaged in the acquisition and development of real property for sale or the improvement of real property by construction or rehabilitation of residential or commercial units for sale or lease.

Our bank has no present plans to make such an investment.

Real estate acquired by our bank in satisfaction of or foreclosure upon loans may be held by our bank for specified periods.

Our bank is also permitted to invest in such real estate as is necessary for the convenient transaction of its business.

Our bank’s Board of Directors may alter our bank’s investment policy without shareholder approval at any time.

Our banks may invest their funds in a wide variety of debt instruments and may participate in the federal funds market with other depository institutions.

Subject to certain exceptions, our banks are prohibited from investing in equity securities.

Among the equity investments permitted for our banks under various conditions and subject in some instances to amount limitations, are shares of a subsidiary insurance agency, mortgage company, real estate company, or Michigan business and industrial development company, such as our insurance company.

Under another such exception, in certain circumstances and with prior notice to or approval of the FDIC, our banks could invest up to 10% of their total assets in the equity securities of a subsidiary corporation engaged in the acquisition and development of real property for sale or the improvement of real property by construction or rehabilitation of residential or commercial units for sale or lease.

Our banks have no present plans to make such an investment.

Real estate acquired by our banks in satisfaction of or foreclosure upon loans may be held by our banks for specified periods.

Our banks are also permitted to invest in such real estate as is necessary for the convenient transaction of their business.

Our banks' Boards of Directors may alter our banks' investment policies without shareholder approval at any time.

Additional detail and information relative to the securities portfolio is incorporated by reference to Management’s Discussion and Analysis and Note 2 of the Notes to Consolidated Financial Statements included in this Annual Report.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business