SEC Form 11-K filed by Mercantile Bank Corporation

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).

Greenleaf Trust Company (Trustee) is the trustee and recordkeeper of the Plan. The Bank is the administrator of the Plan. The Trustee holds all assets of the Plan in accordance with the service provider contract with the Bank. Management of the Plan Sponsor determines the appropriateness of the Plan's investment offerings, monitors investment performance and reports to the Plan's Trustees.

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 2025.

Participant Accounts

Each participant’s account is credited with the participant’s contributions, allocations of the Bank’s matching contribution, profit sharing contributions (when made), 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 the trustee, in connection with delivery of its Investment Management Services and subject to the participant's appointment of the trustee as their Investment Advisor.

Vesting

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

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 balances in the participants' accounts and bear interest at rates that are commensurate with local borrowing rates. Interest rates on notes receivable outstanding as of December 31, 2025, 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

The Plan's administrative expenses are paid either by the Plan or the Bank, as provided by the Plan document. Certain administrative expenses, including an allocation of salaries related to Plan administration, and audit and legal costs, are paid by the Bank and qualify as party-in-interest transactions which are exempt from prohibited transaction rules. Expenses that are paid directly by the Bank are excluded from these financial statements. 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

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.

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, 2025 and 2024.

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.

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. Certain administration 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. Certain administration fees are paid by the Plan and are considered party-in-interest transactions, which are exempt from prohibited transaction rules.

The 333,821 and 338,794 shares of Mercantile Bank Corporation common stock held by the Plan as of December 31, 2025 and 2024, respectively, represent 1.94% and 2.10% of the Corporation’s outstanding shares as of December 31, 2025 and 2024, respectively. The value of shares of Mercantile Bank Corporation common stock held by the Plan were $16,056,790 and $15,072,946 as of  December 31, 2025 and 2024, respectively,

Cash dividends of $495,861 were paid to the Plan by Mercantile Bank Corporation during 2025. During 2025, the Plan purchased 32,245 shares of Mercantile Bank Corporation's stock at a cost of $1,422,682, the Plan sold 32,874 shares of Mercantile Bank Corporation's stock with proceeds of $1,556,998, and the Plan had in-kind distributions of 4,344 shares valued at $211,742. During 2024, the Plan purchased 31,763 shares of Mercantile Bank Corporation's stock at a cost of $1,283,209, the Plan sold 107,102 shares of Mercantile Bank Corporation's stock with proceeds of $4,767,439, and the Plan had in-kind distributions of 43,754 shares valued at $2,107,968. 

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)

Mercantile Bank 401(k) Plan

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