Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | --- | --- | --- | | Common Stock | MBWM | The Nasdaq Stock Market LLC | FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period ...

| --- | --- | --- | |-------|------------------------------------------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | CONFERENCE CALL AND WEBCAST PRESENTATION | | | | FOURTH QUARTER 2020 | | Forward-LookingStatements This presentation contains comments or information that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such comments are based on current expectations that involve a number ...

Financial Data and Key Metrics Changes - The company reported net income of $14.1 million, or $0.87 per diluted share for Q4 2020, compared to $13.3 million, or $0.81 per diluted share for Q4 2019 [25] - Full year 2020 net income totaled $44.1 million or $2.71 per diluted share, down from $49.5 million or $3.01 per diluted share in 2019 [25] - Provision expense for Q4 2020 was $2.5 million, compared to a negative $0.7 million in Q4 2019, reflecting the impact of the pandemic [28][30] Business Line Data and Key Metrics Changes - The total loan portfolio decreased to $134 million during the quarter, with a reduction in the C&I portfolio of $176 million, impacted by $189 million of PPP forgiveness [17] - Mortgage banking income increased significantly, with Q4 2020 non-interest income at $14.3 million, up 96% from the prior year [21] - Mortgage loan originations totaled $219 million in Q4 2020, a 100% increase from $111 million in Q4 2019 [38] Market Data and Key Metrics Changes - The company experienced a strong performance in mortgage banking, driven by a higher level of refinance activity due to historically low rates [21] - Non-performing assets totaled $4.1 million or 0.9% of total assets at December 31, 2020, indicating strong asset quality [18] - The yield on loans was up 31 basis points during Q4 2020 compared to Q3 2020, but down 67 basis points compared to Q4 2019 [33] Company Strategy and Development Direction - The company is focused on digital delivery and branch optimization to enhance customer engagement [13] - Strategic initiatives include opening mortgage lending centers in new markets to boost market share and revenue [11] - The company is committed to environmental, social, and governance (ESG) practices, including diversity and community support initiatives [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong asset quality and capital position despite uncertainties from the pandemic [42] - The outlook for 2021 will be influenced by economic conditions, asset quality, and PPP forgiveness activity [41] - Management noted that they will not provide earnings guidance due to the high degree of uncertainty [41] Other Important Information - The company reinstated its stock buyback program during Q4 2020 after pausing it in March due to the pandemic [7] - The Tier 1 leverage capital ratio was 9.8% and the total risk-based capital ratio was 13.8% as of year-end 2020, indicating a well-capitalized position [40] Q&A Session Summary Question: State of hotel, restaurant, and entertainment industries - Management noted that these industries are still heavily impacted but have shown slight improvement compared to the depths of the pandemic [45] Question: Reserve coverage outlook - Management indicated that the provision for 2021 is expected to be much lower than in 2020, relying on strong asset quality metrics [46][47] Question: Margin impact from PPP loan forgiveness - The forgiveness payments added about 25 basis points to the margin for Q4 2020, while excess liquidity negatively impacted the margin by about 40 basis points [57] Question: Core expense run rate for 2021 - Management suggested a reasonable increase in core expenses of about 1.5% to 2% from 2020 levels [59] Question: New swap fee income program - Management confirmed that the swap fee income program is a new focus and will be incorporated into future income projections [62] Question: Thoughts on recent bank M&A activity - Management expressed that disruptions in the market could provide opportunities for the company to strengthen its position [64]

[PART I. Financial Information](index=2&type=section&id=PART%20I.%2E%20Financial%20Information) [Item 1. Financial Statements](index=2&type=section&id=Item%201%2E%20Financial%20Statements) The unaudited consolidated financial statements for Mercantile Bank Corporation as of September 30, 2020, detail significant asset, loan, and deposit growth, driven by PPP, and increased loan loss provisions reflecting COVID-19 uncertainty [Consolidated Balance Sheets](index=2&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$4.42 billion** as of September 30, 2020, primarily due to a **$494 million** rise in net loans (PPP-driven) and **$315 million** in cash, while total deposits grew by **$682 million** Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2020 | Dec 31, 2019 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$4,420,610** | **$3,632,915** | **+21.7%** | | Total cash and cash equivalents | $554,591 | $233,731 | +137.3% | | Loans, net | $3,314,972 | $2,832,778 | +17.0% | | **Total Liabilities** | **$3,988,710** | **$3,216,354** | **+24.0%** | | Total deposits | $3,372,034 | $2,690,384 | +25.3% | | Federal Home Loan Bank advances | $394,000 | $354,000 | +11.3% | | **Total Shareholders' Equity** | **$431,900** | **$416,561** | **+3.7%** | [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q3 and YTD 2020 declined to **$10.7 million** and **$30.1 million**, respectively, driven by higher loan loss provisions and lower net interest income, partially offset by strong mortgage banking income Key Income Statement Data (in thousands, except per share data) | Metric | Q3 2020 | Q3 2019 | 9 Months 2020 | 9 Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $29,509 | $31,605 | $90,397 | $93,366 | | Provision for loan losses | $3,200 | $700 | $11,550 | $2,450 | | Noninterest Income | $13,307 | $6,676 | $30,839 | $19,643 | | Noninterest Expense | $26,423 | $22,027 | $72,579 | $65,944 | | **Net Income** | **$10,686** | **$12,600** | **$30,056** | **$36,139** | | **Diluted EPS** | **$0.66** | **$0.77** | **$1.85** | **$2.20** | - Mortgage banking income significantly drove noninterest income, increasing to **$9.5 million** in Q3 2020 from **$2.9 million** in Q3 2019, and to **$19.7 million** for the nine-month period from **$5.3 million** in the prior year[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2020, net cash from operating activities was **$16.3 million**, while investing activities used **$452.4 million**, and financing activities generated a strong **$756.9 million** inflow, resulting in a **$320.9 million** net increase in cash Cash Flow Summary - Nine Months Ended Sep 30 (in thousands) | Cash Flow Category | 2020 | 2019 | | :--- | :--- | :--- | | Net cash from operating activities | $16,306 | $20,133 | | Net cash for investing activities | ($452,367) | ($165,543) | | Net cash from financing activities | $756,921 | $298,594 | | **Net change in cash and cash equivalents** | **$320,860** | **$153,184** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies and financial components, emphasizing the impact of COVID-19, **$555 million** in PPP loans, loan deferment programs, and the postponement of CECL adoption - The company originated approximately **2,200 PPP loans** totaling **$555 million**, with associated net origination fees of approximately **$15.0 million** being accreted into interest income[73](index=73&type=chunk) - Commercial loan payment deferments peaked at **$719 million** in mid-July, significantly decreasing to only **$7.0 million** by October 30, 2020[54](index=54&type=chunk)[55](index=55&type=chunk) - The company postponed the adoption of the Current Expected Credit Loss (CECL) methodology, as permitted by the CARES Act, due to economic uncertainty from the pandemic[58](index=58&type=chunk)[81](index=81&type=chunk) Loan Portfolio Composition (in thousands) | Loan Class | Sep 30, 2020 | Dec 31, 2019 | % Change | | :--- | :--- | :--- | :--- | | Commercial and industrial (incl. PPP) | $1,321,419 | $846,551 | +56.1% | | Real estate – owner occupied | $549,364 | $579,003 | -5.1% | | Real estate – non-owner occupied | $878,897 | $835,346 | +5.2% | | 1-4 family mortgages | $348,460 | $339,749 | +2.6% | | **Total Loans** | **$3,350,544** | **$2,856,667** | **+17.3%** | - Total nonperforming loans increased to **$4.1 million** as of September 30, 2020, from **$2.3 million** at December 31, 2019[97](index=97&type=chunk) - The company's bank was categorized as "well capitalized" as of September 30, 2020, with a Common equity tier 1 capital ratio of **12.5%** against a **6.5%** requirement[158](index=158&type=chunk)[161](index=161&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=53&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance and condition, highlighting strong balance sheet growth from PPP and deposits, compressed net interest margin, increased loan loss provisions, and robust noninterest income from mortgage refinancing [Coronavirus Pandemic](index=55&type=section&id=Coronavirus%20Pandemic) This section details the company's response to the COVID-19 pandemic, including originating **$555 million** in PPP loans, implementing loan deferment programs that have significantly declined, and delaying CECL adoption under the CARES Act - The company originated approximately **2,200 PPP loans** totaling **$555 million**, with net origination fees of about **$15.0 million**[190](index=190&type=chunk) - Commercial loan deferments peaked at **$719 million** in mid-July but decreased to only **$7.0 million** by October 30, 2020, indicating a significant number of borrowers have resumed payments[196](index=196&type=chunk) [Financial Condition](index=58&type=section&id=Financial%20Condition) Total assets grew by **$788 million** to **$4.42 billion** in the first nine months of 2020, driven by increased loans (including PPP) and deposits, with strong asset quality and an increased allowance for loan losses of **$35.6 million** - Commercial loans increased by **$497 million** in the first nine months of 2020, primarily due to **$555 million** in PPP loan originations, partially offset by a **$109 million** reduction in commercial line of credit balances[202](index=202&type=chunk)[209](index=209&type=chunk) - Nonperforming assets were **$4.7 million**, or **0.1%** of total assets, as of September 30, 2020[218](index=218&type=chunk) - The allowance for loan losses increased to **$35.6 million**, equal to **1.27%** of total loans (excluding PPP loans) and over eight times the level of nonperforming loans as of September 30, 2020[228](index=228&type=chunk) [Liquidity and Capital Resources](index=65&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity with significant deposit growth and reduced wholesale funding, while shareholders' equity increased to **$432 million**, and the stock repurchase program was suspended to preserve capital - The stock repurchase program was suspended in March 2020 to preserve capital amid the pandemic, with no shares repurchased in Q2 or Q3 2020, and **$10.1 million** remaining under authorization[166](index=166&type=chunk)[264](index=264&type=chunk) - The bank's total risk-based capital ratio was **13.5%** as of September 30, 2020, with total regulatory capital of **$446 million**, exceeding the "well capitalized" requirement by **$116 million**[266](index=266&type=chunk) [Results of Operations](index=67&type=section&id=Results%20of%20Operations) Net income declined in Q3 and YTD 2020 due to higher loan loss provisions and a compressed net interest margin of **2.86%**, partially offset by a **99.3%** increase in Q3 noninterest income from record mortgage banking activity Net Interest Margin Analysis | Period | Net Interest Margin | Yield on Earning Assets | Cost of Interest-Bearing Liabilities | | :--- | :--- | :--- | :--- | | Q3 2020 | 2.86% | 3.45% | 0.99% | | Q3 2019 | 3.71% | 4.73% | 1.52% | - The loan loss provision was **$3.2 million** in Q3 2020 and **$11.6 million** for the first nine months of 2020, significantly higher than prior year periods, reflecting economic uncertainty from the COVID-19 pandemic[289](index=289&type=chunk) - Noninterest income in Q3 2020 increased **99.3%** year-over-year, driven by a surge in mortgage banking income due to high refinance activity[291](index=291&type=chunk) - Noninterest expense rose **20.0%** in Q3 2020 compared to Q3 2019, primarily due to higher compensation costs from mortgage originator commissions and a catch-up bonus accrual[293](index=293&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=72&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, managed via NII simulation modeling, which indicates an asset-sensitive balance sheet where a gradual **100 basis point** rate increase is projected to increase NII by **3.9%**, while a decrease reduces it by **0.5%** Net Interest Income Sensitivity Analysis (as of Sep 30, 2020) | Interest Rate Scenario (Gradual change over 12 months) | Dollar Change in NII | Percent Change in NII | | :--- | :--- | :--- | | Rates down 100 bps | ($600,000) | (0.5%) | | Rates up 100 bps | $4,740,000 | 3.9% | | Rates up 200 bps | $9,240,000 | 7.5% | | Rates up 300 bps | $13,700,000 | 11.2% | [Item 4. Controls and Procedures](index=74&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2020, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2020[312](index=312&type=chunk) [PART II. Other Information](index=75&type=section&id=PART%20II%2E%20Other%20Information) [Legal Proceedings](index=75&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is not a party to any legal proceedings considered material to its financial condition - The company reports no material legal proceedings incidental to its business[315](index=315&type=chunk) [Risk Factors](index=75&type=section&id=Item%201A%2E%20Risk%20Factors) No material changes in risk factors were reported from previous disclosures in the company's Annual Report on Form 10-K for 2019 and Form 10-Q for Q1 2020 - No material changes in risk factors were reported from previous disclosures[316](index=316&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company made no unregistered sales of equity securities in Q3 2020, and its stock repurchase program, with **$10.1 million** remaining authorization, was temporarily suspended in March 2020 to preserve capital amid the COVID-19 pandemic - The company temporarily ceased stock repurchases in late March 2020 to preserve capital amid the Coronavirus Pandemic, with no shares repurchased in Q3 2020[318](index=318&type=chunk) Issuer Purchases of Equity Securities (Q3 2020) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Maximum Dollar Value that May Yet Be Purchased Under the Plan | | :--- | :--- | :--- | :--- | | July 1 – 31 | 0 | N/A | $10,135,000 | | August 1 – 31 | 0 | N/A | $10,135,000 | | September 1 – 30 | 0 | N/A | $10,135,000 | | **Total** | **0** | **N/A** | **$10,135,000** | [Other Items (Defaults, Mine Safety, Other Info)](index=75&type=section&id=Items%203,%204,%205) Items 3 (Defaults Upon Senior Securities), 4 (Mine Safety Disclosures), and 5 (Other Information) are all reported as not applicable - No disclosures were required for Defaults Upon Senior Securities, Mine Safety, or Other Information[320](index=320&type=chunk)[321](index=321&type=chunk)[322](index=322&type=chunk)

PART I. [Financial Information](index=2&type=section&id=PART%20I.%20Financial%20Information) This section provides the unaudited consolidated financial statements and management's analysis for the period ended June 30, 2020 [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements detail asset and deposit growth, with net income affected by loan loss provisions [Consolidated Balance Sheets](index=2&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity as of June 30, 2020 Consolidated Balance Sheet Highlights (Unaudited) | Metric | June 30, 2020 (USD) | December 31, 2019 (USD) | | :--- | :--- | :--- | | **Total Assets** | **$4,314,379,000** | **$3,632,915,000** | | Total Loans, Net | $3,300,810,000 | $2,832,778,000 | | Total Deposits | $3,262,280,000 | $2,690,384,000 | | **Total Liabilities** | **$3,889,158,000** | **$3,216,354,000** | | **Total Shareholders' Equity** | **$425,221,000** | **$416,561,000** | - Total assets grew by approximately **$681 million**, or **18.8%**, in the first six months of 2020, primarily driven by a significant increase in loans and deposits[10](index=10&type=chunk) [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income) This section outlines the company's financial performance, including revenues, expenses, and net income for the quarter Income Statement Summary (Unaudited) | Metric | Three Months Ended June 30, 2020 (USD) | Three Months Ended June 30, 2019 (USD) | | :--- | :--- | :--- | | Net Interest Income | $30,571,000 | $31,116,000 | | Provision for Loan Losses | $7,600,000 | $900,000 | | Noninterest Income | $10,984,000 | $6,334,000 | | **Net Income** | **$8,698,000** | **$11,715,000** | | **Diluted EPS** | **$0.54** | **$0.71** | - Net income for Q2 2020 decreased by **25.7%** year-over-year, primarily due to a significant increase in the provision for loan losses from **$0.9 million** to **$7.6 million**. This was partially offset by a substantial increase in noninterest income, driven by a surge in mortgage banking income from **$1.3 million** to **$7.6 million**[12](index=12&type=chunk) [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the company's comprehensive income, including net income and other comprehensive income items Comprehensive Income Summary (Unaudited) | Metric | Three Months Ended June 30, 2020 (USD) | Three Months Ended June 30, 2019 (USD) | | :--- | :--- | :--- | | Net Income | $8,698,000 | $11,715,000 | | Other Comprehensive Income/(Loss), net of tax | $1,292,000 | $7,554,000 | | **Comprehensive Income** | **$9,990,000** | **$19,269,000** | [Consolidated Statements of Changes in Shareholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This section tracks changes in the company's shareholders' equity, reflecting net income, dividends, and share repurchases - Shareholders' equity increased from **$416.6 million** at the beginning of 2020 to **$425.2 million** at June 30, 2020. The growth was driven by **$19.4 million** in net income, partially offset by **$9.0 million** in cash dividends and **$6.3 million** in share repurchases during the first six months of the year[19](index=19&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary (Unaudited) | Metric | Six Months Ended June 30, 2020 (USD) | Six Months Ended June 30, 2019 (USD) | | :--- | :--- | :--- | | Net Cash (for) from Operating Activities | ($12,389,000) | $13,917,000 | | Net Cash for Investing Activities | ($412,048,000) | ($122,895,000) | | Net Cash from Financing Activities | $661,933,000 | $184,049,000 | | **Net Change in Cash and Cash Equivalents** | **$237,496,000** | **$75,071,000** | - The significant increase in cash and cash equivalents was primarily driven by financing activities, which included a net increase of over **$571 million** in deposits during the first six months of 2020[30](index=30&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements - The company elected to postpone the adoption of the Current Expected Credit Loss (CECL) methodology, as permitted by the CARES Act, due to the high degree of uncertainty in economic forecasting[61](index=61&type=chunk)[90](index=90&type=chunk) - In response to the COVID-19 pandemic, the company developed loan payment deferment programs. As of June 30, 2020, it had processed interest-only amendments on **$421 million** of loans and principal/interest deferments on **$298 million** of commercial loans and **$23.8 million** of retail loans[55](index=55&type=chunk) - The company actively participated in the Paycheck Protection Program (PPP), originating nearly **2,200 loans** totaling **$550 million** as of July 31, 2020. These loans are **100%** guaranteed by the Small Business Administration[82](index=82&type=chunk) - As of June 30, 2020, the bank was categorized as "**well capitalized**" under the regulatory framework for prompt corrective action[179](index=179&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=53&type=section&id=Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses COVID-19's impact, highlighting asset growth, lower net interest margin, and increased loan loss provisions - Net income for Q2 2020 was **$8.7 million**, down from **$11.7 million** in Q2 2019. The decrease was primarily driven by a **$7.6 million** provision for loan losses, reflecting the creation of a new COVID-19 environmental factor to address economic uncertainty[229](index=229&type=chunk)[234](index=234&type=chunk) - Total assets grew by **$681 million** in the first half of 2020 to **$4.31 billion**, driven by a **$476 million** increase in loans (including **$549 million** in PPP loans) and a **$572 million** increase in deposits[236](index=236&type=chunk)[238](index=238&type=chunk) - The net interest margin declined to **3.17%** in Q2 2020 from **3.79%** in Q2 2019, as the sharp decrease in asset yields from FOMC rate cuts outpaced the reduction in funding costs[308](index=308&type=chunk) - Noninterest income surged, driven by mortgage banking income which benefited from significant refinancing activity. The bank originated **$408 million** in residential mortgage loans in the first half of 2020, a **225%** increase over the same period in 2019[235](index=235&type=chunk)[240](index=240&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=74&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, managed through NII simulation, showing asset-sensitivity to rising rates Net Interest Income Sensitivity Analysis (as of June 30, 2020) | Interest Rate Scenario | Dollar Change In Net Interest Income (USD) | Percent Change In Net Interest Income (%) | | :--- | :--- | :--- | | Interest rates down 100 basis points | ($710,000) | (0.6%) | | Interest rates up 100 basis points | $4,940,000 | 4.1% | | Interest rates up 200 basis points | $9,440,000 | 7.8% | | Interest rates up 300 basis points | $13,880,000 | 11.5% | [Controls and Procedures](index=76&type=section&id=Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[337](index=337&type=chunk) PART II. [Other Information](index=76&type=section&id=PART%20II.%20Other%20Information) This section covers legal proceedings, risk factors, equity sales, and exhibits for the reporting period [Legal Proceedings](index=76&type=section&id=Legal%20Proceedings) The company is not involved in any legal proceedings material to its financial condition - The company is not involved in any legal proceedings that are material to its financial condition[340](index=340&type=chunk) [Risk Factors](index=76&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported for the quarter - No material changes in risk factors were reported for the quarter[341](index=341&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales or share repurchases occurred, with buybacks suspended to preserve capital and $10.1 million remaining - No shares were repurchased during the second quarter of 2020. The company temporarily ceased stock repurchases in late March 2020 to preserve capital due to the Coronavirus Pandemic[343](index=343&type=chunk)[344](index=344&type=chunk) - As of June 30, 2020, approximately **$10.1 million** remained available for repurchase under the company's publicly announced plan[344](index=344&type=chunk) [Exhibits](index=77&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including CEO/CFO certifications and Inline XBRL financial data

U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 Table of Contents ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File No. 000-26719 MERCANTILE BANK CORPORATION (Exact name of registrant as specified in its charter) Michigan 38-3360865 (State or other jurisdictio ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ Commission file number 000-26719 MERCANTILE BANK CORPORATION (Exact name of registrant as specified in its charter) ...

Table of Contents U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File No. 000-26719 MERCANTILE BANK CORPORATION (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorpo ...

Table of Contents U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File No. 000-26719 MERCANTILE BANK CORPORATION (Exact name of registrant as specified in its charter) Michigan 38-3360865 (State or other jurisdic ...

[PART I. Financial Information](index=3&type=section&id=PART%20I.%20Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents the unaudited condensed consolidated financial statements for the period ended March 31, 2019 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $3.55 billion, driven by increases in net loans and cash equivalents Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2019 ($ thousands) | December 31, 2018 ($ thousands) | | :--- | :--- | :--- | | **Total Assets** | **3,551,754** | **3,363,907** | | Total cash and cash equivalents | 214,894 | 75,354 | | Loans, net | 2,776,504 | 2,730,705 | | **Total Liabilities** | **3,168,025** | **2,988,658** | | Total deposits | 2,610,974 | 2,463,708 | | Federal Home Loan Bank advances | 384,000 | 350,000 | | **Total Shareholders' Equity** | **383,729** | **375,249** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Net income rose to $11.8 million, supported by higher net interest and noninterest income Condensed Consolidated Income Statement Highlights (Unaudited) | Account | Three Months Ended March 31, 2019 ($ thousands) | Three Months Ended March 31, 2018 ($ thousands) | | :--- | :--- | :--- | | Net interest income | 30,645 | 30,199 | | Provision for loan losses | 850 | 0 | | Total noninterest income | 6,632 | 4,381 | | Total noninterest expenses | 21,830 | 21,147 | | **Net income** | **11,824** | **10,881** | | **Diluted earnings per share** | **$0.72** | **$0.66** | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income increased significantly to $15.3 million due to gains on securities Condensed Consolidated Comprehensive Income (Unaudited) | Account | Three Months Ended March 31, 2019 ($ thousands) | Three Months Ended March 31, 2018 ($ thousands) | | :--- | :--- | :--- | | Net income | 11,824 | 10,881 | | Other comprehensive income (loss), net of tax | 3,515 | (5,641) | | **Comprehensive income** | **15,339** | **5,240** | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity grew to $383.7 million, driven by net income and unrealized gains - Key drivers of equity growth in Q1 2019 were **$11.8 million in net income** and a **$3.5 million gain on securities**[20](index=20&type=chunk) - Growth was partially offset by **$4.2 million in cash dividends** and **$3.6 million in share repurchases**[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) A net cash increase of $139.5 million resulted from strong financing inflows offsetting investing outflows Net Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2019 ($ thousands) | Three Months Ended March 31, 2018 ($ thousands) | | :--- | :--- | :--- | | Net cash from operating activities | 2,445 | 13,045 | | Net cash for investing activities | (44,284) | (2,456) | | Net cash from financing activities | 181,379 | 467 | | **Net change in cash and cash equivalents** | **139,540** | **11,056** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Details the basis of presentation, significant accounting policies, and preparations for CECL adoption - Adopted ASU 2016-02, Leases, on January 1, 2019, recording a **right-of-use asset and lease liability of approximately $1.3 million**[61](index=61&type=chunk) - The company is preparing for the adoption of the Current Expected Credit Loss (CECL) model, with an **initial model expected to be operational in Q2 2019**[62](index=62&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=63&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q1 2019 financial performance, highlighting asset growth and strong loan quality - Reported **net income of $11.8 million** ($0.72 per diluted share) for Q1 2019, an increase from $10.9 million in Q1 2018[211](index=211&type=chunk) - Results were positively impacted by a **$1.8 million one-time gain** from a life insurance benefit and branch sale[211](index=211&type=chunk) - Loan portfolio quality remains strong, with **nonperforming loans at just 0.15% of total loans** as of March 31, 2019[212](index=212&type=chunk) [Financial Condition](index=66&type=section&id=Financial%20Condition) Total assets reached $3.55 billion with strong credit quality and a growing commercial loan portfolio - **Nonperforming assets decreased to $4.5 million**, or 0.1% of total assets, at March 31, 2019[223](index=223&type=chunk) - The **allowance for loan losses stood at $23.1 million**, representing 559% of nonperforming loans[238](index=238&type=chunk) Loan Portfolio Composition (3/31/19) | Loan Category | Balance ($ thousands) | % of Total Loans | | :--- | :--- | :--- | | Commercial & Industrial | 839,207 | 30.0% | | Owner Occupied Commercial RE | 551,518 | 19.7% | | Non-Owner Occupied Commercial RE | 835,678 | 29.8% | | 1-4 Family Mortgages | 316,314 | 11.3% | | Other | 256,822 | 9.2% | | **Total Loans** | **2,799,639** | **100.0%** | [Liquidity](index=72&type=section&id=Liquidity) Liquidity is maintained through diverse funding sources, with substantial available credit from FHLBI - **Wholesale funds increased to $570 million** as of March 31, 2019, from $474 million at year-end 2018[252](index=252&type=chunk) - The company had an FHLBI borrowing line of about $827 million, with **remaining availability of approximately $437 million**[253](index=253&type=chunk) - Total **unfunded loan commitments and standby letters of credit amounted to approximately $1.04 billion**[256](index=256&type=chunk) [Capital Resources](index=74&type=section&id=Capital%20Resources) The company remains 'well capitalized' with a total risk-based capital ratio of 12.4% - **Shareholders' equity increased by $8.5 million** during Q1 2019 to $384 million[258](index=258&type=chunk) - During Q1 2019, the company **repurchased 119,120 shares for $3.6 million** under its authorized stock repurchase program[259](index=259&type=chunk) - The bank's **total risk-based capital ratio was 12.4%**, with regulatory capital $77 million above the 'well capitalized' minimum[261](index=261&type=chunk) [Results of Operations](index=74&type=section&id=Results%20of%20Operations) Q1 2019 net income grew to $11.8 million despite a decline in net interest margin - The increase in interest expense was primarily due to a **higher weighted average cost of interest-bearing liabilities**, which rose to 1.47% from 0.94% YoY[265](index=265&type=chunk) Q1 Performance Comparison (YoY) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Net Interest Income | $30.6M | $30.2M | | Net Interest Margin | 3.88% | 4.06% | | Provision for Loan Losses | $0.9M | $0.0M | | Noninterest Income | $6.6M | $4.4M | | Noninterest Expense | $21.8M | $21.1M | | Net Income | $11.8M | $10.9M | [Quantitative and Qualitative Disclosures About Market Risk](index=78&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, managed via NII simulation - The company's primary market risk exposure is **interest rate risk**, managed through GAP analysis and net interest income (NII) simulation[275](index=275&type=chunk)[281](index=281&type=chunk) Net Interest Income Simulation (as of March 31, 2019) | Interest Rate Scenario (Gradual change over 12 months) | Percent Change in Net Interest Income | | :--- | :--- | | Interest rates up 300 basis points | +16.0% | | Interest rates up 200 basis points | +8.1% | | Interest rates up 100 basis points | +4.0% | | Interest rates down 100 basis points | -5.4% | | Interest rates down 200 basis points | -11.1% | [Controls and Procedures](index=80&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls were effective as of Q1 2019 - Management concluded that **disclosure controls and procedures were effective** as of March 31, 2019[286](index=286&type=chunk) - **No material changes** were made to internal control over financial reporting during the quarter ended March 31, 2019[287](index=287&type=chunk) [PART II. Other Information](index=81&type=section&id=PART%20II.%20Other%20Information) [Legal Proceedings](index=81&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings that would impact its financial condition - The company reports **no material legal proceedings**[290](index=290&type=chunk) [Risk Factors](index=81&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were identified since the last annual report - **No material changes** to risk factors have occurred since the 2018 Form 10-K filing[291](index=291&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=81&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 119,120 shares for $3.6 million in Q1 2019 under its buyback program - **No unregistered sales of equity securities** were made during Q1 2019[292](index=292&type=chunk) Issuer Purchases of Equity Securities (Q1 2019) | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Dollar Value Remaining in Plan | | :--- | :--- | :--- | :--- | | Jan 1 - 31 | 119,120 | $30.23 | $5,962,000 | | Feb 1 - 28 | 0 | $0 | $5,962,000 | | Mar 1 - 31 | 0 | $0 | $5,962,000 | | **Total** | **119,120** | **$30.23** | **$5,962,000** | [Defaults Upon Senior Securities](index=81&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable [Mine Safety Disclosures](index=81&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable [Other Information](index=81&type=section&id=Item%205.%20Other%20Information) Not applicable [Exhibits](index=82&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including certifications and XBRL data - Exhibits filed include **CEO and CFO certifications** and financial statements formatted in XBRL[298](index=298&type=chunk)