10-K

Table Of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

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)

Michigan	38-3360865
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
310 Leonard Street NW, Grand Rapids, Michigan	49504
(Address of principal executive offices)	(Zip Code)

(616) 406-3000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes       No   X  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes       No   X  

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  X  No __

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes   X   No       

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer ___	Accelerated filer  X
Non-accelerated filer ___	Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes        No    X  

The aggregate value of the common equity held by non-affiliates (persons other than directors and executive officers) of the registrant, computed by reference to the closing price of the common stock as of the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $377 million.

As of March 6, 2015, there were issued and outstanding 16,888,530 shares of the registrant’s common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s proxy statement for the Annual Meeting of Shareholders to be held May 28, 2015 are incorporated by reference into Part III of this report.

PART I

Item 1. Business.

The Company

Mercantile Bank Corporation is a registered bank holding company under the Bank Holding Company Act of 1956, as amended (the “Bank Holding Company Act”). Unless the text clearly suggests otherwise, references to “us,” “we,” “our,” or “the company” include Mercantile Bank Corporation and its wholly-owned subsidiaries. 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 of Michigan (“our bank”), and of such other subsidiaries as we may acquire or establish. Our 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. Mercantile Bank Real Estate Co., L.L.C., (“our real estate company”), a subsidiary of our bank, was organized on July 21, 2003, principally to develop, construct and own our facility in downtown Grand Rapids which serves as our bank’s main office and Mercantile Bank Corporation’s headquarters. Mercantile Bank Capital Trust I (“our trust”), a business trust subsidiary, was formed in September 2004 to issue trust preferred securities.

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.

Firstbank Corporation Merger

We completed our merger with Firstbank Corporation (“Firstbank”), a Michigan corporation with approximately $1.5 billion in total assets and 46 branch locations, into Mercantile Bank Corporation as of June 1, 2014 (“Merger Date”). The merger was accounted for using the acquisition method of accounting, with Mercantile treated as the acquirer for accounting purposes. The results of operations due to the Firstbank transaction have been included in Mercantile’s financial results since the Merger Date. All of Firstbank’s common stock was converted into the right to receive one share of Mercantile common stock for each share of Firstbank common stock. The conversion of Firstbank’s common stock into Mercantile’s common stock resulted in Mercantile issuing 8,087,272 shares of common stock. As of the Merger Date, former Firstbank shareholders owned approximately 48% of the combined company. The merger substantially expanded our geographic footprint and increased the size of our balance sheet.

In conjunction with the completion of the merger, Mercantile assumed the obligations of Firstbank Capital Trust I, Firstbank Capital Trust II, Firstbank Capital Trust III and Firstbank Capital Trust IV, all of which are business trust subsidiaries formed to issue trust preferred securities. At the Merger Date, Firstbank had two Michigan-chartered bank subsidiaries that were consolidated into Mercantile Bank of Michigan effective June 30, 2014.

Our Board of Directors declared a special cash dividend on our common stock on May 9, 2014, in the amount of $2.00 per share that was paid on May 29, 2014 to shareholders of record as of May 22, 2014. The special cash dividend, in contemplation of the plan of merger with Firstbank, was paid to Mercantile shareholders prior to the effective date of the merger with Firstbank and before the issuance of Mercantile shares in exchange for Firstbank shares.

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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 Office of Financial and Insurance Regulation. Our bank’s deposits are insured to the maximum extent permitted by law by the Federal Deposit Insurance Corporation (“FDIC”). Our bank, through its 53 office locations, provides commercial banking services primarily to small- to medium-sized businesses and retail banking services in and around the West and Central portions of Michigan. Our bank’s main office is located in Grand Rapids, with branch office locations in Alma, Ashley, Belding, Cadillac, Canadian Lakes, Clare, Comstock Park, DeWitt, Fairview, Grand Rapids, Hale, Hastings, Higgins Lake, Holland, Howard City, Ionia, Ithaca, Kalamazoo, Kentwood, Lakeview, Lansing, Lowell, Merrill, Mt. Pleasant, Paw Paw, Portage, Remus, Rose City, Shepherd, St. Charles, St. Helen, St. Johns, St. Louis, Vestaburg, West Branch, and Wyoming.

Our bank makes secured and unsecured commercial, construction, mortgage and consumer loans, and accepts checking, savings and time deposits. Our bank owns 53 automated teller machines ("ATM") located at certain of our office locations and at one off-site location 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. Courier service is provided to certain commercial customers, and safe deposit facilities are available at a vast majority of our office locations. Our bank does 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. 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.

Our Real Estate Company

Our real estate company was organized on July 21, 2003, principally to develop, construct and own our facility in downtown Grand Rapids that serves as our bank’s main office and Mercantile Bank Corporation’s headquarters. This facility was placed into service during the second quarter of 2005. Our real estate company is 99% owned by our bank and 1% owned by our insurance company.

Our Trusts

We have five business trusts that are wholly-owned subsidiaries of Mercantile, four of which were assumed by Mercantile in conjunction with the merger with Firstbank. Each of the trusts was formed to issue Preferred Securities that were sold in private sales, as well as selling Common Securities to Mercantile. The proceeds from the Preferred and Common Securities sales were used by the trusts to purchase Floating Rate Notes issued by Mercantile. 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 only significant assets of our trusts are the Floating Rate Notes, and the only significant liabilities of our trusts are the Preferred Securities. The Floating Rate Notes are categorized on our Consolidated Balance Sheets as subordinated debentures, and the interest expense is recorded on our Consolidated Statements of Income under interest expense on other borrowings.

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Effect of Government Monetary Policies

Our earnings are affected by domestic economic conditions and the monetary and fiscal policies of the United States Government, its agencies, and the Federal Reserve Board. The Federal Reserve Board’s monetary policies have had, and will likely continue to have, an important impact on the operating results of commercial banks through its power to implement national monetary policy in order to, among other things, curb inflation, maintain or encourage employment, and mitigate economic recessions. The policies of the Federal Reserve Board have a major effect upon the levels of bank loans, investments and deposits through its open market operations in United States Government securities, and through its regulation of, among other things, the discount rate on borrowings of member banks and the reserve requirements against member bank deposits. Our bank maintains reserves directly with the Federal Reserve Bank of Chicago to the extent required by law. It is not possible to predict the nature and impact of future changes in monetary and fiscal policies.

Regulation and Supervision

As a registered bank holding company under the Bank Holding Company Act, we are required to file an annual report with the Federal Reserve Board and such additional information as the Federal Reserve Board may require. We are also subject to examination 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 non-banking activities. The permitted non-banking activities include those limited activities that the Federal Reserve Board found, 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; performing certain data processing operations; providing certain investment and financial advice; acting as an insurance agent for certain types of credit-related insurance; leasing property on a full-payout, nonoperating basis; and providing discount securities brokerage services for customers. Neither we nor any of our subsidiaries engage in any of the non-banking activities listed above.

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 by the Federal Reserve Board. In order to continue 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 than are permitted to 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 of the financial system generally. Such expanded activities include, among others: insuring, guaranteeing, or indemnifying against loss, harm, damage, illness, disability or death, or issuing annuities, and acting as principal, agent or broker for such purposes; providing financial, investment or economic advisory services, including advising a mutual fund; and underwriting, dealing in, or making a market in securities. 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 the expanded activities.

Our bank is subject to restrictions imposed by federal law and regulation. Among other things, these restrictions apply to any extension of credit to us or to our other subsidiaries, to securities borrowing or lending, derivatives, and repurchase transactions with us or our other subsidiaries, to investments in stock or other securities that we issue, to the taking of such stock or securities as collateral for loans to any borrower, and to acquisitions of assets or services from, and sales of certain types of assets to, us or our other subsidiaries. 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.

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. Acquisitions of banking organizations across state lines are subject to restrictions imposed by federal and state laws and regulations.

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The scope of existing regulation and supervision of various aspects of our business has expanded, and continues to expand, as a result of the adoption in July, 2010 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and of implementing regulations that are being adopted by federal regulators. For additional information on this legislation and its potential impact, refer to the Risk Factor entitled “The effect of financial services legislation and regulations remains uncertain” in Item 1A- Risk Factors in this Annual Report.

Employees

As of December 31, 2014, we employed 550 full-time and 181 part-time persons. Management believes that relations with employees are good.

Lending Policy

As a routine part of our business, we make loans to businesses and individuals located within our market areas. Our lending policy states that the function of the lending operation is twofold: to provide a means for the investment of funds at a profitable rate of return with an acceptable degree of risk, and to meet the credit needs of the creditworthy businesses and individuals who are our customers. We recognize that in the normal business of lending, some losses on loans will be inevitable and should be considered a part of the normal cost of doing business.

Our lending policy anticipates that priorities in extending loans will be modified from time to time as interest rates, market conditions and competitive factors change. The policy sets forth guidelines on a nondiscriminatory basis for lending in accordance with applicable laws and regulations. The policy describes various criteria for granting loans, including the ability to pay; the character of the customer; evidence of financial responsibility; purpose of the loan; knowledge of collateral and its value; terms of repayment; source of repayment; payment history; and economic conditions.

The lending policy further limits the amount of funds that may be loaned against specified types of real estate collateral. For certain loans secured by real estate, the policy requires an appraisal of the property offered as collateral by a state certified independent appraiser. The policy also provides general guidelines for loan to value for other types of collateral, such as accounts receivable and machinery and equipment. 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 loan 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 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 officers and loan managers are able to approve loans up to $1.0 million and $2.5 million, respectively. We have established higher approval limits for our bank’s Senior Lender, President, and Chairman of the Board and Chief Executive 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. Generally, loan requests exceeding $2.5 million require approval by the Officers Loan Committee, and loan requests exceeding $7.5 million, up to the legal lending limit of approximately $80.2 million, require approval by the Board of Directors. We apply an in-house lending limit that is significantly less than our bank’s legal lending limit.

Provisions of recent legislation, including the Dodd-Frank Act, when fully implemented by regulations to be adopted by federal agencies, may have a significant impact on our lending policy, especially in the areas of single-family residential real estate and other consumer lending. For additional information on this legislation and its potential impact, refer to the Risk Factors entitled “The effect of financial services legislation and regulations remains uncertain” and “Our single-family real estate lending business faces significant change” in Item 1A- Risk Factors in this Annual Report.

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Lending Activity

Commercial Loans. Our commercial lending group originates commercial loans primarily in our market areas. Our commercial lenders have extensive commercial lending experience, with most having at least ten years’ experience. Loans are originated for general business purposes, including working capital, accounts receivable financing, machinery and equipment acquisition, and commercial real estate financing, including new construction and land development.

Working capital loans are often structured as a line of credit and are reviewed periodically in connection with the borrower’s year-end financial reporting. These loans are generally secured by substantially all of the assets of the borrower and have a floating interest rate tied to the Mercantile Bank Prime Rate, Wall Street Journal Prime Rate or 30-day Libor Rate. Loans for machinery and equipment purposes typically have a maturity of three to five years and are fully amortizing, while commercial real estate loans are usually written with a five-year maturity and amortize over a 10- to 20-year period. Commercial loans typically have an interest rate that is fixed to maturity or is tied to the Wall Street Journal Prime Rate, Mercantile Bank Prime Rate or 30-day Libor Rate.

We evaluate many aspects of a commercial loan transaction in order to minimize credit and interest rate risk. Underwriting includes an assessment of the management, products, markets, cash flow, capital, income and collateral of the borrowing entity. This analysis includes a review of the borrower’s historical and projected financial results. Appraisals are generally required to be performed by certified independent appraisers where real estate is the primary collateral, and in some cases, where equipment is the primary collateral. In certain situations, for creditworthy customers, we may accept title reports instead of requiring lenders’ policies of title insurance.

Commercial real estate lending involves more risk than residential lending because loan balances are typically greater and repayment is dependent upon the borrower’s business operations. We attempt to minimize the risks associated with these transactions by generally limiting our commercial real estate lending to owner-operated properties and to owners of non-owner occupied properties who have an established profitable history and satisfactory tenant structure. In many cases, risk is further reduced by requiring personal guarantees, limiting the amount of credit to any one borrower to an amount considerably less than our legal lending limit and avoiding certain types of commercial real estate financings.

We have no material foreign loans, and only limited exposure to companies engaged in energy producing and agricultural-related activities.

Single-Family Residential Real Estate Loans. We originate single-family residential real estate loans in our market areas, generally according to secondary market underwriting standards. Loans not conforming to those standards are made in certain circumstances. Single-family residential real estate loans provide borrowers with a fixed or adjustable interest rate with terms up to 30 years and are generally sold to certain investors.

Our bank has 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. The program provides revolving credit at a rate tied to the Wall Street Journal Prime Rate.

Consumer Loans. We originate consumer loans for a variety of personal financial needs, including new and used automobiles, boats, credit cards and overdraft protection for our checking account customers. 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.

We believe our consumer loans are underwritten carefully, with a strong emphasis on the amount of the down payment, credit quality, employment stability and monthly income of the borrower. These loans are generally repaid on a monthly repayment schedule with the source of repayment tied to the borrower’s periodic income. In addition, consumer lending collections are dependent on the borrower’s continuing financial stability, and are thus likely to be adversely affected by job loss, illness and personal bankruptcy. In many cases, repossessed collateral for a defaulted consumer loan will not provide an adequate source of repayment of the outstanding loan balance because of depreciation of the underlying collateral.

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We believe that the generally higher yields earned on consumer loans compensate for the increased credit risk associated with such loans, and that consumer loans are important to our efforts to serve the credit needs of the communities and customers that we serve.

Loan Portfolio Quality

We utilize a comprehensive grading system for our commercial loans, whereby all commercial loans are graded on a ten grade rating system. The rating system utilizes standardized grade paradigms that analyze several critical factors such as cash flow, operating performance, financial condition, collateral, industry condition and management. All commercial loans are graded at inception and reviewed at various intervals.

Our independent loan review program is primarily responsible for the administration of the grading system and ensuring adherence to established lending policies and procedures. 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 covers approximately 40% of total loans outstanding each year. Our watch list credits are reviewed monthly by our Board of Directors and our Watch List Committee, the latter of which is comprised of senior level officers from the administration, lending and loan review functions.

Loans are placed in a nonaccrual status when, in our opinion, uncertainty exists as to the ultimate collection of all principal and interest. As of December 31, 2014, loans placed in nonaccrual status totaled $29.4 million, or 1.4% of total loans, compared to $6.7 million, or 0.6% of total loans, at December 31, 2013. Loans past due 90 days or more and still accruing interest at year-end 2014 totaled less than $0.1 million, and we had no such loans as of year-end 2013.

Additional detail and information relative to the loan portfolio is incorporated by reference to Management’s Discussion and Analysis of Financial Condition and Results of Operations (“Management’s Discussion and Analysis”) and Note 4 of the Notes to Consolidated Financial Statements in this Annual Report.

Allowance for Loan Losses

In each accounting period, we adjust the allowance to the amount we believe is necessary to maintain the allowance at an adequate level. Through the loan review and credit departments, we establish specific portions of the allowance based on specifically identifiable problem loans. The evaluation of the allowance is further based on, but not limited to, consideration of the internally prepared Allowance Analysis, loan loss migration analysis, composition of the loan portfolio, third party analysis of the loan administration processes and portfolio, and general economic conditions.

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The Allowance Analysis applies reserve allocation factors to non-impaired outstanding loan balances, the result of which is combined with specific reserves to calculate an overall allowance dollar amount. For non-impaired commercial loans, reserve allocation factors are based on the loan ratings as determined by our standardized grade paradigms and by loan purpose. Our commercial loan portfolio is segregated into five classes: 1) commercial and industrial loans; 2) vacant land, land development and residential construction loans; 3) owner occupied real estate loans; 4) non-owner occupied real estate loans; and 5) multi-family and residential rental property loans. The reserve allocation factors are primarily based on the historical trends of net loan charge-offs through a migration analysis whereby net loan losses are tracked via assigned grades over various time periods, with adjustments made for environmental factors reflecting the current status of, or recent changes in, items such as: lending policies and procedures; economic conditions; nature and volume of the loan portfolio; experience, ability and depth of management and lending staff; volume and severity of past due, nonaccrual and adversely classified loans; effectiveness of the loan review program; value of underlying collateral; lending concentrations; and other external factors, including competition and regulatory environment. Adjustments for specific lending relationships, particularly impaired loans, are made on a case-by-case basis. Non-impaired retail loan reserve allocations are determined in a similar fashion as those for non-impaired commercial loans, except that retail loans are segmented by type of credit and not a grading system. We regularly review the Allowance Analysis and make adjustments periodically based upon identifiable trends and experience.

A migration analysis is completed quarterly to assist us in determining appropriate reserve allocation factors for non-impaired commercial loans. Our migration takes into account various time periods, with most weight placed on the twelve-quarter time frame. We believe the twelve-quarter period represents an appropriate range of economic conditions, and that it provides for an appropriate basis in determining reserve allocation factors given current economic conditions and the general market consensus of economic conditions in the near future.

Although the migration analysis provides an accurate historical accounting of our net loan losses, it is not able to fully account for environmental factors that will also very likely impact the collectability of our commercial loans as of any quarter-end date. Therefore, we incorporate the environmental factors as adjustments to the historical data. Environmental factors include both internal and external items. We believe the most significant internal environmental factor is our credit culture and the relative aggressiveness in assigning and revising commercial loan risk ratings, with the most significant external environmental factor being the assessment of the current economic environment and the resulting implications on our commercial loan portfolio.

The primary risk elements with respect to commercial loans are the financial condition of the borrower, the sufficiency of collateral, and timeliness of scheduled payments. We have a policy of requesting and reviewing periodic financial statements from commercial loan customers, and we have a disciplined and formalized review of the existence of collateral and its value. The primary risk element with respect to each residential real estate loan and consumer loan is the timeliness of scheduled payments. We have a reporting system that monitors past due loans and have adopted policies to pursue creditor’s rights in order to preserve our collateral position.

Additional detail regarding the allowance is incorporated by reference to Management’s Discussion and Analysis and Note 4 of the Notes to Consolidated Financial Statements included in this Annual Report.

Investments

Bank Holding Company Investments. The principal investments of our bank holding company are the investments in the common stock of our bank and the common securities of our trusts. 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 and the “Volcker Rule”, 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. Our bank holding company has no plans at this time to make directly any of these equity investments at the bank holding company level. Our Board of Directors may, however, alter the investment policy at any time without shareholder approval.

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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 and our real estate 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 the bank’s investment policy 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 3 of the Notes to Consolidated Financial Statements included in this Annual Report.

Competition

We face substantial competition in all phases of our operations from a variety of different competitors. We compete for deposits, loans and other financial services with numerous Michigan-based and national and regional banks, savings banks, thrifts, credit unions and other financial institutions as well as from other entities that provide financial services. Some of the financial institutions and financial service organizations with which we compete are not subject to the same degree of regulation as we are. Many of our primary competitors have been in business for many years, have established customer bases, are larger, have substantially higher lending limits than we do, and offer larger branch networks and other services which we do not. Most of these same entities have greater capital resources than we do, which, among other things, may allow them to price their services at levels more favorable to the customer and to provide larger credit facilities than we do. Under specified circumstances (that have been modified by the Dodd-Frank Act), securities firms and insurance companies that elect to become financial holding companies under the Bank Holding Company Act may acquire banks and other financial institutions. Federal banking law affects the competitive environment in which we conduct our business. The financial services industry is also likely to become more competitive as further technological advances enable more companies to provide financial services.

Selected Statistical Information

Management’s Discussion and Analysis beginning on Page F-4 in this Annual Report includes selected statistical information.

Return on Equity and Assets

Return on Equity and Asset information is included in Management’s Discussion and Analysis beginning on Page F-4 in this Annual Report.

Available Information

We maintain an internet website at www.mercbank.com. We make available on or through our website, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practical after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. We do not intend the address of our website to be an active link or to otherwise incorporate the contents of our website into this Annual Report.

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Item 1A. Risk Factors.

The following risk factors could affect our business, financial condition or results of operations. These risk factors should be considered in connection with evaluating the forward-looking statements contained in this Annual Report because they could cause the actual results and conditions to differ materially from those projected in forward-looking statements. Before you buy our common stock, you should know that investing in our common stock involves risks, including the risks described below. The risks that are highlighted here are not the only ones we face. If the adverse matters referred to in any of the risks actually occur, our business, financial condition or operations could be adversely affected. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Adverse changes in economic conditions or interest rates may negatively affect our earnings, capital and liquidity.

The results of operations for financial institutions, including our bank, may be materially and adversely affected by changes in prevailing local and national economic conditions, including declines in real estate market values and the related declines in value of our real estate collateral, rapid increases or decreases in interest rates and changes in the monetary and fiscal policies of the federal government. Our profitability is heavily influenced by the spread between the interest rates we earn on loans and investments and the interest rates we pay on deposits and other interest-bearing liabilities. Substantially all of our loans are to businesses and individuals in Western or Central Michigan, and any decline in the economy of these areas could adversely affect us. Like most banking institutions, our net interest spread and margin will be affected by general economic conditions and other factors that influence market interest rates and our ability to respond to changes in these rates. At any given time, our assets and liabilities may be such that they will be affected differently by a given change in interest rates.

Significant declines in the value of commercial real estate could adversely impact us.

Many of our loans relate to commercial real estate. Stressed economic conditions may reduce the value of commercial real estate and strain the financial condition of our commercial real estate borrowers, especially in the land development and non-owner occupied commercial real estate segments of our loan portfolio. Those difficulties could adversely affect us and could produce losses and other adverse effects on our business.

Market volatility may adversely affect us.

The capital and credit markets may experience volatility and disruption. In some cases, the markets have produced downward pressure on stock prices and credit availability for certain issuers without apparent regard to those issuers’ underlying financial strength. Future levels of market disruption and volatility may have an adverse effect, which may be material, on our ability to access capital and on our business, financial condition and results of operations.

Our future success is dependent on our ability to compete effectively in the highly competitive banking industry.

We face substantial competition in all phases of our operations from a variety of different competitors. Our future growth and success will depend on our ability to compete effectively in this highly competitive environment. We compete for deposits, loans and other financial services with numerous Michigan-based and national and regional banks, thrifts, credit unions and other financial institutions as well as other entities that provide financial services, including securities firms and mutual funds. Some of the financial institutions and financial service organizations with which we compete are not subject to the same degree of regulation as we are. Most of our competitors have been in business for many years, have established customer bases, are larger, have substantially higher lending limits than we do and offer branch networks and other services which we do not, including trust and international banking services. Most of these entities have greater capital and other resources than we do, which, among other things, may allow them to price their services at levels more favorable to the customer and to provide larger credit facilities than we do. This competition may limit our growth or earnings. Under specified circumstances (that have been modified by the Dodd-Frank Act), securities firms and insurance companies that elect to become financial holding companies under the Bank Holding Company Act may acquire banks and other financial institutions. Federal banking law affects the competitive environment in which we conduct our business. The financial services industry is also likely to become more competitive as further technological advances enable more companies to provide financial services. These technological advances may diminish the importance of depository institutions and other financial intermediaries in the transfer of funds between parties.

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Our risk management systems may fall short of their intended objectives.

We seek to monitor and control our risk exposure through a risk and control framework encompassing a variety of separate but complementary financial, credit, operational, compliance and legal reporting systems, internal controls, management review processes and other mechanisms. Our risk management process seeks to balance our ability to profit from investing or lending positions with our exposure to potential losses. While we employ a broad and diversified set of risk monitoring and risk mitigation techniques, those techniques and the judgments that accompany their application cannot anticipate every economic and financial outcome or the specifics and timing of such outcomes. Thus, we may, in the course of our activities, incur losses.

We may not be able to successfully adapt to evolving industry standards and market pressures.

Our success depends, in part, on the ability to adapt products and services to evolving industry standards. There is increasing pressure to provide products and services at lower prices. This can reduce net interest income and noninterest income from fee-based products and services. In addition, the widespread adoption of new technologies could require us to make substantial capital expenditures to modify or adapt existing products and services or develop new products and services. We may not be successful in introducing new products and services in response to industry trends or developments in technology, or those new products may not achieve market acceptance. As a result, we could lose business, be forced to price products and services on less advantageous terms to retain or attract clients, or be subject to cost increases. As a result, our business, financial condition, or results of operations may be adversely affected.

Our inability to integrate potential future acquisitions successfully could impede us from realizing all of the benefits of the acquisitions, which could weaken our operations.

If we are unable to successfully integrate potential future acquisitions, we could be impeded from realizing all of the benefits of those acquisitions and could weaken our business operations. The integration process may disrupt our business and, if implemented ineffectively, may preclude realization of the full benefits expected by us and could harm our results of operations. In addition, the overall integration of the combining companies may result in unanticipated problems, expenses, liabilities and competitive responses, and may cause our stock price to decline. The difficulties of integrating an acquisition include, among others:

° unanticipated issues in integration of information, communications and other systems;

° unanticipated incompatibility of logistics, marketing and administration methods;

° maintaining employee morale and retaining key employees;

° integrating the business cultures of both companies;

° preserving important strategic client relationships;

° coordinating geographically diverse organizations; and

° consolidating corporate and administrative infrastructures and eliminating duplicative operations.

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Finally, even if the operations of an acquisition are integrated successfully, we may not realize the full benefits of the acquisition, including the synergies, cost savings or growth opportunities we expect. These benefits may not be achieved within the anticipated time frame as well.

The soundness of other financial institutions could adversely affect us.

Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial industry. As a result, defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. Even routine funding transactions expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the financial instrument exposure due us. There is no assurance that any such losses would not materially and adversely affect our results of operations.

The timing and effect of Federal Reserve Board policy normalization remains uncertain.

In response to the turmoil in the financial services sector and the severe recession in the broader economy that began in 2008, the Federal Reserve Board eased short-term interest rates and implemented a series of emergency programs to furnish liquidity to the financial markets and credit to various participants in those markets, as well as programs of quantitative easing through direct open market purchases of certain Treasury and other securities. In December, 2013, the Federal Reserve Board began a phased reduction in the amount of such securities purchases, and ceased such purchases by the end of October, 2014. In September, 2014, the Federal Reserve Board announced principles it would follow to implement monetary policy normalization, that is, to raise the Federal funds rate and other short-term interest rates to more normal levels and to reduce the Federal Reserve’s securities holdings, so as to promote its statutory mandate of maximum employment and price stability. There can be no assurance as to the actual impact of those policies on the financial markets, the broader economy, or on our business, financial condition, results of operations, access to credit or the trading price of our common stock.

The effect of financial services legislation and regulations remains uncertain.

In response to the financial crisis, on July 21, 2010, President Obama signed the Dodd-Frank Act, the most comprehensive reform of the regulation of the financial services industry since the Great Depression of the 1930’s. Among many other things, the Dodd-Frank Act provides for increased supervision of financial institutions by regulatory agencies, more stringent capital requirements for financial institutions, major changes to deposit insurance assessments by the FDIC, prohibitions on proprietary trading and sponsorship or investment in hedge funds and private equity funds by insured depository institutions, holding companies, and their affiliates, heightened regulation of hedging and derivatives activities, a greater focus on consumer protection issues, in part through the formation of a new Consumer Financial Protection Bureau (“CFPB”) having powers formerly split among different regulatory agencies, extensive changes to the regulation of residential mortgage lending, imposition of limits on interchange transaction and network fees for electronic debit transactions and repeal of the prohibition on payment of interest on demand deposits. Many of the Dodd-Frank Act’s provisions have delayed effective dates, while other provisions require implementing regulations of various federal agencies, some of which have not yet been adopted in final form. There can be no assurance that the Dodd-Frank Act and its implementing regulations will not limit our ability to pursue business opportunities, impose additional costs on us, impact our revenues or the value of our assets, or otherwise adversely affect our business.

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Our credit losses could increase and our allowance may not be adequate to cover actual loan losses.

The risk of nonpayment of loans is inherent in all lending activities, and nonpayment, when it occurs, may have a materially adverse effect on our earnings and overall financial condition as well as the value of our common stock. Our focus on commercial lending may result in a larger concentration of loans to small businesses. As a result, we may assume different or greater lending risks than other banks. We make various assumptions and judgments about the collectability of our loan portfolio and provide an allowance for losses based on several factors. If our assumptions are wrong, our allowance may not be sufficient to cover our losses, which would have an adverse effect on our operating results. The actual amounts of future provisions for loan losses cannot be determined at this time and may exceed the amounts of past provisions. Additions to our allowance decrease our net income.

We rely heavily on our management and other key personnel, and the loss of any of them may adversely affect our operations.

We are and will continue to be dependent upon the services of our management team, including our executive officers and our other senior managers. The unanticipated loss of our executive officers, or any of our other senior managers, could have an adverse effect on our growth and performance.

In addition, we continue to depend on our key commercial loan officers. Several of our commercial loan officers are responsible, or share responsibility, for generating and managing a significant portion of our commercial loan portfolio. Our success can be attributed in large part to the relationships these officers as well as members of our management team have developed and are able to maintain with our customers as we continue to implement our community banking philosophy. The loss of any of these commercial loan officers could adversely affect our loan portfolio and performance, and our ability to generate new loans. Many of our key employees have signed agreements with us agreeing not to compete with us in one or more of our markets for specified time periods if they leave employment with us. However, we may not be able to effectively enforce such agreements.

Some of the other financial institutions in our markets also require their key employees to sign agreements that preclude or limit their ability to leave their employment and compete with them or solicit their customers. These agreements make it more difficult for us to hire loan officers with experience in our markets who can immediately solicit their former or new customers on our behalf.

Future sales of our common stock or other securities may dilute the value of our common stock.

In many situations, our Board of Directors has the authority, without any vote of our shareholders, to issue shares of our authorized but unissued preferred or common stock, including shares authorized and unissued under our Stock Incentive Plan of 2006. In the future, we may issue additional securities, through public or private offerings, in order to raise additional capital. Any such issuance would dilute the percentage of ownership interest of existing shareholders and may dilute the per share book value of the common stock. In addition, option holders under our stock-based incentive plans may exercise their options at a time when we would otherwise be able to obtain additional equity capital on more favorable terms.

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We are subject to significant government regulation, and any regulatory changes may adversely affect us.

The banking industry is heavily regulated under both federal and state law. These regulations are primarily intended to protect customers, the federal deposit insurance fund, and the stability of the U.S. financial system, not our creditors or shareholders. Existing state and federal banking laws subject us to substantial limitations with respect to the making of loans, the purchase of securities, the payment of dividends and many other aspects of our business. Some of these laws may benefit us, others may increase our costs of doing business, or otherwise adversely affect us and create competitive advantages for others. Regulations affecting banks and financial services companies undergo continuous change, and we cannot predict the ultimate effect of these changes, which could have a material adverse effect on our profitability or financial condition. Federal economic and monetary policy may also affect our ability to attract deposits, make loans and achieve satisfactory interest spreads.

Our single-family real estate lending business faces significant change.

The Dodd-Frank Act significantly changed the regulation of single-family residential mortgage lending in the United States. Among other things, the law transferred rule-making and enforcement powers from a number of federal agencies to the CFPB, imposed new risk retention and recordkeeping requirements on lenders (such as our bank) that sell single-family residential mortgage loans in the secondary market, required revision of disclosure documents mandated by various federal laws, limited loan originator compensation and expanded recordkeeping and reporting requirements under other federal statutes. Regulations implementing the Dodd-Frank Act adopted in 2013 by the CFPB (i) require lenders to make a reasonable good faith determination of a prospective residential mortgage borrower’s ability to repay based on specific underwriting criteria and define the characteristics of “qualified mortgages” that presumptively satisfy the ability to pay requirement, (ii) impose new requirements on mortgage servicing that address many issues, including periodic billing statements, error resolution, force-placed insurance, payment crediting and payoff, early intervention with delinquent borrowers, and enhanced loss mitigation procedures, (iii) specify new limitations on loan originator compensation, (iv) further restrict certain high-cost mortgage loans, (v) expand mandated loan escrow accounts for certain loans, (vi) revise existing appraisal requirements under the Equal Credit Opportunity Act and require provision of a free copy of all appraisals to applicants for first lien loans, and (vii) combine in a single, new form required loan disclosures under the Truth-in-Lending Act (“TILA”) and the Real Estate Settlement Procedures Act (“RESPA”). Apart from use of the TILA/RESPA combined disclosure form (which becomes effective August 1, 2015), the effective dates of these changes are in 2014. These and other changes required by the Dodd-Frank Act will require substantial modifications to the entire mortgage lending and servicing industry. Their impact may involve changes to our operations and increased compliance costs in making single-family residential mortgage loans.

Minimum capital requirements are scheduled to increase.

The provisions of the Dodd-Frank Act relating to capital to be maintained by financial institutions approach convergence with the standards (generally known as Basel III) adopted in December, 2010 by the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision. Among other things, those standards contain a narrower definition of elements qualifying for inclusion as Tier 1 capital and higher minimum risk-based capital levels than those specified in previous U.S. law and regulations. In July, 2013, the U.S. federal bank regulatory agencies adopted regulations to implement the provisions of the Dodd-Frank Act and Basel III for U.S. financial institutions. The new regulations became applicable to us and our bank effective January 1, 2015.

The new regulations implement (i) revised definitions of regulatory capital elements, (ii) a new common equity Tier 1 (“CET 1”) minimum capital ratio requirement, (iii) an increase in the existing minimum Tier 1 capital ratio requirement, (iv) new limits on capital distributions and certain discretionary bonus payments if an institution does not hold a specified amount of CET 1 (called a capital conservation buffer) in addition to the amount required to meet its minimum risk-based capital requirements, (v) new risk-weightings for certain categories of assets, and (vi) other requirements applicable to banking organizations which have total consolidated assets of $250 billion or more, total consolidated on-balance sheet foreign exposure of $10 billion or more, elect to use the advanced measurement approach for calculating risk-weighted assets, or are subsidiaries of banking organizations that use the advanced measurement approach (“Advanced Approaches Entities”).

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Among other things, the new regulations generally require banking organizations to recognize in regulatory capital most components of accumulated other comprehensive income (“AOCI”), including accumulated unrealized gains and losses on available for sale securities. This requirement, which was not imposed under previous risk-based capital regulations, may be avoided by banking organizations, such as us and our bank, that are not Advanced Approaches Entities, by making a one-time, irrevocable election on the first quarterly regulatory report following the date on which the regulations become effective as to them. We intend to make the one-time, irrevocable election regarding the treatment of AOCI by March 31, 2015.

In addition, the new regulations (unlike the original proposal), permit companies such as us, which had total assets of less than $15 billion on December 31, 2009, and had issued trust preferred securities on or prior to May 19, 2010, to continue to include such securities in Tier 1 capital.

On January 1, 2015, for banking organizations such as us and our bank that are not Advanced Approaches Entities, the new regulations mandate a minimum ratio of CET 1 to standardized total risk-weighted assets (“RWA”) of 4.5%, an increased ratio of Tier 1 capital to RWA of 6.0% (compared to the current requirement of 4.0%), a total capital ratio (that is, the sum of Tier 1 and Tier 2 capital to RWA) of 8.0%, and a minimum leverage ratio (that is, Tier 1 capital to adjusted average total consolidated assets) of 4.0%. The calculation of these amounts will be affected by the new definitions of certain capital elements. The capital conservation buffer comprised solely of CET 1 will be phased-in commencing January 1, 2016, beginning at 0.625% of RWA and rising to 2.5% of RWA on January 1, 2019. Failure by a banking organization to maintain the aggregate required minimum capital ratios and capital conservation buffer will impair its ability to make certain distributions (including dividends and stock repurchases) and discretionary bonus payments to executive officers.

These increased minimum capital requirements may adversely affect our ability (and that of our bank) to pay cash dividends, reduce our profitability, or otherwise adversely affect our business, financial condition or results of operations. In the event of a need for additional capital to meet these requirements, there can be no assurance of our ability to raise funding in the equity and capital markets. Factors that we cannot control, such as the disruption of financial markets or negative views of the financial services industry generally, could impair our ability to raise qualifying equity capital. In addition, our ability to raise qualifying equity capital could be impaired if investors develop a negative perception of our financial prospects. If we were unable to raise qualifying equity capital, it might be necessary for us to sell assets in order to maintain required capital ratios. We may be unable to sell some of our assets, or we may have to sell assets at a discount from market value, either of which could adversely affect our results of operations, cash flow and financial condition.

We may need to raise additional capital in the future, and such capital may not be available when needed or at all.

We may need or want to raise additional capital in the future to provide us with sufficient capital resources and liquidity to meet our commitments and business needs, particularly if our asset quality or earnings were to deteriorate significantly. Our ability to raise additional capital will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and our financial performance. Economic conditions and any loss of confidence in financial institutions generally may increase our cost of funding and limit access to certain customary sources of capital.

There can be no assurance that capital will be available on acceptable terms or at all. Any occurrence that may limit our access to the capital markets, such as a decline in the confidence of equity or debt purchasers, or counterparties participating in the capital markets, may adversely affect our capital costs and our ability to raise capital and, potentially, our liquidity. Also, if we need to raise capital in the future, we may have to do so when many other financial institutions are also seeking to raise capital and would have to compete with those institutions for investors. An inability to raise additional capital on acceptable terms when needed could have a materially adverse effect on our business, financial condition and results of operations.

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We continually encounter technological change, and we may have fewer resources than our competitors to continue to invest in technological improvements.

The banking industry is undergoing technological changes with frequent introductions of new technology-driven products and services. In addition to better serving customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs. Our future success will depend, in part, on our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience as well as create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements than we do. There can be no assurance that we will be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers.

Our Articles of Incorporation and By-laws and the laws of the State of Michigan contain provisions that may discourage or prevent a takeover of our company and reduce any takeover premium.

Our Articles of Incorporation and By-laws, and the corporate laws of the State of Michigan, include provisions which are designed to provide our Board of Directors with time to consider whether a hostile takeover offer is in our and our shareholders’ best interest. These provisions, however, could discourage potential acquisition proposals and could delay or prevent a change in control. The provisions also could diminish the opportunities for a holder of our common stock to participate in tender offers, including tender offers at a price above the then-current market price for our common stock. These provisions could also prevent transactions in which our shareholders might otherwise receive a premium for their shares over then-current market prices, and may limit the ability of our shareholders to approve transactions that they may deem to be in their best interest.

The Michigan Business Corporation Act contains provisions intended to protect shareholders and prohibit or discourage various types of hostile takeover activities. In addition to these provisions and the provisions of our Articles of Incorporation and By-laws, federal law requires the Federal Reserve Board’s approval prior to acquiring “control” of a bank holding company. All of these provisions may delay or prevent a change in control without action by our shareholders and could adversely affect the price of our common stock.

There is a limited trading market for our common stock.

The price of our common stock has been, and will likely continue to be, subject to fluctuations based on, among other things, economic and market conditions for bank holding companies and the stock market in general, as well as changes in investor perceptions of our company. The issuance of new shares of our common stock also may affect the market for our common stock.

Our common stock is traded on the Nasdaq Global Select Market under the symbol “MBWM.” The development and maintenance of an active public trading market depends upon the existence of willing buyers and sellers, the presence of which is beyond our control. While we are a publicly-traded company, the volume of trading activity in our stock is still relatively limited. Even if a more active market develops, there can be no assurance that such a market will continue, or that our shareholders will be able to sell their shares at or above the offering price.

Our business is subject to operational risks.

We, like most financial institutions, are exposed to many types of operational risks, including the risk of fraud by employees or outsiders, unauthorized transactions by employees or operational errors. Operational errors may include clerical or record keeping errors or those resulting from faulty or disabled computer or telecommunications systems. Given our volume of transactions, certain errors may be repeated or compounded before they are discovered and successfully corrected. Our necessary dependence upon automated systems to record and process our transaction volume may further increase the risk that technical system flaws or employee tampering or manipulation of those systems will result in losses that are difficult to detect.

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We may also be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control, including, for example, computer viruses or electrical or telecommunications outages, which may give rise to losses in service to customers and to loss or liability to us. We are further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations to us, or will be subject to the same risk of fraud or operational errors by their respective employees as are we, and to the risk that our or our vendors’ business continuity and data security systems prove not to be adequate. We also face the risk that the design of our controls and procedures proves inadequate or is circumvented, causing delays in detection or errors in information. Although we maintain a system of controls designed to keep operational risks at appropriate levels, there can be no assurance that we will not suffer losses from operational risks in the future that may be material in amount.

We face the risk of cyber-attack to our computer systems.

Our computer systems, software and networks have been and will continue to be vulnerable to unauthorized access, loss or destruction of data (including confidential client information), account takeovers, unavailability of service, computer viruses or other malicious code, cyber-attacks and other events. These threats may derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. If one or more of these events occurs, it could result in the disclosure of confidential client information, damage to our reputation with our clients and the market, additional costs to us (such as repairing systems or adding new personnel or protection technologies), regulatory penalties and financial losses, to both us and our clients and customers. Such events could also cause interruptions or malfunctions in our operations (such as the lack of availability of our online banking system), as well as the operations of our clients, customers or other third parties. Although we maintain safeguards to protect against these risks, there can be no assurance that we will not suffer losses in the future that may be material in amount.

Damage to our reputation could materially harm our business.

Our relationship with many of our clients is predicated upon our reputation as a fiduciary and a service provider that adheres to the highest standards of ethics, service quality and regulatory compliance. Adverse publicity, regulatory actions, litigation, operational failures, the failure to meet client expectations and other issues with respect to one or more of our businesses could materially and adversely affect our reputation, our ability to attract and retain clients or our sources of funding for the same or other businesses. Preserving and enhancing our reputation also depends on maintaining systems and procedures that address known risks and regulatory requirements, as well as our ability to identify and mitigate additional risks that arise due to changes in our businesses and the marketplaces in which we operate, the regulatory environment and client expectations. If any of these developments has a material effect on our reputation, our business will suffer.     

Item 1B. Unresolved Staff Comments

We have received no written comments regarding our periodic or current reports from the staff of the Securities and Exchange Commission that were issued 180 days or more before the end of our 2014 fiscal year and that remain unresolved.

Item 2. Properties.

Our headquarters is located in our bank’s main office facility in Grand Rapids, Michigan. Our bank operates 53 banking offices throughout Western and Central Michigan, most of which are full-service facilities. We have larger banking facilities in Alma, Holland, Ionia, Kalamazoo, Lansing, Mt. Pleasant and West Branch. The remaining banking offices generally range in size from 1,200 to 3,200 square feet, based on the location and number of employees located at the facility. All but six of the banking offices are owned by our bank, with the remaining facilities rented under various operating lease agreements. In several instances, the banking offices contain more usable space than what is needed for current banking operations. This excess space, totaling approximately 23,500 square feet, is generally leased to unrelated businesses. In addition, certain functions operate out of our standalone facility located in Alma.

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We consider our properties and equipment to be well maintained, in good operating condition and capable of accommodating current growth forecasts. However, we may choose to add additional branch locations to expand our presence in current markets and/or in new markets or, alternatively, to consolidate, close or relocate branches if we believe it would be beneficial to our overall performance.

Item 3. Legal Proceedings.

From time to time, we may be involved in various legal proceedings that are incidental to our business. In the opinion of management, we are not a party to any legal proceedings that are material to our financial condition, either individually or in the aggregate.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is traded on the Nasdaq Global Select Market under the symbol “MBWM.” At March 6, 2015, there were 1,663 record holders of our common stock. In addition, we estimate that there were approximately 7,000 beneficial owners of our common stock who own their shares through brokers or banks. The following table shows the high and low sales prices for our common stock as reported by the Nasdaq Global Select Market for the periods indicated and the quarterly and special cash dividends paid by us during those periods.

	High		Low		Dividend
2014
First Quarter	$	22.15	$	18.82	$	0.12
Second Quarter		24.34		18.26		2.12
Third Quarter		23.58		18.40		0.12
Fourth Quarter		22.27		18.69		0.12
2013
First Quarter	$	17.29	$	16.03	$	0.10
Second Quarter		18.00		16.50		0.11
Third Quarter		22.41		17.87		0.12
Fourth Quarter		22.52		19.95		0.12

Holders of our common stock are entitled to receive dividends that the Board of Directors may declare from time to time. We may only pay dividends out of funds that are legally available for that purpose. We are a financial holding company and substantially all of our assets are held by our bank and its subsidiaries. Our ability to pay dividends to our shareholders depends primarily on our bank’s ability to pay dividends to us. Dividend payments and extensions of credit to us from our bank are subject to legal and regulatory limitations, generally based on capital levels and current and retained earnings, imposed by law and regulatory agencies with authority over our bank. The ability of our bank to pay dividends is also subject to its profitability, financial condition, capital expenditures and other cash flow requirements. In addition, under the terms of our subordinated debentures, we would be precluded from paying dividends on our common stock if an event of default has occurred and is continuing under the subordinated debentures, or if we exercised our right to defer payments of interest on the subordinated debentures, until the deferral ended.

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We and our bank are subject to regulatory capital requirements administered by state and federal banking agencies. Failure to meet the various capital requirements can initiate regulatory action that could have a direct material effect on our financial statements. Our bank’s ability to pay cash and stock dividends is subject to limitations under various laws and regulations and to prudent and sound banking practices.

On January 16, 2014, our Board of Directors declared a cash dividend on our common stock in the amount of $0.12 per share that was paid on March 10, 2014 to shareholders of record as of February 10, 2014. On May 9, 2014, our Board of Directors declared a cash dividend on our common stock in the amount of $0.12 per share that was paid on June 25, 2014 to shareholders of record as of June 13, 2014. On July 17, 2014, our Board of Directors declared a cash dividend on our common stock in the amount of $0.12 per share that was paid on September 24, 2014 to shareholders of record as of September 12, 2014. On October 16, 2014, our Board of Directors declared a cash dividend on our common stock in the amount of $0.12 per share that was paid on December 24, 2014 to shareholders of record as of December 12, 2014. In addition, on May 9, 2014, our Board of Directors declared a special cash dividend on our common stock in the amount of $2.00 per share that was paid on May 29, 2014 to shareholders of record as of May 22, 2014. The special cash dividend, in contemplation of the plan of merger with Firstbank, was paid to Mercantile shareholders prior to the effective date of the merger with Firstbank and before the issuance of Mercantile shares in exchange for Firstbank shares.

On January 10, 2013, our Board of Directors declared a cash dividend on our common stock in the amount of $0.10 per share that was paid on March 8, 2013 to shareholders of record as of February 8, 2013. On April 11, 2013, our Board of Directors declared a cash dividend on our common stock in the amount of $0.11 per share that was paid on June 10, 2013 to shareholders of record as of May 10, 2013. On July 11, 2013, our Board of Directors declared a cash dividend on our common stock in the amount of $0.12 per share that was paid on September 10, 2013 to shareholders of record as of August 9, 2013. On October 10, 2013, our Board of Directors declared a cash dividend on our common stock in the amount of $0.12 per share that was paid on December 10, 2013 to shareholders of record as of November 8, 2013.

On January 15, 2015, our Board of Directors declared a cash dividend on our common stock in the amount of $0.14 per share that will be paid on March 25, 2015 to shareholders of record as of March 13, 2015.

Issuer Purchases of Equity Securities

There were no issuer purchases of equity securities during the fourth quarter of 2014. However, on January 30, 2015, we announced that our Board of Directors had authorized a new program to repurchase up to $20.0 million of our common stock from time to time in open market transactions at prevailing market prices or by other means in accordance with applicable regulations. We expect to fund a majority of such repurchases from cash dividends paid to us from our bank.

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Shareholder Return Performance Graph

Set forth below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on our common stock (based on the last reported sales price of the respective year) with the cumulative total return of the Nasdaq Composite Index and the SNL Bank Nasdaq Index from December 31, 2009 through December 31, 2014. The following is based on an investment of $100 on December 31, 2009 in our common stock, the Nasdaq Composite Index and the SNL Bank Nasdaq Index, with dividends reinvested where applicable.

Item 6. Selected Financial Data.

The Selected Financial Data in this Annual Report is incorporated here by reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis included in this Annual Report is incorporated here by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The information under the heading “Market Risk Analysis” included in this Annual Report is incorporated here by reference.

Item 8. Financial Statements and Supplementary Data.

The Consolidated Financial Statements, the Notes to Consolidated Financial Statements and the Reports of Independent Registered Public Accounting Firm included in this Annual Report are incorporated here by reference.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None

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Item 9A. Controls and Procedures.

As of December 31, 2014, an evaluation was performed under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of December 31, 2014.

There have been no significant changes in our internal control over financial reporting during the quarter ended December 31, 2014, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). There are inherent limitations in the effectiveness of any system of internal control. Accordingly, even an effective system of internal control can provide only reasonable assurance with respect to financial statement preparation.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2014. This evaluation was based on criteria for effective internal control over financial reporting described in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our evaluation under the COSO framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2014. Refer to page F-36 for management’s report.

Our independent registered public accounting firm has issued an audit report on our internal control over financial reporting which is included in this Annual Report.

Item 9B. Other Information.

None

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information presented under the captions “Election of Directors,” “Executive Officers,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Corporate Governance – Code of Ethics” in the definitive Proxy Statement of Mercantile for our May 28, 2015 Annual Meeting of Shareholders (the “Proxy Statement”), a copy of which will be filed with the Securities and Exchange Commission before April 30, 2015, is incorporated here by reference.

We have a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the Audit Committee consist of David M. Cassard, Jeff A. Gardner, Edward B. Grant, and Calvin D. Murdock. The Board of Directors has determined that Messrs. Cassard, Grant, and Murdock, members of the Audit Committee, are qualified as audit committee financial experts, as that term is defined in the rules of the Securities and Exchange Commission. Messrs. Cassard, Gardner, Grant, and Murdock are independent, as independence for audit committee members is defined in the Nasdaq listing standards and the rules of the Securities and Exchange Commission.

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Item 11. Executive Compensation.

The information presented under the captions “Executive Compensation,” “Corporate Governance – Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” in the Proxy Statement is incorporated here by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information presented under the caption “Stock Ownership of Certain Beneficial Owners and Management” in the Proxy Statement is incorporated here by reference.

Equity Compensation Plan Information

The following table summarizes information, as of December 31, 2014, relating to compensation plans under which equity securities are authorized for issuance.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders (1)		253,317	$	17.15		277,000	(2)
Equity compensation plans not approved by security holders		0		0		0
Total		253,317	$	17.15		277,000

(1) These plans are Mercantile’s 2004 Employee Stock Option Plan and the Stock Incentive Plan of 2006. Also, in conjunction with the merger with Firstbank, we issued Mercantile stock options in replacement of all outstanding stock option grants that had been issued to Firstbank employees under the Firstbank Corporation Stock Option and Restricted Stock Plan of 1997 and the Firstbank Corporation Stock Compensation Plan.

(2) These securities are available under the Stock Incentive Plan of 2006. Incentive awards may include, but are not limited to, stock options, restricted stock, stock appreciation rights and stock awards. No further issuances will be made under the Firstbank Corporation Stock Option and Restricted Stock Plan of 1997 or the Firstbank Corporation Stock Compensation Plan.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information presented under the captions “Transactions with Related Persons” and “Corporate Governance – Director Independence” in the Proxy Statement is incorporated here by reference.

Item 14. Principal Accountant Fees and Services.

The information presented under the caption “Principal Accountant Fees and Services” in the Proxy Statement is incorporated here by reference.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) (1)     Financial Statements. The following financial statements and reports of the independent registered public accounting firm of Mercantile Bank Corporation and its subsidiaries are filed as part of this report:

Reports of Independent Registered Public Accounting Firm dated March 10, 2015 – BDO USA, LLP

Consolidated Balance Sheets --- December 31, 2014 and 2013

Consolidated Statements of Income for each of the three years in the period ended December 31, 2014

Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2014

Consolidated Statements of Changes in Shareholders’ Equity for each of the three years in the period ended December 31, 2014

Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2014

Notes to Consolidated Financial Statements

The Consolidated Financial Statements, the Notes to the Consolidated Financial Statements, and the Reports of Independent Registered Public Accounting Firm listed above are incorporated by reference in Item 8 of this report.

(2) Financial Statement Schedules

Not applicable

(b)     Exhibits:

Exhibit No.	EXHIBIT DESCRIPTION
2.1	Agreement and Plan of Merger dated August 14, 2013, incorporated by reference to exhibit 2.1 to our Current Report on Form 8-K filed August 15, 2013
2.2	First Amendment to Merger Agreement dated February 20, 2014, incorporated by reference to exhibit 10.1 to our Current Report on Form 8-K filed February 21, 2014
3.1	Our Articles of Incorporation are incorporated by reference to exhibit 3.1 of our Form 10-Q for the quarter ended June 30, 2009
3.2	Our Amended and Restated By-laws dated as of February 26, 2014 are incorporated by reference to exhibit 3.1 to our Current Report on Form 8-K filed February 26, 2015
4.1	Instruments defining the Rights of Security Holders – reference is made to Exhibits 3.1 and 3.2. In accordance with Regulation S-K Item 601(b)(4), Mercantile Bank Corporation is not filing copies of instruments defining the rights of holders of long-term debt because none of those instruments authorizes debt in excess of 10% of the total assets of Mercantile Bank Corporation and its subsidiaries on a consolidated basis. Mercantile Bank Corporation hereby agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.

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Exhibit No.	EXHIBIT DESCRIPTION
10.1	Our 2004 Employee Stock Option Plan is incorporated by reference to exhibit 10.1 of our Form 10-Q for the quarter ended September 30, 2004 *
10.2	Form of Mercantile Bank of Michigan Split Dollar Agreement that has been entered into between our bank and each of Michael H. Price, Robert B. Kaminski, Jr., Charles E. Christmas, and certain other officers of our bank is incorporated by reference to exhibit 10.33 of our Form 10-K for the year ended December 31, 2005 *
10.3	Amendment and Restatement of Stock Incentive Plan of 2006 dated November 18, 2008 is incorporated by reference to exhibit 10.39 of our Form 10-K for the year ended December 31, 2008 *
10.4	Form of Notice of Grant of Incentive Stock Option and Stock Option Agreement for incentive stock options granted after 2006 under our Stock Incentive Plan of 2006 is incorporated by reference to exhibit 10.41 of our Form 10-K for the year ended December 31, 2007 *
10.5	Form of Restricted Stock Award Agreement Notification of Award and Terms and Conditions of Award for restricted stock granted after 2006 under our Stock Incentive Plan of 2006 is incorporated by reference to exhibit 10.43 of our Form 10-K for the year ended December 31, 2007 *
10.6	Mercantile Bank Corporation Employee Stock Purchase Plan of 2014 is incorporated by reference to exhibit 4(b) of our Registration Statement on Form S-8 that became effective on June 27, 2014
10.7	Employment Agreement with Thomas Sullivan dated August 14, 2013, incorporated by reference to exhibit 10.2 of our Form 8-K filed August 15, 2013 *
10.8	Employment Agreement with Samuel Stone dated August 14, 2013, incorporated by reference to exhibit 10.3 of our Form 8-K filed August 15, 2013 *
10.9	2014 Mercantile Executive Officer Bonus Plan for the First Six Months of 2014, as amended by First Amendment, incorporated by reference to exhibit 10.1 of our Form 8-K filed May 22, 2014 *
10.10	Mercantile Executive Officer Bonus Plan for July – December 2014, incorporated by reference to exhibit 10.1 of our Form 8-K filed August 21, 2014 *
10.11	Credit Agreement and Form of Term Note between Mercantile Bank Corporation and U.S. Bank National Association dated as of May 21, 2014, incorporated by reference to exhibit 10.1 of our Form 8-K filed May 28, 2014
10.12	Employment Agreement dated as of November 13, 2014, effective as of December 31, 2014, among the company, our bank and Michael H. Price *
10.13	Employment Agreement dated as of November 13, 2014, effective as of December 31, 2014, among the company, our bank and Robert B. Kaminski, Jr *
10.14	Employment Agreement dated as of November 13, 2014, effective as of December 31, 2014, among the company, our bank and Charles E. Christmas *

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Exhibit No.	EXHIBIT DESCRIPTION
10.15	Mercantile Bank of Michigan Amended and Restated Deferred Compensation Plan dated as of November 13, 2014, effective on January 1, 2015 *
10.16	Director Fee Summary *
21	Subsidiaries of the company
23	Consent of BDO USA, LLP
31	Rule 13a-14(a) Certifications
32.1	Section 1350 Chief Executive Officer Certification
32.2	Section 1350 Chief Financial Officer Certification
101	The following information from Mercantile’s Annual Report on Form 10-K for the year ended December 31, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements

* Management contract or compensatory plan.

(c)	Financial Statements Not Included In Annual Report
	Not applicable

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MERCANTILE BANK CORPORATION

FINANCIAL INFORMATION

December 31, 2014 and 2013

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MERCANTILE BANK CORPORATION

FINANCIAL INFORMATION

December 31, 2014 and 2013

CONTENTS

SELECTED FINANCIAL DATA	F-3
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	F-4
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-34
REPORT BY MERCANTILE BANK CORPORATION’S MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING	F-36
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS	F-37
CONSOLIDATED STATEMENTS OF INCOME	F-38
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	F-39
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY	F-40
CONSOLIDATED STATEMENTS OF CASH FLOWS	F-43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F-45

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SELECTED FINANCIAL DATA

	2014 (*)			2013			2012			2011			2010
	(Dollars in thousands except per share data)
Consolidated Results of Operations:
Interest income	$	89,118		$	58,242		$	59,917		$	71,069		$	88,143
Interest expense		11,340			10,786			13,216			19,832			31,794
Net interest income		77,778			47,456			46,701			51,237			56,349
Provision for loan losses		(3,000	)		(7,200	)		(3,100	)		6,900			31,800
Noninterest income		10,028			6,872			7,994			7,282			9,244
Noninterest expense		65,610			36,403			39,624			41,495			47,156
Income (loss) before income tax expense (benefit)		25,196			25,125			18,171			10,124			(13,363	)
Income tax expense (benefit)		7,865			8,092			5,636			(27,361	)		(47	)
Net income (loss)		17,331			17,033			12,535			37,485			(13,316	)
Preferred stock dividends and accretion		0			0			1,030			1,343			1,295
Net income (loss) attributable to common shares	$	17,331		$	17,033		$	11,505		$	36,142		$	(14,611	)
Consolidated Balance Sheet Data:
Total assets	$	2,893,379		$	1,426,966		$	1,422,926		$	1,433,229		$	1,632,421
Cash and cash equivalents		172,738			146,965			136,003			76,372			64,198
Securities		446,611			143,139			150,275			184,953			235,175
Loans		2,089,277			1,053,243			1,041,189			1,072,422			1,262,630
Allowance for loan losses		20,041			22,821			28,677			36,532			45,368
Bank owned life insurance		57,861			51,377			50,048			48,520			46,743
Deposits		2,276,915			1,118,911			1,135,204			1,112,075			1,273,832
Securities sold under agreements to repurchase		167,569			69,305			64,765			72,569			116,979
Federal Home Loan Bank advances		54,022			45,000			35,000			45,000			65,000
Subordinated debentures		54,472			32,990			32,990			32,990			32,990
Shareholders’ equity		328,138			153,325			146,590			164,999			125,936
Consolidated Financial Ratios:
Return on average assets		0.76	%		1.22	%		0.82	%		2.36	%		(0.80	%)
Return on average shareholders’ equity		6.91	%		11.36	%		7.51	%		27.28	%		(10.62	%)
Average shareholders’ equity to average assets		11.05	%		10.77	%		10.90	%		8.66	%		7.56	%
Nonperforming loans to total loans		1.41	%		0.64	%		1.82	%		4.20	%		5.50	%
Allowance for loan losses to total originated loans		1.55	%		2.17	%		2.75	%		3.41	%		3.59	%
Tier 1 leverage capital		11.15	%		12.53	%		11.31	%		12.09	%		9.09	%
Tier 1 leverage risk-based capital		13.57	%		14.65	%		13.37	%		14.19	%		11.17	%
Total risk-based capital		14.43	%		15.91	%		14.63	%		15.46	%		12.45	%
Per Common Share Data:
Net income (loss):
Basic	$	1.28		$	1.96		$	1.33		$	4.20		$	(1.72	)
Diluted		1.28			1.95			1.30			4.07			(1.72	)
Tangible book value per share at end of period		15.49			17.54			16.84			16.73			12.20
Dividends declared		2.48			0.45			0.09			0.00			0.01
Dividend payout ratio		141.16	%		22.83	%		6.73	%		NA			NA

(*) – Includes the merger with Firstbank effective June 1, 2014. See Note 2 to the Consolidated Financial Statements for additional information.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

The following discussion and other portions of this Annual Report contain forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and about our company. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “is likely,” “plans,” “projects,” and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (“Future Factors”) that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. We undertake no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events (whether anticipated or unanticipated), or otherwise.

Future Factors include, among others, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; future impacts of the Firstbank merger; changes in banking regulation or actions by bank regulators; changes in tax laws; changes in prices, levies, and assessments; impact of technological advances; governmental and regulatory policy changes; outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; changes in the national and local economies; and other risk factors described in Item 1A of this Annual Report. These are representative of the Future Factors that could cause a difference between an ultimate actual outcome and a forward-looking statement.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“Management’s Discussion and Analysis”) is based on Mercantile Bank Corporation’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, and actual results could differ from those estimates. We have reviewed the analyses with the Audit Committee of our Board of Directors.

Allowance For Loan Losses: The allowance for loan losses (“allowance”) is maintained at a level we believe is adequate to absorb probable incurred losses identified and inherent in the loan portfolio. Our evaluation of the adequacy of the allowance is an estimate based on past loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values, guidance from bank regulatory agencies, and assessments of the impact of current and anticipated economic conditions on the loan portfolio. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in our judgment, should be charged-off. Loan losses are charged against the allowance when we believe the uncollectability of a loan is likely. The balance of the allowance represents our best estimate, but significant downturns in circumstances relating to loan quality or economic conditions could result in a requirement for an increased allowance in the future. Likewise, an upturn in loan quality or improved economic conditions may result in a decline in the required allowance in the future. In either instance, unanticipated changes could have a significant impact on the allowance and operating results.

We complete a migration analysis each quarter to assist us in determining appropriate reserve allocation factors for non-impaired commercial loans. Our migration takes into account various time periods, with most weight placed on the twelve-quarter time frame. We believe the twelve-quarter period represents an appropriate range of economic conditions, and that it provides for an appropriate basis in determining reserve allocation factors given current economic conditions and the general market consensus of economic conditions in the near future.

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Although the migration analysis provides an accurate historical accounting of our net loan losses, it is not able to fully account for environmental factors that will also very likely impact the collectability of our commercial loans as of any quarter-end date. Therefore, we incorporate the environmental factors as adjustments to the historical data. Environmental factors include both internal and external items. We believe the most significant internal environmental factor is our credit culture and the relative aggressiveness in assigning and revising commercial loan risk ratings, with the most significant external environmental factor being the assessment of the current economic environment and the resulting implications on our commercial loan portfolio.

The allowance is increased through a provision charged to operating expense. Uncollectable loans are charged-off through the allowance. Recoveries of loans previously charged-off are added to the allowance. A loan is considered impaired when it is probable that contractual principal and interest payments will not be collected either for the amounts or by the dates as scheduled in the loan agreement. Impairment is evaluated in aggregate for smaller-balance loans of similar nature such as residential mortgage, consumer and credit card loans, and on an individual loan basis for other loans. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing interest rate or at the fair value of collateral if repayment is expected solely from the collateral. The timing of obtaining outside appraisals varies, generally depending on the nature and complexity of the property being evaluated, general breadth of activity within the marketplace and the age of the most recent appraisal. For collateral dependent impaired loans, in most cases we obtain and use the “as is” value as indicated in the appraisal report, adjusting for any expected selling costs. In certain circumstances, we may internally update outside appraisals based on recent information impacting a particular or similar property, or due to identifiable trends (e.g., recent sales of similar properties) within our markets. The expected future cash flows exclude potential cash flows from certain guarantors. To the extent these guarantors are able to provide repayments, a recovery would be recorded upon receipt. Loans are evaluated for impairment when payments are delayed, typically 30 days or more, or when serious deficiencies are identified within the credit relationship. Our policy for recognizing income on impaired loans is to accrue interest unless a loan is placed on nonaccrual status. We put loans into nonaccrual status when the full collection of principal and interest is not expected.

Income Tax Accounting: Current income tax assets and liabilities are established for the amount of taxes payable or refundable for the current year. In the preparation of income tax returns, tax positions are taken based on interpretation of federal and state income tax laws for which the outcome may be uncertain. We periodically review and evaluate the status of our tax positions and make adjustments as necessary. Deferred income tax assets and liabilities are also established for the future tax consequences of events that have been recognized in our financial statements or tax returns. A deferred income tax asset or liability is recognized for the estimated future tax effects attributable to temporary differences that can be carried forward (used) in future years. The valuation of our net deferred income tax asset is considered critical as it requires us to make estimates based on provisions of the enacted tax laws. The assessment of the realizability of the net deferred income tax asset involves the use of estimates, assumptions, interpretations and judgments concerning accounting pronouncements, federal and state tax codes and the extent of future taxable income. There can be no assurance that future events, such as court decisions, positions of federal and state taxing authorities, and the extent of future taxable income will not differ from our current assessment, the impact of which could be significant to the consolidated results of operations and reported earnings.

Accounting guidance requires us to assess whether a valuation allowance should be established against our deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. In making such judgments, we consider both positive and negative evidence and analyze changes in near-term market conditions as well as other factors that may impact future operating results. Significant weight is given to evidence that can be objectively verified.

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Securities and Other Financial Instruments: Securities available for sale consist of bonds and notes which might be sold prior to maturity due to changes in interest rates, prepayment risks, yield and availability of alternative investments, liquidity needs and other factors. Securities classified as available for sale are reported at their fair value. Declines in the fair value of securities below their cost that are other than temporary are reflected as realized losses. In estimating other than temporary losses, we consider: (1) the length of time and extent that fair value has been less than carrying value; (2) the financial condition and near term prospects of the issuer; and (3) our ability and intent to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. Fair values for securities available for sale are generally obtained from outside sources and applied to individual securities within the portfolio. The difference between the amortized cost and the current fair value of securities is recorded as a valuation adjustment and reported in other comprehensive income.

Mortgage Servicing Rights: Mortgage servicing rights are recognized as assets based on the allocated fair value of retained servicing rights on mortgage loans sold. Servicing rights are carried at the lower of amortized cost or fair value and are expensed in proportion to, and over the period of, estimated net servicing income. We utilize a discounted cash flow model to determine the value of our servicing rights. The valuation model utilizes mortgage loan prepayment speeds, the remaining life of the mortgage loan pool, delinquency rates, our cost to service the mortgage loans and other factors to determine the cash flow that we will receive from servicing each grouping of mortgage loans. These cash flows are then discounted based on current interest rate assumptions to arrive at the fair value of the right to service those mortgage loans. Impairment is evaluated quarterly based on the fair value of the mortgage servicing rights, using groupings of the underlying mortgage loans classified by interest rates. Any impairment of a grouping is reported as a valuation allowance.

Goodwill: Generally accepted principles require us to determine the fair value of all of the assets and liabilities of an acquired entity, and record their fair value on the date of acquisition. We employ a variety of means in determination of the fair value, including the use of discounted cash flow analysis, market comparisons and projected revenue streams. For certain items that we believe we have the appropriate expertise to determine the fair value, we may choose to use our own calculation of the value. In other cases, where the value is not easily determined, we consult with outside parties to determine the fair value of the asset or liability. Once valuations have been adjusted, the net difference between the price paid for the acquired company and the fair value of its balance sheet is recorded as goodwill.

Goodwill is assessed at least annually for impairment and any such impairment is recognized in the period identified. A more frequent assessment is performed should events or changes in circumstances indicate the carrying value of the goodwill may not be recoverable. We may elect to perform a qualitative assessment for the annual impairment test. If the qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we elect not to perform a qualitative assessment, then we would be required to perform a quantitative test for goodwill impairment. The quantitative test is a two-step process consisting of comparing the carrying value of the reporting unit to an estimate of its fair value. If the estimated fair value of the reporting unit is less than the carrying value, goodwill is impaired and is written down to its estimated fair value. In 2014, we elected to perform a qualitative assessment for our annual impairment test and concluded our fair value was greater than its carrying amount; therefore, no further testing was required.

INTRODUCTION

This Management’s Discussion and Analysis should be read in conjunction with the consolidated financial statements contained in this Annual Report. This discussion provides information about the consolidated financial condition and results of operations of Mercantile Bank Corporation and its consolidated subsidiary, Mercantile Bank of Michigan (“our bank”), and of Mercantile Bank Real Estate Co., L.L.C. (“our real estate company”) and Mercantile Insurance Center, Inc. (“our insurance company”), subsidiaries of our bank. Unless the text clearly suggests otherwise, references to “us,” “we,” “our,” or “the company” include Mercantile Bank Corporation and its wholly-owned subsidiaries referred to above.

On December 12, 2013, our shareholders and the shareholders of Firstbank Corporation (“Firstbank”) overwhelmingly voted to approve an Agreement and Plan of Merger providing for the merger of Mercantile and Firstbank. The merger was consummated effective June 1, 2014. For additional information, see “Item 1 - Business – Firstbank Corporation Merger” and Note 2- Business Combination in this Annual Report.

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FINANCIAL OVERVIEW

We reported net income of $17.3 million, or $1.28 per diluted share, for 2014, compared to $17.0 million, or $1.95 per diluted share, for 2013. Our 2014 earnings results were significantly impacted by the Firstbank merger. In addition to our results reflecting seven months of operations as a combined organization, we recorded relatively large merger-related costs during the year. Merger-related costs totaled $5.4 million during 2014, equating to $3.8 million, or $0.28 per diluted share, on an after-tax basis. Merger-related costs totaled $1.2 million during 2013, equating to $1.1 million, or $0.13 per diluted share, on an after-tax basis. We do not expect to record any further significant costs related to the Firstbank merger in future periods. Our projected annual cost savings as disclosed at the time the merger was announced were $5.5 million, or approximately $1.4 million quarterly. Our fourth quarter 2014 results included realizing a vast majority of this target. We expect to realize the full amount of this target in the first quarter of 2015 and subsequent quarters.

The overall quality of our loan portfolio remains strong, which when combined with recoveries of prior loan charge-offs and the eliminations of and reductions in specific reserves, have produced a positive impact on our allowance calculations and allowed us to make no or negative provisions in eight consecutive quarters and in eleven of the last twelve quarters. In addition, we have recorded a net loan recovery during seven out of the last twelve quarters. We continue our collection efforts on charged-off loans, and expect to record recoveries in future periods; however, given the nature of these efforts, it is not practical to forecast the dollar amount and timing of the recoveries. The level of problem asset administration costs has declined substantially over the past several years, reflecting our improved asset quality.

New term loan originations totaled approximately $258 million during 2014. We also experienced net increases in commercial lines of credit, in large part reflecting lines that are part of new commercial lending relationships established during recent quarterly periods. The new loan pipeline remains strong, and at year-end 2014 we had over $150 million in unfunded loan commitments on commercial construction and development loans that are in the construction phase. We believe our loan portfolio is well diversified post-merger, with commercial real estate non-owner occupied loans comprising 27%, commercial and industrial loans equaling 26%, commercial real estate owner occupied loans comprising 21% and residential mortgage and consumer loans aggregating 18% of total loans as of December 31, 2014. As a percent of total commercial loans, commercial and industrial loans and commercial real estate owner occupied loans combined equaled 57% at year-end 2014.

The merger with Firstbank also had a significant impact on our funding structure, resulting in a well diversified funding mix and an approximate 20 basis point reduction in our cost of funds as a percent of average earning assets. As of December 31, 2014, noninterest-bearing checking accounts comprised 22% of total funds, interest-bearing checking and sweep accounts combined for 23%, savings deposits and money market deposit accounts aggregated to 23% and local time deposits accounted for 23%. Wholesale funds, comprised of brokered deposits and Federal Home Loan Bank (“FHLB”) advances, represented 9% of total funds.

FINANCIAL CONDITION

Primarily reflecting the merger with Firstbank, our total assets increased $1.47 billion during 2014, and totaled $2.89 billion as of December 31, 2014. Total loans increased $1.04 billion, securities available for sale were up $302 million and cash and cash equivalents increased $25.8 million. Total deposits increased $1.16 billion and securities sold under agreements to repurchase (“sweep accounts”) were up $98.3 million during 2014.

Earning Assets

Average earning assets equaled 92.0% of average total assets during 2014, compared to 92.3% during 2013. The loan portfolio continued to comprise a majority of earning assets, followed by securities, federal funds sold and interest-bearing deposits. Average total loans equaled 79.1% of average earning assets in 2014, while average securities, federal funds sold and interest-bearing deposits equaled a combined 20.9%. We expect the percentage of average assets comprised of average earning assets to remain relatively unchanged in future periods in comparison to 2014 levels; however, we also expect the loan component of earning assets to increase over the next couple of years as a sizable portion of our anticipated net loan growth is funded from monies from our excess interest-bearing deposit balances and from maturities and calls of U.S. Agency and municipal bonds and paydowns on mortgage-backed securities.

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Our loan portfolio has historically been primarily comprised of commercial loans, although less so now following the merger with Firstbank. Commercial loans increased $729 million during 2014, and at December 31, 2014 totaled $1.72 billion, or 82.1% of the loan portfolio. As of December 31, 2013, the commercial loan portfolio comprised 93.7% of total loans. Commercial and industrial loans were up $264 million, non-owner occupied commercial real estate (“CRE”) loans increased $196 million, owner occupied CRE loans increased $169 million, multi-family and residential rental loans increased $85.1 million and vacant land, land development and residential construction loans were up $15.2 million. As a percent of total commercial loans, commercial and industrial loans and commercial real estate owner occupied loans combined equaled 57.2% as of December 31, 2014.

We have significantly enhanced our commercial loan calling efforts over the past few years. We are very pleased with the approximately $664 million in new commercial term loan fundings over the past three years, and our current commercial loan pipeline reports indicate continued strong commercial loan funding opportunities in future periods. Also, as of December 31, 2014, availability on existing construction and development loans totaled over $150 million, with most of those commitments expected to be drawn during 2015. Further, we have made additional lending commitments totaling about $110 million, a majority of which we expect to be accepted and funded over the next 12 to 18 months. Our commercial loan officers also report substantial additional opportunities they are currently discussing with existing borrowers and potential new customers.

We continue to experience commercial loan principal paydowns and payoffs. While a portion of the principal paydowns and payoffs received thus far have been welcomed, such as on stressed lending relationships, we have also experienced significant instances where well-performing relationships have been refinanced at other financial institutions and other situations where the borrower has sold the underlying asset, paying off the loan. In many of those cases where the loans have been refinanced elsewhere, we believed the terms and conditions of the new lending arrangements were too aggressive, generally reflecting the very competitive banking environment in our markets. We remain committed to prudent underwriting standards that provide for an appropriate yield and risk relationship. In addition, we continue to receive accelerated principal paydowns from certain borrowers who have elevated deposit balances generally resulting from profitable operations and an apparent unwillingness to expand their business and /or replace equipment due to economic- and tax-related uncertainties. Usage of existing commercial lines of credit has remained relatively steady.

Reflecting the merger with Firstbank, one-to-four family mortgage loans increased $183 million and other consumer-related loans were up $124 million during 2014, and at December 31, 2014 totaled a combined $374 million, or 17.9% of the loan portfolio. One-to-four family mortgage loans and other consumer-related loans equated to 6.3% of total loans as of December 31, 2013.

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The following table summarizes our loan portfolio:

	12/31/14		12/31/13		12/31/12		12/31/11		12/31/10
Commercial:
Commercial & Industrial	$	550,629,000	$	286,373,000	$	285,322,000	$	266,548,000	$	288,515,000
Land Development & Construction		51,977,000		36,741,000		48,099,000		63,467,000		83,786,000
Owner Occupied
Commercial RE		430,406,000		261,877,000		259,277,000		264,426,000		277,377,000
Non-Owner Occupied
Commercial RE		559,594,000		364,066,000		324,886,000		334,165,000		449,104,000
Multi-Family & Residential Rental		122,772,000		37,639,000		50,922,000		68,299,000		77,188,000
Total Commercial		1,715,378,000		986,696,000		968,506,000		996,905,000		1,175,970,000
Retail:
1-4 Family Mortgages		214,695,000		31,467,000		33,766,000		33,181,000		35,474,000
Home Equity & Other Consumer Loans		159,204,000		35,080,000		38,917,000		42,336,000		51,186,000
Total Retail		373,899,000		66,547,000		72,683,000		75,517,000		86,660,000
Total	$	2,089,277,000	$	1,053,243,000	$	1,041,189,000	$	1,072,422,000	$	1,262,630,000

The following table presents total loans outstanding as of December 31, 2014, according to scheduled repayments of principal on fixed rate loans and repricing frequency on variable rate loans. Floating rate loans that are currently at interest rate floors, comprising a majority of our floating rate commercial loans, are treated as fixed rate loans and are reflected using maturity date and not repricing frequency.

	Less Than		One Through		More Than
	One Year		Five Years		Five Years		Total
Construction and land development	$	49,317,000	$	75,778,000	$	22,818,000	$	147,913,000
Real estate - residential properties		57,591,000		140,054,000		155,795,000		353,440,000
Real estate - multi-family properties		2,740,000		30,494,000		30,491,000		63,725,000
Real estate - commercial properties		192,177,000		668,671,000		89,950,000		950,798,000
Commercial and industrial		293,264,000		191,675,000		28,246,000		513,185,000
Consumer		4,372,000		43,663,000		12,181,000		60,216,000
Total loans	$	599,461,000	$	1,150,335,000	$	339,481,000	$	2,089,277,000
Fixed rate loans	$	329,023,000	$	1,133,206,000	$	332,789,000	$	1,795,018,000
Floating rate loans		270,438,000		17,129,000		6,692,000		294,259,000
Total loans	$	599,461,000	$	1,150,335,000	$	339,481,000	$	2,089,277,000

Our credit policies establish guidelines to manage credit risk and asset quality. These guidelines include loan review and early identification of problem loans to provide effective loan portfolio administration. The credit policies and procedures are meant to minimize the risk and uncertainties inherent in lending. In following these policies and procedures, we must rely on estimates, appraisals and evaluations of loans and the possibility that changes in these could occur quickly because of changing economic conditions. Identified problem loans, which exhibit characteristics (financial or otherwise) that could cause the loans to become nonperforming or require restructuring in the future, are included on the internal loan watch list. Senior management and the Board of Directors review this list regularly. Market value estimates of collateral on impaired loans, as well as on foreclosed and repossessed assets, are reviewed periodically; however, we have a process in place to monitor whether value estimates at each quarter-end are reflective of current market conditions. Our credit policies establish criteria for obtaining appraisals and determining internal value estimates. We may also adjust outside and internal valuations based on identifiable trends within our markets, such as recent sales of similar properties or assets, listing prices and offers received. In addition, we may discount certain appraised and internal value estimates to address distressed market conditions.

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Nonperforming assets, comprised of nonaccrual loans, loans past due 90 days or more and accruing interest and foreclosed properties, totaled $31.4 million (1.1% of total assets) as of December 31, 2014, compared to $9.6 million (0.7% of total assets) at December 31, 2013. The volume of nonperforming assets has generally been on a declining trend since the peak of $118 million on March 31, 2010. Reductions in nonperforming assets over the past couple of years primarily reflect principal payments on nonaccrual loans and sales proceeds on foreclosed properties. After placing less than $2.0 million of loans into nonaccrual status during 2013, that level increased to $25.9 million during 2014; however, over 85% of that figure is related to one commercial loan relationship that was placed into nonaccrual status in late 2014. We are working closely with the owners to address the identified financial and operating weaknesses. Notwithstanding this one relatively large loan relationship, we are pleased with the overall quality of the loan portfolio.

The following tables provide a breakdown of nonperforming assets by property type:

NONPERFORMING LOANS
	12/31/14		12/31/13		12/31/12		12/31/11		12/31/10
Residential Real Estate:
Land Development	$	84,000	$	40,000	$	1,188,000	$	1,179,000	$	11,775,000
Construction		0		0		319,000		686,000		1,037,000
Owner Occupied / Rental		4,229,000		4,219,000		4,321,000		6,018,000		9,149,000
		4,313,000		4,259,000		5,828,000		7,883,000		21,961,000
Commercial Real Estate:
Land Development		209,000		389,000		737,000		1,661,000		2,044,000
Construction		0		0		0		409,000		0
Owner Occupied		18,089,000		885,000		2,577,000		8,133,000		11,629,000
Non-Owner Occupied		378,000		169,000		9,093,000		23,914,000		25,428,000
		18,676,000		1,443,000		12,407,000		34,117,000		39,101,000
Non-Real Estate:
Commercial Assets		6,401,000		1,016,000		734,000		3,060,000		8,221,000
Consumer Assets		42,000		0		1,000		14,000		161,000
		6,443,000		1,016,000		735,000		3,074,000		8,382,000
Total	$	29,432,000	$	6,718,000	$	18,970,000	$	45,074,000	$	69,444,000

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OTHER REAL ESTATE OWNED & REPOSSESSED ASSETS
	12/31/14		12/31/13		12/31/12		12/31/11		12/31/10
Residential Real Estate:
Land Development	$	329,000	$	427,000	$	1,174,000	$	4,300,000	$	2,772,000
Construction		0		22,000		157,000		711,000		1,296,000
Owner Occupied / Rental		722,000		207,000		491,000		1,120,000		305,000
		1,051,000		656,000		1,822,000		6,131,000		4,373,000
Commercial Real Estate:
Land Development		0		92,000		52,000		450,000		410,000
Construction		0		0		0		0		0
Owner Occupied		247,000		164,000		957,000		2,509,000		3,111,000
Non-Owner Occupied		697,000		1,939,000		4,139,000		6,192,000		8,781,000
		944,000		2,195,000		5,148,000		9,151,000		12,302,000
Non-Real Estate:
Commercial Assets		0		0		0		0		0
Consumer Assets		0		0		0		0		0
		0		0		0		0		0
Total	$	1,995,000	$	2,851,000	$	6,970,000	$	15,282,000	$	16,675,000

The following tables provide a reconciliation of nonperforming assets:

NONPERFORMING LOANS RECONCILIATION
	2014			2013			2012			2011			2010
Beginning balance	$	6,718,000		$	18,970,000		$	45,074,000		$	69,444,000		$	85,050,000
Additions, net of transfers to ORE		25,870,000			1,726,000			4,998,000			12,750,000			51,503,000
Returns to performing status		(779,000	)		0			(774,000	)		(766,000	)		(11,124,000	)
Principal payments		(2,064,000	)		(10,934,000	)		(25,095,000	)		(24,795,000	)		(24,213,000	)
Loan charge-offs		(313,000	)		(3,044,000	)		(5,233,000	)		(11,559,000	)		(31,772,000	)
Total	$	29,432,000		$	6,718,000		$	18,970,000		$	45,074,000		$	69,444,000

OTHER REAL ESTATE OWNED & REPOSSESSED ASSETS RECONCILIATION
	2014			2013			2012			2011			2010
Beginning balance	$	2,851,000		$	6,970,000		$	15,282,000		$	16,675,000		$	26,608,000
Additions		2,593,000			2,181,000			11,808,000			11,504,000			9,159,000
Sale proceeds		(3,183,000	)		(5,585,000	)		(16,916,000	)		(10,340,000	)		(13,969,000	)
Valuation write-downs		(266,000	)		(715,000	)		(3,204,000	)		(2,557,000	)		(5,123,000	)
Total	$	1,995,000		$	2,851,000		$	6,970,000		$	15,282,000		$	16,675,000

The level of net loan charge-offs continued to improve during 2014, primarily reflecting a decline in nonperforming loans, an improvement in the overall quality of the loan portfolio and significant recoveries of prior period charge-offs. During 2014, we recorded loan charge-offs totaling $1.5 million and recoveries of prior period loan charge-offs aggregating $1.7 million, thereby providing for a net loan recovery of $0.2 million.

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The following table summarizes changes in the allowance for originated loan losses for the past five years:

	2014			2013			2012			2011			2010
Originated loans outstanding at year-end	$	1,246,116,000		$	1,053,243,000		$	1,041,189,000		$	1,072,422,000		$	1,262,630,000
Daily average balance of originated loans outstanding during the year	$	1,141,682,000		$	1,050,961,000		$	1,049,315,000		$	1,148,671,000		$	1,412,555,000
Balance of allowance for originated loans at beginning of year	$	22,821,000		$	28,677,000		$	36,532,000		$	45,368,000		$	47,878,000
Originated loans charged-off:
Commercial, financial and agricultural		(840,000	)		(3,596,000	)		(11,311,000	)		(12,373,000	)		(25,539,000	)
Construction and land development		(36,000	)		(822,000	)		(348,000	)		(2,919,000	)		(9,273,000	)
Residential real estate		(484,000	)		(862,000	)		(938,000	)		(4,422,000	)		(2,242,000	)
Instalment loans to individuals		(70,000	)		(10,000	)		(46,000	)		(183,000	)		(74,000	)
Total charge-offs		(1,430,000	)		(5,290,000	)		(12,643,000	)		(19,897,000	)		(37,128,000	)
Recoveries of previously charged-off originated loans:
Commercial, financial and agricultural		1,117,000			4,795,000			7,076,000			3,186,000			1,637,000
Construction and land development		180,000			897,000			285,000			441,000			995,000
Residential real estate		404,000			933,000			469,000			513,000			178,000
Instalment loans to individuals		0			9,000			58,000			21,000			8,000
Total recoveries		1,701,000			6,634,000			7,888,000			4,161,000			2,818,000
Net loan (charge-offs) recoveries		271,000			1,344,000			(4,755,000	)		(15,736,000	)		(34,310,000	)
Provision for loan losses for originated loans		(3,793,000	)		(7,200,000	)		(3,100,000	)		6,900,000			31,800,000
Balance of allowance for originated loans at end of year	$	19,299,000		$	22,821,000		$	28,677,000		$	36,532,000		$	45,368,000
Ratio of net loan (charge-offs) recoveries to average loans outstanding during the year		0.02	%		0.13	%		(0.45%	)		(1.37%	)		(2.43%	)
Ratio of allowance to originated loans outstanding at year-end		1.55	%		2.17	%		2.75	%		3.41	%		3.59	%

The following table illustrates the breakdown of the allowance balance by loan type (dollars in thousands) and of the total originated loan portfolio (in percentages):

	12/31/2014					12/31/2013					12/31/2012					12/31/2011					12/31/2010
			Loan					Loan					Loan					Loan					Loan
	Amount		Portfolio			Amount		Portfolio			Amount		Portfolio			Amount		Portfolio			Amount		Portfolio
Commercial, financial and agricultural	$	16,112		82.8	%	$	17,786		84.0	%	$	22,646		85.3	%	$	28,913		83.3	%	$	32,645		81.5	%
Construction and land development		1,012		8.8			1,858		8.9			2,246		6.2			3,484		7.5			7,019		9.3
Residential real estate		1,974		7.2			3,027		6.8			3,646		8.1			3,895		8.8			5,495		8.8
Instalment loans to individuals		125		1.2			68		0.3			139		0.4			158		0.4			172		0.4
Unallocated		76		0.0			0		0.0			0		0.0			82		0.0			37		0.0
Total	$	19,299		100.0	%	$	22,821		100.0	%	$	28,677		100.0	%	$	36,532		100.0	%	$	45,368		100.0	%

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The following table depicts the ratio of our allowance to nonperforming loans:

	12/31/14			12/31/13			12/31/12			12/31/11			12/31/10
Ratio of allowance to nonperforming loans		68.09	%		339.70	%		151.17	%		81.05	%		65.33	%

The ratio of our allowance to nonperforming loans had been on an increasing trend during the period of 2010 through 2013, generally reflecting total nonperforming loans declining at a faster rate than the balance of the allowance, as well as certain higher-balance commercial loan relationships being categorized as troubled debt restructurings resulting in higher specific reserve allocations. The decline during 2014 primarily reflects the aforementioned one commercial loan relationship that was placed into nonaccrual status during the fourth quarter of 2014.

In each accounting period, we adjust the allowance to the amount we believe is necessary to maintain the allowance at an adequate level. Through the loan review and credit departments, we establish specific portions of the allowance based on specifically identifiable problem loans. The evaluation of the allowance is further based on, but not limited to, consideration of the internally prepared Allowance Analysis, loan loss migration analysis, composition of the loan portfolio, third party analysis of the loan administration processes and portfolio, and general economic conditions.

The Allowance Analysis applies reserve allocation factors to non-impaired outstanding loan balances, the result of which is combined with specific reserves to calculate an overall allowance dollar amount. For non-impaired commercial loans, reserve allocation factors are based on the loan ratings as determined by our standardized grade paradigms and by loan purpose. Our commercial loan portfolio is segregated into five classes: 1) commercial and industrial loans; 2) vacant land, land development and residential construction loans; 3) owner occupied real estate loans; 4) non-owner occupied real estate loans; and 5) multi-family and residential rental property loans. The reserve allocation factors are primarily based on the historical trends of net loan charge-offs through a migration analysis whereby net loan losses are tracked via assigned grades over various time periods, with adjustments made for environmental factors reflecting the current status of, or recent changes in, items such as: lending policies and procedures; economic conditions; nature and volume of the loan portfolio; experience, ability and depth of management and lending staff; volume and severity of past due, nonaccrual and adversely classified loans; effectiveness of the loan review program; value of underlying collateral; lending concentrations; and other external factors, including competition and regulatory environment. Adjustments for specific lending relationships, particularly impaired loans, are made on a case-by-case basis. Non-impaired retail loan reserve allocations are determined in a similar fashion as those for non-impaired commercial loans, except that retail loans are segmented by type of credit and not a grading system. We regularly review the Allowance Analysis and make adjustments periodically based upon identifiable trends and experience.

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A migration analysis is completed quarterly to assist us in determining appropriate reserve allocation factors for non-impaired commercial loans. Our migration takes into account various time periods, with most weight placed on the twelve-quarter time frame. We believe the twelve-quarter period represents an appropriate range of economic conditions, and that it provides for an appropriate basis in determining reserve allocation factors given current economic conditions and the general market consensus of economic conditions in the near future.

Although the migration analysis provides an accurate historical accounting of our net loan losses, it is not able to fully account for environmental factors that will also very likely impact the collectability of our commercial loans as of any quarter-end date. Therefore, we incorporate the environmental factors as adjustments to the historical data. Environmental factors include both internal and external items. We believe the most significant internal environmental factor is our credit culture and the relative aggressiveness in assigning and revising commercial loan risk ratings, with the most significant external environmental factor being the assessment of the current economic environment and the resulting implications on our commercial loan portfolio.

The primary risk elements with respect to commercial loans are the financial condition of the borrower, the sufficiency of collateral, and timeliness of scheduled payments. We have a policy of requesting and reviewing periodic financial statements from commercial loan customers, and we have a disciplined and formalized review of the existence of collateral and its value. The primary risk element with respect to each residential real estate loan and consumer loan is the timeliness of scheduled payments. We have a reporting system that monitors past due loans and have adopted policies to pursue creditor’s rights in order to preserve our collateral position.

The allowance for originated loans equaled $19.3 million as of December 31, 2014, or 1.5% of total originated loans outstanding, compared to 2.2% as of December 31, 2013. We also had an allowance for acquired loans as of December 31, 2014, totaling $0.7 million. A large portion of the recent decline in the level of the allowance for originated loans reflects the elimination and reduction of specific reserves due to successful collection efforts, while the remainder of the decline is primarily associated with commercial loan upgrades and reductions in most reserve allocation factors on non-impaired commercial loans resulting from the impact of lower net loan charge-offs in recent periods on our migration calculations. The total allowance equaled 68.1% of nonperforming loans as of December 31, 2014, compared to 339.7% as of December 31, 2013. Although this particular measurement had been increasing during the past several years primarily due to total nonperforming loans declining at a faster rate than the balance of the allowance and certain accruing higher-balance commercial loan relationships having been categorized as troubled debt restructurings resulting in higher specific reserve allocations, the aforementioned relatively larger credit relationship that was put into nonaccrual status in late 2014 had a substantial impact on this measurement. This particular credit relationship is collateralized by real estate and equipment.

As of December 31, 2014, the allowance for originated loans was comprised of $9.1 million in general reserves relating to non-impaired loans, $4.4 million in specific reserve allocations relating to nonaccrual loans, and $5.8 million in specific allocations on other loans, primarily accruing loans designated as troubled debt restructurings. Troubled debt restructurings totaled $50.4 million at December 31, 2014, consisting of $26.4 million that are on nonaccrual status and $24.0 million that are on accrual status. The latter, while considered and accounted for as impaired loans in accordance with accounting guidelines, is not included in our nonperforming loan totals. Impaired loans with an aggregate carrying value of $1.3 million as of December 31, 2014 had been subject to previous partial charge-offs aggregating $2.3 million. Those partial charge-offs were recorded as follows: $0.2 million in 2014, $0.3 million in 2013, $1.0 million in 2012, $0.6 million in 2011 and $0.2 million in 2010. As of December 31, 2014, specific reserves allocated to impaired loans that had been subject to a previous partial charge-off totaled less than $0.1 million.

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The following table provides a breakdown of our loans categorized as troubled debt restructurings:

	12/31/14		12/31/13		12/31/12		12/31/11		12/31/10
Performing	$	24,001,000	$	30,247,000	$	38,148,000	$	26,155,000	$	12,263,000
Nonperforming		26,433,000		4,645,000		12,612,000		14,508,000		19,050,000
Total	$	50,434,000	$	34,892,000	$	50,760,000	$	40,663,000	$	31,313,000

Although we believe the allowance is adequate to absorb losses as they arise, there can be no assurance that we will not sustain losses in any given period that could be substantial in relation to, or greater than, the size of the allowance.

In large part reflecting the merger with Firstbank, securities increased $302 million during 2014, totaling $433 million as of December 31, 2014. The securities portfolio equaled 15.5% of average earning assets during 2014. Purchases during 2014, generally consisting of U.S. Government agency and municipal bonds, totaled $19.9 million. Proceeds from matured and called U.S. Government agency and municipal bonds during 2014 totaled $40.0 million and $18.0 million, respectively, with another $17.7 million from principal paydowns on mortgage-backed securities. At December 31, 2014, the securities portfolio was primarily comprised of U.S. Government agency bonds (45%), municipal bonds (33%) and U.S. Government agency issued or guaranteed mortgage-backed securities (22%). All of our securities are currently designated as available for sale, and therefore are stated at fair value. The fair value of securities designated as available for sale at December 31, 2014 totaled $433 million, including a net unrealized gain of $0.3 million. We maintain the securities portfolio at levels to provide adequate pledging and secondary liquidity for our daily operations. In addition, the securities portfolio serves a primary interest rate risk management function.

The following table reflects the composition of the securities portfolio:

	12/31/14					12/31/13					12/31/12
	Carrying					Carrying					Carrying
	Value		Percent			Value		Percent			Value		Percent
U.S. Government agency debt obligations	$	193,468,000		44.7	%	$	98,477,000		75.1	%	$	79,098,000		57.2	%
Mortgage-backed securities		93,561,000		21.6			13,558,000		10.3			21,996,000		15.9
Municipal general obligations		133,082,000		30.8			16,872,000		12.9			22,743,000		16.5
Municipal revenue bonds		10,873,000		2.5			916,000		0.7			1,817,000		1.3
Other investments		1,928,000		0.4			1,355,000		1.0			12,660,000		9.1
Totals	$	432,912,000		100.0	%	$	131,178,000		100.0	%	$	138,314,000		100.0	%

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FHLB of Indianapolis (“FHLBI”) stock totaled $13.7 million as of December 31, 2014, an increase of $1.7 million during 2014. During 2014, our FHLBI stock investment increased $7.2 million as a result of the merger with Firstbank, but then declined in late 2014 by $5.5 million reflecting the impact of an involuntary excess stock repurchase program by the FHLBI. We continue to receive regular quarterly cash dividends, and we expect a cash dividend will continue in future quarterly periods.

Market values on our U.S. Government agency bonds, mortgage-backed securities issued or guaranteed by U.S. Government agencies and municipal bonds are determined on a monthly basis with the assistance of a third party vendor. Evaluated pricing models that vary by type of security and incorporate available market data are utilized. Standard inputs include issuer and type of security, benchmark yields, reported trades, broker/dealer quotes and issuer spreads. The market value of certain non-rated securities issued by relatively small municipalities generally located within our markets is estimated at carrying value. We believe our valuation methodology provides for a reasonable estimation of market value, and that it is consistent with the requirements of accounting guidelines. Reference is made to Note 18 of the Notes to Consolidated Financial Statements for additional information.

The following table shows by class of maturities as of December 31, 2014, the amounts and weighted average yields (on a fully taxable-equivalent basis) of investment securities:

	Carrying		Average
	Value		Yield
Obligations of U.S. Government agencies:
One year or less	$	10,960,000		0.31	%
Over one through five years		73,105,000		1.08
Over five through ten years		26,365,000		2.31
Over ten years		83,038,000		3.45
		193,468,000		2.25
Obligations of states and political subdivisions:
One year or less		16,702,000		1.00
Over one through five years		74,869,000		1.62
Over five through ten years		43,826,000		3.43
Over ten years		8,558,000		5.49
		143,955,000		2.31
Mortgage-backed securities		93,561,000		1.79
Other investments		1,928,000		2.57
Totals	$	432,912,000		2.17	%

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Federal funds sold, consisting of excess funds sold overnight to correspondent banks, along with investments in interest-bearing deposits at correspondent and other banks, are used to manage daily liquidity needs and interest rate sensitivity. The average balance of these funds equaled 4.5% of average earning assets during 2014, compared to 7.1% during 2013. We anticipate the level of these earning assets to average approximately 2% of average earning assets in future periods, with the year-end 2014 excess over that amount expected to fund net loan growth during the first part of 2015.

Non-Earning Assets

In large part reflecting the merger with Firstbank, cash and due from bank balances increased $26.6 million during 2014, while premises and fixed assets increased $23.9 million. As of December 31, 2014, cash and due from bank balances totaled $43.8 million, and premises and fixed assets totaled $48.8 million. Foreclosed and repossessed assets totaled $2.0 million at December 31, 2014, compared to $2.9 million at December 31, 2013. While we expect further transfers from loans to foreclosed and repossessed assets in future periods reflecting our collection efforts on some impaired lending relationships, we believe the strong quality of our loan portfolio combined with the increased sales activity we have experienced during the past couple of years will continue and limit the overall increase in, and average balance of, this nonperforming asset category.

Source of Funds

Primarily reflecting the merger with Firstbank, total deposits increased $1.16 billion during 2014, totaling $2.28 billion as of December 31, 2014. Out-of-area deposits decreased $37.5 million during 2014, and equaled 7.7% of total deposits at year-end 2014, compared to 19.0% as of December 31, 2013.

Noninterest-bearing checking accounts increased $334 million during 2014. While the growth was primarily due to the merger with Firstbank, noninterest-bearing checking accounts also increased due to deposit account openings as part of new commercial lending relationships. Also primarily reflecting the impact of the Firstbank merger, interest-bearing checking accounts increased $216 million, savings deposits grew $278 million, money market deposit accounts increased $102 million and local time deposits grew $265 million during 2014.

Sweep accounts increased $98.3 million during 2014, totaling $168 million at December 31, 2014. The increase is primarily due to the merger with Firstbank. Our sweep account program entails transferring collected funds from certain business noninterest-bearing checking accounts to overnight interest-bearing repurchase agreements. Such repurchase agreements are not deposit accounts and are not afforded federal deposit insurance. All of our repurchase agreements are accounted for as secured borrowings.

Primarily reflecting the merger with Firstbank, FHLB advances increased $9.0 million during 2014, totaling $54.0 million as of December 31, 2014. The FHLB advances are generally collateralized by a blanket lien on our residential mortgage loan portfolio. Our borrowing line of credit at year-end 2014 totaled $410 million, with availability of $356 million.

Shareholders’ equity increased $175 million during 2014, primarily reflecting the merger with Firstbank. We issued almost 8.1 million shares of common stock, with a value of $173 million, in connection with the Firstbank merger. Net income totaled $17.3 million during 2014. Negatively impacting shareholders’ equity during 2014 were cash dividends on our common stock totaling $24.5 million. In accordance with the plan of merger with Firstbank, we declared and paid a special $2.00 per share cash dividend to Mercantile shareholders prior to the effective date of the merger and before the issuance of Mercantile shares in exchange for Firstbank shares. In addition, we declared and paid a $0.12 per share cash dividend during each of the four quarters during 2014. Positively impacting shareholders’ equity during 2014 was an increase in the net unrealized gain on securities available for sale of $5.6 million.

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RESULTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2014 and 2013

Summary

We recorded net income of $17.3 million, or $1.28 per basic and diluted share, for 2014, compared to net income of $17.0 million, or $1.96 per basic share and $1.95 per diluted share, for 2013. The results for 2014 and 2013 were impacted by the merger with Firstbank, which was consummated on June 1, 2014; operating results for 2014 include seven months of operations as a combined organization. After-tax merger-related costs totaled $3.8 million, or $0.28 per basic and diluted share, during 2014 and $1.1 million, or $0.13 per basic and diluted share, during 2013. We do not expect to record any further significant costs related to the Firstbank merger in future periods. Our projected annual cost savings as disclosed at the time the merger was announced were $5.5 million, or approximately $1.4 million quarterly. Our fourth quarter 2014 results included realizing a vast majority of this target. We expect to realize the full amount of this target in the first quarter of 2015 and subsequent quarters.

The improved earnings performance in 2014 compared to 2013 primarily resulted from increased net interest income, which more than offset increased overhead costs. The increased net interest income primarily resulted from the higher level of average earning assets associated with the completion of the merger. Various nonmerger-related costs necessary to operate the combined company, along with a higher level of merger-related costs, resulted in the increase in overhead costs. The continued improvement in the quality of our loan portfolio and associated recoveries of previously charged-off loans, reversals of specific reserves, reduced level of loan-rating downgrades and ongoing loan-rating upgrades produced a positive impact on our loan loss reserve calculations and allowed us to make negative provisions to the loan loss reserve during 2014 and 2013. Increased noninterest income also contributed to the improved earnings performance in 2014; substantially all categories of noninterest income benefitted from the consummation of the merger.

The following table shows some of the key performance and equity ratios for the years ended December 31, 2014 and 2013:

	2014			2013
Return on average assets		0.76	%		1.22	%
Return on average shareholders’ equity		6.91	%		11.36	%
Average shareholders’ equity to average assets		11.05	%		10.77	%

Net Interest Income

Net interest income, the difference between revenue generated from earning assets and the interest cost of funding those assets, is our primary source of earnings. Interest income (adjusted for tax-exempt income) and interest expense totaled $89.6 million and $11.3 million during 2014, respectively, providing for net interest income of $78.3 million. During 2013, interest income and interest expense equaled $58.7 million and $10.8 million, respectively, providing for net interest income of $47.9 million.

In comparing 2014 with 2013, interest income increased 52.6%, interest expense was up 5.1%, and net interest income increased 63.3%. The level of net interest income is primarily a function of asset size, as the weighted average interest rate received on earning assets is greater than the weighted average interest cost of funding sources; however, factors such as types and levels of assets and liabilities, the interest rate environment, interest rate risk, asset quality, liquidity, and customer behavior also impact net interest income as well as the net interest margin.

The $30.4 million increase in net interest income in 2014 compared to 2013 primarily resulted from a higher level of average earning assets. Average earning assets include Firstbank’s assets from the date of acquisition. During 2014, the net interest margin equaled 3.75%, up from 3.73% during 2013. Although our yield on earning assets declined in 2014 compared to 2013 primarily due to decreased yields on average securities and loans, our cost of funds declined at a greater rate, resulting in the improved net interest margin. The declines in the yields on securities and loans reflect the ongoing low interest rate environment, while the cost of funds was positively impacted by the absorption of Firstbank’s lower-costing interest-bearing liability base and the lowering of interest rates on certain non-certificate of deposit accounts in the latter part of the fourth quarter of 2013.

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The following table depicts the average balance, interest earned and paid, and weighted average rate of our assets, liabilities and shareholders’ equity during 2014, 2013 and 2012. The subsequent table also depicts the dollar amount of change in interest income and interest expense of interest-earning assets and interest-bearing liabilities, segregated between change due to volume and change due to rate. For tax-exempt investment securities, interest income and yield have been computed on a tax equivalent basis using a marginal tax rate of 35%. As a result, securities interest income was increased by $0.5 million in both 2014 and 2013 and $0.6 million in 2012.

(Dollars in thousands)	Years ended December 31,
	2 0 1 4								2 0 13								2 0 1 2
	Average					Average			Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate
Taxable securities	$	262,696		$	6,417		2.44	%	$	117,887		$	4,134		3.51	%	$	112,122		$	4,383		3.91	%
Tax-exempt securities		78,075			2,157		2.76			25,706			1,434		5.58			40,818			2,018		4.94
Total securities		340,771			8,574		2.52			143,593			5,568		3.88			152,940			6,401		4.19
Loans		1,653,605			80,824		4.89			1,050,961			52,924		5.04			1,049,315			53,898		5.14
Interest-bearing deposits		46,161			110		0.24			7,703			21		0.28			10,522			29		0.28
Federal funds sold		48,690			124		0.25			83,468			212		0.25			75,678			192		0.25
Total earning assets		2,089,227			89,632		4.29			1,285,725			58,725		4.57			1,288,455			60,520		4.70
Allowance for loan losses		(21,214	)							(26,505	)							(31,171	)
Cash and due from banks		35,248								17,420								16,217
Other non-earning assets		166,652								115,758								132,105
Total assets	$	2,269,913							$	1,392,398							$	1,405,606
Interest-bearing demand deposits	$	323,335		$	1,141		0.35	%	$	204,945		$	1,276		0.62	%	$	205,848		$	1,572		0.76	%
Savings deposits		223,658			405		0.18			55,214			142		0.26			42,452			118		0.28
Money market accounts		196,723			364		0.19			134,875			366		0.27			148,596			571		0.38
Time deposits		648,102			6,468		1.00			504,672			7,128		1.41			549,535			8,876		1.62
Total interest- bearing deposits		1,391,818			8,378		0.60			899,706			8,912		0.99			946,431			11,137		1.18
Short-term borrowings		105,474			122		0.12			65,939			80		0.12			61,930			157		0.25
Federal Home Loan Bank advances		51,456			636		1.24			39,082			533		1.36			39,809			993		2.49
Other borrowings		51,642			2,204		4.27			34,505			1,261		3.65			34,406			929		2.70
Total interest- bearing liabilities		1,600,390			11,340		0.71			1,039,232			10,786		1.04			1,082,576			13,216		1.22
Demand deposits		407,870								197,621								164,081
Other liabilities		10,774								5,555								5,675
Total liabilities		2,019,034								1,242,408								1,252,332
Average equity		250,879								149,990								153,274
Total liabilities and equity	$	2,269,913							$	1,392,398							$	1,405,606
Net interest income				$	78,292							$	47,939							$	47,304
Rate spread							3.58	%							3.53	%							3.48	%
Net interest margin							3.75	%							3.73	%							3.67	%

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	Years ended December 31,
	2014 over 2013									2013 over 2012
	Total			Volume			Rate			Total			Volume			Rate
Increase (decrease) in interest income
Taxable securities	$	2,283,000		$	3,842,000		$	(1,559,000	)	$	(249,000	)	$	218,000		$	(467,000	)
Tax exempt securities		723,000			1,740,000			(1,017,000	)		(584,000	)		(818,000	)		234,000
Loans		27,900,000			29,447,000			(1,547,000	)		(974,000	)		136,000			(1,110,000	)
Interest-bearing deposit balances		89,000			92,000			(3,000	)		(8,000	)		(8,000	)		0
Federal funds sold		(88,000	)		(88,000	)		0			20,000			20,000			0
Net change in tax-equivalent interest income		30,907,000			35,033,000			(4,126,000	)		(1,795,000	)		(452,000	)		(1,343,000	)
Increase (decrease) in interest expense
Interest-bearing demand deposits		(135,000	)		555,000			(690,000	)		(296,000	)		(7,000	)		(289,000	)
Savings deposits		263,000			316,000			(53,000	)		24,000			33,000			(9,000	)
Money market accounts		(2,000	)		136,000			(138,000	)		(205,000	)		(49,000	)		(156,000	)
Time deposits		(660,000	)		1,733,000			(2,393,000	)		(1,748,000	)		(689,000	)		(1,059,000	)
Short-term borrowings		42,000			46,000			(4,000	)		(77,000	)		10,000			(87,000	)
Federal Home Loan Bank advances		103,000			157,000			(54,000	)		(460,000	)		(18,000	)		(442,000	)
Other borrowings		943,000			705,000			238,000			332,000			3,000			329,000
Net change in interest expense		554,000			3,648,000			(3,094,000	)		(2,430,000	)		(717,000	)		(1,713,000	)
Net change in tax-equivalent net interest income	$	30,353,000		$	31,385,000		$	(1,032,000	)	$	635,000		$	265,000		$	370,000

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Interest income is primarily generated from the loan portfolio, and to a significantly lesser degree, from securities, federal funds sold, and interest-bearing deposits. Interest income increased $30.9 million during 2014 from that earned in 2013, totaling $89.6 million in 2014 compared to $58.7 million in the previous year. The increase in interest income is attributable to a higher level of average earning assets, which more than offset a decreased yield on average earning assets. During 2014 and 2013, earning assets had an average yield (tax equivalent-adjusted basis) of 4.29% and 4.57%, respectively. The decline in earning asset yield in 2014 mainly resulted from a decreased yield on average securities, and to a lesser extent, a decreased yield on average loans. During 2014, earning assets averaged $2.09 billion, or $803.5 million higher than average earning assets during 2013. Average loans increased $602.6 million, average securities increased $197.2 million, average interest-bearing deposits increased $38.5 million, and average federal funds sold decreased $34.8 million.

Interest income generated from the loan portfolio increased $27.9 million in 2014 compared to the level earned in 2013; growth in the loan portfolio during 2014 resulted in a $29.4 million increase in interest income, while a decline in loan yield from 5.04% in 2013 to 4.89% in 2014 resulted in a $1.5 million decrease in interest income. The lower yield on average loans mainly resulted from a decreased yield on average commercial loans, which equaled 4.83% in 2014 compared to 5.06% in 2013. The commercial loan yield was negatively impacted by the lowering of rates on certain commercial loans throughout 2013 and 2014 as a result of borrowers warranting decreased loan rates due to improved financial performance, the renewal of certain maturing term loans at lower rates, and competitive pricing pressures. In addition, the commercial loan yield was negatively impacted by an ongoing interest rate risk management strategy implemented in early 2011 whereby certain commercial loan relationships are being converted from the Mercantile Bank Prime Rate to the Wall Street Journal Prime Rate; this strategy, which helps mitigate interest rate risk exposure in an increasing rate environment, has a short-term negative impact on net interest income as the conversions generally involve interest rate reductions. Accretion of acquired loans totaled $3.2 million during 2014.

Interest income generated from the securities portfolio increased $3.0 million in 2014 compared to the level earned in 2013 due to portfolio growth associated with the merger with Firstbank, which more than offset a lower yield on average securities.  The higher average portfolio balance resulted in a $5.6 million increase in interest income, while the lower yield on average securities equated to a decrease in interest income of $2.6 million.  Average securities equaled $340.8 million during 2014, up from $143.6 million during 2013.  The yield on securities equaled 2.52% in 2014 compared to 3.88% in 2013; the lower yield on average securities primarily resulted from decreased yields on municipal securities, mortgage-backed securities, and U.S. Government agency bonds, reflecting the ongoing low interest rate environment.

Interest income earned on federal funds sold decreased $0.1 million in 2014 compared to 2013 due to a lower average balance, while interest income earned on interest-bearing deposits increased $0.1 million due to a higher average balance, which more than offset a slight decline in yield.

Interest expense is primarily generated from interest-bearing deposits, and to a lesser degree, from subordinated debentures, FHLB advances, repurchase agreements, and other borrowings. Interest expense increased $0.5 million during 2014 from that expensed in 2013, totaling $11.3 million in 2014 compared to $10.8 million in the previous year. The increase in interest expense is attributable to a higher level of average interest-bearing liabilities, primarily reflecting the completion of the merger, which more than offset a decreased cost of funds.

During 2014 and 2013, interest-bearing liabilities had a weighted average rate of 0.71% and 1.04%, respectively; a decline in interest expense of $3.1 million was recorded during 2014 due to the decreased cost of funds. The absorption of Firstbank’s lower-costing interest-bearing liability base and the lowering of interest rates on certain non-certificate of deposit accounts in the latter part of the fourth quarter of 2013 positively impacted the cost of funds during 2014. In addition, maturing fixed-rate certificates of deposit were renewed at lower rates, replaced by lower-costing funds, or allowed to runoff during 2013 and 2014.

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During 2014, interest-bearing liabilities averaged $1.60 billion, or $561.2 million higher than average interest-bearing liabilities of $1.04 billion during the prior year. Growth in these liabilities resulted in increased interest expense of $3.6 million. Interest-bearing liabilities include Firstbank’s liabilities from the date of acquisition. Average interest-bearing deposits were up $492.1 million, while average short-term borrowings increased $39.6 million, average other borrowings increased $17.1 million, and average FHLB advances increased $12.4 million.

Average certificates of deposit increased $143.4 million during 2014, which equated to an increase in interest expense of $1.7 million. A $2.4 million reduction in interest expense resulted from a decrease in the average rate paid as higher-rate certificates of deposit matured and were renewed at lower rates, replaced with lower-costing funds, or allowed to runoff throughout 2013 and 2014. An increase in other average interest-bearing deposit accounts, totaling $348.7 million, equated to a $1.0 million increase in interest expense, while a decrease in the average rate paid on these deposit accounts resulted in a $0.9 million decline in interest expense.

Average short-term borrowings, comprised entirely of repurchase agreements, increased $39.6 million during 2014, resulting in a slight increase in interest expense. Average FHLB advances increased $12.4 million, resulting in a $0.2 million increase in interest expense, while a lower average rate paid on the advances resulted in a $0.1 million decrease in interest expense. A $17.1 million increase in average other borrowings, which is comprised of subordinated debentures and deferred director and officer compensation programs, equated to a $0.7 million increase in interest expense, while a higher average rate paid on these borrowings resulted in a $0.2 million increase in interest expense.

Net interest income and the net interest margin were affected by purchase accounting accretion and amortization entries associated with the fair value measurements recorded effective June 1, 2014.  An increase in interest income on loans totaling $3.2 million, as well as a decrease in interest expense on deposits and FHLB advances aggregating $1.4 million, were recorded during the seven months subsequent to consummation of the Firstbank merger. An increase in interest expense on subordinated debentures totaling $0.4 million was also recorded during the same time period. Mercantile expects to continue to record adjustments in interest income on loans and interest expense on subordinated debentures in future periods; however, the adjustments to interest expense on deposits and FHLB advances will no longer occur after July of 2015 in accordance with our fair value measurements at the time of the merger.  The resulting increase in interest expense will negatively affect our net interest margin by approximately nine basis points in future periods starting after July 31, 2015.  An ongoing reallocation of our earning asset mix will help offset this negative impact, as excess lower-yielding overnight funds and cash flows from lower-yielding investments are invested into higher-yielding loans.

Provision for Loan Losses

A negative loan loss provision expense of $3.0 million was recorded in 2014, compared to a negative provision expense of $7.2 million recorded in 2013. The negative provision expense reflects recoveries of previously charged-off loans, reversals of specific reserves, a reduced level of loan-rating downgrades, and ongoing loan-rating upgrades as the quality of the loan portfolio continued to improve. Continued progress in the stabilization of economic and real estate market conditions and resulting collateral valuations also positively impacted provision expense.

Net loan recoveries of $0.2 million were recorded during 2014, compared to net loan recoveries of $1.3 million recorded during the prior year. The allowance for originated loans, as a percentage of total originated loans, was 1.6% as of December 31, 2014, compared to 2.2% as of December 31, 2013. Our allowance for acquired loans totaled $0.7 million as of December 31, 2014.

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Noninterest Income

Noninterest income totaled $10.0 million in 2014, an increase of $3.1 million, or 45.9%, from the $6.9 million earned in 2013. The increase in noninterest income was mainly due to higher debit and credit card fee income, service charges on deposit accounts, and mortgage referral and sale fees. These categories of noninterest income benefited from the consummation of the merger with Firstbank. An industry-wide slowdown in mortgage banking activity negatively affected our mortgage banking income during 2014; however, reflecting lower interest rates, mortgage banking income in the fourth quarter of 2014 increased approximately 21 percent in comparison to the linked quarter, and was approximately 10 percent below what Firstbank and Mercantile combined had achieved in the fourth quarter of 2013. During the third quarter of 2014, mortgage banking income was less than half of what the two companies combined recorded during the third quarter of 2013.

Noninterest Expense

Noninterest expense during 2014 totaled $65.6 million, an increase of $29.2 million, or 80.2%, from the $36.4 million expensed in 2013. The increase in noninterest expense primarily resulted from higher salary and benefit expenses; these expenses totaled $33.7 million during 2014, an increase of $13.4 million, or 66.0%, from the $20.3 million expensed during 2013. The increase in salary and benefit expenses was mainly due to the increase in employees associated with the completion of the merger with Firstbank, along with the hiring of additional staff members over the past year and merit pay increases. As of December 31, 2014, full-time equivalent employees numbered 653, up from 241 as of December 31, 2013. In addition, we recorded core deposit intangible expense totaling $1.9 million during the last seven months of 2014.

Increases in merger-related expenses and other categories of nonmerger-related costs necessary to operate the combined company also contributed to the higher level of overhead costs. Pre-tax merger-related costs totaled $5.4 million in 2014 compared to $1.2 million in 2013.

Federal Income Tax Expense

During 2014, we recorded income before federal income tax of $25.2 million and a federal income tax expense of $7.9 million, compared to income before federal income tax of $25.1 million and a federal income tax expense of $8.1 million during 2013. The decline in federal income tax expense resulted from a decrease in our effective tax rate from 32.2% in 2013 to 31.2% in 2014, generally reflecting a higher level of tax-exempt interest income in 2014.

Preferred Stock Dividends and Accretion

Preferred stock dividends and discount accretion totaled $1.0 million during 2012. No preferred stock dividends and discount accretion were recorded during 2014 or 2013 as we repurchased the $21.0 million in non-voting preferred stock issued in May of 2009 to the U.S. Department of the Treasury under the Treasury’s Capital Purchase Program, as part of the Troubled Asset Relief Program, during the second quarter of 2012.

RESULTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2013 and 2012

Summary

We recorded net income attributable to common shares of $17.0 million, or $1.96 per basic share and $1.95 per diluted share, for 2013, compared to net income attributable to common shares of $11.5 million, or $1.33 per basic share and $1.30 per diluted share, for 2012. The results for 2013 include costs associated with our pending merger with Firstbank Corporation. On an after-tax basis, we expensed $1.2 million during 2013, nearly all of which was expensed during the third and fourth quarters.

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The improved earnings performance in 2013 compared to 2012 resulted from a larger negative loan loss provision, decreased overhead costs, lower preferred stock dividends and discount accretion, and increased net interest income. The continued improvement in the quality of our loan portfolio and recoveries of prior period loan charge-offs produced a positive impact on our loan loss reserve calculations and allowed us to make negative provisions to the loan loss reserve during 2013 and 2012. The decline in preferred stock dividends and discount accretion in 2013 compared to 2012 resulted from us repurchasing the non-voting preferred stock issued in May of 2009 to the U.S. Department of the Treasury during the second quarter of 2012.

The decline in overhead costs in 2013 mainly resulted from decreased problem asset administration and resolution costs. Gains on sales of other real estate, which are netted against problem asset costs, contributed to the reduction in costs associated with the administration and resolution of problem assets in 2013 compared to the prior year; excluding the impact of these gains, problem asset costs still decreased significantly in 2013 compared to 2012. Costs associated with the administration and resolution of problem assets remained elevated; however, these costs trended downward during 2011, 2012, and 2013 as the level of problem assets declined. Although decreasing, the level of problem assets remained elevated compared to pre-2006 levels as a result of the state, regional and national economic struggles experienced over the past few years and related impact on certain of our borrowers.

A higher net interest margin, which more than offset a slight decline in average earning assets, resulted in an increased level of net interest income in 2013 compared to 2012. The yield on average earning assets, although declining in comparison to 2012 primarily due to decreased yields on average loans and securities, was relatively stable throughout 2013 as the collection of unaccrued interest on several larger nonaccrual commercial loan relationships that were paid off during the year and the collection of prepayment fees associated with several larger performing commercial loan relationships substantially offset a high level of lower-yielding federal funds sold. The cost of funds declined in 2013 compared to 2012 mainly due to decreases in the costs of various certificate of deposit account categories, certain non-certificate of deposit account categories, FHLB advances, and repurchase agreements and a change in interest-bearing liability mix, most notably a decrease in various higher-costing average certificates of deposit account categories and increases in certain lower-costing non-certificate of deposit account categories and repurchase agreements as a percentage of average interest-bearing liabilities.

The following table shows some of the key performance and equity ratios for the years ended December 31, 2013 and 2012:

	2013			2012
Return on average assets		1.22	%		0.82	%
Return on average shareholders’ equity		11.36	%		7.51	%
Average shareholders’ equity to average assets		10.77	%		10.90	%

Net Interest Income

Net interest income, the difference between revenue generated from earning assets and the interest cost of funding those assets, is our primary source of earnings. Interest income (adjusted for tax-exempt income) and interest expense totaled $58.7 million and $10.8 million during 2013, respectively, providing for net interest income of $47.9 million. During 2012, interest income and interest expense equaled $60.5 million and $13.2 million, respectively, providing for net interest income of $47.3 million.

In comparing 2013 with 2012, interest income decreased 3.0%, interest expense was down 18.4%, and net interest income increased 1.3%. The level of net interest income is primarily a function of asset size, as the weighted average interest rate received on earning assets is greater than the weighted average interest cost of funding sources; however, factors such as types and levels of assets and liabilities, interest rate environment, interest rate risk, asset quality, liquidity, and customer behavior also impact net interest income as well as the net interest margin.

The $0.6 million increase in net interest income in 2013 compared to 2012 resulted from an improved net interest margin, which more than offset a slight decline in average earning assets. During 2013, the net interest margin equaled 3.73%, up from 3.67% during 2012. Although our yield on earning assets declined in 2013 compared to 2012 primarily due to a decreased yield on average loans, our cost of funds declined at a greater rate, resulting in the improved net interest margin. The decline in loan yield primarily resulted from a decreased yield on commercial loans, while the cost of funds decreased primarily due to decreases in the costs of various certificate of deposit account categories, certain non-certificate of deposit account categories, FHLB advances, and repurchase agreements and a change in funding mix, most notably a decrease in higher-costing average certificates of deposit and increases in certain lower-costing non-certificate of deposit accounts, noninterest-bearing deposit accounts, and repurchase agreements as a percentage of average total funding sources.

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Interest income is primarily generated from the loan portfolio, and to a significantly lesser degree, from securities, federal funds sold, and interest-bearing deposit balances. Interest income decreased $1.8 million during 2013 from that earned in 2012, totaling $58.7 million in 2013 compared to $60.5 million in the previous year. The reduction in interest income is attributable to a decreased yield on average earning assets and, to a much lesser extent, a lower level of average earning assets. During 2013 and 2012, earning assets had an average yield (tax equivalent-adjusted basis) of 4.57% and 4.70%, respectively. The decline in earning asset yield in 2013 mainly resulted from a decreased yield on average loans, and to a lesser extent, a decreased yield on average securities. During 2013, earning assets averaged $1.29 billion, or $2.7 million lower than average earning assets during 2012. Average securities were down $9.3 million, average federal funds sold increased $7.8 million, average interest-bearing deposit balances decreased $2.8 million, and average loans increased $1.6 million.

Interest income generated from the loan portfolio decreased $1.0 million in 2013 compared to the level earned in 2012; a decline in loan yield from 5.14% in 2012 to 5.04% in 2013 resulted in a $1.1 million decrease in interest income, while growth in the loan portfolio during 2013 resulted in a $0.1 million increase in interest income. The lower yield on average loans mainly resulted from a decreased yield on average commercial loans, which equaled 5.06% in 2013 compared to 5.16% in 2012. The commercial loan yield was negatively impacted by the lowering of rates on certain commercial loans throughout 2012 and 2013 as a result of borrowers warranting decreased loan rates due to improved financial performance, the renewal of certain maturing term loans at lower rates, and competitive pricing pressures. In addition, the commercial loan yield was negatively impacted by an ongoing interest rate risk management strategy implemented in early 2011 whereby certain commercial loan relationships are being converted from the Mercantile Bank Prime Rate to the Wall Street Journal Prime Rate; this strategy, which helps mitigate interest rate risk exposure in an increasing rate environment, has a short-term negative impact on net interest income as the conversions generally involve interest rate reductions. A declining level of nonaccrual loans and the collection of unaccrued interest on nonaccrual commercial loan relationships that were paid off and commercial loan prepayment fees helped mitigate the negative impact of these factors on the commercial loan yield. Unaccrued interest totaling $1.9 million was collected on the paid off nonaccrual commercial loan relationships and recorded as interest income during 2013.

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Interest income generated from the securities portfolio decreased $0.8 million in 2013 compared to the level earned in 2012 due to portfolio contraction and a lower yield on average securities, which equaled 3.88% in 2013 compared to 4.19% in 2012. The reduced average portfolio balance resulted in a $0.6 million decrease in interest income, while the lower yield on average securities equated to a decrease in interest income of $0.2 million. Average securities equaled $143.6 million during 2013, down from $152.9 million during 2012 primarily due to decreases in the average balances of mortgage-backed securities, municipal securities, and Michigan Strategic Fund bonds, which more than offset an increase in the average balance of U.S. Government agency bonds. The lower yield on average securities resulted from a decreased yield on U.S. Government agency bonds, reflecting a decline in market rates, and a shift in the securities portfolio mix from higher-yielding mortgage-backed and municipal securities to lower-yielding agency bonds. The yield on U.S. Government agency bonds was 3.28% during 2013 compared to 3.70% during 2012. Purchases of U.S. Government agency bonds with lower yields during 2012 and 2013 using proceeds received from called bonds of the same type and called and matured municipal securities and principal paydowns on mortgage-backed securities negatively impacted the yield on average securities. Proceeds received from called U.S. Government agency bonds totaled $78.4 million and $20.0 million in 2012 and 2013, respectively, while proceeds from called and matured municipal bonds totaled $7.1 million and $6.1 million in 2012 and 2013, respectively. Principal payments received on mortgage-backed securities totaled $11.7 million in 2012 and $7.8 million in 2013. The bond purchases were necessary to meet pledging requirements and internal funds management policy guidelines. Unaccreted discount of $30,000 related to called U.S. Government agency bonds was recognized as income during 2013; excluding this discount, the yield on U.S. Government agency bonds would have been 3.25% in 2013. Unaccreted discount of $116,000 related to called U.S. Government agency bonds was recognized as income during 2012; excluding this discount, the yield on U.S. Government agency bonds would have been 3.54% in 2012. Average U.S. Government agency bonds, municipal securities, and mortgage-backed securities represented 61.0%, 14.3%, and 11.8%, respectively, of average total securities during 2013 compared to 46.0%, 18.5%, and 18.6%, respectively, during 2012. A decline in the market value of the available for sale securities portfolio during 2013 partially offset the negative impacts of the decreased yield on U.S. Government agency bonds and the shift in securities portfolio mix on portfolio yield. The average net unrealized loss on available for sale securities equaled $1.5 million during 2013, while the average net unrealized gain on available for sale securities equaled $5.1 million during 2012.

Interest income earned on federal funds sold increased slightly in 2013 compared to 2012 due to a higher average balance, while interest income earned on interest-bearing deposit balances decreased slightly due to a lower average balance.

Interest expense is primarily generated from interest-bearing deposits, and to a lesser degree, from subordinated debentures, FHLB advances, repurchase agreements, and other borrowings. Interest expense decreased $2.4 million during 2013 from that expensed in 2012, totaling $10.8 million in 2012 compared to $13.2 million in the previous year. The decline in interest expense is attributable to a decreased cost of funds and a lower level of average interest-bearing liabilities.

During 2013 and 2012, interest-bearing liabilities had a weighted average rate of 1.04% and 1.22%, respectively; a decline in interest expense of $1.7 million was recorded during 2013 due to the decreased cost of funds. The lower weighted average cost of interest-bearing liabilities was primarily due to decreases in the costs of various certificate of deposit account categories, certain non-certificate of deposit account categories, FHLB advances, and repurchase agreements and a change in interest-bearing liability mix, most notably a decrease in various higher-costing average certificates of deposit account categories and increases in certain lower-costing non-certificate of deposit account categories and repurchase agreements as a percentage of average interest-bearing liabilities. Market interest rates began falling in the latter part of 2007 and have remained low since. The lowering of interest rates on non-certificate of deposit accounts and repurchase agreements periodically during 2012 positively impacted the weighted average cost of interest-bearing liabilities in 2013; interest rates on certain non-certificate of deposit accounts were also reduced in December of 2013. In addition, maturing fixed-rate certificates of deposit and FHLB advances were renewed at lower rates, replaced by lower-costing funds, or allowed to runoff during 2012 and 2013.

During 2013, interest-bearing liabilities averaged $1.04 billion, or $43.3 million lower than average interest-bearing liabilities of $1.08 billion during the prior year. This reduction resulted in decreased interest expense of $0.7 million. Average interest-bearing deposits were down $46.7 million, while average short-term borrowings increased $4.0 million, average FHLB advances decreased $0.7 million, and average other borrowings increased $0.1 million. Average certificates of deposit declined $44.9 million during 2013, which equated to a decrease in interest expense of $0.7 million. An additional $1.0 million reduction in interest expense resulted from a decrease in the average rate paid as higher-rate certificates of deposit matured and were renewed at lower rates, replaced with lower-costing funds, or allowed to runoff throughout 2013. A reduction in other average interest-bearing deposit accounts, totaling $1.9 million, equated to a nominal decrease in interest expense, while a decrease in the average rate paid on these deposit accounts resulted in a $0.5 million decline in interest expense.

Average short-term borrowings, comprised entirely of repurchase agreements, increased $4.0 million during 2013, resulting in a slight increase in interest expense, while a decrease in the average rate paid during 2013 resulted in a reduction in interest expense of $0.1 million. Average FHLB advances decreased $0.7 million, resulting in a nominal decrease in interest expense, while a lower average rate paid on the advances resulted in a $0.4 million decrease in interest expense. A $0.1 million increase in average other borrowings, which is comprised of subordinated debentures and deferred director and officer compensation programs, equated to a nominal increase in interest expense, while a higher average rate paid on subordinated debentures resulted in a $0.3 million increase in interest expense.

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Provision for Loan Losses

A negative loan loss provision expense of $7.2 million was recorded in 2013, compared to a negative provision expense of $3.1 million recorded in 2012. The negative provision expense reflects recoveries of previously charged-off loans and a reduced level of loan-rating downgrades and ongoing loan-rating upgrades as the quality of the loan portfolio continued to improve. Continued progress in the stabilization of economic and real estate market conditions and resulting collateral valuations also positively impacted provision expense. Recoveries of previously charged-off loans totaled $6.6 million during 2013, while loan charge-offs not specifically reserved for in prior periods amounted to $1.4 million, resulting in a net positive impact of $5.2 million on provision expense. Net loan recoveries of $1.3 million were recorded during 2013, compared to net loan charge-offs of $4.8 million during the prior year. Of the $5.2 million in gross loans charged-off during 2013, $3.9 million, or 73.4%, represents the elimination of specific reserves that were established through provision expense in earlier periods. Nonperforming loans totaled $6.7 million, or 0.6% of total loans, as of December 31, 2013, compared to $19.0 million, or 1.8% of total loans, as of December 31, 2012. The allowance, as a percentage of total loans outstanding, was 2.2% as of December 31, 2013, compared to 2.8% as of December 31, 2012.

Noninterest Income

Noninterest income totaled $6.9 million in 2013, a decrease of $1.1 million, or 14.0%, from the $8.0 million earned in 2012. The decrease in noninterest income was mainly due to lower residential mortgage banking fee income, rental income from foreclosed properties, and earnings on bank owned life insurance. Residential mortgage rates were relatively stable during 2012 and the first few months of 2013, resulting in a lower level of refinance activity during 2013 as many qualifying borrowers had already refinanced at these rates during 2012. Residential mortgage rates began increasing during the latter part of the second quarter of 2013, continued increasing during the early part of the third quarter, and stabilized during the rest of the year. Increased fee income from the sales of purchase mortgages during 2013 helped mitigate the decreased fee income resulting from the lower level of refinance activity. A reduction in the number of foreclosed properties, reflecting ongoing sales of these properties, resulted in the decreased rental income, while the decline in earnings on bank owned life insurance primarily resulted from reduced investment yields, as paydowns on mortgage-backed securities were reinvested into similar securities with lower rates.

Noninterest Expense

Noninterest expense during 2013 totaled $36.4 million, a decrease of $3.2 million, or 8.1%, from the $39.6 million expensed in 2012. Merger-related costs were $1.2 million during 2013. The decrease in noninterest expense primarily resulted from lower problem asset administration and resolution costs and FDIC insurance premiums.

Problem asset administration and resolution costs totaled $0.6 million during 2013, a decrease of $5.3 million, or 89.8%, from the $5.9 million in costs incurred during 2012. Gains on sales of other real estate owned, which are netted against problem asset costs, totaled $2.3 million in 2013 compared to $1.3 million in 2012.

FDIC insurance costs were $0.8 million during 2013, a decrease of $0.4 million, or 33.9%, from the $1.2 million in costs incurred during 2012. The lower premiums mainly resulted from a decreased assessment rate, reflecting further improvement in our financial condition and operating performance.

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Federal Income Tax Expense

During 2013, we recorded income before federal income tax of $25.1 million and a federal income tax expense of $8.1 million, compared to income before federal income tax of $18.2 million and a federal income tax expense of $5.6 million during 2012. The increase in federal income tax expense resulted from the higher level of income before federal income tax and an increase in our effective tax rate from 31.0% in 2012 to 32.2% in 2013.

Preferred Stock Dividends and Accretion

Preferred stock dividends and discount accretion totaled $1.0 million during 2012. No preferred stock dividends and discount accretion were recorded during 2013 as we repurchased the $21.0 million in non-voting preferred stock issued in May of 2009 to the U.S. Department of the Treasury under the Treasury’s Capital Purchase Program, as part of the Troubled Asset Relief Program, during the second quarter of 2012.

CAPITAL RESOURCES

Shareholders’ equity increased $175 million during 2014, primarily reflecting the merger with Firstbank. We issued almost 8.1 million shares of common stock, with a value of $173 million, in connection with the Firstbank merger. Net income totaled $17.3 million during 2014. Negatively impacting shareholders’ equity during 2014 were cash dividends on our common stock totaling $24.5 million. In accordance with the plan of merger with Firstbank, we declared and paid a special $2.00 per share cash dividend to Mercantile shareholders prior to the effective date of the merger and before the issuance of Mercantile shares in exchange for Firstbank shares. In addition, we declared and paid a $0.12 per share cash dividend during each of the four quarters during 2014. Positively impacting shareholders’ equity during 2014 was an increase in the net unrealized gain on securities available for sale of $5.6 million.

We and our bank are subject to regulatory capital requirements administered by state and federal banking agencies. Failure to meet the various capital requirements can initiate regulatory action that could have a direct material effect on the financial statements. As of December 31, 2014, our bank’s total risk-based capital ratio was 14.4%, compared to 15.7% at December 31, 2013. Our bank’s total regulatory capital increased $142 million during 2014, primarily reflecting the net impact of the Firstbank merger whereby the Firstbank and Keystone Community Bank charters were consolidated into the existing Mercantile Bank of Michigan charter, and net income of $21.2 million. Negatively impacting total regulatory capital were cash dividends paid to Mercantile Bank Corporation during 2014 totaling $12.1 million. Our bank’s total risk-based capital ratio was also impacted by a $1.10 billion increase in total risk-weighted assets, primarily resulting from the merger with Firstbank. As of December 31, 2014, our bank’s total regulatory capital equaled $333 million, or approximately $101 million in excess of the amount necessary to attain the 10.0% minimum total risk-based capital ratio, which is among the requirements to be categorized as “well capitalized.”

On January 30, 2015, we announced that our Board of Directors had authorized a new program to repurchase up to $20.0 million of our common stock from time to time in open market transactions at prevailing market prices or by other means in accordance with applicable regulations. We expect to fund a majority of such repurchases from cash dividends paid to us from our bank.

LIQUIDITY

Liquidity is measured by our ability to raise funds through deposits, borrowed funds, capital or cash flow from the repayment of loans and securities. These funds are used to fund loans, meet deposit withdrawals, maintain reserve requirements and operate our company. Liquidity is primarily achieved through local and out-of-area deposits and liquid assets such as securities available for sale, matured and called securities, federal funds sold and interest-bearing deposit balances. Asset and liability management is the process of managing the balance sheet to achieve a mix of earning assets and liabilities that maximizes profitability, while providing adequate liquidity.

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To assist in providing needed funds, we have regularly obtained monies from wholesale funding sources. Wholesale funds, primarily comprised of deposits from customers outside of our market areas and advances from the FHLB, totaled $230 million, or 9.2% of combined deposits and borrowed funds as of December 31, 2014, compared to $258 million, or 20.9% of combined deposits and borrowed funds, as of December 31, 2013.

Sweep accounts increased $98.3 million during 2014, totaling $168 million at December 31, 2014. The increase is primarily due to the merger with Firstbank. Our sweep account program entails transferring collected funds from certain business noninterest-bearing checking accounts to overnight interest-bearing repurchase agreements. Such repurchase agreements are not deposit accounts and are not afforded federal deposit insurance. All of our repurchase agreements are accounted for as secured borrowings. Information regarding our repurchase agreements as of December 31, 2014 and during 2014 is as follows:

Outstanding balance at December 31, 2014	$	167,569,000
Weighted average interest rate at December 31, 2014		0.11	%
Maximum daily balance twelve months ended December 31, 2014	$	178,042,000
Average daily balance for twelve months ended December 31, 2014	$	105,474,000
Weighted average interest rate for twelve months ended December 31, 2014		0.12	%

Primarily reflecting the merger with Firstbank, FHLB advances increased $9.0 million during 2014, totaling $54.0 million as of December 31, 2014. The FHLB advances are generally collateralized by a blanket lien on our residential mortgage loan portfolio. Our borrowing line of credit at year-end 2014 totaled $410 million, with availability of $356 million.

We also have the ability to borrow up to $63.0 million on a daily basis through correspondent banks using established unsecured federal funds purchased lines of credit. We did not access these lines of credit during 2014; in fact, we have not accessed the lines of credit since January of 2010. In contrast, federal funds sold averaged $48.7 million and interest-bearing deposit balances averaged $46.2 million during 2014. We have a line of credit through the Discount Window of the Federal Reserve Bank of Chicago. Using certain municipal bonds as collateral, we could have borrowed up to $12.1 million at December 31, 2014. We did not utilize this line of credit during the past six years, and do not plan to access this line of credit in future periods.

The following table reflects, as of December 31, 2014, significant fixed and determinable contractual obligations to third parties by payment date, excluding accrued interest:

	One Year		One to		Three to		Over
	or Less		Three Years		Five Years		Five Years		Total
Deposits without a stated maturity	$	1,538,166,000	$	0	$	0	$	0	$	1,538,166,000
Certificates of deposit		368,163,000		272,265,000		98,321,000		0		738,749,000
Short-term borrowings		167,569,000		0		0		0		167,569,000
Federal Home Loan Bank advances		6,022,000		48,000,000		0		0		54,022,000
Subordinated debentures		0		0		0		54,472,000		54,472,000
Other borrowed money		0		0		0		3,727,000		3,727,000
Property leases		368,000		753,000		493,000		143,000		1,757,000

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In addition to normal loan funding and deposit flow, we must maintain liquidity to meet the demands of certain unfunded loan commitments and standby letters of credit. At December 31, 2014, we had a total of $746 million in unfunded loan commitments and $35.5 million in unfunded standby letters of credit. Of the total unfunded loan commitments, $636 million were commitments available as lines of credit to be drawn at any time as customers’ cash needs vary, and $110 million were for loan commitments generally expected to close and become funded within the next twelve months. We regularly monitor fluctuations in loan balances and commitment levels, and include such data in our overall liquidity management.

The following table depicts our loan commitments at the end of the past three years:

	12/31/14		12/31/13		12/31/12
Commercial unused lines of credit	$	554,856,000	$	257,937,000	$	222,237,000
Unused lines of credit secured by 1-4 family residential properties		60,983,000		23,429,000		24,250,000
Credit card unused lines of credit		11,649,000		9,013,000		8,512,000
Other consumer unused lines of credit		8,673,000		5,695,000		4,613,000
Commitments to make loans		110,126,000		58,799,000		64,565,000
Standby letters of credit		35,461,000		19,670,000		10,591,000
Total	$	781,748,000	$	374,543,000	$	334,768,000

We monitor our liquidity position and funding strategies on an ongoing basis, but recognize that unexpected events, economic or market conditions, reduction in earnings performance, declining capital levels or situations beyond our control could cause liquidity challenges. While we believe it is unlikely that a funding crisis of any significant degree is likely to materialize, we have developed a comprehensive contingency funding plan that provides a framework for meeting liquidity disruptions.

MARKET RISK ANALYSIS

Our primary market risk exposure is interest rate risk and, to a lesser extent, liquidity risk. All of our transactions are denominated in U.S. dollars with no specific foreign exchange exposure. We have only limited agricultural-related loan assets and therefore have no significant exposure to changes in commodity prices. Any impact that changes in foreign exchange rates and commodity prices would have on interest rates is assumed to be insignificant. Interest rate risk is the exposure of our financial condition to adverse movements in interest rates. We derive our income primarily from the excess of interest collected on interest-earning assets over the interest paid on interest-bearing liabilities. The rates of interest we earn on our assets and owe on our liabilities generally are established contractually for a period of time. Since market interest rates change over time, we are exposed to lower profitability if we cannot adapt to interest rate changes. Accepting interest rate risk can be an important source of profitability and shareholder value; however, excessive levels of interest rate risk could pose a significant threat to our earnings and capital base. Accordingly, effective risk management that maintains interest rate risk at prudent levels is essential to our safety and soundness.

Evaluating the exposure to changes in interest rates includes assessing both the adequacy of the process used to control interest rate risk and the quantitative level of exposure. Our interest rate risk management process seeks to ensure that appropriate policies, procedures, management information systems and internal controls are in place to maintain interest rate risk at prudent levels with consistency and continuity. In evaluating the quantitative level of interest rate risk, we assess the existing and potential future effects of changes in interest rates on our financial condition, including capital adequacy, earnings, liquidity and asset quality.

We use two interest rate risk measurement techniques. The first, which is commonly referred to as GAP analysis, measures the difference between the dollar amounts of interest-sensitive assets and liabilities that will be refinanced or repriced during a given time period. A significant repricing gap could result in a negative impact to the net interest margin during periods of changing market interest rates.

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The following table depicts our GAP position as of December 31, 2014:

	Within			Three to			One to			After
	Three			Twelve			Five			Five
	Months			Months			Years			Years			Total
Assets:
Commercial loans (1)	$	311,964,000		$	225,534,000		$	966,618,000		$	171,505,000		$	1,675,621,000
Residential real estate loans		37,501,000			20,090,000			140,054,000			155,795,000			353,440,000
Consumer loans		2,438,000			1,934,000			43,663,000			12,181,000			60,216,000
Securities (2)		18,381,000			26,545,000			233,561,000			168,124,000			446,611,000
Federal funds sold		11,207,000			0			0			0			11,207,000
Interest-bearing deposits		116,530,000			497,000			750,000			0			117,777,000
Allowance for loan losses		0			0			0			0			(20,041,000	)
Other assets		0			0			0			0			248,548,000
Total assets		498,021,000			274,600,000			1,384,646,000			507,605,000		$	2,893,379,000
Liabilities:
Interest-bearing checking		413,382,000			0			0			0			413,382,000
Savings deposits		330,459,000			0			0			0			330,459,000
Money market accounts		235,587,000			0			0			0			235,587,000
Time deposits under $100,000		26,951,000			74,526,000			81,971,000			0			183,448,000
Time deposits $100,000 & over		75,356,000			191,330,000			288,615,000			0			555,301,000
Short-term borrowings		167,569,000			0			0			0			167,569,000
Federal Home Loan Bank advances		6,022,000			0			48,000,000			0			54,022,000
Other borrowed money		3,727,000			0			0			54,472,000			58,199,000
Noninterest-bearing checking		0			0			0			0			558,738,000
Other liabilities		0			0			0			0			8,536,000
Total liabilities		1,259,053,000			265,856,000			418,586,000			54,472,000			2,565,241,000
Shareholders' equity		0			0			0			0			328,138,000
Total liabilities & shareholders' equity		1,259,053,000			265,856,000			418,586,000			54,472,000		$	2,893,379,000
Net asset (liability) GAP	$	(761,032,000	)	$	8,744,000		$	966,060,000		$	453,133,000
Cumulative GAP	$	(761,032,000	)	$	(752,288,000	)	$	213,772,000		$	666,905,000
Percent of cumulative GAP to total assets		(26.3%	)		(26.0%	)		7.4	%		23.0	%

(1) Floating rate loans that are currently at interest rate floors are treated as fixed rate loans and are reflected using maturity date and not repricing frequency.

(2) Mortgage-backed securities are categorized by expected maturities based upon prepayment trends as of December 31, 2014.

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The second interest rate risk measurement used is commonly referred to as net interest income simulation analysis. We believe that this methodology provides a more accurate measurement of interest rate risk than the GAP analysis, and therefore, it serves as our primary interest rate risk measurement technique. The simulation model assesses the direction and magnitude of variations in net interest income resulting from potential changes in market interest rates.

Key assumptions in the model include prepayment speeds on various loan and investment assets; cash flows and maturities of interest-sensitive assets and liabilities; and changes in market conditions impacting loan and deposit volume and pricing. These assumptions are inherently uncertain, subject to fluctuation and revision in a dynamic environment; therefore, the model cannot precisely estimate net interest income or exactly predict the impact of higher or lower interest rates on net interest income. Actual results will differ from simulated results due to timing, magnitude, and frequency of interest rate changes and changes in market conditions and our strategies, among other factors.

We conducted multiple simulations as of December 31, 2014, in which it was assumed that changes in market interest rates occurred ranging from up 400 basis points to down 400 basis points in equal quarterly instalments over the next twelve months. The following table reflects the suggested impact on net interest income over the next twelve months in comparison to estimated net interest income based on our balance sheet structure, including the balances and interest rates associated with our specific loans, securities, deposits and borrowed funds, as of December 31, 2014. The resulting estimates are well within our policy parameters established to manage and monitor interest rate risk.

	Dollar Change			Percent Change
	In Net			In Net
Interest Rate Scenario	Interest Income			Interest Income
Interest rates down 400 basis points	$	(6,730,000	)		(7.3%	)
Interest rates down 300 basis points		(5,870,000	)		(6.4	)
Interest rates down 200 basis points		(4,890,000	)		(5.3	)
Interest rates down 100 basis points		(3,140,000	)		(3.4	)
No change in interest rates		70,000			0.1
Interest rates up 100 basis points		1,230,000			1.3
Interest rates up 200 basis points		2,180,000			2.4
Interest rates up 300 basis points		3,130,000			3.4
Interest rates up 400 basis points		3,670,000			4.0

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The resulting estimates have been significantly impacted by the current interest rate and economic environment, as adjustments have been made to critical model inputs with regards to traditional interest rate relationships. This is especially important as it relates to floating rate commercial loans and out-of-area deposits, which comprise a sizable portion of our balance sheet.

In addition to changes in interest rates, the level of future net interest income is also dependent on a number of other variables, including: the growth, composition and absolute levels of loans, deposits, and other earning assets and interest-bearing liabilities; level of nonperforming assets; economic and competitive conditions; potential changes in lending, investing, and deposit gathering strategies; client preferences; and other factors.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Mercantile Bank Corporation

Grand Rapids, Michigan

We have audited the accompanying Consolidated Balance Sheets of Mercantile Bank Corporation as of December 31, 2014 and 2013, and the related Consolidated Statements of Income, Comprehensive Income, Changes in Shareholders' Equity and Cash Flows for each of the three years in the period ended December 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mercantile Bank Corporation as of December 31, 2014 and 2013, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Mercantile Bank Corporation’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 10, 2015 expressed an unqualified opinion thereon.

/s/ BDO USA, LLP

BDO USA, LLP

Grand Rapids, Michigan

March 10, 2015

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Mercantile Bank Corporation

Grand Rapids, Michigan

We have audited Mercantile Bank Corporation’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Mercantile Bank Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report by Mercantile Bank Corporation’s Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Mercantile Bank Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Consolidated Balance Sheets of Mercantile Bank Corporation as of December 31, 2014 and 2013, and the related Consolidated Statements of Income, Comprehensive Income, Changes in Shareholders’ Equity and Cash Flows for each of the three years in the period ended December 31, 2014, and our report dated March 10, 2015 expressed an unqualified opinion thereon.

/s/ BDO USA, LLP

BDO USA, LLP

Grand Rapids, Michigan

March 10, 2015

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March 10, 2015 

REPORT BY MERCANTILE BANK CORPORATION’S MANAGEMENT

ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining an effective system of internal control over financial reporting that is designed to produce reliable financial statements presented in conformity with generally accepted accounting principles. There are inherent limitations in the effectiveness of any system of internal control. Accordingly, even an effective system of internal control can provide only reasonable assurance with respect to financial statement preparation.

Management assessed the Company’s system of internal control over financial reporting that is designed to produce reliable financial statements presented in conformity with generally accepted accounting principles as of December 31, 2014. This assessment was based on criteria for effective internal control over financial reporting described in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that, as of December 31, 2014, Mercantile Bank Corporation maintained an effective system of internal control over financial reporting that is designed to produce reliable financial statements presented in conformity with generally accepted accounting principles based on those criteria.

The Company’s independent auditors have issued an audit report on the effectiveness of the Company’s internal control over financial reporting as found on page F-35.

Mercantile Bank Corporation

/s/ Michael H. Price 

Michael H. Price 

President and Chief Executive Officer  

/s/ Charles E. Christmas 

Charles E. Christmas 

Senior Vice President, Chief Financial Officer and Treasurer  

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MERCANTILE BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

December 31, 2014 and 2013

	2014			2013
ASSETS
Cash and due from banks	$	43,754,000		$	17,149,000
Interest-bearing deposits		117,777,000			6,389,000
Federal funds sold		11,207,000			123,427,000
Total cash and cash equivalents		172,738,000			146,965,000
Securities available for sale		432,912,000			131,178,000
Federal Home Loan Bank stock		13,699,000			11,961,000
Loans		2,089,277,000			1,053,243,000
Allowance for loan losses		(20,041,000	)		(22,821,000	)
Loans, net		2,069,236,000			1,030,422,000
Premises and equipment, net		48,812,000			24,898,000
Bank owned life insurance		57,861,000			51,377,000
Goodwill		49,473,000			0
Cored deposit intangible		15,624,000			0
Other assets		33,024,000			30,165,000
Total assets	$	2,893,379,000		$	1,426,966,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing	$	558,738,000		$	224,580,000
Interest-bearing		1,718,177,000			894,331,000
Total deposits		2,276,915,000			1,118,911,000
Securities sold under agreements to repurchase		167,569,000			69,305,000
Federal Home Loan Bank advances		54,022,000			45,000,000
Subordinated debentures		54,472,000			32,990,000
Accrued interest and other liabilities		12,263,000			7,435,000
Total liabilities		2,565,241,000			1,273,641,000
Shareholders' equity
Preferred stock, no par value; 1,000,000 shares authorized; 0 shares outstanding at December 31, 2014 and December 31, 2013		0			0
Common stock, no par value; 40,000,000 shares authorized; 16,976,839 shares outstanding at December 31, 2014 and 8,739,108 shares outstanding at December 31, 2013		317,904,000			162,999,000
Retained earnings (deficit)		10,218,000			(4,101,000	)
Accumulated other comprehensive income (loss)		16,000			(5,573,000	)
Total shareholders’ equity		328,138,000			153,325,000
Total liabilities and shareholders’ equity	$	2,893,379,000		$	1,426,966,000

See accompanying notes to consolidated financial statements.

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MERCANTILE BANK CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

Years ended December 31, 2014, 2013 and 2012

	2014			2013			2012
Interest income
Loans, including fees	$	80,824,000		$	52,924,000		$	53,898,000
Securities, taxable		6,417,000			4,134,000			4,383,000
Securities, tax-exempt		1,643,000			951,000			1,415,000
Federal funds sold		124,000			212,000			192,000
Interest-bearing deposits		110,000			21,000			29,000
Total interest income		89,118,000			58,242,000			59,917,000
Interest expense
Deposits		8,378,000			8,912,000			11,137,000
Short-term borrowings		122,000			80,000			157,000
Federal Home Loan Bank advances		636,000			533,000			993,000
Subordinated debentures and other borrowings		2,204,000			1,261,000			929,000
Total interest expense		11,340,000			10,786,000			13,216,000
Net interest income		77,778,000			47,456,000			46,701,000
Provision for loan losses		(3,000,000	)		(7,200,000	)		(3,100,000	)
Net interest income after provision for loan losses		80,778,000			54,656,000			49,801,000
Noninterest income
Service charges on deposit and sweep accounts		2,586,000			1,532,000			1,523,000
Credit and debit card fees		2,494,000			1,063,000			891,000
Mortgage banking activities		1,672,000			800,000			1,479,000
Earnings on bank owned life insurance		1,184,000			1,329,000			1,528,000
Payroll processing		782,000			660,000			591,000
Letter of credit fees		335,000			370,000			336,000
Rental income from other real estate owned		109,000			528,000			1,061,000
Other income		866,000			590,000			585,000
Total noninterest income		10,028,000			6,872,000			7,994,000
Noninterest expense
Salaries and benefits		33,703,000			20,298,000			19,367,000
Occupancy		4,637,000			2,547,000			2,501,000
Furniture and equipment rent, depreciation and maintenance		1,738,000			984,000			1,176,000
Data processing		5,869,000			3,440,000			3,193,000
Merger-related costs		5,447,000			1,246,000			0
Advertising		1,315,000			1,113,000			1,167,000
FDIC insurance costs		1,182,000			793,000			1,200,000
Problem asset costs		585,000			595,000			5,862,000
Other expense		11,134,000			5,387,000			5,158,000
Total noninterest expenses		65,610,000			36,403,000			39,624,000
Income before federal income tax expense		25,196,000			25,125,000			18,171,000
Federal income tax expense		7,865,000			8,092,000			5,636,000
Net income		17,331,000			17,033,000			12,535,000
Preferred stock dividends and accretion		0			0			1,030,000
Net income attributable to common shares	$	17,331,000		$	17,033,000		$	11,505,000
Earnings per common share:
Basic	$	1.28		$	1.96		$	1.33
Diluted	$	1.28		$	1.95		$	1.30

See accompanying notes to consolidated financial statements.

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MERCANTILE BANK CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years ended December 31, 2014, 2013 and 2012

	2014			2013			2012
Net income	$	17,331,000		$	17,033,000		$	12,535,000
Other comprehensive income (loss):
Unrealized holding gains (losses) on securities available for sale		8,596,000			(11,960,000	)		(2,184,000	)
Fair value of interest rate swap		11,000			849,000			(1,113,000	)
		8,607,000			(11,111,000	)		(3,297,000	)
Tax effect of unrealized holding gains (losses) on securities available for sale		(3,014,000	)		4,186,000			1,229,000
Tax effect of fair value of interest rate swap		(4,000	)		(298,000	)		390,000
		(3,018,000	)		3,888,000			1,619,000
Other comprehensive income (loss), net of tax effect		5,589,000			(7,223,000	)		(1,678,000	)
Comprehensive income	$	22,920,000		$	9,810,000		$	10,857,000

See accompanying notes to consolidated financial statements. 

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MERCANTILE BANK CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY 

Years ended December 31, 2014, 2013 and 2012

													Accumulated
							Common			Retained			Other			Total
($ in thousands)	Preferred			Common			Stock			Earnings			Comprehensive			Shareholders’
	Stock			Stock			Warrant			(Deficit)			Income/(Loss)			Equity
Balances, January 1, 2012	$	20,331		$	172,841		$	1,138		$	(32,639	)	$	3,328		$	164,999
Repurchase of preferred stock		(21,000	)														(21,000	)
Preferred stock dividends											(361	)					(361	)
Accretion of preferred stock		669									(669	)					0
Repurchase of stock warrant					(6,327	)		(1,138	)								(7,465	)
Employee stock purchase plan (2,400 shares)					39												39
Dividend reinvestment plan (934 shares)					14												14
Stock option exercises (50,930 shares)					551												551
Stock tendered for stock option exercises (19,120 shares)					(324	)											(324	)
Stock-based compensation expense					54												54
Cash dividends ($0.09 per common share)					(774	)											(774	)
Net income for 2012											12,535						12,535
Change in net unrealized gain on securities available for sale, net of tax effect														(955	)		(955	)
Change in fair value of interest rate swap, net tax effect														(723	)		(723	)
Balances, December 31, 2012	$	0		$	166,074		$	0		$	(21,134	)	$	1,650		$	146,590

See accompanying notes to consolidated financial statements.

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MERCANTILE BANK CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)

Years ended December 31, 2014, 2013 and 2012

											Accumulated
						Common		Retained			Other			Total
($ in thousands)	Preferred		Common			Stock		Earnings			Comprehensive			Shareholders’
	Stock		Stock			Warrant		(Deficit)			Income/(Loss)			Equity
Balances, January 1, 2013	$	0	$	166,074		$	0	$	(21,134	)	$	1,650		$	146,590
Employee stock purchase plan (1,098 shares)				19											19
Dividend reinvestment plan (1,954 shares)				33											33
Stock option exercises (51,055 shares)				700											700
Stock tendered for stock option exercises (18,950 shares)				(411	)										(411	)
Stock-based compensation expense				473											473
Cash dividends ($0.45 per common share)				(3,889	)										(3,889	)
Net income for 2013									17,033						17,033
Change in net unrealized gain on securities available for sale, net of tax effect												(7,774	)		(7,774	)
Change in fair value of interest rate swap, net of tax effect												551			551
Balances, December 31, 2013	$	0	$	162,999		$	0	$	(4,101	)	$	(5,573	)	$	153,325

See accompanying notes to consolidated financial statements.

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MERCANTILE BANK CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)

Years ended December 31, 2014, 2013 and 2012

											Accumulated
						Common		Retained			Other			Total
($ in thousands)	Preferred		Common			Stock		Earnings			Comprehensive			Shareholders’
	Stock		Stock			Warrant		(Deficit)			Income/(Loss)			Equity
Balances, January 1, 2014	$	0	$	162,999		$	0	$	(4,101	)	$	(5,573	)	$	153,325
Common stock issued in connection with Firstbank merger (8,087,272 shares)				173,310											173,310
Issuance of stock options to replace existing Firstbank options at merger date				1,664											1,664
Employee stock purchase plan (1,150 shares)				23											23
Dividend reinvestment plan (10,359 shares)				209											209
Stock option exercises (30,585 shares)				282											282
Stock grants to directors for retainer fees (7,375 shares)				155											155
Stock-based compensation expense				714											714
Cash dividends ($2.48 per common share)				(21,452	)				(3,012	)					(24,464	)
Net income for 2014									17,331						17,331
Change in net unrealized gain on securities available for sale, net of tax effect												5,582			5,582
Change in fair value of interest rate swap, net of tax effect												7			7
Balances, December 31, 2014	$	0	$	317,904		$	0	$	10,218		$	16		$	328,138

See accompanying notes to consolidated financial statements.

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MERCANTILE BANK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2014, 2013 and 2012

	2014			2013			2012
Cash flows from operating activities
Net income	$	17,331,000		$	17,033,000		$	12,535,000
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		7,613,000			2,208,000			2,238,000
Accretion of acquired loans		(3,194,000	)		0			0
Provision for loan losses		(3,000,000	)		(7,200,000	)		(3,100,000	)
Deferred income tax expense		4,506,000			8,092,000			5,636,000
Stock-based compensation expense		714,000			473,000			54,000
Stock grants to directors for retainer fee		155,000			0			0
Proceeds from sales of mortgage loans held for sale		67,422,000			51,373,000			83,713,000
Origination of mortgage loans held for sale		(65,392,000	)		(48,321,000	)		(83,986,000	)
Net gain on sales of mortgage loans held for sale		(1,625,000	)		(658,000	)		(1,247,000	)
Net (gain) loss on sale and valuation write-downs of foreclosed assets		(894,000	)		(1,585,000	)		1,725,000
Earnings on bank owned life insurance		(1,184,000	)		(1,329,000	)		(1,528,000	)
Net change in:
Accrued interest receivable		(11,000	)		225,000			529,000
Other assets		1,795,000			8,465,000			(1,805,000	)
Accrued interest and other liabilities		(9,822,000	)		(94,000	)		2,267,000
Net cash from operating activities		14,414,000			28,682,000			17,031,000
Cash flows from investing activities
Cash received in merger		91,806,000			0			0
Purchases of:
Securities available for sale		(19,874,000	)		(49,812,000	)		(69,956,000	)
Proceeds from:
Maturities, calls and repayments of securities available for sale		75,880,000			34,809,000			102,672,000
Proceeds from sales of securities available for sale		0			10,310,000			0
Proceeds from Federal Home Loan Bank stock redemption		5,527,000			0			0
Loan originations and payments, net		(90,853,000	)		(15,298,000	)		16,237,000
Purchases of premises and equipment, net		(2,150,000	)		(326,000	)		(571,000	)
Proceeds from sale of foreclosed assets		4,427,000			7,898,000			18,348,000
Net cash from (for) investing activities		64,763,000			(12,419,000	)		66,730,000
Cash flows from financing activities
Net decrease in time deposits		(58,927,000	)		(23,038,000	)		(47,257,000	)
Net increase (decrease) in all other deposits		(11,307,000	)		6,745,000			70,386,000
Net increase (decrease) in securities sold under agreements to repurchase		43,780,000			4,540,000			(7,804,000	)
Proceeds from Federal Home Loan Bank advances		0			10,000,000			20,000,000
Maturities and prepayments of Federal Home Loan Bank advances		(3,000,000	)		0			(30,000,000	)
Repurchase of preferred stock		0			0			(21,000,000	)
Repurchase of common stock warrant		0			0			(7,465,000	)
Proceeds from stock option exercises, net of cashless exercises		282,000			289,000			227,000
Employee stock purchase plan		23,000			19,000			39,000
Dividend reinvestment plan		209,000			33,000			14,000
Payment of cash dividends on preferred stock		0			0			(496,000	)
Payment of cash dividends to common shareholders		(24,464,000	)		(3,889,000	)		(774,000	)
Net cash for financing activities		(53,404,000	)		(5,301,000	)		(24,130,000	)
Net change in cash and cash equivalents		25,773,000			10,962,000			59,631,000
Cash and cash equivalents at beginning of period		146,965,000			136,003,000			76,372,000
Cash and cash equivalents at end of period	$	172,738,000		$	146,965,000		$	136,003,000

See accompanying notes to consolidated financial statements.

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MERCANTILE BANK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

Years ended December 31, 2014, 2013 and 2012

	2014		2013		2012
Supplemental disclosures of cash flows information
Cash paid during the year for:
Interest	$	11,439,000	$	11,059,000	$	13,741,000
Federal income taxes		2,625,000		0		0
Noncash financing and investing activities:
Transfers from loans to foreclosed assets		1,490,000		2,194,000		11,761,000
Common stock issued in connection with the Firstbank merger		173,310,000		0		0

See accompanying notes to consolidated financial statements.

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The consolidated financial statements include the accounts of Mercantile Bank Corporation (“Mercantile”) and its subsidiary, Mercantile Bank of Michigan (“Bank”), and of Mercantile Bank Real Estate Co., L.L.C. (“Mercantile Real Estate”) and Mercantile Insurance Center, Inc. (“Mercantile Insurance”), subsidiaries of our Bank, after elimination of significant intercompany transactions and accounts.

We have five separate business trusts: Mercantile Bank Capital Trust I, Firstbank Capital Trust I, Firstbank Capital Trust II, Firstbank Capital Trust III and Firstbank Capital Trust IV (“our trusts”). Our trusts were formed to issue trust preferred securities. We issued subordinated debentures to our trusts in return for the proceeds raised from the issuance of the trust preferred securities. Our trusts are not consolidated, but instead we report the subordinated debentures issued to the trusts as liabilities.

Nature of Operations: Mercantile was incorporated on July 15, 1997 to establish and own the Bank based in Grand Rapids, Michigan. The Bank began operations on December 15, 1997. We completed the merger of Firstbank Corporation (“Firstbank”), a Michigan corporation with approximately $1.5 billion in total assets and 46 branch locations, into Mercantile as of June 1, 2014.

The Bank is a community-based financial institution. The Bank’s primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are commercial loans, residential mortgage loans, and instalment loans. Substantially all loans are secured by specific items of collateral including business assets, real estate or consumer assets. Commercial loans are expected to be repaid from cash flow from operations of businesses. Real estate loans are secured by commercial or residential real estate. The Bank’s loan accounts and retail deposits are primarily with customers located in the communities in which we have bank office locations. As an alternative source of funds, the Bank has also issued certificates of deposit to depositors outside of its primary market areas. Substantially all revenues are derived from banking products and services and investment securities. While we monitor the revenue streams of the various products and services offered, we manage our business on the basis of one operating segment, banking.

Mercantile Insurance was formed during 2002 through the acquisition of an existing shelf insurance agency. Insurance products are offered through an Agency and Institutions Agreement among Mercantile Insurance, the Bank and Hub International. The insurance products are marketed through a central facility operated by the Michigan Bankers Insurance Association, members of which include the insurance subsidiaries of various Michigan-based financial institutions and Hub International. Mercantile Insurance receives commissions based upon written premiums produced under the Agency and Institutions Agreement.

Mercantile Real Estate was organized on July 21, 2003, principally to develop, construct, and own a facility in downtown Grand Rapids that serves as our Bank’s main office and Mercantile’s headquarters. This facility was placed into service during the second quarter of 2005.

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. The allowance for loan losses and the fair values of financial instruments are particularly subject to change.

Cash Flow Reporting: Cash and cash equivalents include cash on hand, demand deposits with other financial institutions, short-term investments (including securities with daily put provisions) and federal funds sold. Cash flows are reported net for customer loan and deposit transactions, interest-bearing time deposits with other financial institutions and short-term borrowings with maturities of 90 days or less.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Securities: Debt securities classified as held to maturity are carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available for sale when they might be sold prior to maturity. Equity securities with readily determinable fair values are classified as available for sale. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax. Federal Home Loan Bank stock is carried at cost.

Interest income includes amortization of purchase premiums and accretion of discounts. Premiums and discounts on securities are amortized or accreted on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

Declines in the fair value of debt securities below their amortized cost that are other than temporary (“OTTI”) are reflected in earnings or other comprehensive income, as appropriate. For those debt securities whose fair value is less than their amortized cost, we consider our intent to sell the security, whether it is more likely than not that we will be required to sell the security before recovery and whether we expect to recover the entire amortized cost of the security based on our assessment of the issuer’s financial condition. In analyzing an issuer’s financial condition, we consider whether the securities are issued by the federal government or its agencies, and whether downgrades by bond rating agencies have occurred. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement, and 2) OTTI related to other factors, such as liquidity conditions in the market or changes in market interest rates, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost.

Loans: Loans that we have the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs and an allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments. Net unamortized deferred loan fees amounted to $1.1 million and $0.5 million at December 31, 2014 and 2013, respectively.

Interest income on commercial loans and mortgage loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer and credit card loans are typically charged off no later than when they are 120 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal and interest is considered doubtful.

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loans Held for Sale: Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings. Prior to the merger with Firstbank, such mortgage loans were sold servicing released. Subsequent to the merger, mortgage loans held for sale are generally sold with servicing rights retained. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related mortgage loan sold, which is reduced by the cost allocated to the servicing right. We generally lock in the sale price to the purchaser of the mortgage loan at the same time we make an interest rate commitment to the borrower.

Year-end mortgage loans held for sale were as follows:

	2014		2013
Mortgage loans held for sale	$	1,574,000	$	1,115,000
Less: Allowance to adjust to lower of cost or market		0		0
Mortgage loans held for sale, net	$	1,574,000	$	1,115,000

Mortgage Loan Derivatives: From time to time, we enter into mortgage loan derivatives such as forward contracts and interest rate lock commitments in the ordinary course of business. The derivatives are not designated as hedges and are carried at fair value. The net gain or loss on mortgage loan derivatives is included in mortgage banking activities in the income statement. The balance of mortgage loan derivatives was immaterial at December 31, 2014 and 2013.

Mortgage Banking Activities: Mortgage loan servicing rights are recognized as assets based on the allocated value of retained servicing rights on mortgage loans sold. Mortgage loan servicing rights are carried at the lower of amortized cost or fair value and are expensed in proportion to, and over the period of, estimated net servicing revenues. Impairment is evaluated based on the fair value of the rights using groupings of the underlying mortgage loans as to interest rates. Any impairment of a grouping is reported as a valuation allowance.

Servicing fee income is recorded for fees earned for serving mortgage loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. Amortization of mortgage loan servicing rights is netted against mortgage loan servicing income and recorded in mortgage banking activities in the income statement.

Troubled Debt Restructurings: A loan is accounted for as a troubled debt restructuring if we, for economic or legal reasons, grant a concession to a borrower considered to be experiencing financial difficulties that we would not otherwise consider. A troubled debt restructuring may involve the receipt of assets from the debtor in partial or full satisfaction of the loan, or a modification of terms such as a reduction of the stated interest rate or balance of the loan, a reduction of accrued interest, an extension of the maturity date or renewal of the loan at a stated interest rate lower than the current market rate for a new loan with similar risk, or some combination of these concessions. Troubled debt restructurings can be in either accrual or nonaccrual status. Nonaccrual troubled debt restructurings are included in nonperforming loans. Accruing troubled debt restructurings are generally excluded from nonperforming loans as it is considered probable that all contractual principal and interest due under the restructured terms will be collected.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loans modified as troubled debt restructurings are, by definition, considered to be impaired loans. Impairment for these loans is measured on a loan-by-loan basis similar to other impaired loans as described below under “Allowance for Loan Losses.” Certain loans modified as troubled debt restructurings may have been previously measured for impairment under a general allowance methodology (i.e., pooling), thus at the time the loan is modified as a troubled debt restructuring the allowance will be impacted by the difference between the results of these two measurement methodologies. Loans modified as troubled debt restructurings that subsequently default are factored into the determination of the allowance for loan losses in the same manner as other defaulted loans.

Allowance for Loan Losses: The allowance for loan losses (“allowance”) is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when we believe the uncollectability of a loan is confirmed. Subsequent recoveries, if any, are credited to the allowance. We estimate the allowance balance required using past loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. We estimate credit losses based on individual loans determined to be impaired and on all other loans grouped on similar risk characteristics. Our historical loss component is the most significant of the allowance components and is based on historical loss experience by credit risk grade for commercial loans and payment status for mortgage and consumer loans. Loans are pooled based on similar risk characteristics supported by observable data. The historical loss experience component of the allowance represents the results of migration analysis of historical net charge-offs for portfolios of loans, including groups of commercial loans within each credit risk grade. For measuring loss exposure in a pool of loans, the historical net charge-off or migration experience is utilized to estimate expected future losses to be realized from the pool of loans. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in our judgment, should be charged-off.

A loan is considered impaired when, based on current information and events, it is probable we will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Factors considered in determining impairment include payment status and collateral value. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. We determine the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of delay, the reasons for delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment.

Transfers of Financial Assets: Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when: (1) the assets have been isolated from the Bank and put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. Our transfers of financial assets are generally limited to commercial loan participations sold and residential mortgage loans sold in the secondary market.

Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 5 to 33 years. Furniture, fixtures and equipment are depreciated using the straight-line method with useful lives ranging from 3 to 7 years. Maintenance, repairs and minor alterations are charged to current operations as expenditures occur and major improvements are capitalized.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Long-lived Assets: Premises and equipment and other long-lived assets are reviewed for impairment when events indicate their carrying amount may not be recoverable based on future undiscounted cash flows. If impaired, the assets are recorded at the lower of carrying value or fair value.

Foreclosed Assets: Assets acquired through or in lieu of foreclosure are initially recorded at their estimated fair value net of estimated selling costs, establishing a new cost basis. If fair value subsequently declines, a valuation allowance is recorded through noninterest expense, as are collection and operating costs after acquisition. Foreclosed assets totaled $2.0 million and $2.9 million as of December 31, 2014 and 2013, respectively.

Bank Owned Life Insurance: The Bank has purchased life insurance policies on certain key officers. Bank owned life insurance is recorded at its cash surrender value, or the amount that can be realized.

Goodwill and Core Deposit Intangible: Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment and any such impairment is recognized in the period identified. A more frequent assessment is performed should events or changes in circumstances indicate the carrying value of the goodwill may not be recoverable. We may elect to perform a qualitative assessment for the annual impairment test. If the qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we elect not to perform a qualitative assessment, then we would be required to perform a quantitative test for goodwill impairment. The quantitative test is a two-step process consisting of comparing the carrying value of the reporting unit to an estimate of its fair value. If the estimated fair value of the reporting unit is less than the carrying value, goodwill is impaired and is written down to its estimated fair value. In 2014, we elected to perform a qualitative assessment for our annual impairment test and concluded our fair value was greater than its carrying amount; therefore, no further testing was required.

The core deposit intangible that arose from the merger with Firstbank was initially measured at fair value and is being amortized into noninterest expense over a ten-year period using the sum-of-the-years-digits methodology.

Repurchase Agreements: The Bank sells certain securities under agreements to repurchase. The agreements are treated as collateralized financing transactions, with the obligations to repurchase the securities sold reflected as liabilities and the securities underlying the agreements remaining in assets in the Consolidated Balance Sheets.

Financial Instruments and Loan Commitments: Financial instruments include off-balance-sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded. Instruments, such as standby letters of credit, that are considered financial guarantees are recorded at fair value.

Stock-Based Compensation: Compensation cost for equity-based awards is measured on the grant date based on the fair value of the award at that date, and is recognized over the requisite service period, net of estimated forfeitures. Fair value of stock option awards is estimated using a closed option valuation (Black-Scholes) model. Fair value of restricted stock awards is based upon the quoted market price of the common stock on the date of grant.

Advertising Costs: Advertising costs are expensed as incurred.

Income Taxes: Income tax expense is the total of the current year income tax due or refundable, the change in deferred income tax assets and liabilities, and any adjustments related to unrecognized tax benefits. Deferred income tax assets and liabilities are recognized for the tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates applicable to future years. A valuation allowance, if needed, reduces deferred income tax assets to the amount expected to be realized.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Values of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates. The fair value estimates of existing on- and off-balance sheet financial instruments do not include the value of anticipated future business or the values of assets and liabilities not considered financial instruments.

Earnings Per Share: Basic earnings per share is based on the weighted average number of common shares and participating securities outstanding during the period. Diluted earnings per share include the dilutive effect of additional potential common shares issuable under our stock-based compensation plans using the treasury stock method. In addition, diluted earnings per share for 2012 include the dilutive effect of our common stock warrant granted to the U.S. Department of Treasury that we repurchased on July 3, 2012, also using the treasury stock method. Our unvested stock awards, which contain non-forfeitable rights to dividends whether paid or unpaid (i.e., participating securities), are included in the number of shares outstanding for both basic and diluted earnings per share calculations. In the event of a net loss, our unvested stock awards are excluded from the calculations of both basic and diluted earnings per share.

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale and interest rate swaps which are also recognized as a separate component of equity.

Derivatives: Derivative financial instruments are recognized as assets or liabilities at fair value. The accounting for changes in the fair value of derivatives depends on the use of the derivatives and whether the derivatives qualify for hedge accounting. Used as part of our asset and liability management to help manage interest rate risk, our derivatives have historically generally consisted of interest rate swap agreements that qualified for hedge accounting. We do not use derivatives for trading purposes.

Changes in the fair value of derivatives that are designated, for accounting purposes, as a hedge of the variability of cash flows to be received on various assets and liabilities and are effective are reported in other comprehensive income. They are later reclassified into earnings in the same periods during which the hedged transaction affects earnings and are included in the line item in which the hedged cash flows are recorded. If hedge accounting does not apply, changes in the fair value of derivatives are recognized immediately in current earnings as interest income or expense.

If designated as a hedge, we formally document the relationship between the derivative instrument and the hedged item, as well as the risk-management objective and the strategy for undertaking the hedge transaction. This documentation includes linking cash flow hedges to specific assets on the balance sheet. If designated as a hedge, we also formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivative instrument that is used is highly effective in offsetting changes in cash flows of the hedged items. Ineffective hedge gains and losses are recognized immediately in current earnings as noninterest income or expense. We discontinue hedge accounting when we determine the derivative is no longer effective in offsetting changes in the cash flows of the hedged item, the derivative is settled or terminates, or treatment of the derivatives as a hedge is no longer appropriate or intended.

Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. We do not believe there are any such matters outstanding that would have a material effect on the financial statements.

Reclassifications: Certain items in the prior years’ financial statements have been reclassified to conform to the current year presentation.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounting Standards Updates: In January of 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. This ASU clarifies that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The ASU also requires additional related interim and annual disclosures. The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2014, and is not expected to have a material effect on our financial position or results of operations when adopted.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU establishes a comprehensive revenue recognition standard for virtually all industries under U.S. GAAP, including those that previously followed industry-specific guidance such as the real estate, construction and software industries. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires five basic steps: i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2016, with three transition methods available – full retrospective, retrospective and cumulative effect approach. Although we are in process of evaluating the impact, the adoption of this ASU is not expected to have a material effect on our financial position or results of operations.

In June 2014, the FASB issued ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. This ASU requires two accounting changes. First, repurchase-to-maturity transactions will be accounted for as secured borrowing transactions on the balance sheet, rather than sales. Second, for repurchase financing arrangements, the ASU requires separate accounting for a transfer of a financial asset executed contemporaneously with (or in contemplation of) a repurchase agreement with the same counterparty, which also will generally result in secured borrowing accounting for the repurchase agreement. The ASU also introduces new disclosures to increase transparency about the types of collateral pledged for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions that are accounted for as secured borrowings. The ASU also requires a transferor to disclose information about transactions accounted for as a sale in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets through an agreement with the transferee. The accounting changes and disclosure for certain transactions accounted for as a sale are effective for the first annual and interim periods beginning after December 15, 2014. The disclosure for transactions accounted for as secured borrowings is required for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Adoption of this ASU is not expected to have a material effect on our financial position or results of operations.

In August 2014, the FASB issued ASU 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure. This ASU requires that certain government-guaranteed mortgage loans, including those guaranteed by the Federal Housing Administration, be derecognized and that a separate other receivable be recognized upon foreclosure if certain conditions are met. Upon foreclosure on the loans that meet these criteria, a separate receivable should be recorded based on the amount of the loan balance expected to be recovered from the guarantor. The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2014, and is not expected to have a material effect on our financial position or results of operations when adopted.

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 2 - BUSINESS COMBINATION

We completed the merger of Firstbank Corporation (“Firstbank”), a Michigan corporation with approximately $1.5 billion in total assets and 46 branch locations, into Mercantile Bank Corporation as of June 1, 2014 (“Merger Date”). Each share of Firstbank’s common stock was converted into the right to receive one share of Mercantile common stock, resulting in Mercantile issuing 8,087,272 shares of its common stock. The merger provided an expanded geographic footprint for the Company and increased the size of the balance sheet. In conjunction with the completion of the merger, Mercantile assumed the obligations of Firstbank Capital Trust I, Firstbank Capital Trust II, Firstbank Capital Trust III and Firstbank Capital Trust IV.

The Firstbank transaction was accounted for using the acquisition method of accounting and accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the Merger Date. Preliminary goodwill of $49.5 million was calculated as the purchase premium after adjusting for the fair value of net assets acquired and represents the value expected from the synergies created from combining the two banking organizations as well as the economies of scale expected from combining the operations of the two companies. None of the goodwill is deductible for income tax purposes as the merger is accounted for as a tax-free exchange.

The following table provides the purchase price calculation as of the Merger Date and the identifiable assets purchased and the liabilities assumed at their estimated fair values. These fair value measurements are provisional based on third-party valuations that are currently under review and are subject to refinement for up to one year after the Merger Date based on additional information that may be obtained by us that existed as of the Merger Date.

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 2 - BUSINESS COMBINATION (Continued)

Purchase Price:
Mercantile common shares issued for Firstbank common shares		8,087,272
Price per share, based on Mercantile closing price on May 30, 2014	$	21.43
Value of common stock issued		173,310,000
Value of replacement stock options granted		1,664,000
Total purchase price	$	174,974,000

Preliminary Statement of Net Assets Acquired at Fair Value:
Assets
Cash and cash equivalents	$	91,806,000
Securities		358,599,000
Total loans		943,662,000
Premises and equipment		24,049,000
Core deposit intangible		17,478,000
Mortgage servicing rights		7,389,000
Other assets		9,897,000
Total Assets	$	1,452,880,000
Liabilities
Deposits	$	1,229,609,000
Borrowings		87,615,000
Other liabilities		10,155,000
Total Liabilities	$	1,327,379,000
Net Identifiable Assets Acquired			$	125,501,000
Goodwill			$	49,473,000

Effective December 31, 2014, we identified certain Firstbank deferred tax assets and liabilities that should have been addressed on the Merger Date. The net impact of recording the necessary entries was a $1.4 million reduction to Goodwill and a $1.4 million increase to our net deferred tax asset account (included in other assets above) from what we reported in our June 30, 2014 and September 30, 2014 Form 10-Qs.

Firstbank’s results of operations prior to the Merger Date are not included in our Consolidated Statements of Income or Consolidated Statements of Comprehensive Income. We recorded merger-related expenses of $5.4 million and $1.2 million during 2014 and 2013, respectively. Such expenses were generally for professional services, costs related to termination of existing contractual arrangements for various services, retention and severance compensation costs, marketing and promotional expenses, travel costs, and printing and supplies costs. We do not expect to record any additional significant expenses related to the Firstbank merger in future periods. We are not presenting the amounts of revenue and earnings of Firstbank since the Merger Date as it is impracticable due to the integration of Firstbank upon the consummation of the merger.

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 2 - BUSINESS COMBINATION (Continued)

The following table provides the unaudited pro forma information for the results of operations for the twelve month periods ended December 31, 2014 and 2013, as if the acquisition had occurred on January 1, 2013. These adjustments reflect the impact of certain purchase accounting fair value measurements primarily related to Firstbank’s loan and deposit portfolios. In addition, the aggregate $12.2 million in merger-related expenses recorded by us and Firstbank during 2014 and 2013 are reflected to have been recorded during 2013. We expect to achieve further operating cost savings and other business synergies as a result of the merger which are not reflected in the pro forma amounts. These unaudited pro forma results are presented for illustrative purposes only and are not intended to represent or be indicative of the actual results of operations of the combined banking organization that would have been achieved had the merger occurred at the beginning of each period presented, nor are they intended to represent or be indicative of future results of operations.

	2014		2013
Net interest income	$	98,607,000	$	93,862,000
Noninterest expense		81,295,000		93,263,000
Net income		22,659,000		16,068,000
Net income per diluted share		1.33		0.96

In most instances, determining the fair value of the acquired assets and assumed liabilities required us to estimate cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of those determinations relates to the valuation of acquired loans. For such loans, the excess of cash flows expected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and other factors, such as prepayments. In accordance with the applicable accounting guidance for business combinations, there was no carry-over of Firstbank’s previously established allowance for loan losses.

The acquired loans were divided into loans with evidence of credit quality deterioration, which are accounted for under ASC 310-30 (“acquired impaired”), and loans that do not meet this criteria, which are accounted for under ASC 310-20 (“acquired non-impaired”). In addition, the loans are further categorized into different loan pools based primarily on the type and purpose of the loan.

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 2 - BUSINESS COMBINATION (Continued)

The provisional fair value of loans at the Merger Date is presented in the following table: 

	Acquired		Acquired		Acquired
	Impaired		Non-Impaired		Total Loans
Commercial Loans:
Commercial & industrial	$	878,000	$	163,316,000	$	164,194,000
Commercial real estate		12,973,000		378,016,000		390,989,000
Construction & development		1,289,000		33,726,000		35,015,000
Total Commercial Loans	$	15,140,000	$	575,058,000	$	590,198,000
Consumer Loans:
Residential mortgages	$	9,694,000	$	216,653,000	$	226,347,000
Instalment		167,000		61,657,000		61,824,000
Home equity lines		288,000		52,054,000		52,342,000
Construction		76,000		12,875,000		12,951,000
Total Consumer Loans	$	10,225,000	$	343,239,000	$	353,464,000
Total Loans	$	25,365,000	$	918,297,000	$	943,662,000

The following table presents data on acquired impaired loans at the Merger Date:

	Acquired Impaired
Contractually required payments	$	44,936,000
Nonaccretable difference		17,057,000
Expected cash flows		27,879,000
Accretable yield		2,514,000
Carrying balance	$	25,365,000

The nonaccretable difference includes $10.4 million in principal cash flows not expected to be collected, $2.8 million of pre-acquisition charge-offs and $3.9 million of future interest not expected to be collected. The unpaid principal balance of acquired performing loans was $926.4 million at the Merger Date, and the unaccreted discount on such loans was $8.1 million.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 3 – SECURITIES

The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
2014
U.S. Government agency debt obligations	$	194,894,000	$	1,612,000	$	(3,038,000	)	$	193,468,000
Mortgage-backed securities		92,656,000		1,123,000		(218,000	)		93,561,000
Municipal general obligation bonds		132,347,000		1,042,000		(307,000	)		133,082,000
Municipal revenue bonds		10,769,000		117,000		(13,000	)		10,873,000
Other investments		1,925,000		3,000		0			1,928,000
	$	432,591,000	$	3,897,000	$	(3,576,000	)	$	432,912,000
2013
U.S. Government agency debt obligations	$	108,279,000	$	263,000	$	(10,065,000	)	$	98,477,000
Mortgage-backed securities		12,456,000		1,102,000		0			13,558,000
Municipal general obligation bonds		16,488,000		388,000		(4,000	)		16,872,000
Municipal revenue bonds		878,000		38,000		0			916,000
Mutual funds		1,386,000		0		(31,000	)		1,355,000
	$	139,487,000	$	1,791,000	$	(10,100,000	)	$	131,178,000

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 3 – SECURITIES (Continued)

Securities with unrealized losses at year-end 2014 and 2013, aggregated by investment category and length of time that individual securities have been in a continuous loss position, are as follows:

	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
2014
U.S. Government agency debt obligations	$	81,891,000	$	202,000	$	74,120,000	$	2,836,000	$	156,011,000	$	3,038,000
Mortgage-backed securities		49,940,000		218,000		0		0		49,940,000		218,000
Municipal general obligation bonds		54,104,000		307,000		0		0		54,104,000		307,000
Municipal revenue bonds		4,644,000		13,000		0		0		4,644,000		13,000
Other investments		0		0		0		0		0		0
	$	190,579,000	$	740,000	$	74,120,000	$	2,836,000	$	264,699,000	$	3,576,000
2013
U.S. Government agency debt obligations	$	57,117,000	$	5,798,000	$	29,679,000	$	4,267,000	$	86,796,000	$	10,065,000
Mortgage-backed securities		0		0		0		0		0		0
Municipal general obligation bonds		295,000		4,000		0		0		295,000		4,000
Municipal revenue bonds		0		0		0		0		0		0
Mutual funds		1,355,000		31,000		0		0		1,355,000		31,000
	$	58,767,000	$	5,833,000	$	29,679,000	$	4,267,000	$	88,446,000	$	10,100,000

We evaluate securities for other-than-temporary impairment at least on a quarterly basis. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability we have to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. For those debt securities whose fair value is less than their amortized cost basis, we also consider our intent to sell the security, whether it is more likely than not that we will be required to sell the security before recovery and if we do not expect to recover the entire amortized cost basis of the security. In analyzing an issuer’s financial condition, we may consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial condition.

At December 31, 2014, 341 debt securities with fair values totaling $264.7 million have unrealized losses aggregating $3.6 million. After we considered whether the securities were issued by the federal government or its agencies and whether downgrades by bond rating agencies had occurred, we determined that unrealized losses were due to changing interest rate environments. As we do not intend to sell our debt securities before recovery of their cost basis and we believe it is more likely than not that we will not be required to sell our debt securities before recovery of the cost basis, no unrealized losses are deemed to be other-than-temporary.

The amortized cost and fair values of debt securities at December 31, 2014, by maturity, are shown in the following table. The contractual maturity is utilized for U.S. Government agency debt obligations and municipal bonds. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately. Weighted average yields are also reflected, with yields for municipal securities shown at their tax equivalent yield.

	Weighted
	Average			Amortized		Fair
	Yield			Cost		Value
Due in one year or less		0.72	%	$	27,651,000	$	27,662,000
Due from one to five years		1.35			148,233,000		147,974,000
Due from five to ten years		2.99			70,282,000		70,191,000
Due after ten years		3.62			91,844,000		91,596,000
Mortgage-backed securities		1.79			92,656,000		93,561,000
Other investments		2.57			1,925,000		1,928,000
		2.17	%	$	432,591,000	$	432,912,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 3 – SECURITIES (Continued)

During 2013, Michigan Strategic Fund bonds totaling $10.3 million were sold at par. No securities were sold during 2014 and 2012.

Securities issued by the State of Michigan and all its political subdivisions had a combined amortized cost of $113.1 million and $17.4 million at December 31, 2014 and December 31, 2013, respectively, with estimated market values of $113.9 million and $17.8 million, respectively. Securities issued by all other states and their political subdivisions had a combined amortized cost of $30.0 million and estimated market value of $30.0 million at December 31, 2014; as of December 31, 2013, our entire municipal bond portfolio consisted of securities issued by the State of Michigan and its political subdivisions. Total securities of any other specific issuer, other than the U.S. Government and its agencies and the State of Michigan and all its political subdivisions, did not exceed 10% of shareholders’ equity.

The carrying value of U.S. Government agency debt obligations and mortgage-backed securities that are pledged to secure repurchase agreements was $180.5 million and $94.4 million at December 31, 2014 and 2013, respectively. In addition, substantially all of our municipal bonds have been pledged to the Discount Window of the Federal Reserve Bank of Chicago. Investments in FHLB stock are restricted and may only be resold to, or redeemed by, the issuer.

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans originated for investment are stated at their principal amount outstanding adjusted for partial charge-offs, the allowance, and net deferred loan fees and costs. Interest income on loans is accrued over the term of the loans primarily using the simple interest method based on the principal balance outstanding. Interest is not accrued on loans where collectability is uncertain. Accrued interest is included in other assets in the Consolidated Balance Sheets. Loan origination fees and certain direct costs incurred to extend credit are deferred and amortized over the term of the loan or loan commitment period as an adjustment to the related loan yield.

Acquired loans are those purchased in the Firstbank merger (see Note 2 – Business Combination for further information). These loans were recorded at estimated fair value at the Merger Date with no carryover of the related allowance. The acquired loans were segregated between those considered to be performing (“acquired non-impaired loans”) and those with evidence of credit deterioration (“acquired impaired loans”). Acquired loans are considered impaired if there is evidence of credit deterioration and if it is probable, at acquisition, all contractually required payments will not be collected. Acquired loans restructured after acquisition are not considered or reported as troubled debt restructurings if the loans evidenced credit deterioration as of the Merger Date and are accounted for in pools.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The fair value estimates for acquired loans are based on expected prepayments and the amount and timing of discounted expected principal, interest and other cash flows. Credit discounts representing the principal losses expected over the life of the loan are also a component of the initial fair value. In determining the Merger Date fair value of acquired impaired loans, and in subsequent accounting, we have generally aggregated acquired commercial and consumer loans into pools of loans with common risk characteristics.

The difference between the fair value of an acquired non-impaired loan and contractual amounts due at the Merger Date is accreted into income over the estimated life of the loan. Contractually required payments represent the total undiscounted amount of all uncollected principal and interest payments. Acquired non-impaired loans are placed on nonaccrual status and reported as nonperforming or past due using the same criteria applied to the originated loan portfolio.

The excess of an acquired impaired loan’s contractually required payments over the amount of its undiscounted cash flows expected to be collected is referred to as the non-accretable difference. The non-accretable difference, which is neither accreted into income nor recorded on the Consolidated Balance Sheets, reflects estimated future credit losses and uncollectable contractual interest expected to be incurred over the life of the acquired impaired loan. The excess cash flows expected to be collected over the carrying amount of the acquired loan is referred to as the accretable yield. This amount is accreted into interest income over the remaining life of the acquired loans or pools using the level yield method. The accretable yield is affected by changes in interest rate indices for variable rate loans, changes in prepayment speed assumptions and changes in expected principal and interest payments over the estimated lives of the acquired impaired loans.

We evaluate quarterly the remaining contractually required payments receivable and estimate cash flows expected to be collected over the lives of the impaired loans. Contractually required payments receivable may increase or decrease for a variety of reasons, for example, when the contractual terms of the loan agreement are modified, when interest rates on variable rate loans change, or when principal and/or interest payments are received. Cash flows expected to be collected on acquired impaired loans are estimated by incorporating several key assumptions similar to the initial estimate of fair value. These key assumptions include probability of default, loss given default, and the amount of actual prepayments after the Merger Date. Prepayments affect the estimated lives of loans and could change the amount of interest income, and possibly principal, expected to be collected. In re-forecasting future estimated cash flows, credit loss expectations are adjusted as necessary. The adjustments are based, in part, on actual loss severities recognized for each loan type, as well as changes in the probability of default. For periods in which estimated cash flows are not re-forecasted, the prior reporting period’s estimated cash flows are adjusted to reflect the actual cash received and credit events that transpired during the current reporting period.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Increases in expected cash flows of acquired impaired loans subsequent to the Merger Date are recognized prospectively through adjustments of the yield on the loans or pools over their remaining lives, while decreases in expected cash flows are recognized as impairment through a provision for loan losses and an increase in the allowance.

Year-end loans disaggregated by class of loan within the loan portfolio segments were as follows:

											Percent
	December 31, 2014					December 31, 2013					Increase
	Balance		%			Balance		%			(Decrease)
Originated Loans
Commercial:
Commercial and industrial	$	384,570,000		30.8	%	$	286,373,000		27.2	%		34.3	%
Vacant land, land development, and residential construction		29,826,000		2.4			36,741,000		3.5			(18.8	)
Real estate – owner occupied		291,758,000		23.4			261,877,000		24.9			11.4
Real estate – non-owner occupied		410,977,000		33.0			364,066,000		34.6			12.9
Real estate – multi-family and residential rental		36,058,000		2.9			37,639,000		3.5			(4.2	)
Total commercial		1,153,189,000		92.5			986,696,000		93.7			16.9
Retail:
Home equity and other		50,059,000		4.0			35,080,000		3.3			42.7
1-4 family mortgages		42,868,000		3.5			31,467,000		3.0			36.2
Total retail		92,927,000		7.5			66,547,000		6.3			39.6
Total originated loans	$	1,246,116,000		100.0	%	$	1,053,243,000		100.0	%		18.3	%

										Percent
	December 31, 2014					December 31, 2013				Increase
	Balance		%			Balance		%		(Decrease)
Acquired Loans
Commercial:
Commercial and industrial	$	166,037,000		19.7	%	$	0		NA		NM
Vacant land, land development, and residential construction		22,148,000		2.6			0		NA		NM
Real estate – owner occupied		138,630,000		16.4			0		NA		NM
Real estate – non-owner occupied		148,597,000		17.6			0		NA		NM
Real estate – multi-family and residential rental		86,702,000		10.3			0		NA		NM
Total commercial		562,114,000		66.6			0		NA		NM
Retail:
Home equity and other		109,219,000		13.0			0		NA		NM
1-4 family mortgages		171,828,000		20.4			0		NA		NM
Total retail		281,047,000		33.4			0		NA		NM
Total acquired loans	$	843,161,000		100.0	%	$	0		NA		NM

(Continued) 

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

											Percent
	December 31, 2014					December 31, 2013					Increase
	Balance		%			Balance		%			(Decrease)
Total Loans
Commercial:
Commercial and industrial	$	550,607,000		26.4	%	$	286,373,000		27.2	%		92.3	%
Vacant land, land development, and residential construction		51,974,000		2.5			36,741,000		3.5			41.5
Real estate – owner occupied		430,388,000		20.5			261,877,000		24.9			64.3
Real estate – non-owner occupied		559,574,000		26.8			364,066,000		34.6			53.7
Real estate – multi-family and residential rental		122,760,000		5.9			37,639,000		3.5			226.2
Total commercial		1,715,303,000		82.1			986,696,000		93.7			73.8
Retail:
Home equity and other		159,278,000		7.6			35,080,000		3.3			354.0
1-4 family mortgages		214,696,000		10.3			31,467,000		3.0			582.3
Total retail		373,974,000		17.9			66,547,000		6.3			462.0
Total loans	$	2,089,277,000		100.0	%	$	1,053,243,000		100.0	%		98.4	%

The total contractually required payments and carrying value of acquired impaired loans was $31.4 million and $18.6 million, respectively, as of December 31, 2014. Changes in the accretable yield for acquired impaired loans for the seven-month period ended December 31, 2014 were as follows:

	2014
Balance at May 31, 2014	$	0
Additions		2,514,000
Accretion		(786,000	)
Net reclassification from nonaccretable to accretable		3,537,000
Disposals		(40,000	)
Other activity		(227,000	)
Balance at December 31, 2014	$	4,998,000

(Continued) 

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Concentrations within the loan portfolio were as follows at year-end:

	2014					2013
			Percentage of					Percentage of
	Balance		Loan Portfolio			Balance		Loan Portfolio
Commercial real estate loans to lessors of non-residential buildings	$	480,170,000		23.0	%	$	299,446,000		28.4	%

Year-end nonperforming originated loans were as follows:

	2014		2013
Loans past due 90 days or more still accruing interest	$	0	$	0
Nonaccrual loans		26,048,000		6,718,000
Total nonperforming loans	$	26,048,000	$	6,718,000

Year-end nonperforming acquired loans were as follows:

	2014		2013
Loans past due 90 days or more still accruing interest	$	26,000	$	NA
Nonaccrual loans		3,358,000		NA
Total nonperforming loans	$	3,384,000	$	NA

(Continued) 

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The recorded principal balance of nonperforming loans was as follows:

	December 31,		December 31,
	2014		2013
Commercial:
Commercial and industrial	$	6,478,000	$	1,501,000
Vacant land, land development, and residential construction		209,000		785,000
Real estate – owner occupied		18,062,000		389,000
Real estate – non-owner occupied		378,000		168,000
Real estate – multi-family and residential rental		106,000		208,000
Total commercial		25,233,000		3,051,000
Retail:
Home equity and other		800,000		788,000
1-4 family mortgages		3,399,000		2,879,000
Total retail		4,199,000		3,667,000
Total nonperforming loans	$	29,432,000	$	6,718,000

Acquired impaired loans are not reported as nonperforming loans based on acquired impaired loan accounting. Acquired non-impaired loans are placed on nonaccrual status and reported as nonperforming or past due using the same criteria applied to the originated loan portfolio.

(Continued) 

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

An age analysis of past due loans is as follows as of December 31, 2014:

					Greater								Recorded
	30 – 59		60 – 89		Than 89								Balance > 89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing
Originated Loans
Commercial:
Commercial and industrial	$	0	$	0	$	0	$	0	$	384,570,000	$	384,570,000	$	0
Vacant land, land development, and residential construction		0		0		0		0		29,826,000		29,826,000		0
Real estate – owner occupied		0		0		120,000		120,000		291,638,000		291,758,000		0
Real estate – non-owner occupied		0		0		116,000		116,000		410,861,000		410,977,000		0
Real estate – multi-family and residential rental		0		0		0		0		36,058,000		36,058,000		0
Total commercial		0		0		236,000		236,000		1,152,953,000		1,153,189,000		0
Retail:
Home equity and other		38,000		3,000		0		41,000		50,018,000		50,059,000		0
1- 4 family mortgages		0		0		366,000		366,000		42,502,000		42,868,000		0
Total retail		38,000		3,000		366,000		407,000		92,520,000		92,927,000		0
Total past due loans	$	38,000	$	3,000	$	602,000	$	643,000	$	1,245,473,000	$	1,246,116,000	$	0

(Continued)

F-64

MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

					Greater								Recorded
	30 – 59		60 – 89		Than 89								Balance > 89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing
Acquired Loans
Commercial:
Commercial and industrial	$	29,000	$	32,000	$	76,000	$	137,000	$	165,900,000	$	166,037,000	$	0
Vacant land, land development, and residential construction		0		38,000		0		38,000		22,110,000		22,148,000		0
Real estate – owner occupied		51,000		425,000		1,625,000		2,101,000		136,529,000		138,630,000		0
Real estate – non-owner occupied		68,000		598,000		395,000		1,061,000		147,536,000		148,597,000		0
Real estate – multi-family and residential rental		37,000		0		105,000		142,000		86,560,000		86,702,000		0
Total commercial		185,000		1,093,000		2,201,000		3,479,000		558,635,000		562,114,000		0
Retail:
Home equity and other		445,000		419,000		155,000		1,019,000		108,200,000		109,219,000		26,000
1- 4 family mortgages		1,087,000		408,000		750,000		2,245,000		169,583,000		171,828,000		0
Total retail		1,532,000		827,000		905,000		3,264,000		277,783,000		281,047,000		26,000
Total past due loans	$	1,717,000	$	1,920,000	$	3,106,000	$	6,743,000	$	836,418,000	$	843,161,000	$	26,000

(Continued)

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Table Of Contents

MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

An age analysis of past due loans is as follows as of December 31, 2013:

					Greater								Recorded
	30 – 59		60 – 89		Than 89								Balance > 89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing
Originated Loans
Commercial:
Commercial and industrial	$	0	$	0	$	309,000	$	309,000	$	286,064,000	$	286,373,000	$	0
Vacant land, land development, and residential construction		0		0		0		0		36,741,000		36,741,000		0
Real estate – owner occupied		65,000		0		50,000		115,000		261,762,000		261,877,000		0
Real estate – non-owner occupied		0		0		0		0		364,066,000		364,066,000		0
Real estate – multi-family and residential rental		0		0		64,000		64,000		37,575,000		37,639,000		0
Total commercial		65,000		0		423,000		488,000		986,208,000		986,696,000		0
Retail:
Home equity and other		14,000		0		0		14,000		35,066,000		35,080,000		0
1- 4 family mortgages		21,000		44,000		375,000		440,000		31,027,000		31,467,000		0
Total retail		35,000		44,000		375,000		454,000		66,093,000		66,547,000		0
Total past due loans	$	100,000	$	44,000	$	798,000	$	942,000	$	1,052,301,000	$	1,053,243,000	$	0

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Impaired originated loans with no related allowance recorded were as follows as of December 31, 2014:

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	1,170,000	$	1,164,000			$	652,000
Vacant land, land development and residential construction		540,000		209,000				227,000
Real estate – owner occupied		3,609,000		1,901,000				4,365,000
Real estate – non-owner occupied		1,210,000		1,210,000				971,000
Real estate – multi-family and residential rental		375,000		317,000				64,000
Total commercial		6,904,000		4,801,000				6,279,000
Retail:
Home equity and other		207,000		191,000				517,000
1-4 family mortgages		1,144,000		560,000				585,000
Total retail		1,351,000		751,000				1,102,000
Total with no related allowance recorded	$	8,255,000	$	5,552,000		0	$	7,381,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Impaired originated loans with an allowance recorded and total impaired loans were as follows as of December 31, 2014:

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With an allowance recorded:
Commercial:
Commercial and industrial	$	5,299,000	$	5,226,000	$	1,578,000	$	2,759,000
Vacant land, land development and residential construction		2,000,000		2,000,000		151,000		3,229,000
Real estate – owner occupied		15,745,000		15,674,000		2,200,000		4,630,000
Real estate – non-owner occupied		16,033,000		15,949,000		4,779,000		18,245,000
Real estate – multi-family and residential rental		1,371,000		1,371,000		666,000		1,700,000
Total commercial		40,448,000		40,220,000		9,374,000		30,563,000
Retail:
Home equity and other		115,000		84,000		84,000		128,000
1-4 family mortgages		2,194,000		2,000,000		694,000		2,115,000
Total retail		2,309,000		2,084,000		778,000		2,243,000
Total with an allowance recorded	$	42,757,000	$	42,304,000	$	10,152,000	$	32,806,000
Total impaired loans:
Commercial	$	47,352,000	$	45,021,000	$	9,374,000	$	36,842,000
Retail		3,660,000		2,835,000		778,000		3,345,000
Total impaired loans	$	51,012,000	$	47,856,000	$	10,152,000	$	40,187,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Impaired acquired loans with no related allowance recorded were as follows as of December 31, 2014:

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	1,586,000	$	1,579,000			$	563,000
Vacant land, land development and residential construction		0		0				0
Real estate – owner occupied		113,000		113,000				52,000
Real estate – non-owner occupied		326,000		326,000				260,000
Real estate – multi-family and residential rental		487,000		487,000				166,000
Total commercial		2,512,000		2,505,000				1,041,000
Retail:
Home equity and other		641,000		639,000				262,000
1-4 family mortgages		866,000		866,000				458,000
Total retail		1,507,000		1,505,000				720,000
Total with no related allowance recorded	$	4,019,000	$	4,010,000		0	$	1,761,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Impaired acquired loans with an allowance recorded and total impaired loans were as follows as of December 31, 2014:

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With an allowance recorded:
Commercial:
Commercial and industrial	$	0	$	0	$	0	$	0
Vacant land, land development and residential construction		0		0		0		0
Real estate – owner occupied		1,516,000		1,502,000		605,000		501,000
Real estate – non-owner occupied		0		0		0		0
Real estate – multi-family and residential rental		0		0		0		0
Total commercial		1,516,000		1,502,000		605,000		501,000
Retail:
Home equity and other		0		0		0		0
1-4 family mortgages		0		0		0		0
Total retail		0		0		0		0
Total with an allowance recorded	$	1,516,000	$	1,502,000	$	605,000	$	501,000
Total impaired loans:
Commercial	$	4,028,000	$	4,007,000	$	605,000	$	1,542,000
Retail		1,507,000		1,505,000		0		720,000
Total impaired loans	$	5,535,000	$	5,512,000	$	605,000	$	2,262,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Impaired originated loans with no related allowance recorded were as follows as of December 31, 2013:

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	2,229,000	$	511,000			$	1,205,000
Vacant land, land development and residential construction		475,000		362,000				991,000
Real estate – owner occupied		1,270,000		785,000				1,084,000
Real estate – non-owner occupied		895,000		733,000				4,049,000
Real estate – multi-family and residential rental		41,000		1,000				390,000
Total commercial		4,910,000		2,392,000				7,719,000
Retail:
Home equity and other		507,000		461,000				471,000
1-4 family mortgages		1,272,000		647,000				727,000
Total retail		1,779,000		1,108,000				1,198,000
Total with no related allowance recorded	$	6,689,000	$	3,500,000		0	$	8,917,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Impaired originated loans with an allowance recorded and total impaired loans were as follows as of December 31, 2013:

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With an allowance recorded:
Commercial:
Commercial and industrial	$	1,517,000	$	1,440,000	$	792,000	$	1,880,000
Vacant land, land development and residential construction		4,436,000		4,139,000		844,000		3,354,000
Real estate – owner occupied		1,513,000		1,513,000		528,000		2,550,000
Real estate – non-owner occupied		21,088,000		21,072,000		7,969,000		28,388,000
Real estate – multi-family and residential rental		3,219,000		2,684,000		1,127,000		2,915,000
Total commercial		31,773,000		30,848,000		11,260,000		39,087,000
Retail:
Home equity and other		320,000		289,000		96,000		329,000
1-4 family mortgages		2,274,000		2,231,000		1,030,000		1,628,000
Total retail		2,594,000		2,520,000		1,126,000		1,957,000
Total with an allowance recorded	$	34,367,000	$	33,368,000	$	12,386,000	$	41,044,000
Total impaired loans:
Commercial	$	36,683,000	$	33,240,000	$	11,260,000	$	46,806,000
Retail		4,373,000		3,628,000		1,126,000		3,155,000
Total impaired loans	$	41,056,000	$	36,868,000	$	12,386,000	$	49,961,000

Impaired loans for which no allocation of the allowance for loan losses has been made generally reflect situations whereby the loans have been charged-down to estimated collateral value. Interest income recognized on accruing troubled debt restructurings totaled $1.8 million, $2.5 million and $2.0 million during 2014, 2013 and 2012, respectively. Interest income recognized on nonaccrual loans totaled $1.9 million during 2013, reflecting the collection of interest at the time of principal pay-off. No such significant collections of interest income were recorded during 2014 or 2012. Lost interest income on nonaccrual loans totaled $0.1 million, $0.4 million and $0.8 million during 2014, 2013 and 2012, respectively.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Credit Quality Indicators. We utilize a comprehensive grading system for our commercial loans. All commercial loans are graded on a ten grade rating system. The rating system utilizes standardized grade paradigms that analyze several critical factors such as cash flow, operating performance, financial condition, collateral, industry condition and management. All commercial loans are graded at inception and reviewed and, if appropriate, re-graded at various intervals thereafter. The risk assessment for retail loans is primarily based on the type of collateral and payment activity.

Loans by credit quality indicators were as follows as of December 31, 2014:

Originated Loans

Commercial credit exposure – credit risk profiled by internal credit risk grades:

	Commercial and Industrial		Commercial Vacant Land, Land  Development, and Residential Construction		Commercial Real Estate - Owner Occupied		Commercial Real Estate - Non-Owner Occupied		Commercial Real Estate - Multi-Family and Residential Rental
Internal credit risk grade groupings:
Grades 1 – 4	$	266,631,000	$	11,242,000	$	190,656,000	$	285,035,000	$	12,394,000
Grades 5 – 7		109,639,000		16,375,000		83,123,000		113,982,000		22,282,000
Grades 8 – 9		8,300,000		2,209,000		17,979,000		11,960,000		1,382,000
Total commercial	$	384,570,000	$	29,826,000	$	291,758,000	$	410,977,000	$	36,058,000

Retail credit exposure – credit risk profiled by collateral type:

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Total retail	$	50,059,000	$	42,868,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Acquired Loans

Commercial credit exposure – credit risk profiled by internal credit risk grades:

			Commercial						Commercial
			Vacant Land,		Commercial		Commercial		Real Estate -
	Commercial		Land Development,		Real Estate -		Real Estate -		Multi-Family
	and		and Residential		Owner		Non-Owner		and Residential
	Industrial		Construction		Occupied		Occupied		Rental
Internal credit risk grade groupings:
Grades 1 – 4	$	72,411,000	$	5,875,000	$	39,496,000	$	65,886,000	$	35,858,000
Grades 5 – 7		90,320,000		14,472,000		92,212,000		78,103,000		49,781,000
Grades 8 – 9		3,306,000		1,801,000		6,922,000		4,608,000		1,063,000
Total commercial	$	166,037,000	$	22,148,000	$	138,630,000	$	148,597,000	$	86,702,000

Retail credit exposure – credit risk profiled by collateral type:

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Total retail	$	109,219,000	$	171,828,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Loans by credit quality indicators were as follows as of December 31, 2013:

Originated Loans

Commercial credit exposure – credit risk profiled by internal credit risk grades:

			Commercial Vacant Land, Land		Commercial		Commercial		Commercial Real Estate -
	Commercial		Development,		Real Estate -		Real Estate -		Multi-Family
	and		and Residential		Owner		Non-Owner		and Residential
	Industrial		Construction		Occupied		Occupied		Rental
Internal credit risk grade groupings:
Grades 1 – 4	$	208,151,000	$	6,973,000	$	156,230,000	$	219,325,000	$	15,465,000
Grades 5 – 7		76,237,000		25,535,000		103,066,000		122,717,000		19,469,000
Grades 8 – 9		1,985,000		4,233,000		2,581,000		22,024,000		2,705,000
Total commercial	$	286,373,000	$	36,741,000	$	261,877,000	$	364,066,000	$	37,639,000

Retail credit exposure – credit risk profiled by collateral type:

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Total retail	$	35,080,000	$	31,467,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

All commercial loans are graded using the following number system:

Grade 1.     Excellent credit rating that contain very little, if any, risk of loss.

Grade 2.     Strong sources of repayment and have low repayment risk.

Grade 3.     Good sources of repayment and have limited repayment risk.

Grade 4.     Adequate sources of repayment and acceptable repayment risk; however, characteristics are present that render the credit more vulnerable to a negative event.

Grade 5.     Marginally acceptable sources of repayment and exhibit defined weaknesses and negative characteristics.

Grade 6.     Well defined weaknesses which may include negative current cash flow, high leverage, or operating losses. Generally, if the credit does not stabilize or if further deterioration is observed in the near term, the loan will likely be downgraded and placed on the Watch List (i.e., list of lending relationships that receive increased scrutiny and review by the Board of Directors and senior management).

Grade 7.     Defined weaknesses or negative trends that merit close monitoring through Watch List status.

Grade 8.     Inadequately protected by current sound net worth, paying capacity of the obligor, or pledged collateral, resulting in a distinct possibility of loss requiring close monitoring through Watch List status.

Grade 9.     Vital weaknesses exist where collection of principal is highly questionable.

Grade 10.   Considered uncollectable and of such little value that their continuance as an asset is not warranted.

The primary risk elements with respect to commercial loans are the financial condition of the borrower, the sufficiency of collateral, and timeliness of scheduled payments. We have a policy of requesting and reviewing periodic financial statements from commercial loan customers and employ a disciplined and formalized review of the existence of collateral and its value. The primary risk element with respect to each residential real estate loan and consumer loan is the timeliness of scheduled payments. We have a reporting system that monitors past due loans and have adopted policies to pursue creditor’s rights in order to preserve our collateral position.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The allowance for originated loan losses and recorded investments in originated loans for the year-ended December 31, 2014 are as follows:

	Commercial			Retail
	Loans			Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	20,455,000		$	2,358,000		$	8,000	$	22,821,000
Provision for loan losses		(3,140,000	)		(721,000	)		68,000		(3,793,000	)
Charge-offs		(876,000	)		(554,000	)		0		(1,430,000	)
Recoveries		1,297,000			404,000			0		1,701,000
Ending balance	$	17,736,000		$	1,487,000		$	76,000	$	19,299,000
Ending balance: individually evaluated for impairment	$	9,374,000		$	777,000		$	0	$	10,151,000
Ending balance: collectively evaluated for impairment	$	8,362,000		$	710,000		$	76,000	$	9,148,000
Total loans:
Ending balance	$	1,153,189,000		$	92,927,000				$	1,246,116,000
Ending balance: individually evaluated for impairment	$	45,021,000		$	2,835,000				$	47,856,000
Ending balance: collectively evaluated for impairment	$	1,108,168,000		$	90,092,000				$	1,198,260,000

The allowance for acquired loan losses for the year-ended December 31, 2014 is as follows:

	Commercial			Retail
	Loans			Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	0		$	0		$	0	$	0
Provision for loan losses		734,000			59,000			0		793,000
Charge-offs		(55,000	)		(16,000	)		0		(71,000	)
Recoveries		2,000			18,000			0		20,000
Ending balance	$	681,000		$	61,000		$	0	$	742,000

In accordance with the applicable accounting guidance for business combinations, there was no carry-over of Firstbank’s previously established allowance for loan losses.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The allowance for loan losses and recorded investments in loans for the year-ended December 31, 2013 are as follows:

	Commercial			Retail
	Loans			Loans			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	26,043,000		$	2,645,000		$	(11,000	)	$	28,677,000
Provision for loan losses		(6,730,000	)		(489,000	)		19,000			(7,200,000	)
Charge-offs		(5,120,000	)		(170,000	)		0			(5,290,000	)
Recoveries		6,262,000			372,000			0			6,634,000
Ending balance	$	20,455,000		$	2,358,000		$	8,000		$	22,821,000
Ending balance: individually evaluated for impairment	$	11,260,000		$	1,126,000		$	0		$	12,386,000
Ending balance: collectively evaluated for impairment	$	9,195,000		$	1,232,000		$	8,000		$	10,435,000
Total loans:
Ending balance	$	986,696,000		$	66,547,000					$	1,053,243,000
Ending balance: individually evaluated for impairment	$	33,240,000		$	3,628,000					$	36,868,000
Ending balance: collectively evaluated for impairment	$	953,456,000		$	62,919,000					$	1,016,375,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The allowance for loan losses and recorded investments in loans for the year-ended December 31, 2012 are as follows:

	Commercial			Retail
	Loans			Loans			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	33,431,000		$	3,019,000		$	82,000		$	36,532,000
Provision for loan losses		(2,800,000	)		(207,000	)		(93,000	)		(3,100,000	)
Charge-offs		(12,075,000	)		(569,000	)		0			(12,644,000	)
Recoveries		7,487,000			402,000			0			7,889,000
Ending balance	$	26,043,000		$	2,645,000		$	(11,000	)	$	28,677,000
Ending balance: individually evaluated for impairment	$	16,860,000		$	329,000		$	0		$	17,189,000
Ending balance: collectively evaluated for impairment	$	9,183,000		$	2,316,000		$	(11,000	)	$	11,488,000
Total loans:
Ending balance	$	968,506,000		$	72,683,000					$	1,041,189,000
Ending balance: individually evaluated for impairment	$	55,138,000		$	2,141,000					$	57,279,000
Ending balance: collectively evaluated for impairment	$	913,368,000		$	70,542,000					$	983,910,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Loans modified as troubled debt restructurings during 2014 were as follows:

			Pre-		Post-
			Modification		Modification
			Recorded		Recorded
	Number of		Principal		Principal
	Contracts		Balance		Balance
Originated Loans
Commercial:
Commercial and industrial		2	$	5,994,000	$	6,094,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		2		16,787,000		16,787,000
Real estate – non-owner occupied		1		146,000		146,000
Real estate – multi-family and residential rental		0		0		0
Total commercial		5		22,927,000		23,027,000
Retail:
Home equity and other		0		0		0
1-4 family mortgages		0		0		0
Total retail		0		0		0
Total		5	$	22,927,000	$	23,027,000
Acquired Loans
Commercial:
Commercial and industrial		7	$	1,604,000	$	1,604,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		2		1,619,000		1,619,000
Real estate – non-owner occupied		1		65,000		65,000
Real estate – multi-family and residential rental		4		394,000		394,000
Total commercial		14		3,682,000		3,682,000
Retail:
Home equity and other		1		26,000		26,000
1-4 family mortgages		1		179,000		179,000
Total retail		2		205,000		205,000
Total		16	$	3,887,000	$	3,887,000

(Continued)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Originated loans modified as troubled debt restructurings during 2013 were as follows:

			Pre-		Post-
			Modification		Modification
			Recorded		Recorded
	Number of		Principal		Principal
	Contracts		Balance		Balance
Commercial:
Commercial and industrial		3	$	741,000	$	741,000
Vacant land, land development and residential construction		2		3,610,000		3,610,000
Real estate – owner occupied		2		715,000		715,000
Real estate – non-owner occupied		1		45,000		45,000
Real estate – multi-family and residential rental		1		241,000		241,000
Total commercial		9		5,352,000		5,352,000
Retail:
Home equity and other		0		0		0
1-4 family mortgages		1		1,879,000		1,879,000
Total retail		1		1,879,000		1,879,000
Total		10	$	7,231,000	$	7,231,000

The following originated loans, modified as troubled debt restructurings within the previous twelve months, became over 30 days past due during the twelve months ended December 31, 2014 (amounts as of period end):

			Recorded
	Number of		Principal
	Contracts		Balance
Commercial:
Commercial and industrial		0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		0		0
Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0
Total		0	$	0

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The following acquired loans, modified as troubled debt restructurings within the previous seven months, became over 30 days past due during the seven months ended December 31, 2014 (amounts as of period end):

			Recorded
	Number of		Principal
	Contracts		Balance
Commercial:
Commercial and industrial		0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		0		0
Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0
Total		0	$	0

The following originated loans, modified as troubled debt restructurings within the previous twelve months, became over 30 days past due during the twelve months ended December 31, 2013 (amounts as of period end):

	Number of		Principal
	Contracts		Balance
Commercial:
Commercial and industrial		0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		1		65,000
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		1		65,000
Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0
Total		1	$	65,000

(Continued)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Activity for originated loans categorized as troubled debt restructurings during 2014 is as follows:

				Commercial
				Vacant Land, Land			Commercial			Commercial			Commercial Real Estate -
	Commercial			Development,			Real Estate -			Real Estate -			Multi-Family
	and			and Residential			Owner			Non-Owner			and Residential
	Industrial			Construction			Occupied			Occupied			Rental
Commercial Loan Portfolio:
Beginning Balance	$	1,656,000		$	4,501,000		$	1,816,000		$	22,311,000		$	2,620,000
Charge-Offs		(67,000	)		0			(11,000	)		0			(420,000	)
Payments		(871,000	)		(4,719,000	)		(2,343,000	)		(5,190,000	)		(1,695,000	)
Transfers to ORE		(21,000	)		0			(48,000	)		0			0
Net Additions/Deletions		6,329,000			2,898,000			17,746,000			318,000			0
Ending Balance	$	7,026,000		$	2,680,000		$	17,160,000		$	17,439,000		$	505,000

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	1,987,000
Charge-Offs		0		0
Payments		0		(224,000	)
Transfers to ORE		0		0
Net Additions/Deletions		0		204,000
Ending Balance	$	0	$	1,967,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Activity for acquired loans categorized as troubled debt restructurings during the last seven months of 2014 is as follows:

				Commercial
				Vacant Land, Land		Commercial		Commercial		Commercial Real Estate -
	Commercial			Development,		Real Estate -		Real Estate -		Multi-Family
	and			and Residential		Owner		Non-Owner		and Residential
	Industrial			Construction		Occupied		Occupied		Rental
Commercial Loan Portfolio:
Beginning Balance	$	0		$	0	$	0	$	0	$	0
Charge-Offs		0			0		0		0		0
Payments		(2,000	)		0		0		0		(18,000	)
Transfers to ORE		0			0		0		0		0
Net Additions/Deletions		1,441,000			0		1,569,000		64,000		399,000
Ending Balance	$	1,439,000		$	0	$	1,569,000	$	64,000	$	381,000

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	0
Charge-Offs		0		0
Payments		0		0
Transfers to ORE		0		0
Net Additions/Deletions		26,000		178,000
Ending Balance	$	26,000	$	178,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Activity for loans categorized as troubled debt restructurings during 2013 is as follows:

				Commercial
				Vacant Land, Land			Commercial			Commercial			Commercial Real Estate -
	Commercial			Development,			Real Estate -			Real Estate -			Multi-Family
	and			and Residential			Owner			Non-Owner			and Residential
	Industrial			Construction			Occupied			Occupied			Rental
Commercial Loan Portfolio:
Beginning Balance	$	2,720,000		$	3,071,000		$	4,116,000		$	37,671,000		$	3,027,000
Charge-Offs		(35,000	)		(725,000	)		(70,000	)		(2,537,000	)		(15,000	)
Payments		(2,781,000	)		(1,596,000	)		(2,151,000	)		(13,795,000	)		(735,000	)
Transfers to ORE		(74,000	)		0			(363,000	)		(1,153,000	)		0
Net Additions/Deletions		1,826,000			3,751,000			284,000			2,126,000			343,000
Ending Balance	$	1,656,000		$	4,501,000		$	1,816,000		$	22,312,000		$	2,620,000

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	155,000
Charge-Offs		0		0
Payments		0		(46,000	)
Transfers to ORE		0		0
Net Additions/Deletions		0		1,878,000
Ending Balance	$	0	$	1,987,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Activity for loans categorized as troubled debt restructurings during 2012 is as follows:

				Commercial
				Vacant Land, Land			Commercial			Commercial			Commercial Real Estate -
	Commercial			Development,			Real Estate -			Real Estate -			Multi-Family
	and			and Residential			Owner			Non-Owner			and Residential
	Industrial			Construction			Occupied			Occupied			Rental
Commercial Loan Portfolio:
Beginning Balance	$	4,553,000		$	5,100,000		$	6,183,000		$	12,036,000		$	12,626,000
Charge-Offs		(540,000	)		(63,000	)		(426,000	)		(720,000	)		(2,180,000	)
Payments		(2,584,000	)		(2,013,000	)		(3,443,000	)		(2,482,000	)		(7,422,000	)
Transfers to ORE		(96,000	)		0			(65,000	)		(1,045,000	)		(186,000	)
Net Additions/Deletions		1,387,000			47,000			1,867,000			29,882,000			189,000
Ending Balance	$	2,720,000		$	3,071,000		$	4,116,000		$	37,671,000		$	3,027,000

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	164,000
Charge-Offs		0		0
Payments		0		(9,000	)
Transfers to ORE		0		0
Net Additions/Deletions		0		0
Ending Balance	$	0	$	155,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The allowance related to loans categorized as troubled debt restructurings was as follows:

	December 31,		December 31,
	2014		2013
Commercial:
Commercial and industrial	$	16,000	$	187,000
Vacant land, land development, and residential construction		151,000		798,000
Real estate – owner occupied		182,000		528,000
Real estate – non-owner occupied		4,778,000		7,828,000
Real estate – multi-family and residential rental		666,000		1,010,000
Total commercial		5,793,000		10,351,000
Retail:
Home equity and other		0		0
1-4 family mortgages		0		48,000
Total retail		0		48,000
Total related allowance	$	5,793,000	$	10,399,000

In general, our policy dictates that a renewal or modification of an 8- or 9-rated commercial loan meets the criteria of a troubled debt restructuring, although we review and consider all renewed and modified loans as part of our troubled debt restructuring assessment procedures. Loan relationships rated 8 contain significant financial weaknesses, resulting in a distinct possibility of loss, while relationships rated 9 reflect vital financial weaknesses, resulting in a highly questionable ability on our part to collect principal; we believe borrowers warranting such ratings would have difficulty obtaining financing from other market participants. Thus, due to the lack of comparable market rates for loans with similar risk characteristics, we believe 8- or 9-rated loans renewed or modified were done so at below market rates. Loans that are identified as troubled debt restructurings are considered impaired and are individually evaluated for impairment when assessing these credits in our allowance for loan losses calculation.

NOTE 5 - PREMISES AND EQUIPMENT, NET

Year-end premises and equipment were as follows:

	2014		2013
Land and improvements	$	16,579,000	$	8,556,000
Buildings		38,761,000		24,733,000
Furniture and equipment		16,622,000		12,718,000
		71,962,000		46,007,000
Less: accumulated depreciation		23,150,000		21,109,000
Total premises and equipment	$	48,812,000	$	24,898,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 5 - PREMISES AND EQUIPMENT, NET (Continued)

Future lease payments total $1.8 million, comprised of $0.4 million in one year, $0.8 million in one to three years, $0.5 million in three to five years and $0.1 million in over five years. Depreciation expense totaled $2.3 million in 2014, $1.3 million in 2013, and $1.5 million in 2012.

NOTE 6 – MORTGAGE LOAN SERVICING

Mortgage loans serviced for others are not reported as assets in the Consolidated Balance Sheets. The mortgage loan servicing portfolio was acquired in the merger with Firstbank. The year-end aggregate unpaid principal balances of mortgage loans serviced for others were as follows:

	2014
Mortgage loan portfolios serviced for:
Federal Home Loan Mortgage Corporation	$	589,118,000
Federal Home Loan Bank		1,702,000
Total mortgage loans serviced for others	$	590,820,000

Custodial escrow balances maintained in connection with serviced loans were $2.8 million as of December 31, 2014.

Activity for capitalized mortgage loan servicing rights, included in other assets in the Consolidated Balance Sheets, during 2014 was as follows:

	2014
Balance at January 1, 2014	$	0
Firstbank merger		7,389,000
Additions		575,000
Amortized to expense		(1,252,000	)
Balance at December 31, 2014	$	6,712,000

We determined that no valuation allowance was necessary as of December 31, 2014. The estimated fair value of mortgage servicing rights was $7.3 million as of December 31, 2014. The fair value of mortgage servicing rights is estimated using a valuation model that calculates the present value of estimated future net servicing cash flows, taking into consideration expected mortgage loan prepayment rates, discount rates, servicing costs and other economic factors, which are determined based on current market conditions. Fair value was determined using a discount rate of 7.05%, a weighted average constant prepayment rate of 12.6%, depending on the stratification of the specific right, and a weighted average delinquency rate of 1.01%.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 6 – MORTGAGE LOAN SERVICING (Continued)

The weighted average amortization period is 3.7 years as of December 31, 2014. Estimated amortization is as follows:

2015	$	1,560,000
2016		1,256,000
2017		1,023,000
2018		857,000
2019		722,000
Thereafter		1,294,000

NOTE 7 – CORE DEPOSIT INTANGIBLE ASSETS, NET

The gross carrying amount of core deposit intangible assets totaled $17.5 million as of December 31, 2014 (none at December 31, 2013). The accumulated amortization on core deposit intangible assets was $1.9 million, providing for a net carry balance of $15.6 million as of December 31, 2014.

The estimated amortization expense on core deposit intangible assets in future periods is:

2015	$	2,992,000
2016		2,675,000
2017		2,357,000
2018		2,039,000
2019		1,721,000
Thereafter		3,839,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 8 – DEPOSITS

Deposits at year-end are summarized as follows:

											Percent
	December 31, 2014					December 31, 2013					Increase
	Balance		%			Balance		%			(Decrease)
Noninterest-bearing demand	$	558,738,000		24.5	%	$	224,580,000		20.1	%		148.8	%
Interest-bearing checking		413,382,000		18.2			197,388,000		17.6			109.4
Money market		235,587,000		10.3			133,369,000		11.9			76.6
Savings		330,459,000		14.5			52,606,000		4.7			528.2
Time, under $100,000		181,026,000		8.0			43,251,000		3.9			318.5
Time, $100,000 and over		382,120,000		16.8			254,600,000		22.8			50.1
		2,101,312,000		92.3			905,794,000		81.0			132.0
Out-of-area time, under $100,000		2,422,000		0.1			4,078,000		0.4			(40.6	)
Out-of-area time, $100,000 and over		173,181,000		7.6			209,039,000		18.6			(17.2	)
		175,603,000		7.7			213,117,000		19.0			(17.6	)
Total deposits	$	2,276,915,000		100.0	%	$	1,118,911,000		100.0	%		103.5

Out-of-area certificates of deposit consist of certificates obtained from depositors outside of our primary market areas almost exclusively through deposit brokers.

The following table depicts the maturity distribution for certificates of deposit at year-end:

	2014		2013
In one year or less	$	368,163,000	$	213,454,000
In one to two years		153,346,000		80,138,000
In two to three years		118,919,000		73,271,000
In three to four years		60,953,000		95,979,000
In four to five years		37,368,000		48,126,000
Total certificates of deposit	$	738,749,000	$	510,968,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 8 – DEPOSITS (Continued)

The following table depicts the maturity distribution for certificates of deposit with balances of $100,000 or more at year-end:

	2014		2013
Up to three months	$	75,356,000	$	57,469,000
Three months to six months		65,838,000		41,237,000
Six months to twelve months		125,492,000		93,920,000
Over twelve months		288,615,000		271,013,000
Total certificates of deposit	$	555,301,000	$	463,639,000

NOTE 9 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Information regarding securities sold under agreements to repurchase at year-end is summarized below:

	2014			2013
Outstanding balance at year-end	$	167,569,000		$	69,305,000
Weighted average interest rate at year-end		0.11	%		0.12	%
Average daily balance during the year	$	105,474,000		$	65,939,000
Weighted average interest rate during the year		0.12	%		0.12	%
Maximum daily balance during the year	$	178,042,000		$	78,960,000

Securities sold under agreements to repurchase (“repurchase agreements”) generally have original maturities of less than one year. Repurchase agreements are treated as financings, and the obligations to repurchase securities sold are reflected as liabilities. Securities involved with the repurchase agreements are recorded as assets of our Bank and are held in safekeeping by a correspondent bank. Repurchase agreements are offered principally to certain large deposit customers. Repurchase agreements are secured by securities with an aggregate fair value equal to the aggregate outstanding balance.

NOTE 10 - FEDERAL HOME LOAN BANK ADVANCES

Federal Home Loan Bank (“FHLB”) advances totaled $54.0 million at December 31, 2014, and mature at varying dates from January 2015 through September 2017, with fixed rates of interest from 0.62% to 1.51% and averaging 1.26%. FHLB advances totaled $45.0 million at December 31, 2013, and were expected to mature at varying dates ranging from March 2017 through September 2017, with fixed rates of interest from 1.22% to 1.51% and averaging 1.34%.

Each advance is payable at its maturity date, and is subject to a prepayment fee if paid prior to the maturity date. The advances are generally collateralized by a blanket lien on our residential mortgage loan portfolio. Our borrowing line of credit as of December 31, 2014 totaled $409.5 million, with availability of $355.5 million.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 10 - FEDERAL HOME LOAN BANK ADVANCES (Continued)

Maturities over the next five years are:
2015	$	6,022,000
2016		3,000,000
2017		45,000,000
2018		0
2019		0

NOTE 11 - FEDERAL INCOME TAXES

The consolidated income tax expense is as follows:

	2014		2013		2012
Current expense	$	3,359,000	$	0	$	0
Deferred expense		4,506,000		8,092,000		5,636,000
Tax expense	$	7,865,000	$	8,092,000	$	5,636,000

A reconciliation of the differences between the federal income tax expense recorded and the amount computed by applying the federal statutory rate to income before income taxes is as follows:

	2014			2013			2012
Tax at statutory rate (35%)	$	8,819,000		$	8,794,000		$	6,360,000
Increase (decrease) from
Tax-exempt interest		(621,000	)		(347,000	)		(486,000	)
Bank owned life insurance		(415,000	)		(465,000	)		(535,000	)
Other		82,000			110,000			297,000
Tax expense	$	7,865,000		$	8,092,000		$	5,636,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 11 - FEDERAL INCOME TAXES (Continued)

Significant components of deferred tax assets and liabilities as of December 31, 2014 and 2013 are as follows:

	2014			2013
Deferred income tax assets
Allowance for loan losses	$	7,014,000		$	7,987,000
Tax credit carryforwards		3,395,000			1,397,000
Nonaccrual loan interest income		471,000			605,000
Deferred compensation		1,304,000			567,000
Deferred loan fees		445,000			273,000
Fair value write-downs on foreclosed properties		212,000			241,000
Fair value of interest rate swap		89,000			92,000
Losses on capital investments		450,000			0
Stock compensation		521,000			207,000
Net operating loss carryforward		0			4,050,000
Unrealized loss on securities		0			2,908,000
Other		725,000			136,000
		14,626,000			18,463,000
Deferred income tax liabilities
Depreciation		1,217,000			419,000
Prepaid expenses		425,000			192,000
Core deposit intangible		5,386,000			0
Mortgage loan servicing rights		2,349,000			0
Unrealized gain on securities		112,000			0
Other		476,000			98,000
		9,965,000			709,000
Net deferred tax asset before valuation allowance		4,661,000			17,754,000
Valuation allowance		(450,000	)		0
Total net deferred tax asset	$	4,211,000		$	17,754,000

A valuation allowance related to deferred tax assets is required when it is considered more likely than not that all or part of the benefits related to such assets will not be realized. We do not believe the deferred tax asset related to losses on certain capital investments acquired in our merger with Firstbank is more likely than not to be realized. Therefore, we established a valuation allowance of $0.5 million in connection with the acquisition accounting at the time of the merger.

At December 31, 2014, we had carryforwards of the following tax attributes: general business tax credits of $0.6 million that expire in the years 2028 through 2034; and $2.8 million of federal alternative minimum tax credits with an indefinite life.

We had no unrecognized tax benefits at any time during 2014 or 2013 and do not anticipate any significant increase in unrecognized tax benefits during 2015. Should the accrual of any interest or penalties relative to unrecognized tax benefits be necessary, it is our policy to record such accruals in our income tax accounts; no such accruals existed at any time during 2014 or 2013. Our U.S. federal income tax returns are no longer subject to examination for all years before 2011.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 12 – STOCK-BASED COMPENSATION

Stock-based compensation plans are used to provide directors and employees with an increased incentive to contribute to our long-term performance and growth, to align the interests of directors and employees with the interests of our shareholders through the opportunity for increased stock ownership and to attract and retain directors and employees. From 2000 through 2005, stock option grants were provided to directors and certain employees through several stock option plans, including the 2000 Employee Stock Option Plan, 2004 Employee Stock Option Plan and Independent Director Stock Option Plan. During 2006, 2007 and 2008, stock option and restricted stock grants were provided to certain employees through the Stock Incentive Plan of 2006. No stock option or restricted stock grants were made during 2009, 2010 or 2011. During 2012, restricted stock grants were provided to directors and certain employees through the Stock Incentive Plan of 2006. No stock option or restricted stock grants were made during 2013 due to the pending merger with Firstbank. During 2014, stock option and restricted stock grants were provided to certain employees through the Stock Incentive Plan of 2006. In addition, stock grants were provided to directors as retainer payments during 2014 through the Stock Incentive Plan of 2006.

Under our 2000 Employee Stock Option Plan and 2004 Employee Stock Option Plan, stock options granted to employees were granted at the market price on the date of grant, generally fully vested after one year and expired ten years from the date of grant. Stock options granted to non-executive officers during 2005 vested about three weeks after being granted. Under our Independent Director Stock Option Plan, stock options granted to non-employee directors were at 125% of the market price on the date of grant, fully vested after five years and expire ten years from the date of grant.

The Stock Incentive Plan of 2006 replaced all of our outstanding stock option plans for stock options not previously granted. Under the Stock Incentive Plan of 2006, incentive awards may include, but are not limited to, stock options, restricted stock, stock appreciation rights and stock awards. Incentive awards that are stock options or stock appreciation rights are granted with an exercise price not less than the closing price of our common stock on the date of grant, or for stock options granted in 2006 or 2007, the day before the date of grant, if the closing price was higher on the day before the date of grant. Price, vesting and expiration date parameters are determined by Mercantile’s Compensation Committee on a grant-by-grant basis. Generally, the stock options granted to employees during 2006, 2007 and 2008 fully vested after two years and expire after seven years. The restricted stock awards granted to certain employees during 2006, 2007 and 2008 fully vested after four years, while the restricted stock awards granted to directors and certain employees during 2012 fully vested after two years. No payments were required from employees for the restricted stock awards. The restricted stock awards granted to certain employees during 2014 fully vest after three years. The stock options granted to certain employees during 2014, which were at 110% of the market price on the date of grant, fully vest after two years and expire after seven years. At year-end 2014, there were approximately 277,000 shares authorized for future incentive awards.

In conjunction with the Firstbank merger, all of our outstanding restricted stock awards, which were scheduled to vest in full in November, 2014, became fully vested on June 1, 2014, resulting in the recognition of compensation expense of $0.2 million in the second quarter of 2014 to reflect the accelerated vesting of the restricted stock awards. The unrecognized compensation cost related to unvested stock options was less than $0.1 million as of December 31, 2014, which will be recognized as expense over the next two years. The unrecognized compensation cost related to restricted stock grants was $2.0 million as of December 31, 2014, which will be recognized as expense over the next three years.

(Continued)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 12 – STOCK-BASED COMPENSATION (Continued)

Also in conjunction with the Firstbank merger, we issued Mercantile stock options in replacement of all outstanding Firstbank stock option grants that had been previously issued to Firstbank employees under the Firstbank Corporation Stock Option and Restricted Stock Plan of 1997 and the Firstbank Corporation 2006 Stock Compensation Plan. In general, stock option grants for 50 shares or less fully vested after one year from date of grant, while stock option grants for more than 50 shares vested over a five-year period at 20% of the grant per annum starting one year from date of grant. The stock option grants expire ten years from date of grant. There were approximately 282,200 Mercantile stock options issued as a result of the merger, with about 258,400 of the stock option grants fully vested and exercisable on the date of merger. Unrecognized compensation cost related to the unvested stock options was less than $0.1 million as of December 31, 2014, which will be fully expensed during 2015.

A summary of restricted stock activity from grants issued under the Mercantile Stock Incentive Plan of 2006 during the past three years is as follows:

	2014					2013					2012
				Weighted					Weighted					Weighted
				Average					Average					Average
	Shares			Fair Value		Shares			Fair Value		Shares			Fair Value
Nonvested at beginning of year		63,800		$	14.30		66,100		$	14.30		38,650		$	6.20
Granted		101,490			20.13		0		NA			66,100			14.30
Vested		(63,300	)		14.30		0		NA			(38,266	)		6.20
Forfeited		(500	)		14.30		(2,300	)		14.30		(384	)		6.20
Nonvested at end of year		101,490		$	20.13		63,800		$	14.30		66,100		$	14.30

A summary of stock option activity from grants issued under various Mercantile plans during the past three years is as follows:

	2014					2013					2012
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
Outstanding at beginning of year		60,876		$	33.11		152,896		$	26.15		214,903		$	22.40
Granted		6,488			22.15		0		NA			0		NA
Exercised		(2,845	)		17.74		(51,055	)		13.72		(50,930	)		10.83
Forfeited or expired		(29,184	)		34.60		(40,965	)		31.30		(11,077	)		23.77
Outstanding at end of year		35,335		$	31.09		60,876		$	33.11		152,896		$	26.15
Options exercisable at year-end		28,847		$	33.11		60,876		$	33.11		152,896		$	26.15

(Continued)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 12 – STOCK-BASED COMPENSATION (Continued)

The fair value of each stock option award is estimated on the date of grant using a closed option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatilities on our common stock. Historical data is used to estimate stock option expense and post-vesting termination behavior. The expected term of stock options granted is based on historical data and represents the period of time that stock options granted are expected to be outstanding, which takes into account that the stock options are not transferable. The risk-free interest rate for the expected term of the stock option is based on the U.S. Treasury yield curve in effect at the time of the stock option grant.

The fair value of stock options granted during 2014 was determined using the following weighted-average assumptions as of the grant date. No stock options were granted during 2013 or 2012.

	2014
Risk-free interest rate		1.56	%
Expected option life (Years)		5
Expected stock price volatility		26	%
Dividend yield		2.5	%

Options issued under various Mercantile plans outstanding at year-end 2014 were as follows:

			Outstanding					Exercisable
					Weighted Average	Weighted				Weighted
Range of					Remaining	Average				Average
Exercise					Contractual	Exercise				Exercise
Prices			Number		Life (Years)	Price		Number		Price
$6.21	-	$ 8.00		2,700	0.9	$	6.21		2,700	$	6.21
$20.01	-	$24.00		6,488	6.9		22.15		0	NA
$32.01	-	$36.00		26,147	0.9		35.88		26,147		35.88
Outstanding at year end				35,335	2.0	$	31.09		28,847	$	33.11

Information related to options issued under various Mercantile plans outstanding at year-end 2014, 2013 and 2012 is as follows:

	2014		2013		2012
Minimum exercise price	$	6.21	$	6.21	$	6.21
Maximum exercise price		35.88		40.28		40.28
Average remaining option term (Years)	2.0		1.4		1.9

(Continued)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 12 – STOCK-BASED COMPENSATION (Continued)

Information related to stock option grants and exercises issued under various Mercantile plans during 2014, 2013 and 2012 is as follows:

	2014		2013		2012
Aggregate intrinsic value of stock options exercised	$	11,000	$	408,000	$	307,000
Cash received from stock option exercises		50,000		289,000		227,000
Tax benefit realized from stock option exercises		0		0		0
Weighted average per share fair value of stock options granted	$	2.72		NA		NA

The aggregate intrinsic value of all stock options issued under various Mercantile plans outstanding and exercisable at December 31, 2014 was less than $0.1 million. Shares issued as a result of the exercise of stock option grants have been authorized and previously unissued shares.

A summary of stock option activity from grants issued under various Firstbank plans that became part of Mercantile’s plans upon consummation of the merger on June 1, 2014 is as follows:

	2014
				Weighted
				Average
				Exercise
	Shares			Price
Outstanding at beginning of year		0			0
Granted		0			0
Replaced as part of merger		282,178			15.48
Exercised		(27,740	)		8.34
Forfeited or expired		(36,456	)		24.46
Outstanding at end of year		217,982		$	14.89
Options exercisable at year-end		210,777		$	15.22

(Continued)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 12 – STOCK-BASED COMPENSATION (Continued)

Options issued under various Firstbank plans outstanding at year-end 2014 were as follows:

			Outstanding					Exercisable
					Weighted Average	Weighted				Weighted
Range of					Remaining	Average				Average
Exercise					Contractual	Exercise				Exercise
Prices			Number		Life (Years)	Price		Number		Price
$4.00	-	$8.00		63,590	4.9	$	6.53		56,385	$	6.70
$8.01	-	$12.00		68,430	3.7		13.20		68,430		13.20
$20.01	-	$25.00		85,962	1.4		22.43		85,962		22.43
Outstanding at year end				217,982	3.1	$	14.89		210,777	$	15.22

Information related to options issued under various Firstbank plans outstanding at year-end 2014 is as follows:

	2014
Minimum exercise price	$	5.19
Maximum exercise price		24.46
Average remaining option term (Years)	3.1

Information related to stock option grants and exercises issued under various Firstbank plans during 2014 is as follows:

	2014
Aggregate intrinsic value of stock options exercised	$	333,000
Cash received from stock option exercises		232,000
Tax benefit realized from stock option exercises		116,000
Weighted average per share fair value of stock options granted	NA

The aggregate intrinsic value of all stock options issued under various Firstbank plans outstanding and exercisable at December 31, 2014 was $1.3 million. Shares issued as a result of the exercise of stock option grants have been authorized and previously unissued shares.

On June 26, 2014, we granted a total of 7,375 shares of common stock to our Corporate, Bank and Regional Advisory Boards of Directors for retainer payments for the period of June 1, 2014 through December 31, 2014. The associated $0.2 million cost was expensed on a straightline basis over the last six months of 2014.

NOTE 13 – RELATED PARTIES

Certain directors and executive officers of the Bank, including their immediate families and companies in which they are principal owners, were loan customers of the Bank. At year-end 2014 and 2013, the Bank had $15.8 million and $7.8 million in loan commitments to directors and executive officers, of which $9.0 million and $6.9 million were outstanding at year-end 2014 and 2013, respectively, as reflected in the following table. The line item entitled “Adjustments” primarily relates to the Firstbank merger in 2014 and Board member retirements during 2013.

	2014			2013
Beginning balance	$	6,884,000		$	1,418,000
New loans		781,000			6,309,000
Repayments		(381,000	)		(252,000	)
Adjustments		1,718,000			(591,000	)
Ending balance	$	9,002,000		$	6,884,000

Related party deposits and repurchase agreements totaled $16.6 million and $3.9 million at year-end 2014 and 2013, respectively.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 14 – COMMITMENTS AND OFF-BALANCE-SHEET RISK

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit. Loan commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Standby letters of credit are conditional commitments issued by our Bank to guarantee the performance of a customer to a third party. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized, if any, in the balance sheet. Our maximum exposure to loan loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. Collateral, such as accounts receivable, securities, inventory, and property and equipment, is generally obtained based on management’s credit assessment of the borrower. If required, estimated loss exposure resulting from these instruments is expensed and recorded as a liability. There was no liability balance for these instruments as of December 31, 2014 and 2013.

At year-end 2014 and 2013, the rates on existing off-balance sheet instruments were substantially equivalent to current market rates, considering the underlying credit standing of the counterparties.

Our maximum exposure to credit losses for loan commitments and standby letters of credit outstanding at year-end was as follows:

	2014		2013
Commercial unused lines of credit	$	554,856,000	$	257,937,000
Unused lines of credit secured by 1 – 4 family residential properties		60,983,000		23,429,000
Credit card unused lines of credit		11,649,000		9,013,000
Other consumer unused lines of credit		8,673,000		5,695,000
Commitments to make loans		110,126,000		58,799,000
Standby letters of credit		35,461,000		19,670,000
Total commitments	$	781,748,000	$	374,543,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 14 – COMMITMENTS AND OFF-BALANCE-SHEET RISK (Continued)

Commitments to make loans generally reflect our binding obligations to existing and prospective customers to extend credit, including line of credit facilities secured by accounts receivable and inventory, and term debt secured by either real estate or equipment. In most instances, line of credit facilities are for a one-year term and are at a floating rate tied to the Mercantile Bank Prime Rate, the Wall Street Journal Prime Rate or the 30-Day Libor rate. For term debt secured by real estate, customers are generally offered a floating rate tied to the Mercantile Bank Prime Rate or Wall Street Journal Prime Rate, and a fixed rate currently ranging from 4.00% to 7.00%. These credit facilities generally balloon within five years, with payments based on amortizations ranging from 10 to 20 years. For term debt secured by non-real estate collateral, customers are generally offered a floating rate tied to the Mercantile Bank Prime Rate or Wall Street Journal Prime Rate, and a fixed rate currently ranging from 4.00% to 7.50%. These credit facilities generally mature and fully amortize within five years.

Certain of our commercial loan customers have entered into interest rate swap agreements directly with our correspondent banks. To assist our commercial loan customers in these transactions, and to encourage our correspondent banks to enter into the interest rate swap transactions with minimal credit underwriting analyses on their part, we have entered into risk participation agreements with the correspondent banks whereby we agree to make payments to the correspondent banks owed by our commercial loan customers under the interest rate swap agreement in the event that our commercial loan customers do not make the payments. We are not a party to the interest rate swap agreements under these arrangements. As of December 31, 2014, the total notional amount of the underlying interest rate swap agreements was $15.4 million, with a net fair value from our commercial loan customers’ perspective of negative $2.9 million. These risk participation agreements are considered financial guarantees in accordance with applicable accounting guidance and are therefore recorded as liabilities at fair value, generally equal to the fees collected at the time of their execution. These liabilities are accreted into income during the terms of the interest rate swap agreements, generally ranging from an original term of four to fifteen years, and totaled less than $0.1 million at December 31, 2014 and December 31, 2013.

The following instruments are considered financial guarantees under current accounting guidance. These instruments are carried at fair value.

	2014				2013
	Contract		Carrying		Contract		Carrying
	Amount		Value		Amount		Value
Standby letters of credit	$	35,461,000	$	150,000	$	19,670,000	$	148,000

We were required to have $8.4 million and $1.5 million of cash on hand or on deposit with the Federal Reserve Bank of Chicago to meet regulatory reserve and clearing requirements at year-end 2014 and 2013, respectively.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 15 – BENEFIT PLANS

We have a 401(k) benefit plan that covers substantially all of our employees. The percent of our matching contributions to the 401(k) benefit plan is determined annually by the Board of Directors. The matching contribution was 3% as of January 1, 2012, and then increased to 4% as of October 1, 2012. Effective January 1, 2014, the matching contribution was increased to 4.25%. Matching contributions, if made, are immediately vested. Our 2014, 2013 and 2012 matching 401(k) contributions charged to expense were $0.9 million, $0.5 million and $0.4 million, respectively.

We have a deferred compensation plan in which all persons serving on the Board of Directors may defer all or portions of their annual retainer and meeting fees, with distributions to be paid upon termination of service as a director or specific dates selected by the director. We also have a non-qualified deferred compensation program in which selected officers may defer all or portions of salary and bonus payments. The deferred amounts, totaling $3.7 million and $1.6 million as of December 31, 2014 and 2013, respectively, are categorized as other liabilities in the Consolidated Balance Sheets, and are paid interest at a rate equal to the Wall Street Journal Prime Rate. Interest expense is insignificant for all periods presented.

The Mercantile Bank Corporation Employee Stock Purchase Plan of 2002 was replaced by the Mercantile Bank Corporation Employee Stock Purchase Plan of 2014 (herein after referred to as the “Stock Purchase Plans”) in June of 2014. The Stock Purchase Plans are non-compensatory plans intended to encourage full- and part-time employees of Mercantile and its subsidiaries to promote our best interests and to align employees’ interests with the interests of our shareholders by permitting employees to purchase shares of our common stock through regular payroll deductions. Shares are purchased on the last business day of each calendar quarter at a price equal to the consolidated closing bid price of our common stock reported on The Nasdaq Stock Market. A total of 250,000 shares of common stock may be issued under the existing plan; however, the number of shares may be adjusted to reflect any stock dividends and other changes in our capitalization. The number of shares issued under the Stock Purchase Plans totaled 1,150 and 1,098 in 2014 and 2013, respectively. As of December 31, 2014, there were 28,850 shares available under our current plan.

NOTE 16 – HEDGING ACTIVITIES

Our interest rate risk policy includes guidelines for measuring and monitoring interest rate risk. Within these guidelines, parameters have been established for maximum fluctuations in net interest income. Possible fluctuations are measured and monitored using net interest income simulation. Our policy provides for the use of certain derivative instruments and hedging activities to aid in managing interest rate risk to within policy parameters.

In February 2012, we entered into an interest rate swap agreement with a correspondent bank to hedge the floating rate on the subordinated debentures issued to Mercantile Bank Capital Trust I, which became effective in January 2013 and matures in January 2018. The $32.0 million of subordinated debentures have a rate equal to the 90-Day Libor Rate plus a fixed spread of 218 basis points, and are subject to repricing quarterly. The interest rate swap agreement provides for us to pay our correspondent bank a fixed rate, while our correspondent bank will pay us the 90-Day Libor Rate on a $32.0 million notional amount. The quarterly re-set dates for the floating rate on the interest rate swap agreement are the same as the re-set dates for the floating rate on the subordinated debentures. The interest rate swap agreement qualifies for hedge accounting; therefore, fluctuations in the fair value of the interest rate swap agreement, net of tax effect, are recorded in other comprehensive income. As of December 31, 2014 and 2013, the fair value of the interest rate swap agreement was recorded as a liability in the amount of $0.3 million. 

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 17 – FAIR VALUES OF FINANCIAL INSTRUMENTS

Carrying amount, estimated fair value and level within the fair value hierarchy of financial instruments were as follows at year-end (dollars in thousands):

	Level in		2014				2013
	Fair Value		Carrying		Fair		Carrying		Fair
	Hierarchy		Amount		Value		Amount		Value
Financial assets
Cash	Level 1		$	13,261	$	13,261	$	1,464	$	1,464
Cash equivalents	Level 2			159,477		159,477		145,501		145,501
Securities available for sale		(1)		432,912		432,912		131,178		131,178
Federal Home Loan Bank stock		(2)		13,699		13,699		11,961		11,961
Loans, net	Level 3			2,069,236		2,064,140		1,030,422		1,027,300
Bank owned life insurance	Level 2			57,861		57,861		51,377		51,377
Accrued interest receivable	Level 2			8,033		8,033		3,649		3,649
Financial liabilities
Deposits	Level 2			2,276,915		2,254,749		1,118,911		1,120,576
Securities sold under agreements to repurchase	Level 2			167,569		167,569		69,305		69,305
Federal Home Loan Bank advances	Level 2			54,022		54,720		45,000		45,139
Subordinated debentures	Level 2			54,472		54,508		32,990		32,974
Accrued interest payable	Level 2			1,942		1,942		2,041		2,041
Interest rate swap		(1)		253		253		264		264

(1)	See Note 18 for a description of the fair value hierarchy as well as a disclosure of levels for classes of financial assets and liabilities.
(2)	It is not practical to determine the fair value of FHLB stock due to transferability restrictions.

Carrying amount is the estimated fair value for cash and cash equivalents, Federal Home Loan Bank stock, accrued interest receivable and payable, bank owned life insurance, demand deposits, securities sold under agreements to repurchase, and variable rate loans and deposits that reprice frequently and fully. Security fair values are based on market prices or dealer quotes, and if no such information is available, on the rate and term of the security and information about the issuer. For fixed rate loans and deposits and for variable rate loans and deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. Fair value of subordinated debentures and Federal Home Loan Bank advances is based on current rates for similar financing. Fair value of the interest rate swap is determined primarily utilizing market-consensus forecasted yield curves. Fair value of off-balance sheet items is estimated to be nominal. 

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 18 – FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability, or in the absence of a principal market, the most advantageous market for the asset or liability. The price of the principal (or most advantageous) market used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

We are required to use valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect our own estimates about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. In that regard, we utilize a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that we have the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be derived from or corroborated by observable market data by correlation or other means.

Level 3: Significant unobservable inputs that reflect our own estimates about the assumptions that market participants would use in pricing an asset or liability.

The following is a description of our valuation methodologies used to measure and disclose the fair values of our financial assets and liabilities on a recurring or nonrecurring basis:

Securities available for sale. Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based on quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models. Level 2 securities include U.S. Government agency debt obligations, mortgage-backed securities issued or guaranteed by U.S. Government agencies, municipal general obligation and revenue bonds, and mutual funds. Level 3 securities include bonds issued by certain relatively small municipalities located within our markets that have very limited marketability due to their size and lack of ratings from a recognized rating service. We carry these bonds at historical cost, which we believe approximates fair value, unless our periodic financial analysis or other information becomes known which necessitates a valuation allowance. There was no such valuation allowance as of December 31, 2014 or 2013. We have no Level 1 securities available for sale.

(Continued)

F-103

MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 18 – FAIR VALUE MEASUREMENTS (Continued)

Mortgage loans held for sale. Mortgage loans held for sale are carried at the lower of aggregate cost or fair value and are measured on a nonrecurring basis. Fair value is based on independent quoted market prices, where applicable, or the prices for other mortgage whole loans with similar characteristics. As of December 31, 2014 and 2013, we determined that the fair value of our mortgage loans held for sale approximated the recorded cost of $1.6 million and $1.1 million, respectively.

Loans. We do not record loans at fair value on a recurring basis. However, from time to time, we record nonrecurring fair value adjustments to collateral dependent loans to reflect partial write-downs or specific reserves that are based on the observable market price or current estimated value of the collateral. These loans are reported in the nonrecurring table below at initial recognition of impairment and on an ongoing basis until recovery or charge-off.

Foreclosed assets. At time of foreclosure or repossession, foreclosed and repossessed assets are adjusted to fair value less costs to sell upon transfer of the loans to foreclosed and repossessed assets, establishing a new cost basis. We subsequently adjust estimated fair value on foreclosed assets on a nonrecurring basis to reflect write-downs based on revised fair value estimates.

Derivatives. The interest rate swap agreement is measured at fair value on a recurring basis. We measure fair value utilizing models that use primarily market observable inputs, such as forecasted yield curves, and accordingly, the interest rate swap agreement is classified as Level 2.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The balances of assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 are as follows:

				Quoted Prices
				in Active		Significant
				Markets for		Other			Significant
				Identical		Observable			Unobservable
				Assets		Inputs			Inputs
	Total			(Level 1)		(Level 2)			(Level 3)
Available for sale securities
U.S. Government agency debt obligations	$	193,468,000		$	0	$	193,468,000		$	0
Mortgage-backed securities		93,561,000			0		93,561,000			0
Municipal general obligation bonds		133,082,000			0		122,801,000			10,281,000
Municipal revenue bonds		10,873,000			0		10,873,000			0
Other investments		1,928,000			0		1,928,000			0
Derivatives
Interest rate swap agreement		(253,000	)		0		(253,000	)		0
Total	$	432,659,000		$	0	$	422,378,000		$	10,281,000

(Continued)

F-104

MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 18 – FAIR VALUE MEASUREMENTS (Continued)

There were no transfers in or out of Level 1, Level 2 or Level 3 during 2014. The Level 3 investments in the table above originated from the merger with Firstbank.

The balances of assets and liabilities measured at fair value on a recurring basis as of December 31, 2013 are as follows:

				Quoted Prices
				in Active		Significant
				Markets for		Other			Significant
				Identical		Observable			Unobservable
				Assets		Inputs			Inputs
	Total			(Level 1)		(Level 2)			(Level 3)
Available for sale securities U.S. Government agency debt obligations	$	98,477,000		$	0	$	98,477,000		$	0
Mortgage-backed securities		13,558,000			0		13,558,000			0
Municipal general obligation bonds		16,872,000			0		16,872,000			0
Municipal revenue bonds		916,000			0		916,000			0
Mutual funds		1,355,000			0		1,355,000			0
Derivatives
Interest rate swap agreement		(264,000	)		0		(264,000	)		0
Total	$	130,914,000		$	0	$	130,914,000		$	0

There were no transfers in or out of Level 1, Level 2 or Level 3 during 2013.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The balances of assets and liabilities measured at fair value on a nonrecurring basis as of December 31, 2014 are as follows:

			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans (1)	$	17,097,000	$	0	$	0	$	17,097,000
Foreclosed assets (1)		1,995,000		0		0		1,995,000
Total	$	19,092,000	$	0	$	0	$	19,092,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 18 – FAIR VALUE MEASUREMENTS (Continued)

The balances of assets and liabilities measured at fair value on a nonrecurring basis as of December 31, 2013 are as follows:

			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans (1)	$	23,405,000	$	0	$	0	$	23,405,000
Foreclosed assets (1)		2,851,000		0		0		2,851,000
Total	$	26,256,000	$	0	$	0	$	26,256,000

⁽¹⁾ Represents carrying value and related write-downs for which adjustments are based on the estimated value of the property or other assets.

Fair value estimates of collateral on impaired loans, as well as on foreclosed assets, are reviewed periodically. Our credit policies establish criteria for obtaining appraisals and determining internal value estimates. We may also adjust outside appraisals and internal evaluations based on identifiable trends within our markets, such as sales of similar properties or assets, listing prices and offers received. In addition, we may discount certain appraised and internal value estimates to address current distressed market conditions.

NOTE 19 – EARNINGS PER SHARE

The factors used in the earnings per share computation follow:

	2014		2013		2012
Basic
Net income attributable to common shares	$	17,331,000	$	17,033,000	$	11,505,000
Weighted average common shares outstanding		13,510,991		8,710,677		8,625,198
Basic earnings per common share	$	1.28	$	1.96	$	1.33
Diluted
Net income attributable to common shares	$	17,331,000	$	17,033,000	$	11,505,000
Weighted average common shares outstanding for basic earnings per common share		13,510,991		8,710,677		8,625,198
Add: Dilutive effects of share-based awards		30,913		14,031		224,429
Average shares and dilutive potential common shares		13,541,904		8,724,708		8,849,627
Diluted earnings per common share	$	1.28	$	1.95	$	1.30

Stock options for approximately 168,000, 55,000 and 132,000 shares of common stock were antidilutive and were not included in determining dilutive earnings per share in 2014, 2013, and 2012, respectively.

(Continued)

F-106

MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

 

NOTE 20 – SUBORDINATED DEBENTURES

We have five business trusts that are wholly-owned subsidiaries of Mercantile, four of which were assumed by Mercantile in conjunction with the Firstbank merger. A fair value discount of $15.0 million was recorded at the time of the merger, which is being amortized at $0.7 million annually over the next 21.5 years. Each of the trusts was formed to issue Preferred Securities that were sold in private sales, as well as selling Common Securities to Mercantile. The proceeds from the Preferred and Common Securities sales were used by the trusts to purchase Floating Rate Notes issued by Mercantile. 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 the 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. The Floating Rate Notes are categorized on our Consolidated Balance Sheets as subordinated debentures and the interest expense is recorded on our Consolidated Statements of Income under interest expense on other borrowings.

The following table depicts our five business trusts as of December 31, 2014:

	Preferred Securities
Trust Name	Outstanding	Interest Rate	Maturity Date
Mercantile Bank Capital Trust I	$32,000,000	3 Month Libor + 218 bps	September 16, 2034
Firstbank Capital Trust I	$10,000,000	3 Month Libor + 199 bps	October 18, 2034
Firstbank Capital Trust II	$10,000,000	3 Month Libor + 127 bps	April 7, 2036
Firstbank Capital Trust III	$7,500,000	3 Month Libor + 135 bps	July 30, 2037
Firstbank Capital Trust IV	$7,500,000	3 Month Libor + 135 bps	July 30, 2037

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 21 - REGULATORY MATTERS

We are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors, and the regulators can lower classifications in certain cases. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the financial statements.

The prompt corrective action regulations provide five classifications, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If an institution is not well capitalized, regulatory approval is required to accept brokered deposits. Subject to limited exceptions, no institution may make a capital distribution if, after making the distribution, it would be undercapitalized. If an institution is undercapitalized, it is subject to close monitoring by its principal federal regulator, its asset growth and expansion are restricted, and plans for capital restoration are required. In addition, further specific types of restrictions may be imposed on the institution at the discretion of the federal regulator. At year-end 2014 and 2013, our Bank was in the well capitalized category under the regulatory framework for prompt corrective action. There are no conditions or events since December 31, 2014 that we believe have changed our Bank’s categorization.

Our actual capital levels (dollars in thousands) and minimum required levels were:

											Minimum Required
											to be Well
						Minimum Required					Capitalized Under
						for Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Regulations
	Amount		Ratio			Amount		Ratio			Amount		Ratio
2014
Total capital (to risk weighted assets)
Consolidated	$	334,793		14.4	%	$	185,553		8.0	%	$	NA		NA
Bank		332,749		14.4			185,309		8.0			231,636		10.0	%
Tier 1 capital (to risk weighted assets)
Consolidated		314,752		13.6			92,777		4.0			NA		NA
Bank		312,708		13.5			92,655		4.0			138,982		6.0
Tier 1 capital (to average assets)
Consolidated		314,752		11.2			112,949		4.0			NA		NA
Bank		312,708		11.1			112,856		4.0			141,070		5.0
2013
Total capital (to risk weighted assets)
Consolidated	$	193,925		15.9	%	$	97,498		8.0	%	$	NA		NA
Bank		190,493		15.7			97,329		8.0			121,662		10.0	%
Tier 1 capital (to risk weighted assets)
Consolidated		178,598		14.7			48,749		4.0			NA		NA
Bank		175,192		14.4			48,665		4.0			72,997		6.0
Tier 1 capital (to average assets)
Consolidated		178,598		12.5			57,006		4.0			NA		NA
Bank		175,192		12.3			56,860		4.0			71,075		5.0

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 21 - REGULATORY MATTERS (Continued)

Federal and state banking laws and regulations place certain restrictions on the amount of dividends our Bank can transfer to Mercantile and on the capital levels that must be maintained. At year-end 2014, under the most restrictive of these regulations, our Bank could distribute approximately $87.7 million to Mercantile as dividends without prior regulatory approval.

Our and our bank’s ability to pay cash and stock dividends is subject to limitations under various laws and regulations and to prudent and sound banking practices. On January 16, 2014, our Board of Directors declared a cash dividend on our common stock in the amount of $0.12 per share that was paid on March 10, 2014 to shareholders of record as of February 10, 2014. On May 9, 2014, our Board of Directors declared a cash dividend on our common stock in the amount of $0.12 per share that was paid on June 25, 2014 to shareholders of record as of June 13, 2014. On July 17, 2014, our Board of Directors declared a cash dividend on our common stock in the amount of $0.12 per share that was paid on September 24, 2014 to shareholders of record as of September 12, 2014. On October 16, 2014, our Board of Directors declared a cash dividend on our common stock in the amount of $0.12 per share that was paid on December 24, 2014 to shareholders of record as of December 12, 2014. In addition, on May 9, 2014, our Board of Directors declared a special cash dividend on our common stock in the amount of $2.00 per share that was paid on May 29, 2014 to shareholders of record as of May 22, 2014. The special cash dividend, in contemplation of the plan of merger with Firstbank, was paid to Mercantile shareholders prior to the effective date of the merger with Firstbank and before the issuance of Mercantile shares in exchange for Firstbank shares.

On January 15, 2015, our Board of Directors declared a cash dividend on our common stock in the amount of $0.14 per share that will be paid on March 25, 2015 to shareholders of record as of March 13, 2015. In addition, on January 30, 2015, we announced that our Board of Directors had authorized a new program to repurchase up to $20.0 million of our common stock from time to time in open market transactions at prevailing market prices or by other means in accordance with applicable regulations. We expect to fund a majority of such repurchases from cash dividends paid to us from our Bank.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 21 - REGULATORY MATTERS (Continued)

Our consolidated capital levels as of December 31, 2014 and 2013 include $52.4 million and $32.0 million, respectively, of trust preferred securities subject to certain limitations. Under applicable Federal Reserve guidelines, the trust preferred securities constitute a restricted core capital element. The guidelines provide that the aggregate amount of restricted core elements that may be included in Tier 1 capital must not exceed 25% of the sum of all core capital elements, including restricted core capital elements, net of goodwill less any associated deferred tax liability. Our ability to include the trust preferred securities in Tier 1 capital in accordance with the guidelines is not affected by the provision of the Dodd-Frank Act generally restricting such treatment, because (i) the trust preferred securities were issued before May 19, 2010, and (ii) our total consolidated assets as of December 31, 2009 were less than $15.0 billion. At December 31, 2014 and 2013, all $52.4 million and $32.0 million, respectively, of the trust preferred securities were included as Tier 1 capital of Mercantile.

NOTE 22 – U.S. TREASURY CAPITAL PURCHASE PROGRAM PARTICIPATION

On May 15, 2009, we completed the sale of preferred stock and a warrant for common stock to the United States Treasury Department (“Treasury”) for $21.0 million under the Treasury’s Capital Purchase Program.  The program was designed to attract broad participation by healthy banking institutions to help stabilize the financial system and increase lending for the benefit of the U.S. economy.  Under the terms of the sale, the Treasury received 21,000 shares of fixed rate cumulative perpetual preferred stock with a liquidation value of $1,000 per share and a warrant to purchase 616,438 shares of our common stock, no par value, in exchange for $21.0 million.  The preferred stock qualified as Tier 1 capital and paid cumulative dividends at a rate of 5.00% for the first five years, and 9.00% thereafter.  The common stock warrant had a 10-year term and was immediately exercisable upon its issuance, with an exercise price equal to $5.11 per share.  The Treasury agreed not to exercise voting power with respect to any shares of common stock issued upon exercise of the warrant, while it held the shares.

During the second quarter of 2012, we consummated the repurchase of the $21.0 million in preferred stock at par from the Treasury following approval from the Federal Reserve and consultation with the Federal Deposit Insurance Corporation.  To fund the repurchase, our bank paid us cash dividends aggregating approximately the same amount.  We recorded a reduction of retained earnings of approximately $0.6 million in the second quarter of 2012 resulting from the accelerated discount on the preferred stock which was being amortized over an original period of five years from the issuance date of May 15, 2009. During the third quarter of 2012, we consummated the repurchase of the warrant for approximately $7.5 million from the Treasury.  To fund the repurchase, our bank paid us a cash dividend of approximately the same amount. As part of the repurchase, we recorded a reduction in shareholders’ equity of approximately $7.5 million during the third quarter of 2012.

NOTE 23 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

At December 31, 2014, accumulated other comprehensive loss, net of tax effects (as applicable), consists of a net unrealized gain on available for sale securities of $0.2 million and the fair value of an interest rate swap of negative $0.2 million. At December 31, 2013, accumulated other comprehensive income, net of tax effects (as applicable), consists of a net unrealized loss on available for sale securities of $5.4 million and the fair value of an interest rate swap of negative $0.2 million. At December 31, 2012, accumulated other comprehensive income, net of tax effects (as applicable), consists of a net unrealized gain on available for sale securities of $2.4 million and the fair value of an interest rate swap of negative $0.7 million.

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 24 - QUARTERLY FINANCIAL DATA (Unaudited)

	Interest		Net Interest		Net		Earnings per Share
	Income		Income		Income		Basic		Diluted
2014
First quarter	$	13,588,000	$	11,064,000	$	3,580,000	$	0.41	$	0.41
Second quarter		18,483,000		15,552,000		1,510,000		0.13		0.13
Third quarter		28,900,000		25,989,000		5,948,000		0.35		0.35
Fourth quarter		28,147,000		25,173,000		6,293,000		0.37		0.37
2013
First quarter	$	14,210,000	$	11,455,000	$	4,401,000	$	0.51	$	0.50
Second quarter		13,992,000		11,312,000		4,016,000		0.46		0.46
Third quarter		14,667,000		11,994,000		3,453,000		0.40		0.40
Fourth quarter		15,373,000		12,695,000		5,163,000		0.59		0.59

NOTE 25 – MERCANTILE BANK CORPORATION (PARENT COMPANY ONLY)

CONDENSED FINANCIAL STATEMENTS

CONDENSED BALANCE SHEETS

	2014		2013
ASSETS
Cash and cash equivalents	$	1,441,000	$	2,506,000
Investment in bank subsidiary		361,355,000		179,706,000
Other assets		20,948,000		4,740,000
Total assets	$	383,744,000	$	186,952,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities	$	1,134,000	$	637,000
Subordinated debentures		54,472,000		32,990,000
Shareholders’ equity		328,138,000		153,325,000
Total liabilities and shareholders’ equity	$	383,744,000	$	186,952,000

 

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 25 – MERCANTILE BANK CORPORATION (PARENT COMPANY ONLY)

CONDENSED FINANCIAL STATEMENTS (Continued)

CONDENSED STATEMENTS OF INCOME

	2014			2013			2012
Income
Interest and dividends from subsidiaries	$	12,139,000		$	5,516,000		$	32,532,000
Total income		12,139,000			5,516,000			32,532,000
Expenses
Interest expense		2,145,000			1,213,000			884,000
Other operating expenses		3,552,000			2,773,000			1,048,000
Total expenses		5,697,000			3,986,000			1,932,000
Income before income tax benefit and equity in undistributed net income (loss) of subsidiary		6,442,000			1,530,000			30,600,000
Federal income tax benefit		(1,758,000	)		(1,042,000	)		(665,000	)
Equity in undistributed net income (loss) of subsidiary		9,131,000			14,461,000			(18,730,000	)
Net income		17,331,000			17,033,000			12,535,000
Preferred stock dividends and accretion		0			0			1,030,000
Net income attributable to common shares	$	17,331,000		$	17,033,000		$	11,505,000
Comprehensive income	$	22,920,000		$	9,810,000		$	10,857,000

(Continued)

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MERCANTILE BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

NOTE 25 – MERCANTILE BANK CORPORATION (PARENT COMPANY ONLY)

CONDENSED FINANCIAL STATEMENTS (Continued)

CONDENSED STATEMENTS OF CASH FLOWS

	2014			2013			2012
Cash flows from operating activities
Net income	$	17,331,000		$	17,033,000		$	12,535,000
Adjustments to reconcile net income to net cash from operating activities:
Equity in undistributed (income) loss of subsidiary		(9,131,000	)		(14,461,000	)		18,730,000
Stock-based compensation expense		714,000			473,000			54,000
Change in other assets		(8,163,000	)		3,244,000			(3,006,000	)
Change in other liabilities		21,979,000			(708,000	)		1,073,000
Net cash from operating activities		22,730,000			5,581,000			29,386,000
Cash flows from investing activities
Net capital investment into subsidiaries		0			0			0
Net cash for investing activities		0			0			0
Cash flows from financing activities
Repurchase of preferred stock		0			0			(21,000,000	)
Repurchase of common stock warrant		0			0			(7,465,000	)
Stock option exercises, net of cashless exercises		282,000			289,000			227,000
Employee stock purchase plan		23,000			19,000			39,000
Dividend reinvestment plan		209,000			33,000			14,000
Stock grants to directors for retainer fees		155,000			0			0
Cash dividends on preferred stock		0			0			(496,000	)
Cash dividends on common stock		(24,464,000	)		(3,889,000	)		(774,000	)
Net cash for financing activities		(23,795,000	)		(3,548,000	)		(29,455,000	)
Net change in cash and cash equivalents		(1,065,000	)		2,033,000			(69,000	)
Cash and cash equivalents at beginning of period		2,506,000			473,000			542,000
Cash and cash equivalents at end of period	$	1,441,000		$	2,506,000		$	473,000

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 10, 2015.

MERCANTILE BANK CORPORATION

/s/ Michael H. Price

Michael H. Price

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 10, 2015.

/s/ David M. Cassard	/s/ Calvin D. Murdock
David M. Cassard, Director	Calvin D. Murdock, Director
/s/ Jeff A. Gardner	/s/ Michael H. Price
Jeff A. Gardner, Director	Michael H. Price, Director, President and Chief Executive Officer
	(principal executive officer)
/s/ Edward B. Grant	/s/ Thomas R. Sullivan
Edward B. Grant, Director	Thomas R. Sullivan, Chairman of the Board
	s/ Charles E. Christmas
	Charles E. Christmas, Senior Vice President
	Chief Financial Officer and Treasurer
	(principal financial and accounting officer)

Exhibit INDEX

Exhibit No.	EXHIBIT DESCRIPTION
2.1	Agreement and Plan of Merger dated August 14, 2013, incorporated by reference to exhibit 2.1 to our Current Report on Form 8-K filed August 15, 2013
2.2	First Amendment to Merger Agreement dated February 20, 2014, incorporated by reference to exhibit 10.1 to our Current Report on Form 8-K filed February 21, 2014
3.1	Our Articles of Incorporation are incorporated by reference to exhibit 3.1 of our Form 10-Q for the quarter ended June 30, 2009
3.2	Our Amended and Restated By-laws dated as of February 26, 2014 are incorporated by reference to exhibit 3.1 to our Current Report on Form 8-K filed February 26, 2015
4.1	Instruments defining the Rights of Security Holders – reference is made to Exhibits 3.1 and 3.2. In accordance with Regulation S-K Item 601(b)(4), Mercantile Bank Corporation is not filing copies of instruments defining the rights of holders of long-term debt because none of those instruments authorizes debt in excess of 10% of the total assets of Mercantile Bank Corporation and its subsidiaries on a consolidated basis. Mercantile Bank Corporation hereby agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.
10.1	Our 2004 Employee Stock Option Plan is incorporated by reference to exhibit 10.1 of our Form 10-Q for the quarter ended September 30, 2004 *
10.2	Form of Mercantile Bank of Michigan Split Dollar Agreement that has been entered into between our bank and each of Michael H. Price, Robert B. Kaminski, Jr., Charles E. Christmas, and certain other officers of our bank is incorporated by reference to exhibit 10.33 of our Form 10-K for the year ended December 31, 2005 *
10.3	Amendment and Restatement of Stock Incentive Plan of 2006 dated November 18, 2008 is incorporated by reference to exhibit 10.39 of our Form 10-K for the year ended December 31, 2008 *
10.4	Form of Notice of Grant of Incentive Stock Option and Stock Option Agreement for incentive stock options granted after 2006 under our Stock Incentive Plan of 2006 is incorporated by reference to exhibit 10.41 of our Form 10-K for the year ended December 31, 2007 *
10.5	Form of Restricted Stock Award Agreement Notification of Award and Terms and Conditions of Award for restricted stock granted after 2006 under our Stock Incentive Plan of 2006 is incorporated by reference to exhibit 10.43 of our Form 10-K for the year ended December 31, 2007 *
10.6	Mercantile Bank Corporation Employee Stock Purchase Plan of 2014 is incorporated by reference to exhibit 4(b) of our Registration Statement on Form S-8 that became effective on June 27, 2014
10.7	Employment Agreement with Thomas Sullivan dated August 14, 2013, incorporated by reference to exhibit 10.2 of our Form 8-K filed August 15, 2013 *

Exhibit No.	EXHIBIT DESCRIPTION
10.8	Employment Agreement with Samuel Stone dated August 14, 2013, incorporated by reference to exhibit 10.3 of our Form 8-K filed August 15, 2013 *
10.9	2014 Mercantile Executive Officer Bonus Plan for the First Six Months of 2014, as amended by First Amendment, incorporated by reference to exhibit 10.1 of our Form 8-K filed May 22, 2014 *
10.10	Mercantile Executive Officer Bonus Plan for July – December 2014, incorporated by reference to exhibit 10.1 of our Form 8-K filed August 21, 2014 *
10.11	Credit Agreement and Form of Term Note between Mercantile Bank Corporation and U.S. Bank National Association dated as of May 21, 2014, incorporated by reference to exhibit 10.1 of our Form 8-K filed May 28, 2014
10.12	Employment Agreement dated as of November 13, 2014, effective as of December 31, 2014, among the company, our bank and Michael H. Price *
10.13	Employment Agreement dated as of November 13, 2014, effective as of December 31, 2014, among the company, our bank and Robert B. Kaminski, Jr *
10.14	Employment Agreement dated as of November 13, 2014, effective as of December 31, 2014, among the company, our bank and Charles E. Christmas *
10.15	Mercantile Bank of Michigan Amended and Restated Deferred Compensation Plan dated as of November 13, 2014, effective on January 1, 2015 *
10.16	Director Fee Summary *
21	Subsidiaries of the company
23	Consent of BDO USA, LLP
31	Rule 13a-14(a) Certifications
32.1	Section 1350 Chief Executive Officer Certification
32.2	Section 1350 Chief Financial Officer Certification
101	The following information from Mercantile’s Annual Report on Form 10-K for the year ended December 31, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements

*Management contract or compensatory plan

EX-10.12

EXHIBIT 10.12

EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (“Agreement”) is made as of the 13^th day of November, 2014, effective as of December 31, 2014, by and among Mercantile Bank Corporation, a Michigan corporation (the "Company”), Mercantile Bank of Michigan, a Michigan banking corporation (the "Bank", and collectively with the Company, the "Employers", and each an “Employer”), and Michael H. Price (the "Employee").

RECITALS

A.     The Company, the Bank and the Employee have previously entered into an Employment Agreement dated December 1, 1998, which has been amended and restated by an Amended and Restated Employment Agreement dated as of December 31, 1999, an Amended and Restated Employment Agreement dated as of October 12, 2000, and an amended and restated Employment Agreement dated as of October 18, 2001, which was further amended by an amendment dated as of October 17, 2002 and by a Second Amendment dated as of November 17, 2005 (the "Employment Agreement").

B.     The Company, the Bank and the Employee wish to amend and restate the Employment Agreement in its entirety, such that this Agreement will replace and supersede the existing Employment Agreement.

C.     This Agreement sets forth the terms of the Employee's employment as President and Chief Executive Officer of the Company and Chairman and Chief Executive Officer of the Bank.

D.     The Employers believe that entering into this Agreement is in the best interest of their respective shareholders.

E.     The Employee believes that entering into this Agreement is in his best interest.

TERMS OF AGREEMENT

In consideration of the mutual covenants and obligations set forth in this Agreement, to induce the Employee to remain in the employment of the Employers, and for other good and valuable consideration, the Employers and the Employee amend and restate the Employment Agreement, and agree as follows:

1.     Employment, Term, Automatic Annual Extensions, and Acceptance: The Company agrees to employ the Employee as its President and Chief Executive Officer, and the Bank agrees to employ the Employee as its Chairman and Chief Executive Officer, for the period from December 31, 2014 through the Termination Date (the "Employment Period"), unless such employment is terminated earlier pursuant to Section 7 or 8 of this Agreement. The initial Termination Date is December 31, 2017. Effective as of December 31, 2015, and as of each December 31 after December 31, 2015, the Termination Date will automatically extend to the next succeeding December 31 after the then existing Termination Date unless prior to a December 31 automatic extension, the Employee, the Company, or the Bank gives notice to each of the others that the Termination Date shall not be automatically extended on such December 31; in which case the Termination Date will not be extended. Accordingly, unless the Employee, the Company or the Bank gives notice that the Termination Date will not be extended, there will, as of each December 31, be an Employment Period of three years remaining. The Employee hereby accepts such employment.

2.     Duties and Authority.

2.1     Promotion of Employers' Interest. While employed as an executive officer of the Company and the Bank, the Employee shall devote his business time and attention to the business and affairs of the Employers, and shall use his efforts and abilities to promote the interests of the Employers.

2.2     Performance of Duties. The Employee shall perform such services and duties necessary or appropriate for the management of the Employers as are normally expected of persons appointed to President and Chief Executive Officer and Chairman and Chief Executive Officer positions, respectively, in the businesses in which the Employers are engaged.

3.     Cash Compensation. For all services to be performed by the Employee under this Agreement (including services as an officer, employee, director, or member of any board committee), the Bank shall pay the Employee an annual base salary (prorated for any partial year) for each calendar year of this Agreement through the Termination Date, in an amount not less than the annual base salary for the immediately preceding year, as determined by the Board of Directors of the Bank, such determination to be made for each such 12 month period prior to the beginning of such period ("Base Cash Compensation"); payable in each case in accordance with the then prevailing payroll practices of the Bank. To the extent that the date of any change in rate of compensation provided for above does not coincide with the first day of a payroll period of the Bank, such change in rate of compensation shall become effective as of the first day of the payroll period that includes such date. In addition to the Base Cash Compensation described above, the Employee will be entitled to such bonuses and other discretionary compensation as may be awarded to him from time to time by the Board of Directors of either of the Employers.

4.     Participation in Employee Benefit Plans. In addition to the cash compensation payable to the Employee under this Agreement, the Employee shall be entitled to participate in such employee benefit plans, whether contributory or non-contributory, such as group life and disability insurance plans, hospital, surgical, vision and dental benefit plans or other bonus incentive, profit sharing, stock option, retirement or other employee benefit plans of the Employers as may now or hereafter exist to the extent that the Employee meets the eligibility requirements of any such plans. All such group life and disability insurance plans, and hospital, surgical, vision and dental benefit plans are hereafter referred to as "Life, Disability and Medical Plans". If any bonus or incentive compensation plan payments constitute "deferred compensation" within the meaning of Code Section 409A and applicable Treasury regulations, such deferred compensation will be paid to the Employee within 2 ½ months after the end of the calendar year in which it is payable, unless such bonus or incentive compensation is deferred pursuant to a timely election into a plan that complies with Code Section 409A.

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5.     Out of Pocket Expenses. The Employee will be reimbursed by the Bank or the Company, as the case may be, for all reasonable expenses incurred in promoting their respective businesses; including expenses for entertainment, travel and similar items upon the presentation by Employee, from time to time, of an itemized account of such expenditures in a form and manner as determined by the Board of Directors or the chief financial or accounting officer of the Employer for whose account the expenditures are made.

6.     Vacations. The Employee shall be entitled each year to five (5) weeks paid vacation time. The Employee will not be entitled to additional compensation for vacation time not utilized in any year nor will the Employee be permitted to carry over unused vacation time to a succeeding year.

7.     Termination of Employment Upon Disability or Death

7.1     Disability. In the event the Employee shall become Disabled (as hereinafter defined) during the Employment Period, the Bank or the Company may terminate the Employee's employment under this Agreement by giving him written notice of such termination ("Disability Termination Notice"). In the event of any such termination during the Employment Period, the Bank shall continue to pay the Employee his Base Cash Compensation, at the rate in effect immediately prior to the giving of the Disability Termination Notice, through the end of the Employment Period (through the Termination Date then in effect). In addition, the Employers shall cover the Employee under their disability plans, if any, in effect from time to time under the terms and conditions that such coverage is made available to other employees of the respective Employers, and the Employee shall be entitled to any benefits payable to him under such disability plans. While disabled, the Bank shall continue to provide the Employee and his dependents with coverage under its Life, Disability and Medical Plans until the Employee reaches the age of sixty-five (65) years old to the extent that it may do so under the provisions of such plans, with the Employee's contributions to the premiums under such plans being no more than the amounts he paid for such premiums prior to his disability, adjusted from time to time for normal periodic increases in such premiums applied in general to employees of the Bank.

The Employee shall be "Disabled" for purposes of this Agreement if the Employee (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for at least three (3) months from an Employer's long-term disability policy. The Employee shall be deemed to be Disabled if he is determined to be totally disabled by the Social Security Administration.

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7.2     Death. In the event of the death of the Employee, his employment with the Employers shall terminate as of the date of his death. Promptly following his death, the Bank shall pay to his legal representative a death benefit of $250,000. In addition, any life insurance policies owned by the Bank or the Company, and insuring the life of the Employee shall be payable to the beneficiaries of such policies in accordance with the terms of such policies.

7.3     Extent of Obligations. The provisions of Sections 7.1 and 7.2 apply only to Disability or death occurring during the Employment Period while the Employee is employed by the Bank and the Company. Other than as set forth in Section 7.1 or 7.2, neither of the Employers shall have any obligation or liability to the Employee upon the employee's death or Disability except that the Employee shall be entitled to all of his accrued rights under stock option, retirement and other employee benefit plans of the Company and the Bank, and the Bank shall promptly pay the Employee (or his personal representative) his Base Cash Compensation due through the effective date of the termination of his employment, the cash equivalent of any accrued vacation days not taken as of such effective date (calculated based on the Employee's annual base salary attributable to each vacation day), and any out-of-pocket expenses for which the Employee is entitled to be reimbursed, and for which reimbursement has not yet been made.

8.     Termination of Employment for Cause, Without Cause, Good Reason, or Without Good Reason.

8.1     Termination by an Employer for Cause. Each of the Employers shall have the right, at any time, to terminate the Employee’s employment for Cause (as defined herein), within 90 days of the Employer’s learning of such Cause. For purposes of this Agreement, the term "Cause" means (a) an act or acts of dishonesty committed by the Employee and intended by the Employee to result in the Employee's substantial personal enrichment at the expense of the Company or the Bank, (b) continuing intentional gross neglect by the Employee of his duties under Section 2 of this Agreement which cause or are expected to cause material harm to the Company or the Bank, and which is not remedied after receipt of notice from the applicable Employer, (c) the Employee’s conviction of a felony, or (d) the Employee’s intentional breach of his obligations under Section 11 or 12 which causes or may be expected to cause material harm to the Company or the Bank. Any termination for Cause shall be effective upon an Employer giving the Employee written notice that the Employee's employment is terminated, and setting forth in reasonable detail the basis for such termination, and that such termination is for Cause. Any such notice shall terminate the Employee's employment with both Employers.

8.2     Termination by an Employer Without Cause.      Each of the Employers shall have the right at any time to terminate the Employee's employment without Cause by giving the Employee written notice that the Employee's employment is terminated, and setting forth in reasonable detail the basis, if any, for such termination. Any such termination shall be effective upon the giving of such notice by the Employer.

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8.3     Termination by Employee for Good Reason.      The Employee shall have the right at any time to terminate his employment under this Agreement for Good Reason (as defined herein) within ninety (90) days of learning of such Good Reason. For purposes of this Agreement, the term "Good Reason" means (a) any assignment to the Employee of any title or duties that are materially inconsistent with the Employee's present positions, titles, duties, or responsibilities, other than an insubstantial or inadvertent action which is remedied by the applicable Employer promptly after receipt of written notice from the Employee, or which is approved of by the Employee in writing; or (b) any failure by an Employer to comply in a material respect with any provision of Section 3, 4, 5, or 6, other than a insubstantial or inadvertent failure which is remedied by the applicable Employer promptly after receipt of written notice from the Employee. Any termination for Good Reason shall be effective upon the Employee giving the Employers written notice that the Employee is terminating his employment, and setting forth in reasonable detail the basis for such termination, and that such termination is for Good Reason. Any such termination shall be effective upon the giving of such notice by the Employee; and any such notice shall terminate his employment with both Employers.

8.4     Termination by Employee Without Good Reason. The Employee shall have the right at any time to terminate the Employee's employment with both Employers without Good Reason by giving the Employers written notice that the Employee is terminating his employment. Any such termination shall apply to the Employee's employment with both Employers and be effective ninety (90) days after the giving of such notice by the Employee.

8.5     Obligation of Employers upon Termination without Cause or Employee's Termination with Good Reason. In the event that during the Employment Period, an Employer terminates the Employee's employment without Cause under Section 8.2, or the Employee terminates his employment for Good Reason under Section 8.3; or the Employee's employment is terminated for any other reason except (i) for Cause under Section 8.1, (ii) without Good Reason under Section 8.4, or (iii) for Disability or death pursuant to Section 7; the Bank shall pay and provide (and to the extent the insurance referred to in Section 8.5(d) is owned by the Company, the Company shall provide) to the Employee the following:

(a)     to the extent not previously paid, the Employee's Base Cash Compensation due through the effective date of the termination of employment, the cash equivalent of any accrued vacation days not taken as of such effective date (calculated based on the Employee's annual base salary attributable to each vacation day), and any out-of-pocket expenses for which the Employee is entitled to be reimbursed, and for which reimbursement has not yet been made; payable within ten (10) days of such effective date; plus

(b)     an amount equal to the greater of (i) the Base Cash Compensation payable to the Employee for the remainder of the Employment Period (i.e. through the Termination Date then in effect), or (ii) $500,000; in either case, payable in eighteen (18) substantially equal monthly installments commencing within thirty (30) days after the effective date of the termination of employment; plus

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(c)     coverage for the Employee and his dependents under the Bank's Life, Disability, and Medical Plans for the eighteen (18) month period commencing on the effective date of the termination of employment to the extent that the Bank may do so under the provisions of such plans, and to the extent that it is not permitted to do so shall pay the Employee an amount that will permit him to obtain and pay for substantially equivalent coverage; plus

(d)     any term life insurance policies without any cash surrender value, or any term life insurance policies having a cash surrender value that is under $10,000 in aggregate amount, owned by the Bank or the Company and insuring the life of the Employee, to the extent they may be practically assigned or transferred to the Employee without any adverse effect on the Bank or the Company, and which upon assignment or transfer to the Employee the cash surrender value of the policy is paid by the Employee to the Bank or the Company, whichever is the owner of the policy, plus

(e)     $10,000 for out-placement, interim office, and related expenses, payable within thirty (30) days after the effective date of the termination of employment.

In addition, the Employee shall be entitled to all of his accrued rights under stock option, retirement, and other employee benefit plans of the Company and the Bank.

8.6     Obligation of Employers upon Termination for Cause or by Employee without Good Reason. In the event that during the Employment Period, an Employer terminates the Employee's employment for Cause as provided for in Section 8.1, or the Employee terminates his employment without Good Reason as permitted in Section 8.4; the Bank shall pay and provide to the Employee, to the extent not previously paid, the Employee's Base Cash Compensation due through the effective date of the termination of employment, plus the cash equivalent of any accrued vacation days not taken as of such effective date (calculated based on the Employee's annual base salary attributable to each vacation day), within ten (10) days of such effective date. In addition, the Employee shall be entitled to all of his accrued rights under stock option (except with respect to stock option plans, in the event of termination for Cause), retirement, and other employee benefit plans of the Company and the Bank.

8.7     No Other Obligations of Employers upon Termination. Upon termination of the Employee's employment, the Employers shall have no obligations to the Employee except as set forth in this Agreement, or accrued rights under stock option, retirement, or other employee benefit plans of either Employer.

9.     Severance Payments on Termination after the Employment Period. If at any time after the Employment Period and prior to the Employee reaching the age of 65, (a) the Employee's employment with the Bank is terminated by the Bank without Cause, or (b) the Employee's annual base salary from the Bank is reduced without his consent and without Cause, and the Employee, within ninety (90) days thereafter, terminates his employment with the Bank; then unless the termination of employment or reduction in annual base salary resulted from the death or Disability of the Employee, the Bank shall pay and provide (and to the extent the insurance referred to in Section 8.5(d) is owned by the Company, the Company shall provide) to the Employee the following: (a) the amounts, coverage, benefits and life insurance provided for in Section 8.5 (a), (c), (d) and (e), plus (b) $500,000, payable in eighteen (18) substantially equal monthly installments commencing within thirty (30) days after the effective date of the termination of employment. In addition, the Employee shall be entitled to all of his accrued rights under stock option (except with respect to stock option plans, in the event of termination for Cause), retirement, and other employee benefit plans of the Company and the Bank.

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10.     Delay in Severance Payments. If the Employee is a Specified Employee (as hereinafter defined) on the date of termination of employment, then the 18 monthly installments of severance pay described in Sections 8.5(b) and 9 shall be payable as follows. No payments of the monthly installments shall be made within six months after the Employee's termination of employment. On the first business day of the seventh month after the date on which termination of employment occurs, the Bank shall pay to the Employee an amount equal to the sum of seven (7) equal monthly installments. The remaining monthly installments shall be paid on the first business day of each month thereafter.

The Employee is a "Specified Employee" if he is a "key employee" (as defined in Code Section 416(i) without regard to Code Section 416(i)(5)) and the stock of the Bank or the Company is publicly traded on an established securities market or otherwise on the date of termination of employment. The Employee is a "key employee" during the period described below if he is one of the following during the 12-month period ending on any December 31 (the "identification date"):

(a)     an officer of the Bank or the Company with annual compensation greater than $130,000 (as indexed pursuant to Code Section 416(i)(1) -- $170,000 for 2014), provided, that no more than 50 employees (or, if less, the greater of 3 employees or 10% of the employees) shall be treated as officers;

(b)     a five percent (5%) owner of the Bank or the Company; or

(c)     a one percent (1%) owner of the Bank or the Company with annual compensation of more than $150,000.

If the Employee is a "key employee" as of an identification date, he is treated as a Specified Employee for the 12-month period beginning on the first day of the fourth month following the identification date.

11.     Confidential Information. Employee agrees that he will not at any time (whether during his employment or at any time thereafter) disclose to any person, corporation, firm, partnership or other entity, except as required by law, any secret or confidential information concerning the business, clients or affairs of the Company or the Bank, or any of their affiliates, for any reason or purpose whatsoever other than in furtherance of the Employee's work for the Company or the Bank, nor shall the Employee make use of any of such secret or confidential information in any manner adverse to the Company or the Bank.

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12.     Noncompetition Covenant. For a period of eighteen (18) months following the termination of Employee’s employment with the Employers, Employee will not be employed by or act as a director or officer of any business involving or engaged in the business of banking within a 50-mile radius of the City of Grand Rapids, Michigan, where such business engages in soliciting, directly or indirectly, customers of the Bank.

13.     Remedies under Section 11 and 12. The Employee acknowledges and agrees that his obligations under Sections 11 and 12 are of a special and unique nature and that a failure to perform any such obligation or a violation of any such obligation would cause irreparable harm to the Employers, the amount of which cannot be accurately compensated for in damages by an action at law. In the event of a breach by the Employee of any of the provisions of Section 11 or 12, the Company and the Bank shall be entitled to an injunction restraining the Employee from such breach. Nothing in this Section shall be construed as prohibiting the Company or the Bank from pursuing any other remedies available for any breach of this Agreement.

14.     Deduction of Taxes and Adjustments re Code Section 280G. Each Employer may deduct from any amounts required to be paid to the Employee under this Agreement any amounts required to be withheld by the Employer pursuant to federal, state, or local law relating to taxes or related payroll deductions. In the event that any payments, distributions or benefits to or for the benefit of the Employee from the Bank or the Company, whether paid or payable, distributed or distributable, would constitute a "parachute payment", as defined in Section 280G of the Internal Revenue Code of 1986, as amended, or any successors thereto (the "Code"), payments under this Agreement shall be reduced to the largest amount that will eliminate both the imposition of the excise tax imposed by Section 4999 of the Code and the disallowance as deductions to the Employers under Section 280G of the Code of any such payments, distributions or benefits. The determination of any reduction in the payments under this Agreement pursuant to this paragraph shall be made by a major national or regional accounting firm selected by the Bank and approved by the Employee, which approval shall not be unreasonably withheld.

15.     Objection to Termination and Legal Fees. The termination of the Employee's employment pursuant to this Agreement shall not preclude any Employer or the Employee from objecting to the basis asserted by the terminating party for such termination. The Employers agree to pay all reasonable legal fees and expenses incurred by the Employee in enforcing his rights under this Agreement, except with respect to claims made by the Employee that are rejected by a court (or any arbitrator sitting by agreement of the parties) to which such claims are presented; provided that the Employers' obligation to pay legal fees and expenses under this Section shall not exceed $10,000 in aggregate amount.

16.     Adjustment between the Company and the Bank. The Company and the Bank acknowledge that although the Employee is generally paid solely by the Bank, he also performs some services for the Company, and the Company pays the Bank periodically an amount necessary to reimburse the Bank for amounts paid to the Employee by the Bank for services actually rendered to the Company.

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17.     Notices. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and if personally delivered or sent by registered or certified United States mail or by a nationally recognized overnight courier service, to his residence or the last address he has provided in writing to the Employers, in the case of the Employee, or to its principal office in the case of an Employer. For purposes of this Agreement, notices shall be deemed given when received at the address or office specified in the preceding sentence.

18.     Waiver of Breach. No waiver by either party of any breach or non-performance of any provision or obligation of this Agreement shall be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision of this Agreement.

19.     Assignment. The rights and obligations of each Employer under this Agreement shall inure to the benefit of and shall be binding upon them and their respective successors and assigns. As used in this Agreement, the term "successor" shall include any person, firm, corporation, or other business entity which at any time whether by merger, purchase or otherwise acquires all or substantially all of the assets or business of an Employer.

20.     Entire Agreement and Regulatory Compliance. This instrument contains the entire Agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements or understandings between the parties hereto relating to the subject matter hereof. This Agreement may not be changed orally but only by an agreement in writing signed by the Employee and the Employers. Employee acknowledges that each of the Employers is subject to supervision and regulation by bank regulatory agencies. If, at the time any payment would otherwise be made to Employee under this Agreement, such payment is prohibited or limited by any applicable statute or regulation, including, without limitation, the Federal Deposit Insurance Act and 12 C.F.R. Part 359 (Golden Parachute and Indemnification Payments), or by order of any such bank regulatory agency, the amount of such payment shall be reduced to the largest amount, if any, that may be paid at such time consistently with such statute, regulation, or order. Employee agrees that compliance with any such statute, regulation, or order, including any resulting reduction or elimination of any payment specified under this Agreement, shall not constitute a breach of this Agreement by the Employers.

21.     Severability. If a court of competent jurisdiction determines that any one or more of the provisions of this Agreement is invalid, illegal or unenforceable in any respect, such determination shall not affect the validity, legality or enforceability of any other provision of this Agreement.

22.     Governing Law. This Agreement and the legal relations between the parties shall be subject to and governed by the internal laws (and not the law of conflicts) of the State of Michigan.

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23.     Section 409A. This Agreement is intended to be exempt from Section 409A of the Code to the greatest extent possible, to comply with Section 409A to the extent it is applicable and is to be interpreted and operated consistently with those intentions. To the extent that Section 409A applies to payments in the event of termination of employment under this Agreement, such payments shall be made only if the termination of employment is a "separation from service" within the meaning of Treas. Reg. Section 1.409A-1(h).

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The parties have executed this Agreement as of the day and year first above written.

MERCANTILE BANK CORPORATION
By:	/s/ Thomas R. Sullivan
	Its:	Chairman
MERCANTILE BANK OF MICHIGAN
By:	/s/ Thomas R. Sullivan
	Its:	Vice Chairman

EMPLOYEE

/s/ Michael H. Price

Michael H. Price

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EX-10.13

EXHIBIT 10.13

EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (“Agreement”) is made as of the 13^th day of November, 2014, effective as of December 31, 2014, by and among Mercantile Bank Corporation, a Michigan corporation (the "Company”), Mercantile Bank of Michigan, a Michigan banking corporation (the "Bank", and collectively with the Company, the "Employers", and each an “Employer”), and Robert B. Kaminski, Jr. (the "Employee").

RECITALS

A.     The Company, the Bank and the Employee have previously entered into an Employment Agreement dated October 12, 2000, which has been amended and restated by an amended and restated Employment Agreement dated as of October 18, 2001, which was further amended by an amendment dated as of October 17, 2002, an amendment dated as of October 28, 2004 and by a Third Amendment dated as of November 17, 2005 (the "Employment Agreement").

B.     The Company, the Bank and the Employee wish to amend and restate the Employment Agreement in its entirety, such that this Agreement will replace and supersede the existing Employment Agreement.

C.     This Agreement sets forth the terms of the Employee's employment as Executive Vice President, Chief Operating Officer and Secretary of the Company and President, Chief Operating Officer and Secretary of the Bank.

D.     The Employers believe that entering into this Agreement is in the best interest of their respective shareholders.

E.     The Employee believes that entering into this Agreement is in his best interest.

TERMS OF AGREEMENT

In consideration of the mutual covenants and obligations set forth in this Agreement, to induce the Employee to remain in the employment of the Employers, and for other good and valuable consideration, the Employers and the Employee amend and restate the Employment Agreement and agree as follows:

1.     Employment, Term, and Acceptance: The Company agrees to employ the Employee as its Executive Vice President, Chief Operating Officer and Secretary, and the Bank agrees to employ the Employee as its President, Chief Operating Officer and Secretary for the period from January 1, 2015 through the Termination Date (the "Employment Period"), unless such employment is terminated earlier pursuant to Section 7 or 8 of this Agreement. The initial Termination Date is December 31, 2017. Effective as of December 31, 2015, and as of each December 31 after December 31, 2015, the Termination Date will automatically extend to the next succeeding December 31 after the then existing Termination Date unless prior to a December 31 automatic extension, the Employee, the Company, or the Bank gives notice to each of the others that the Termination Date shall not be automatically extended on such December 31; in which case the Termination Date will not be extended. Accordingly, unless the Employee, the Company or the Bank gives notice that the Termination Date will not be extended, there will, as of each December 31, be an Employment Period of three years remaining. The Employee hereby accepts such employment.

2.     Duties and Authority.

2.1     Promotion of Employers' Interest. While employed as an executive officer of the Company and the Bank, the Employee shall devote his business time and attention to the business and affairs of the Employers, and shall use his efforts and abilities to promote the interests of the Employers.

2.2     Performance of Duties. The Employee shall perform such services and duties necessary or appropriate for the Employers as are normally expected of persons appointed to Executive Vice President, Chief Operating Officer and Secretary and President, Chief Operating Officer and Secretary positions, respectively, in the businesses in which the Employers are engaged.

3.     Cash Compensation. For all services to be performed by the Employee under this Agreement (including services as an officer or employee), the Bank shall pay the Employee an annual base salary (prorated for any partial year) for each calendar year of this Agreement through the Termination Date, in an amount not less than the annual base salary for the immediately preceding year, as determined by the Board of Directors of the Bank, such determination to be made for each such 12 month period prior to the beginning of such period ("Base Cash Compensation"); payable in each case in accordance with the then prevailing payroll practices of the Bank. To the extent that the date of any change in rate of compensation provided for above does not coincide with the first day of a payroll period of the Bank, such change in rate of compensation shall become effective as of the first day of the payroll period that includes such date. In addition to the Base Cash Compensation described above, the Employee will be entitled to such bonuses and other discretionary compensation as may be awarded to him from time to time by the Board of Directors of either of the Employers.

4.     Participation in Employee Benefit Plans. In addition to the cash compensation payable to the Employee under this Agreement, the Employee shall be entitled to participate in such employee benefit plans, whether contributory or non-contributory, such as group life and disability insurance plans, hospital, surgical, vision and dental benefit plans or other bonus incentive, profit sharing, stock option, retirement or other employee benefit plans of the Employers as may now or hereafter exist to the extent that the Employee meets the eligibility requirements of any such plans. All such group life and disability insurance plans, and hospital, surgical, vision and dental benefit plans are hereafter referred to as "Life, Disability and Medical Plans". If any bonus or incentive compensation plan payments constitute "deferred compensation" within the meaning of Code Section 409A and applicable Treasury regulations, such deferred compensation will be paid to the Employee within 2 ½ months after the end of the calendar year in which it is payable, unless such bonus or incentive compensation is deferred pursuant to a timely election into a plan that complies with Code Section 409A.

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5.     Out of Pocket Expenses. The Employee will be reimbursed by the Bank or the Company, as the case may be, for all reasonable expenses incurred in promoting their respective businesses; including expenses for entertainment, travel and similar items upon the presentation by Employee, from time to time, of an itemized account of such expenditures in a form and manner as determined by the Board of Directors or the chief financial or accounting officer of the Employer for whose account the expenditures are made; provided that such reimbursement shall be subject to any guidelines provided by the Board of Directors or Chief Executive Officer of the Bank or the Company prior to an expense being incurred.

6.     Vacations. The Employee shall be entitled each year to five (5) weeks paid vacation time. The Employee will not be entitled to additional compensation for vacation time not utilized in any year nor will the Employee be permitted to carry over unused vacation time to a succeeding year.

7.     Termination of Employment Upon Disability or Death.

7.1     Disability. In the event the Employee shall become Disabled (as hereinafter defined) during the Employment Period, the Bank or the Company may terminate the Employee's employment under this Agreement by giving him written notice of such termination ("Disability Termination Notice"). In the event of any such termination during the Employment Period, the Bank shall continue to pay the Employee his Base Cash Compensation, at the rate in effect immediately prior to the giving of the Disability Termination Notice, through the end of the Employment Period (through the Termination Date then in effect). In addition, the Employers shall cover the Employee under their disability plans, if any, in effect from time to time under the terms and conditions that such coverage is made available to other employees of the respective Employers, and the Employee shall be entitled to any benefits payable to him under such disability plans. While disabled, the Bank shall continue to provide the Employee and his dependents with coverage under its Life, Disability and Medical Plans until the Employee reaches the age of sixty-five (65) years old to the extent that it may do so under the provisions of such plans, with the Employee's contributions to the premiums under such plans being no more than the amounts he paid for such premiums prior to his disability, adjusted from time to time for normal periodic increases in such premiums applied in general to employees of the Bank.

The Employee shall be "Disabled" for purposes of this Agreement if the Employee (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for at least three (3) months from an Employer's long-term disability policy. The Employee shall be deemed to be Disabled if he is determined to be totally disabled by the Social Security Administration.

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7.2     Death. In the event of the death of the Employee, his employment with the Employers shall terminate as of the date of his death. Promptly following his death, the Bank shall pay to his legal representative a death benefit of $100,000. In addition, any life insurance policies owned by the Bank or the Company, and insuring the life of the Employee shall be payable to the beneficiaries of such policies in accordance with the terms of such policies.

7.3     Extent of Obligations. The provisions of Sections 7.1 and 7.2 apply only to Disability or death occurring during the Employment Period while the Employee is employed by the Bank and the Company. Other than as set forth in Section 7.1 or 7.2, neither of the Employers shall have any obligation or liability to the Employee upon the employee's death or Disability except that the Employee shall be entitled to all of his accrued rights under stock option, retirement and other employee benefit plans of the Company and the Bank, and the Bank shall promptly pay the Employee (or his personal representative) his Base Cash Compensation due through the effective date of the termination of his employment, the cash equivalent of any accrued vacation days not taken as of such effective date (calculated based on the Employee's annual base salary attributable to each vacation day), and any out-of-pocket expenses for which the Employee is entitled to be reimbursed, and for which reimbursement has not yet been made.

8.     Termination of Employment for Cause, Without Cause, Good Reason, or Without Good Reason.

8.1     Termination by an Employer for Cause. Each of the Employers shall have the right, at any time, to terminate the Employee’s employment for Cause (as defined herein), within 90 days of the Employer’s learning of such Cause. For purposes of this Agreement, the term "Cause" means (a) an act or acts of dishonesty committed by the Employee and intended by the Employee to result in the Employee's substantial personal enrichment at the expense of the Company or the Bank, (b) continuing intentional gross neglect by the Employee of his duties under Section 2 of this Agreement which cause or are expected to cause material harm to the Company or the Bank, and which is not remedied after receipt of notice from the applicable Employer, (c) the Employee’s conviction of a felony, or (d) the Employee’s intentional breach of his obligations under Section 11 or 12 which causes or may be expected to cause material harm to the Company or the Bank. Any termination for Cause shall be effective upon an Employer giving the Employee written notice that the Employee's employment is terminated, and setting forth in reasonable detail the basis for such termination, and that such termination is for Cause. Any such notice shall terminate the Employee's employment with both Employers.

8.2     Termination by an Employer Without Cause.      Each of the Employers shall have the right at any time to terminate the Employee's employment without Cause by giving the Employee written notice that the Employee's employment is terminated, and setting forth in reasonable detail the basis, if any, for such termination. Any such termination shall be effective upon the giving of such notice by the Employer.

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8.3     Termination by Employee for Good Reason.      The Employee shall have the right at any time to terminate his employment under this Agreement for Good Reason (as defined herein) within ninety (90) days of learning of such Good Reason. For purposes of this Agreement, the term "Good Reason" means (a) any assignment to the Employee of any title or duties that are materially inconsistent with the Employee's present positions, titles, duties, or responsibilities, other than an insubstantial or inadvertent action which is remedied by the applicable Employer promptly after receipt of written notice from the Employee, or which is approved of by the Employee in writing; or (b) any failure by an Employer to comply in a material respect with any provision of Section 3, 4, 5, or 6, other than a insubstantial or inadvertent failure which is remedied by the applicable Employer promptly after receipt of written notice from the Employee. Any termination for Good Reason shall be effective upon the Employee giving the Employers written notice that the Employee is terminating his employment, and setting forth in reasonable detail the basis for such termination, and that such termination is for Good Reason. Any such termination shall be effective upon the giving of such notice by the Employee; and any such notice shall terminate his employment with both Employers. Notwithstanding the above, the assignment to the Employee of any title or duties at the Bank or the Company that he has previously held or performed at the Bank or the Company, shall not be sufficient to constitute Good Reason for termination of employment by the Employee.

8.4     Termination by Employee Without Good Reason. The Employee shall have the right at any time to terminate the Employee's employment with both Employers without Good Reason by giving the Employers written notice that the Employee is terminating his employment. Any such termination shall apply to the Employee's employment with both Employers and be effective ninety (90) days after the giving of such notice by the Employee.

8.5     Obligation of Employers upon Termination without Cause or Employee's Termination with Good Reason. In the event that during the Employment Period, an Employer terminates the Employee's employment without Cause under Section 8.2, or the Employee terminates his employment for Good Reason under Section 8.3; or the Employee's employment is terminated for any other reason except (i) for Cause under Section 8.1, (ii) without Good Reason under Section 8.4, or (iii) for Disability or death pursuant to Section 7; the Bank shall pay and provide (and to the extent the insurance referred to in Section 8.5(d) is owned by the Company, the Company shall provide) to the Employee the following:

(a)     to the extent not previously paid, the Employee's Base Cash Compensation due through the effective date of the termination of employment, the cash equivalent of any accrued vacation days not taken as of such effective date (calculated based on the Employee's annual base salary attributable to each vacation day), and any out-of-pocket expenses for which the Employee is entitled to be reimbursed, and for which reimbursement has not yet been made; payable within ten (10) days of such effective date; plus

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(b)     an amount equal to the greater of (i) the Base Cash Compensation payable to the Employee for the remainder of the Employment Period (i.e. through the Termination Date then in effect), or (ii) $250,000; in either case, payable in eighteen (18) substantially equal monthly installments commencing within thirty (30) days after the effective date of the termination of employment; plus

(c)     coverage for the Employee and his dependents under the Bank's Life, Disability, and Medical Plans for the eighteen (18) month period commencing on the effective date of the termination of employment to the extent that the Bank may do so under the provisions of such plans, and to the extent that it is not permitted to do so shall pay the Employee an amount that will permit him to obtain and pay for substantially equivalent coverage; plus

(d)     any term life insurance policies without any cash surrender value, or any term life insurance policies having a cash surrender value that is under $10,000 in aggregate amount, owned by the Bank or the Company and insuring the life of the Employee, to the extent they may be practically assigned or transferred to the Employee without any adverse effect on the Bank or the Company, and which upon assignment or transfer to the Employee the cash surrender value of the policy is paid by the Employee to the Bank or the Company, whichever is the owner of the policy, plus

(e)     $10,000 for out-placement, interim office, and related expenses, payable within thirty (30) days after the effective date of the termination of employment.

In addition, the Employee shall be entitled to all of his accrued rights under stock option, retirement, and other employee benefit plans of the Company and the Bank.

8.6     Obligation of Employers upon Termination for Cause or by Employee without Good Reason. In the event that during the Employment Period, an Employer terminates the Employee's employment for Cause as provided for in Section 8.1, or the Employee terminates his employment without Good Reason as permitted in Section 8.4; the Bank shall pay and provide to the Employee, to the extent not previously paid, the Employee's Base Cash Compensation due through the effective date of the termination of employment, plus the cash equivalent of any accrued vacation days not taken as of such effective date (calculated based on the Employee's annual base salary attributable to each vacation day), within ten (10) days of such effective date. In addition, the Employee shall be entitled to all of his accrued rights under stock option (except with respect to stock option plans, in the event of termination for Cause), retirement, and other employee benefit plans of the Company and the Bank.

8.7     No Other Obligations of Employers upon Termination. Upon termination of the Employee's employment, the Employers shall have no obligations to the Employee except as set forth in this Agreement, or accrued rights under stock option, retirement, or other employee benefit plans of either Employer.

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9.     Severance Payments on Termination after the Employment Period. If at any time after the Employment Period and prior to the Employee reaching the age of 65, (a) the Employee's employment with the Bank is terminated by the Bank without Cause, or (b) the Employee's annual base salary from the Bank is reduced without his consent and without Cause, and the Employee, within ninety (90) days thereafter, terminates his employment with the Bank; then unless the termination of employment or reduction in annual base salary resulted from the death or Disability of the Employee, the Bank shall pay and provide (and to the extent the insurance referred to in Section 8.5(d) is owned by the Company, the Company shall provide) to the Employee the following: (a) the amounts, coverage, benefits and life insurance provided for in Section 8.5 (a), (c), (d) and (e), plus (b) $125,000, payable in eighteen (18) substantially equal monthly installments commencing within thirty (30) days after the effective date of the termination of employment. In addition, the Employee shall be entitled to all of his accrued rights under stock option (except with respect to stock option plans, in the event of termination for Cause), retirement, and other employee benefit plans of the Company and the Bank.

10.     Delay in Severance Payments. If the Employee is a Specified Employee (as hereinafter defined) on the date of termination of employment, then the 18 monthly installments of severance pay described in Sections 8.5(b) and 9 shall be payable as follows. No payments of the monthly installments shall be made within six months after the Employee's termination of employment. On the first business day of the seventh month after the date on which termination of employment occurs, the Bank shall pay to the Employee an amount equal to the sum of seven (7) equal monthly installments. The remaining monthly installments shall be paid on the first business day of each month thereafter.

The Employee is a "Specified Employee" if he is a "key employee" (as defined in Code Section 416(i) without regard to Code Section 416(i)(5)) and the stock of the Bank or the Company is publicly traded on an established securities market or otherwise on the date of termination of employment. The Employee is a "key employee" during the period described below if he is one of the following during the 12-month period ending on any December 31 (the "identification date"):

(a)     an officer of the Bank or the Company with annual compensation greater than $130,000 (as indexed pursuant to Code Section 416(i)(1) -- $170,000 for 2014), provided, that no more than 50 employees (or, if less, the greater of 3 employees or 10% of the employees) shall be treated as officers;

(b)     a five percent (5%) owner of the Bank or the Company; or

(c)     a one percent (1%) owner of the Bank or the Company with annual compensation of more than $150,000.

If the Employee is a "key employee" as of an identification date, he is treated as a Specified Employee for the 12-month period beginning on the first day of the fourth month following the identification date.

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11.     Confidential Information. Employee agrees that he will not at any time (whether during his employment or at any time thereafter) disclose to any person, corporation, firm, partnership or other entity, except as required by law, any secret or confidential information concerning the business, clients or affairs of the Company or the Bank, or any of their affiliates, for any reason or purpose whatsoever other than in furtherance of the Employee's work for the Company or the Bank, nor shall the Employee make use of any of such secret or confidential information in any manner adverse to the Company or the Bank.

12.     Noncompetition Covenant. For a period of eighteen (18) months following the termination of Employee’s employment with the Employers, Employee will not be employed by or act as a director or officer of any business involving or engaged in the business of banking within a 50-mile radius of the City of Grand Rapids, Michigan, where such business engages in soliciting, directly or indirectly, customers of the Bank.

13.     Remedies under Section 11 and 12. The Employee acknowledges and agrees that his obligations under Sections 11 and 12 are of a special and unique nature and that a failure to perform any such obligation or a violation of any such obligation would cause irreparable harm to the Employers, the amount of which cannot be accurately compensated for in damages by an action at law. In the event of a breach by the Employee of any of the provisions of Section 11 or 12, the Company and the Bank shall be entitled to an injunction restraining the Employee from such breach. Nothing in this Section shall be construed as prohibiting the Company or the Bank from pursuing any other remedies available for any breach of this Agreement.

14.     Deduction of Taxes and Adjustments re Code Section 280G. Each Employer may deduct from any amounts required to be paid to the Employee under this Agreement any amounts required to be withheld by the Employer pursuant to federal, state, or local law relating to taxes or related payroll deductions. In the event that any payments, distributions or benefits to or for the benefit of the Employee from the Bank or the Company, whether paid or payable, distributed or distributable, would constitute a "parachute payment", as defined in Section 280G of the Internal Revenue Code of 1986, as amended, or any successors thereto (the "Code"), payments under this Agreement shall be reduced to the largest amount that will eliminate both the imposition of the excise tax imposed by Section 4999 of the Code and the disallowance as deductions to the Employers under Section 280G of the Code of any such payments, distributions or benefits. The determination of any reduction in the payments under this Agreement pursuant to this paragraph shall be made by a major national or regional accounting firm selected by the Bank and approved by the Employee, which approval shall not be unreasonably withheld.

15.     Objection to Termination and Legal Fees. The termination of the Employee's employment pursuant to this Agreement shall not preclude any Employer or the Employee from objecting to the basis asserted by the terminating party for such termination. The Employers agree to pay all reasonable legal fees and expenses incurred by the Employee in enforcing his rights under this Agreement, except with respect to claims made by the Employee that are rejected by a court (or any arbitrator sitting by agreement of the parties) to which such claims are presented; provided that the Employers' obligation to pay legal fees and expenses under this Section shall not exceed $10,000 in aggregate amount.

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16.     Adjustment between the Company and the Bank. The Company and the Bank acknowledge that although the Employee is generally paid solely by the Bank, he also performs some services for the Company, and the Company pays the Bank periodically an amount necessary to reimburse the Bank for amounts paid to the Employee by the Bank for services actually rendered to the Company.

17.     Notices. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and if personally delivered or sent by registered or certified United States mail or by a nationally recognized overnight courier service, to his residence or the last address he has provided in writing to the Employers, in the case of the Employee, or to its principal office in the case of an Employer. For purposes of this Agreement, notices shall be deemed given when received at the address or office specified in the preceding sentence.

18.     Waiver of Breach. No waiver by either party of any breach or non-performance of any provision or obligation of this Agreement shall be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision of this Agreement.

19.     Assignment. The rights and obligations of each Employer under this Agreement shall inure to the benefit of and shall be binding upon them and their respective successors and assigns. As used in this Agreement, the term "successor" shall include any person, firm, corporation, or other business entity which at any time whether by merger, purchase or otherwise acquires all or substantially all of the assets or business of an Employer.

20.     Entire Agreement and Regulatory Compliance. This instrument contains the entire Agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements or understandings between the parties hereto relating to the subject matter hereof. This Agreement may not be changed orally but only by an agreement in writing signed by the Employee and the Employers. Employee acknowledges that each of the Employers is subject to supervision and regulation by bank regulatory agencies. If, at the time any payment would otherwise be made to Employee under this Agreement, such payment is prohibited or limited by any applicable statute or regulation, including, without limitation, the Federal Deposit Insurance Act and 12 C.F.R. Part 359 (Golden Parachute and Indemnification Payments), or by order of any such bank regulatory agency, the amount of such payment shall be reduced to the largest amount, if any, that may be paid at such time consistently with such statute, regulation, or order. Employee agrees that compliance with any such statute, regulation, or order, including any resulting reduction or elimination of any payment specified under this Agreement, shall not constitute a breach of this Agreement by the Employers.

21.     Severability. If a court of competent jurisdiction determines that any one or more of the provisions of this Agreement is invalid, illegal or unenforceable in any respect, such determination shall not affect the validity, legality or enforceability of any other provision of this Agreement.

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22.     Governing Law. This Agreement and the legal relations between the parties shall be subject to and governed by the internal laws (and not the law of conflicts) of the State of Michigan.

23.     Section 409A. This Agreement is intended to be exempt from Section 409A of the Code to the greatest extent possible, to comply with Section 409A to the extent it is applicable and is to be interpreted and operated consistently with those intentions. To the extent that Section 409A applies to payments in the event of termination of employment under this Agreement, such payments shall be made only if the termination of employment is a "separation from service" within the meaning of Treas. Reg. Section 1.409A-1(h).

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The parties have executed this Agreement as of the day and year first above written.

MERCANTILE BANK CORPORATION
By:	/s/ Michael H. Price
	Its:	President and CEO
MERCANTILE BANK OF MICHIGAN
By:	/s/ Michael H. Price
	Its:	Chairman and CEO

EMPLOYEE

/s/ Robert B. Kaminski, Jr.

Robert B. Kaminski, Jr.

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EX-10.14

EXHIBIT 10.14

EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (“Agreement”) is made as of the 13^th day of November, 2014, effective as of December 31, 2014, by and among Mercantile Bank Corporation, a Michigan corporation (the "Company”), Mercantile Bank of Michigan, a Michigan banking corporation (the "Bank", and collectively with the Company, the "Employers", and each an “Employer”), and Charles E. Christmas (the "Employee").

RECITALS

A.     The Company, the Bank and the Employee have previously entered into an Employment Agreement dated October 12, 2000, which has been amended and restated by an amended and restated Employment Agreement dated as of October 18, 2001, which was further amended by an amendment dated as of October 17, 2002 and by a Second Amendment dated as of November 17, 2005 (the "Employment Agreement").

B.     The Company, the Bank and the Employee wish to amend and restate the Employment Agreement in its entirety, such that this Agreement will replace and supersede the existing Employment Agreement.

C.     This Agreement sets forth the terms of the Employee's employment as Senior Vice President, Chief Financial Officer and Treasurer of the Company and Senior Vice President and Chief Financial Officer of the Bank.

D.     The Employers believe that entering into this Agreement is in the best interest of their respective shareholders.

E.     The Employee believes that entering into this Agreement is in his best interest.

TERMS OF AGREEMENT

In consideration of the mutual covenants and obligations set forth in this Agreement, to induce the Employee to remain in the employment of the Employers, and for other good and valuable consideration, the Employers and the Employee amend and restate the Employment Agreement and agree as follows:

1.     Employment, Term, and Acceptance. The Company agrees to employ the Employee as its Senior Vice President, Chief Financial Officer and Treasurer, and the Bank agrees to employ the Employee as its Senior Vice President and Chief Financial Officer, for the period from January 1, 2015 through the Termination Date (the "Employment Period"), unless such employment is terminated earlier pursuant to Section 7 or 8 of this Agreement. The initial Termination Date is December 31, 2017. Effective as of December 31, 2015, and as of each December 31 after December 31, 2015, the Termination Date will automatically extend to the next succeeding December 31 after the then existing Termination Date unless prior to a December 31 automatic extension, the Employee, the Company, or the Bank gives notice to each of the others that the Termination Date shall not be automatically extended on such December 31; in which case the Termination Date will not be extended. Accordingly, unless the Employee, the Company or the Bank gives notice that the Termination Date will not be extended, there will, as of each December 31, be an Employment Period of three years remaining. The Employee hereby accepts such employment.

2.     Duties and Authority.

2.1     Promotion of Employers' Interest. While employed as an executive officer of the Company and the Bank, the Employee shall devote his business time and attention to the business and affairs of the Employers, and shall use his efforts and abilities to promote the interests of the Employers.

2.2     Performance of Duties. The Employee shall perform such services and duties necessary or appropriate for the Employers as are normally expected of persons appointed to Senior Vice President, Chief Financial Officer and Treasurer, and Senior Vice President and Chief Financial Officer positions, respectively, in the businesses in which the Employers are engaged.

3.     Cash Compensation. For all services to be performed by the Employee under this Agreement (including services as an officer or employee), the Bank shall pay the Employee an annual base salary (prorated for any partial year) for each calendar year of this Agreement through the Termination Date, in an amount not less than the annual base salary for the immediately preceding year, as determined by the Board of Directors of the Bank, such determination to be made for each such 12 month period prior to the beginning of such period ("Base Cash Compensation"); payable in each case in accordance with the then prevailing payroll practices of the Bank. To the extent that the date of any change in rate of compensation provided for above does not coincide with the first day of a payroll period of the Bank, such change in rate of compensation shall become effective as of the first day of the payroll period that includes such date. In addition to the Base Cash Compensation described above, the Employee will be entitled to such bonuses and other discretionary compensation as may be awarded to him from time to time by the Board of Directors of either of the Employers.

4.     Participation in Employee Benefit Plans. In addition to the cash compensation payable to the Employee under this Agreement, the Employee shall be entitled to participate in such employee benefit plans, whether contributory or non-contributory, such as group life and disability insurance plans, hospital, surgical, vision and dental benefit plans or other bonus incentive, profit sharing, stock option, retirement or other employee benefit plans of the Employers as may now or hereafter exist to the extent that the Employee meets the eligibility requirements of any such plans. All such group life and disability insurance plans, and hospital, surgical, vision and dental benefit plans are hereafter referred to as "Life, Disability and Medical Plans". If any bonus or incentive compensation plan payments constitute "deferred compensation" within the meaning of Code Section 409A and applicable Treasury regulations, such deferred compensation will be paid to the Employee within 2 ½ months after the end of the calendar year in which it is payable, unless such bonus or incentive compensation is deferred pursuant to a timely election into a plan that complies with Code Section 409A.

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5.     Out of Pocket Expenses. The Employee will be reimbursed by the Bank or the Company, as the case may be, for all reasonable expenses incurred in promoting their respective businesses; including expenses for entertainment, travel and similar items upon the presentation by Employee, from time to time, of an itemized account of such expenditures in a form and manner as determined by the Board of Directors or the chief financial or accounting officer of the Employer for whose account the expenditures are made; provided that such reimbursement shall be subject to any guidelines provided by the Board of Directors or Chief Executive Officer of the Bank or the Company prior to an expense being incurred.

6.     Vacations. The Employee shall be entitled each year to five (5) weeks paid vacation time. The Employee will not be entitled to additional compensation for vacation time not utilized in any year nor will the Employee be permitted to carry over unused vacation time to a succeeding year.

7.     Termination of Employment Upon Disability or Death.

7.1     Disability. In the event the Employee shall become Disabled (as hereinafter defined) during the Employment Period, the Bank or the Company may terminate the Employee's employment under this Agreement by giving him written notice of such termination ("Disability Termination Notice"). In the event of any such termination during the Employment Period, the Bank shall continue to pay the Employee his Base Cash Compensation, at the rate in effect immediately prior to the giving of the Disability Termination Notice, through the end of the Employment Period (through the Termination Date then in effect). In addition, the Employers shall cover the Employee under their disability plans, if any, in effect from time to time under the terms and conditions that such coverage is made available to other employees of the respective Employers, and the Employee shall be entitled to any benefits payable to him under such disability plans. While disabled, the Bank shall continue to provide the Employee and his dependents with coverage under its Life, Disability and Medical Plans until the Employee reaches the age of sixty-five (65) years old to the extent that it may do so under the provisions of such plans, with the Employee's contributions to the premiums under such plans being no more than the amounts he paid for such premiums prior to his disability, adjusted from time to time for normal periodic increases in such premiums applied in general to employees of the Bank.

The Employee shall be "Disabled" for purposes of this Agreement if the Employee (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for at least three (3) months from an Employer's long-term disability policy. The Employee shall be deemed to be Disabled if he is determined to be totally disabled by the Social Security Administration.

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7.2     Death. In the event of the death of the Employee, his employment with the Employers shall terminate as of the date of his death. Promptly following his death, the Bank shall pay to his legal representative a death benefit of $100,000. In addition, any life insurance policies owned by the Bank or the Company, and insuring the life of the Employee shall be payable to the beneficiaries of such policies in accordance with the terms of such policies.

7.3     Extent of Obligations. The provisions of Sections 7.1 and 7.2 apply only to Disability or death occurring during the Employment Period while the Employee is employed by the Bank and the Company. Other than as set forth in Section 7.1 or 7.2, neither of the Employers shall have any obligation or liability to the Employee upon the employee's death or Disability except that the Employee shall be entitled to all of his accrued rights under stock option, retirement and other employee benefit plans of the Company and the Bank, and the Bank shall promptly pay the Employee (or his personal representative) his Base Cash Compensation due through the effective date of the termination of his employment, the cash equivalent of any accrued vacation days not taken as of such effective date (calculated based on the Employee's annual base salary attributable to each vacation day), and any out-of -pocket expenses for which the Employee is entitled to be reimbursed, and for which reimbursement has not yet been made.

8.     Termination of Employment for Cause, Without Cause, Good Reason, or Without Good Reason.

8.1     Termination by an Employer for Cause. Each of the Employers shall have the right, at any time, to terminate the Employee’s employment for Cause (as defined herein), within 90 days of the Employer’s learning of such Cause. For purposes of this Agreement, the term "Cause" means (a) an act or acts of dishonesty committed by the Employee and intended by the Employee to result in the Employee's substantial personal enrichment at the expense of the Company or the Bank, (b) continuing intentional gross neglect by the Employee of his duties under Section 2 of this Agreement which cause or are expected to cause material harm to the Company or the Bank, and which is not remedied after receipt of notice from the applicable Employer, (c) the Employee’s conviction of a felony, or (d) the Employee’s intentional breach of his obligations under Section 11 or 12 which causes or may be expected to cause material harm to the Company or the Bank. Any termination for Cause shall be effective upon an Employer giving the Employee written notice that the Employee's employment is terminated, and setting forth in reasonable detail the basis for such termination, and that such termination is for Cause. Any such notice shall terminate the Employee's employment with both Employers.

8.2     Termination by an Employer Without Cause.      Each of the Employers shall have the right at any time to terminate the Employee's employment without Cause by giving the Employee written notice that the Employee's employment is terminated, and setting forth in reasonable detail the basis, if any, for such termination. Any such termination shall be effective upon the giving of such notice by the Employer.

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8.3     Termination by Employee for Good Reason.      The Employee shall have the right at any time to terminate his employment under this Agreement for Good Reason (as defined herein) within ninety (90) days of learning of such Good Reason. For purposes of this Agreement, the term "Good Reason" means (a) any assignment to the Employee of any title or duties that are materially inconsistent with the Employee's present positions, titles, duties, or responsibilities, other than an insubstantial or inadvertent action which is remedied by the applicable Employer promptly after receipt of written notice from the Employee, or which is approved of by the Employee in writing; or (b) any failure by an Employer to comply in a material respect with any provision of Section 3, 4, 5, or 6, other than a insubstantial or inadvertent failure which is remedied by the applicable Employer promptly after receipt of written notice from the Employee. Any termination for Good Reason shall be effective upon the Employee giving the Employers written notice that the Employee is terminating his employment, and setting forth in reasonable detail the basis for such termination, and that such termination is for Good Reason. Any such termination shall be effective upon the giving of such notice by the Employee; and any such notice shall terminate his employment with both Employers. Notwithstanding the above, the assignment to the Employee of any title or duties at the Bank or the Company that he has previously held or performed at the Bank or the Company, shall not be sufficient to constitute Good Reason for termination of employment by the Employee.

8.4     Termination by Employee Without Good Reason. The Employee shall have the right at any time to terminate the Employee's employment with both Employers without Good Reason by giving the Employers written notice that the Employee is terminating his employment. Any such termination shall apply to the Employee's employment with both Employers and be effective ninety (90) days after the giving of such notice by the Employee.

8.5     Obligation of Employers upon Termination without Cause or Employee's Termination with Good Reason. In the event that during the Employment Period, an Employer terminates the Employee's employment without Cause under Section 8.2, or the Employee terminates his employment for Good Reason under Section 8.3; or the Employee's employment is terminated for any other reason except (i) for Cause under Section 8.1, (ii) without Good Reason under Section 8.4, or (iii) for Disability or death pursuant to Section 7; the Bank shall pay and provide (and to the extent the insurance referred to in Section 8.5(d) is owned by the Company, the Company shall provide) to the Employee the following:

(a)     to the extent not previously paid, the Employee's Base Cash Compensation due through the effective date of the termination of employment, the cash equivalent of any accrued vacation days not taken as of such effective date (calculated based on the Employee's annual base salary attributable to each vacation day), and any out-of-pocket expenses for which the Employee is entitled to be reimbursed, and for which reimbursement has not yet been made; payable within ten (10) days of such effective date; plus

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(b)     an amount equal to the greater of (i) the Base Cash Compensation payable to the Employee for the remainder of the Employment Period (i.e. through the Termination Date then in effect), or (ii) $250,000; in either case, payable in eighteen (18) substantially equal monthly installments commencing within thirty (30) days after the effective date of the termination of employment; plus

(c)     coverage for the Employee and his dependents under the Bank's Life, Disability, and Medical Plans for the eighteen (18) month period commencing on the effective date of the termination of employment to the extent that the Bank may do so under the provisions of such plans, and to the extent that it is not permitted to do so shall pay the Employee an amount that will permit him to obtain and pay for substantially equivalent coverage; plus

(d)     any term life insurance policies without any cash surrender value, or any term life insurance policies having a cash surrender value that is under $10,000 in aggregate amount, owned by the Bank or the Company and insuring the life of the Employee, to the extent they may be practically assigned or transferred to the Employee without any adverse effect on the Bank or the Company, and which upon assignment or transfer to the Employee the cash surrender value of the policy is paid by the Employee to the Bank or the Company, whichever is the owner of the policy, plus

(e)     $10,000 for out-placement, interim office, and related expenses, payable within thirty (30) days after the effective date of the termination of employment.

In addition, the Employee shall be entitled to all of his accrued rights under stock option, retirement, and other employee benefit plans of the Company and the Bank.

8.6     Obligation of Employers upon Termination for Cause or by Employee without Good Reason. In the event that during the Employment Period, an Employer terminates the Employee's employment for Cause as provided for in Section 8.1, or the Employee terminates his employment without Good Reason as permitted in Section 8.4; the Bank shall pay and provide to the Employee, to the extent not previously paid, the Employee's Base Cash Compensation due through the effective date of the termination of employment, plus the cash equivalent of any accrued vacation days not taken as of such effective date (calculated based on the Employee's annual base salary attributable to each vacation day), within ten (10) days of such effective date. In addition, the Employee shall be entitled to all of his accrued rights under stock option (except with respect to stock option plans, in the event of termination for Cause), retirement, and other employee benefit plans of the Company and the Bank.

8.7     No Other Obligations of Employers upon Termination. Upon termination of the Employee's employment, the Employers shall have no obligations to the Employee except as set forth in this Agreement, or accrued rights under stock option, retirement, or other employee benefit plans of either Employer.

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9.     Severance Payments on Termination after the Employment Period. If at any time after the Employment Period and prior to the Employee reaching the age of 65, (a) the Employee's employment with the Bank is terminated by the Bank without Cause, or (b) the Employee's annual base salary from the Bank is reduced without his consent and without Cause, and the Employee, within ninety (90) days thereafter, terminates his employment with the Bank; then unless the termination of employment or reduction in annual base salary resulted from the death or Disability of the Employee, the Bank shall pay and provide (and to the extent the insurance referred to in Section 8.5(d) is owned by the Company, the Company shall provide) to the Employee the following: (a) the amounts, coverage, benefits and life insurance provided for in Section 8.5 (a), (c), (d) and (e), plus (b) $125,000, payable in eighteen (18) substantially equal monthly installments commencing within thirty (30) days after the effective date of the termination of employment. In addition, the Employee shall be entitled to all of his accrued rights under stock option (except with respect to stock option plans, in the event of termination for Cause), retirement, and other employee benefit plans of the Company and the Bank.

10.     Delay in Severance Payments. If the Employee is a Specified Employee (as hereinafter defined) on the date of termination of employment, then the 18 monthly installments of severance pay described in Sections 8.5(b) and 9 shall be payable as follows. No payments of the monthly installments shall be made within six months after the Employee's termination of employment. On the first business day of the seventh month after the date on which termination of employment occurs, the Bank shall pay to the Employee an amount equal to the sum of seven (7) equal monthly installments. The remaining monthly installments shall be paid on the first business day of each month thereafter.

The Employee is a "Specified Employee" if he is a "key employee" (as defined in Code Section 416(i) without regard to Code Section 416(i)(5)) and the stock of the Bank or the Company is publicly traded on an established securities market or otherwise on the date of termination of employment. The Employee is a "key employee" during the period described below if he is one of the following during the 12-month period ending on any December 31 (the "identification date"):

(a)     an officer of the Bank or the Company with annual compensation greater than $130,000 (as indexed pursuant to Code Section 416(i)(1) -- $170,000 for 2014), provided, that no more than 50 employees (or, if less, the greater of 3 employees or 10% of the employees) shall be treated as officers;

(b)     a five percent (5%) owner of the Bank or the Company; or

(c)     a one percent (1%) owner of the Bank or the Company with annual compensation of more than $150,000.

If the Employee is a "key employee" as of an identification date, he is treated as a Specified Employee for the 12-month period beginning on the first day of the fourth month following the identification date.

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11.     Confidential Information. Employee agrees that he will not at any time (whether during his employment or at any time thereafter) disclose to any person, corporation, firm, partnership or other entity, except as required by law, any secret or confidential information concerning the business, clients or affairs of the Company or the Bank, or any of their affiliates, for any reason or purpose whatsoever other than in furtherance of the Employee's work for the Company or the Bank, nor shall the Employee make use of any of such secret or confidential information in any manner adverse to the Company or the Bank.

12.     Noncompetition Covenant. For a period of eighteen (18) months following the termination of Employee’s employment with the Employers, Employee will not be employed by or act as a director or officer of any business involving or engaged in the business of banking within a 50-mile radius of the City of Grand Rapids, Michigan, where such business engages in soliciting, directly or indirectly, customers of the Bank.

13.     Remedies under Section 11 and 12. The Employee acknowledges and agrees that his obligations under Sections 11 and 12 are of a special and unique nature and that a failure to perform any such obligation or a violation of any such obligation would cause irreparable harm to the Employers, the amount of which cannot be accurately compensated for in damages by an action at law. In the event of a breach by the Employee of any of the provisions of Section 11 or 12, the Company and the Bank shall be entitled to an injunction restraining the Employee from such breach. Nothing in this Section shall be construed as prohibiting the Company or the Bank from pursuing any other remedies available for any breach of this Agreement.

14.     Deduction of Taxes and Adjustments re Code Section 280G. Each Employer may deduct from any amounts required to be paid to the Employee under this Agreement any amounts required to be withheld by the Employer pursuant to federal, state, or local law relating to taxes or related payroll deductions. In the event that any payments, distributions or benefits to or for the benefit of the Employee from the Bank or the Company, whether paid or payable, distributed or distributable, would constitute a "parachute payment", as defined in Section 280G of the Internal Revenue Code of 1986, as amended, or any successors thereto (the "Code"), payments under this Agreement shall be reduced to the largest amount that will eliminate both the imposition of the excise tax imposed by Section 4999 of the Code and the disallowance as deductions to the Employers under Section 280G of the Code of any such payments, distributions or benefits. The determination of any reduction in the payments under this Agreement pursuant to this paragraph shall be made by a major national or regional accounting firm selected by the Bank and approved by the Employee, which approval shall not be unreasonably withheld.

15.     Objection to Termination and Legal Fees. The termination of the Employee's employment pursuant to this Agreement shall not preclude any Employer or the Employee from objecting to the basis asserted by the terminating party for such termination. The Employers agree to pay all reasonable legal fees and expenses incurred by the Employee in enforcing his rights under this Agreement, except with respect to claims made by the Employee that are rejected by a court (or any arbitrator sitting by agreement of the parties) to which such claims are presented; provided that the Employers' obligation to pay legal fees and expenses under this Section shall not exceed $10,000 in aggregate amount.

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16.     Adjustment between the Company and the Bank. The Company and the Bank acknowledge that although the Employee is generally paid solely by the Bank, he also performs some services for the Company, and the Company pays the Bank periodically an amount necessary to reimburse the Bank for amounts paid to the Employee by the Bank for services actually rendered to the Company.

17.     Notices. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and if personally delivered or sent by registered or certified United States mail or by a nationally recognized overnight courier service, to his residence or the last address he has provided in writing to the Employers, in the case of the Employee, or to its principal office in the case of an Employer. For purposes of this Agreement, notices shall be deemed given when received at the address or office specified in the preceding sentence.

18.     Waiver of Breach. No waiver by either party of any breach or non-performance of any provision or obligation of this Agreement shall be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision of this Agreement.

19.     Assignment. The rights and obligations of each Employer under this Agreement shall inure to the benefit of and shall be binding upon them and their respective successors and assigns. As used in this Agreement, the term "successor" shall include any person, firm, corporation, or other business entity which at any time whether by merger, purchase or otherwise acquires all or substantially all of the assets or business of an Employer.

20.     Entire Agreement and Regulatory Compliance. This instrument contains the entire Agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements or understandings between the parties hereto relating to the subject matter hereof. This Agreement may not be changed orally but only by an agreement in writing signed by the Employee and the Employers. Employee acknowledges that each of the Employers is subject to supervision and regulation by bank regulatory agencies. If, at the time any payment would otherwise be made to Employee under this Agreement, such payment is prohibited or limited by any applicable statute or regulation, including, without limitation, the Federal Deposit Insurance Act and 12 C.F.R. Part 359 (Golden Parachute and Indemnification Payments), or by order of any such bank regulatory agency, the amount of such payment shall be reduced to the largest amount, if any, that may be paid at such time consistently with such statute, regulation, or order. Employee agrees that compliance with any such statute, regulation, or order, including any resulting reduction or elimination of any payment specified under this Agreement, shall not constitute a breach of this Agreement by the Employers.

21.     Severability. If a court of competent jurisdiction determines that any one or more of the provisions of this Agreement is invalid, illegal or unenforceable in any respect, such determination shall not affect the validity, legality or enforceability of any other provision of this Agreement.

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22.     Governing Law. This Agreement and the legal relations between the parties shall be subject to and governed by the internal laws (and not the law of conflicts) of the State of Michigan.

23.     Section 409A. This Agreement is intended to be exempt from Section 409A of the Code to the greatest extent possible, to comply with Section 409A to the extent it is applicable and is to be interpreted and operated consistently with those intentions. To the extent that Section 409A applies to payments in the event of termination of employment under this Agreement, such payments shall be made only if the termination of employment is a "separation from service" within the meaning of Treas. Reg. Section 1.409A-1(h).

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The parties have executed this Agreement as of the day and year first above written.

MERCANTILE BANK CORPORATION
By:	/s/ Michael H. Price
	Its:	President and CEO
MERCANTILE BANK OF MICHIGAN
By:	/s/ Michael H. Price
	Its:	Chairman and CEO

EMPLOYEE

/s/ Charles E. Christmas

Charles E. Christmas

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EX-10.15

EXHIBIT 10.15

MERCANTILE BANK OF MICHIGAN

AMENDED AND RESTATED

DEFERRED COMPENSATION PLAN

THIS AMENDED AND RESTATED DEFERRED COMPENSATION PLAN (the "Plan") is adopted this 13^th day of November, 2014, by MERCANTILE BANK OF MICHIGAN (the "Company"), a state-chartered commercial bank located in Grand Rapids, Michigan, and is effective on January 1, 2015.

This Plan consolidates, amends and restates (a) each of the existing Executive Deferred Compensation Agreements between the Company and the Executive named therein listed on Schedule 1 attached hereto (individually, an "Executive Agreement" and collectively, the "Executive Agreements") and (b) the Mercantile Bank of Michigan Amended and Restated Deferred Compensation Plan for Members of the Board of Directors, as most recently amended and restated as of June 29, 2006, and as amended by a First Amendment dated as of October 25, 2007 and a Second Amendment dated as of October 23, 2008 (the "Director Plan").

The purpose of this Plan is to provide specified benefits to executives and directors of the Company, each of whom is a member of a select group of management or highly compensated employee who contributes materially to the continued growth, development and future business success of the Company. This Plan shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act ("ERISA").

Article 1

Definitions

Whenever used in this Plan, the following words and phrases shall have the meanings specified:

1.1 "Anniversary Date" means December 31 of each year.

1.2 "Base Salary" shall mean the annual cash compensation relating to services performed by an Executive during any calendar year, excluding distributions from nonqualified deferred compensation plans, bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments, non-monetary awards, and other fees, and automobile and other allowances paid to an Executive for employment services rendered (whether or not such allowances are included in the Executive's gross income). Base Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Executive pursuant to all qualified or non-qualified plans of the Company and shall be calculated to include amounts not otherwise included in the Executive's gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by the Company; provided, however, that all such amounts will be included in compensation only to the extent that had there been no such plan, the amount would have been payable in cash to the Executive.

1.3 "Beneficiary" means each designated person, or the estate of a deceased Participant, entitled to benefits, if any, upon the death of the Participant determined pursuant to Article 6.

1.4 "Beneficiary Designation Form" means the form established from time to time by the Plan Administrator that the Participant completes, signs and returns to the Plan Administrator to designate one or more beneficiaries.

1.5 "Board" means the Board of Directors of the Company as from time to time constituted.

1.6 "Bonus" means the cash bonus, if any, awarded to an Executive for services performed during the Plan Year and that does not qualify as Performance-Based Compensation.

1.7 "Change in Control" means a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, as such change is defined in Section 409A of the Code and regulations thereunder.

1.8 "Code" means the Internal Revenue Code of 1986, as amended.

1.9 "Compensation" means, for an Executive, the total Base Salary, Bonus and Performance-Based Compensation that would be paid to the Executive during a Plan Year, absent deferrals, less FICA taxes associated with such Base Salary, Bonus and Performance-Based Compensation. For a Director, Compensation means the Fees paid to a Director during a Plan Year.

1.10 "Crediting Rate" means the Wall Street Journal Prime Rate adjusted quarterly on January 1, April 1, July 1 and October 1 of each year, compounded monthly.

1.11 "Deferral Account" means the Company's accounting of the Participant's accumulated Deferrals, plus accrued interest.

1.12 "Deferrals" means the amount of the Compensation which the Participant elects to defer according to this Plan.

1.13 "Deferral Election Forms" means each form established from time to time by the Plan Administrator that the Participant completes, signs and returns to the Plan Administrator to designate the amount of Deferrals and, with respect to Deferrals made on and after January 1, 2009, to elect the time and form of a Specified Time Distribution.

1.14 "Director" means any member of the Board who is not an employee of the Company or a subsidiary or parent thereof.

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1.15 "Disability" means an Executive: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees or directors of the Company. Medical determination of Disability may be made by either the Social Security Administration or by the provider of an accident or health plan covering employees or directors of the Company provided that the definition of "disability" applied under such disability insurance program complies with the requirements of the preceding sentence. Upon the request of the Plan Administrator, the Executive must submit proof to the Plan Administrator of the Social Security Administration's or the provider's determination.

1.16 "Distribution Election Form" means the form established from time to time by the Plan Administrator that the Participant completes, signs and returns to the Plan Administrator to designate the time and form of distribution.

1.17 "Early Termination" means Separation from Service by an Executive before Normal Retirement Age for reasons other than death, Disability, Termination for Cause or within twelve (12) months following a Change in Control.

1.18 "Effective Date" means October 18, 2001 with respect to the Director Plan and the original effective date of each Executive Agreement.

1.19 "Executive" means a management employee of the Company selected by the Plan Administrator to participate in the Plan.

1.20 "Fees" means the total fees payable to a Director in cash during a Plan Year.

1.21 "Normal Retirement Age" means an Executive attaining age sixty-two (62).

1.22 "Normal Retirement Date" means the later of Normal Retirement Age or Separation from Service.

1.23 "Participation Agreement" means the agreement that a Director or an Executive completes, signs and returns to the Plan Administrator to participate in this Plan. Each Executive who is a party to an Executive Agreement shall complete, sign and return to the Plan Administrator a Participation Agreement on or before December 31, 2014 acknowledging that he or she is a Participant in this Plan, that the terms set forth in the Executive Agreement are replaced and superseded by this Plan, and that his or her rights and benefits shall be determined under this Plan on and after January 1, 2015.

1.24 "Participant" means an Executive or Director who has agreed to participate in this Plan by completing a Participation Agreement.

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1.25 "Performance-Based Compensation" means the cash bonus, if any, awarded to an Executive that qualifies as "performance-based compensation" under Section 409A of the Code and the regulations thereunder.

1.26 "Plan Administrator" means the plan administrator described in Article 8.

1.27 "Plan Year" means the calendar year.

1.28 "Separation from Service" for an Executive means the termination of the Executive's employment with the Company for reasons other than death or Disability. Whether a Separation from Service takes place is determined based on the facts and circumstances surrounding the termination of the Executive's employment and whether the Company and the Executive intended for the Executive to provide significant services for the Company following such termination. A termination of employment will not be considered a Separation from Service if:

(a) the Executive continues to provide services as an employee of the Company at an annual rate that is twenty percent (20%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or, if employed less than three years, such lesser period) and the annual remuneration for such services is twenty percent (20%) or more of the average annual remuneration earned during the final three full calendar years of employment (or, if less, such lesser period), or

(b) the Executive continues to provide services to the Company in a capacity other than as an employee of the Company at an annual rate that is fifty percent (50%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or if employed less than three years, such lesser period) and the annual remuneration for such services is fifty percent (50%) or more of the average annual remuneration earned during the final three full calendar years of employment (or if less, such lesser period).

"Separation from Service" for a Director means the termination of a Director's service with the Company for reasons other than death. Whether a Separation from Service takes place is determined based on the facts and circumstances surrounding the termination of the Director's service and whether the Company and the Director intended for the Director to provide significant services for the Company following such termination.

1.29 "Specified Employee" means a Participant who at the time of Separation from Service is a key employee of the Company, if any stock of the Company is publicly traded on an established securities market or otherwise. For purposes of this Plan, a Participant is a key employee if the Participant meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and disregarding section 416(i)(5)) at any time during the 12-month period ending on December 31 (the "identification period"). If the Participant is a key employee during an identification period, the Participant is treated as a key employee for purposes of this Plan during the twelve (12) month period that begins on the first day of April following the close of the identification period.

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1.30 "Specified Time Distribution" means a distribution made at a specified time pursuant to a Participant's election on a Specified Time Distribution Election Form or a Deferral Election Form.

1.31 "Specified Time Distribution Election Form" means the form established from time to time by the Plan Administrator that a Participant completes, signs and returns to the Plan Administrator to designate the time and form of a Specified Time Distribution.

1.32     "Termination for Cause" has that meaning set forth in Section 7.1.

1.33 "Unforeseeable Emergency" means a severe financial hardship to a Participant resulting from an illness or accident of the Participant, the Participant's spouse, or a dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

Article 2

Deferral Election

2.1 Elections Generally.

2.1.1 Election by an Executive. An Executive may file annually Base Salary, Bonus and Performance-Based Compensation Deferral Election Forms with the Plan Administrator no later than:

(a) For Base Salary and Bonus, the end of the Plan Year preceding the Plan Year in which services leading to such Base Salary and Bonus will be performed; and

(b) For any payment that is determined to be Performance-Based Compensation, no later than six months before the end of the service period for such Performance-Based Compensation.

2.1.2 Election by a Director. Each Director may annually file Deferral Election Form(s) with the Plan Administrator no later than the end of the Plan Year preceding the Plan Year in which services leading to such Fees will be performed.

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2.2 Initial Election. After being notified by the Plan Administrator of becoming eligible for participation in the Plan, a Participant may make an initial deferral election under this Plan by delivering to the Plan Administrator signed Deferral Election Form(s) and a Beneficiary Designation Form within thirty (30) days of becoming eligible. The Deferral Election Form(s) for an Executive shall set forth the amount of Base Salary, Bonus and Performance-Based Compensation to be deferred. The Deferral Election Form for a Director shall set forth the amount of Fees to be deferred. However, if the Participant was eligible to participate in any other account balance plans sponsored by the Company (as referenced in Section 409A of the Code or the regulations thereunder) prior to becoming eligible to participate in this Plan, (i) the initial election to defer Base Salary and Bonus by an Executive under this Plan shall not be effective until the Plan Year following the Plan Year in which the Executive became eligible to participate in this Plan, (ii) any election by an Executive to defer a Bonus that is determined to be Performance-Based Compensation shall be effective immediately if made more than six (6) months prior to the end of the period to which the Performance-Based Compensation relates, otherwise it too shall be effective beginning the Plan Year following the Plan Year in which the Executive became eligible to participate in this Plan, and (iii) the initial election to defer Fees by a Director under this Plan shall not be effective until the Plan Year following the Plan Year in which the Director became eligible to participate in this Plan.

Article 3

Deferral Account

3.1 Establishing and Crediting. The Company shall establish a Deferral Account on its books for each Participant and shall credit to the Deferral Account the following amounts:

3.1.1 Deferrals. The Compensation deferred by the Participant as of the time the Compensation would have otherwise been paid to the Participant.

3.1.2 Interest.

(a) On the last day of each month and immediately prior to the distribution of any benefits, but only until commencement of benefit distributions under this Plan, interest shall be credited on the Deferral Account at an annual rate equal to the Crediting Rate, compounded monthly.

(b) On the last day of each month during any applicable installment period, interest shall be credited on the unpaid Deferral Account balance at an annual rate equal to the Crediting Rate, compounded monthly. The Board in its sole discretion, may change the rate in this Section 3.1.2(b) only prior to commencement of installment distributions for a Participant.

3.2 Statement of Accounts. The Plan Administrator shall provide to each Participant, within one hundred twenty (120) days after each Anniversary Date, a statement setting forth the Deferral Account balance.

3.3 Accounting Device Only. The Deferral Account is solely a device for measuring amounts to be paid under this Plan. The Deferral Account is not a trust fund of any kind. Each Participant is a general unsecured creditor of the Company for the distribution of benefits. The benefits represent the mere Company promise to pay such benefits. The Participant's rights are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by the Participant's creditors.

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Article 4

Distributions During Lifetime

4.0 Specified Time Distribution. If a Participant elects a Specified Time Distribution, the Company shall distribute to the Participant the benefit described in this Section 4.0. Notwithstanding the prior sentence, if a distribution is payable under Section 4.1, 4.2, 4.3, 4.4 or 4.5, then the distribution under this Article 4 will be made under Section 4.1, 4.2, 4.3, 4.4 or 4.5 and not under this Section 4.0.

4.0.1 Deferrals Made on or Before December 31, 2008. For Deferrals made on or before December 31, 2008, a Participant may elect on or before November 30, 2008, a distribution under this Section 4.0.1. This election may be made notwithstanding any restriction to the contrary in Section 4.8.

4.0.1.1 Amount of Benefit. The benefit under this Section 4.0.1 is the portion of the Deferral Account balance as of December 31, 2008 elected by the Participant on the Specified Time Distribution Election Form.

4.0.1.2 Distribution of Benefit. The Company shall pay the benefit under this Section 4.0.1 to the Participant, commencing on or after March 1, 2009, as elected by the Participant on the Specified Time Distribution Election Form.

4.0.2 Deferrals Made on or After January 1, 2009. For Deferrals made on or after January 1, 2009, a Participant may elect a distribution under this Section 4.0.2. This election shall be made for each Plan Year and shall only apply to the Deferrals made for that Plan Year.

4.0.2.1 Amount of Benefit. The benefit under this Section 4.0.2 is the portion or all of the Deferrals for the Plan Year beginning on or after January 1, 2009 for which a Specified Time Distribution election is made, together with accrued interest, as elected by the Participant on the Deferral Election Forms.

4.0.2.2 Distribution of Benefit. The Company shall pay the benefit under this Section 4.0.2 to the Participant, commencing on or after the earliest date permitted by Code Section 409A, as elected by the Participant on the Deferral Election Forms.

4.1 Normal Retirement Benefit. Upon the Normal Retirement Date of an Executive, the Company shall pay to the Executive the benefit described in this Section 4.1 in lieu of any other benefit under this Article.

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4.1.1 Amount of Benefit. The benefit under this Section 4.1 is the Deferral Account balance at the Normal Retirement Date.

4.1.2 Distribution of Benefit. The Company shall pay the benefit to the Executive as elected by the Executive on the Distribution Election Form commencing within thirty (30) days following the Normal Retirement Date. On and after January 1, 2015, if the Participant elects to receive payment of the benefit in installments rather than in a lump sum, the payment period shall not exceed ten (10) years following the payment commencement date, and payments shall be made monthly. The amounts of any installment payment shall be determined by multiplying the balance of the Participant’s unpaid Deferral Account by a fraction, the numerator of which is one and the denominator of which is the number of remaining unpaid installments. Such balance shall be appropriately reduced to reflect the installment payments made hereunder. In the absence of a valid Distribution Election Form, the benefit shall be distributed in a lump sum.

4.2 Early Termination Benefit; Separation From Service Benefit. Upon Early Termination of an Executive, or Separation from Service of a Director, the Company shall pay to the Executive or Director, as applicable, the benefit described in this Section 4.2 in lieu of any other benefit under this Article.

4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the Deferral Account balance at Separation from Service.

4.2.2 Distribution of Benefit. The Company shall pay the benefit to the Participant as elected by the Participant on the Distribution Election Form commencing within thirty (30) days following Separation from Service. On and after January 1, 2015, if the Participant elects to receive payment of the benefit in installments rather than in a lump sum, the payment period shall not exceed ten (10) years following the payment commencement date, and payments shall be made monthly. The amounts of any installment payment shall be determined by multiplying the balance of the Participant’s unpaid Deferral Account by a fraction, the numerator of which is one and the denominator of which is the number of remaining unpaid installments. Such balance shall be appropriately reduced to reflect the installment payments made hereunder. In the absence of a valid Distribution Election Form, the benefit shall be distributed in a lump sum.

4.3 Disability Benefit. If an Executive experiences a Disability, the Company shall pay the Executive the benefit described in this Section 4.3 in lieu of any other benefit under this Article.

4.3.1 Amount of Benefit. The benefit under this Section 4.3 is the Deferral Account balance as of the date the Executive first experiences Disability.

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4.3.2 Distribution of Benefit. The Company shall pay the benefit to the Executive as elected by the Executive on the Distribution Election Form commencing within thirty (30) days following Disability. On and after January 1, 2015, if the Participant elects to receive payment of the benefit in installments rather than in a lump sum, the payment period shall not exceed ten (10) years following the payment commencement date, and payments shall be made monthly. The amounts of any installment payment shall be determined by multiplying the balance of the Participant’s unpaid Deferral Account by a fraction, the numerator of which is one and the denominator of which is the number of remaining unpaid installments. Such balance shall be appropriately reduced to reflect the installment payments made hereunder. In the absence of a valid Distribution Election Form, the benefit shall be distributed in a lump sum.

4.4 Change in Control Benefit. Upon a Change in Control followed within 12 months by Separation for Service of an Executive, the Company shall pay to the Executive the benefit described in this Section 4.4 in lieu of any other benefit under this Article.

4.4.1 Amount of Benefit. The benefit under this Section 4.4 is the Deferral Account balance at Separation from Service.

4.4.2 Distribution of Benefit. The Company shall pay the benefit to the Executive as elected by the Executive on the Distribution Election Form commencing within thirty (30) days following Separation of Service. On and after January 1, 2015, if the Participant elects to receive payment of the benefit in installments rather than in a lump sum, the payment period shall not exceed ten (10) years following the payment commencement date, and payments shall be made monthly. The amounts of any installment payment shall be determined by multiplying the balance of the Participant’s unpaid Deferral Account by a fraction, the numerator of which is one and the denominator of which is the number of remaining unpaid installments. Such balance shall be appropriately reduced to reflect the installment payments made hereunder. In the absence of a valid Distribution Election Form, the benefit shall be distributed in a lump sum.

4.5 Hardship Distribution. Upon the Plan Administrator's determination (following petition by a Participant) that the Participant has suffered an Unforeseeable Emergency, the Company shall distribute to the Participant all or a portion of the Deferral Account balance as determined by the Plan Administrator, but in no event shall the distribution be greater than is necessary to relieve the Unforeseeable Emergency. Any distribution under this Section 4.5 shall be made in a lump sum and shall reduce the Participant's Deferral Account balance.

4.6 Restriction on Timing of Distribution. Notwithstanding any provision of this Plan to the contrary, if a Participant is considered a Specified Employee under Section 409A of the Code and regulations thereunder, benefit distributions that qualify as a "separation from service" under Section 409A of the Code and regulations thereunder may not commence earlier than six (6) months after the date of such separation from service. Therefore, in the event this Section 4.6 is applicable to a Participant, any distribution which would otherwise be paid to the Participant within the first six (6) months following the Separation from Service shall be accumulated and paid to the Participant in a lump sum on the first day of the seventh month following the Separation from Service. All subsequent distributions shall be paid in the manner specified.

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4.7 Distributions Upon Income Inclusion Under Section 409A of the Code. Upon the inclusion of any portion of the Deferral Account balance into a Participant's income as a result of the failure of this non-qualified deferred compensation plan to comply with the requirements of Section 409A of the Code, to the extent such tax liability can be covered by the Deferral Account balance, a distribution shall be made as soon as is administratively practicable following the discovery of the plan failure.

4.8 Change in Form or Timing of Distributions. For distribution of benefits under this Article 4, a Participant may elect to delay the timing or change the form of distributions by submitting the appropriate Election Form(s) or Specified Time Distribution Election Form(s) to the Plan Administrator. Any such election:

(a) may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A;

(b) must, for benefits distributable under Section 4.0, be made at least twelve (12) months prior to the first scheduled distribution;

(c) must, for benefits distributable under Sections 4.0, 4.1, 4.2 and 4.4, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

(d) must take effect not less than twelve (12) months after the amendment is made.

The restrictions in paragraphs (a) through (d) above do not apply to the Participant's election to receive a distribution under Section 4.0.1.

For purposes of any change under this Section 4.8, a distribution paid in the form of installments shall be deemed to be a single payment.

Article 5

Distributions at Death

5.1 Death During Active Service. If a Participant dies while in active service to the Company, the Company shall pay to the Beneficiary the benefit described in this Section 5.1 in lieu of any other benefit under this Plan.

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5.1.1 Amount of Benefit. The benefit under this Section 5.1 is the Deferral Account balance at the Participant's date of death.

5.1.2 Distribution of Benefit. The Company shall pay the benefit to the Beneficiary in the manner elected by the Participant on the Election Form commencing within thirty (30) days following the Participant's death. On and after January 1, 2015, if a Participant elects to have the benefit paid to the Beneficiary in installments rather in a lump sum, the payment period shall not exceed ten (10) years following the payment commencement date, and payments shall be made monthly. The amounts of any installment payment shall be determined as set forth at Section 4.1.2. In the absence of a valid Distribution Election Form, the benefit shall be distributed in a lump sum.

5.2 Death During Distribution of a Benefit. If the Participant dies after any benefit distributions have commenced under this Plan but before receiving all such distributions, the Company shall pay to the Beneficiary the remaining benefits at the same time and in the same amounts as they would have been paid to the Participant had the Participant survived.

5.3 Death After Separation from Service But Before Benefit Distributions Commence. If the Participant is entitled to benefit distributions under this Plan, but dies prior to the commencement of said benefit distributions, the Company shall pay to the Beneficiary the same benefits to which the Participant was entitled prior to death except that the benefit distributions shall commence within thirty (30) days following the Participant death.

Article 6

Beneficiaries

6.1 Beneficiary. Each Participant shall have the right, at any time, to designate a Beneficiary to receive any benefits payable under the Plan to a Beneficiary upon the death of the Participant. The Beneficiary designated under this Plan may be the same as or different from the beneficiary designation under any other plan of the Company in which the Participant participates.

6.2 Beneficiary Designation; Change. The Participant shall designate a Beneficiary by completing and signing the Beneficiary Designation Form, and delivering it to the Plan Administrator or its designated agent. The Participant's beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Participant or if the Participant names a spouse as Beneficiary and the marriage is subsequently dissolved. The Participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator's rules and procedures, as in effect from time to time. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Plan Administrator prior to the Participant's death.

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6.3 Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Plan Administrator or its designated agent.

6.4 No Beneficiary Designation. If a Participant dies without a valid Beneficiary designation, or if all designated Beneficiaries predecease the Participant, then the Participant's spouse shall be the designated Beneficiary. If the Participant has no surviving spouse, the benefits shall be made to the personal representative of the Participant's estate.

6.5 Facility of Distribution. If the Plan Administrator determines in its discretion that a benefit is to be paid to a minor, to a person declared incompetent, or to a person incapable of handling the disposition of that person's property, the Plan Administrator may direct distribution of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person. The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Any distribution of a benefit shall be a distribution for the account of the Participant and the Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such distribution amount.

Article 7

General Limitations

7.1 Termination for Cause. Notwithstanding any provision of this Plan to the contrary, the Company shall not pay any benefit under this Plan that is in excess of the Deferrals (i.e., Deferral Account minus interest credited thereon) if a Participant's service is terminated by the Board for:

(a) Gross negligence or gross neglect of duties to the Company; or

(b) Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Participant's service to the Company;

(c) Fraud, disloyalty, dishonesty or willful violation of any law or significant Company policy committed in connection with the Participant's service and resulting in an adverse effect on the Company;

(d) Issuance of a final removal or prohibition order issued by a state or federal banking agency with jurisdiction over the Company;

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(e) Suicide within two (2) years after the date of the Participant's initial participation in this Plan, which period shall include participation in the Director Plan or under an Executive Agreement; or

(f) Material misstatement of fact on an employment application or resume provided by an Executive to the Company.

7.2 No Withdrawal Election. Except as expressly provided herein, a Participant may not elect, at any time, to withdraw any portion of the Deferral Account balance.

Article 8

Administration of Plan

8.1 Plan Administrator Duties. This Plan shall be administered by a Plan Administrator which shall consist of the Board, or such committee or person(s) as the Board shall appoint. The Plan Administrator shall also have the discretion and authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Plan and (ii) decide or resolve any and all questions including interpretations of this Plan, as may arise in connection with the Plan.

8.2 Agents. In the administration of this Plan, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit, (including acting through a duly appointed representative), and may from time to time consult with counsel who may be counsel to the Company.

8.3 Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.

8.4 Indemnity of Plan Administrator. The Company shall indemnify and hold harmless the members of the Plan Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Plan Administrator or any of its members.

8.5 Company Information. To enable the Plan Administrator to perform its functions, the Company shall supply full and timely information to the Plan Administrator on all matters relating to the Compensation of the Participants, the date and circumstances of the retirement, Disability, death or Separation from Service of the Participants, and such other pertinent information as the Plan Administrator may reasonably require.

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Article 9

Claims and Review Procedures

9.1     Claims Procedure. A Participant or Beneficiary ("claimant") who has not received benefits under the Plan that he or she believes should be paid shall make a claim for such benefits as follows:

9.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting to the Company a written claim for the benefits. If such a claim relates to the contents of a notice received by the claimant, the claim must be made within sixty (60) days after such notice was received by the claimant. All other claims must be made within 180 days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the claimant.

9.1.2 Timing of Company Response. The Company shall respond to such claimant within 90 days after receiving the claim. If the Company determines that special circumstances require additional time for processing the claim, the Company can extend the response period by an additional 90 days by notifying the claimant in writing, prior to the end of the initial 90-day period that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Company expects to render its decision.

9.1.3 Notice of Decision. If the Company denies part or all of the claim, the Company shall notify the claimant in writing of such denial. The Company shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

(a) The specific reasons for the denial,

(b) A reference to the specific provisions of the Plan on which the denial is based,

(c) A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,

(d) An explanation of the Plan's review procedures and the time limits applicable to such procedures, and

(e) For claims made by an Executive or his Beneficiary, a statement of the claimant's right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

9.2 Review Procedure. If the Company denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Company of the denial, as follows:

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9.2.1 Initiation - Written Request. To initiate the review, the claimant, within 60 days after receiving the Company's notice of denial, must file with the Company a written request for review.

9.2.2 Additional Submissions - Information Access. The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Company shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant's claim for benefits.

9.2.3 Considerations on Review. In considering the review, the Company shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

9.2.4 Timing of Company Response. The Company shall respond in writing to such claimant within 60 days after receiving the request for review. If the Company determines that special circumstances require additional time for processing the claim, the Company can extend the response period by an additional 60 days by notifying the claimant in writing, prior to the end of the initial 60-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Company expects to render its decision.

9.2.5 Notice of Decision. The Company shall notify the claimant in writing of its decision on review. The Company shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

(a) The specific reasons for the denial,

(b) A reference to the specific provisions of the Plan on which the denial is based,

(c) A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant's claim for benefits, and

(d) For claims made by an Executive or his Beneficiary, a statement of the claimant's right to bring a civil action under ERISA Section 502(a).

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Article 10

Amendments and Termination

10.1 Amendments. This Plan may be amended by the Company at any time, provided, however, that no amendment that would have a material adverse effect on the Deferral Account of an Executive shall be effective without the written consent of the Executive. However, the Company may unilaterally amend this Plan to conform with written directives to the Company from its auditors or banking regulators or to comply with legislative changes or tax law, including without limitation Section 409A of the Code and any and all Treasury regulations and guidance promulgated thereunder.

10.2 Plan Termination Generally. This Plan may be terminated by the Company at any time. Except as provided in Section 10.3, the termination of this Plan shall not cause a distribution of benefits under this Plan. Rather, after such termination benefit distributions will be made at the earliest distribution event permitted under Article 4 or Article 5.

10.3 Plan Terminations Under Section 409A. Notwithstanding anything to the contrary in Section 10.2, if this Plan terminates in the following circumstances:

(a) Within thirty (30) days before or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following such termination of the Plan and further provided that all the Company's arrangements which are substantially similar to the Plan are terminated so each Participant and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the such terminations;

(b) Upon the Company's dissolution or with the approval of a bankruptcy court provided that the amounts deferred under the Plan are included in the Participant's gross income in the latest of (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or

(c) Upon the Company's termination of this and all other arrangements that would be aggregated with this Plan pursuant to Treasury Regulations Section 1.409A-1(c) if the Participant participated in such arrangements ("Similar Arrangements"), provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Company, (ii) all termination distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and (iii) the Company does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan;

the Company may distribute the Deferral Account balance, determined as of the date of the termination of the Plan, to the Participant in a lump sum subject to the above terms.

16

Article 11

Miscellaneous

11.1 Binding Effect. This Plan shall bind each Participant and the Company and their beneficiaries, survivors, executors, administrators and transferees.

11.2 No Guarantee of Employment or Service. This Plan is not a contract for employment or service. It does not give any Participant the right to remain an executive or a director of the Company, nor does it interfere with the Company's right to discharge an Executive or Director. It also does not require the Participant to remain an executive or a director nor interfere with the Participant's right to separate from service at any time.

11.3 Non-Transferability. Benefits under this Plan cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

11.4 Tax Withholding and Reporting. The Company shall withhold any taxes that are required to be withheld, including but not limited to taxes owed under Section 409A of the Code and regulations thereunder, from the benefits provided under this Plan. Each Participant acknowledges that the Company's sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authority(ies). Further, the Company shall satisfy all applicable reporting requirements, including those under Section 409A of the Code and regulations thereunder.

11.5 Applicable Law. The Plan, and all rights hereunder shall be governed by the laws of the State of Michigan, except to the extent preempted by the laws of the United States of America.

11.6 Unfunded Arrangement. Each Participant and Beneficiary are general unsecured creditors of the Company for the distribution of benefits under this Plan. The benefits represent the mere promise by the Company to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Participant's life or other informal funding asset is a general asset of the Company to which the Participant and the Beneficiary have no preferred or secured claim.

11.7 Reorganization. The Company shall not merge or consolidate into or with another entity, or reorganize, or sell substantially all of its assets to another bank, firm, or person unless such succeeding or continuing bank, firm, or person agrees to assume and discharge the obligations of the Company under this Plan. Upon the occurrence of such event, the term "Company" as used in this Plan shall be deemed to refer to the successor or survivor bank.

11.8 Entire Agreement. This Plan, together with the Participation Agreement and related election forms, constitutes the entire agreement between the Company and each Participant as to the subject matter hereof. No rights are granted to the Participant by virtue of this Plan other than those specifically set forth herein.

17

11.9 Interpretation. Wherever the fulfillment of the intent and purpose of this Plan requires, and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.

11.10 Alternative Action. In the event it shall become impossible for the Company or the Plan Administrator to perform any act required by this Plan, the Company or Plan Administrator may in its discretion perform such alternative act as most nearly carries out the intent and purpose of this Plan and is in the best interests of the Company, provided that such alternative acts do not violate Section 409A of the Code.

11.11 Headings. Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any of its provisions.

11.12 Validity. In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provision has never been inserted herein.

11.13 Notice. Any notice or filing required or permitted to be given to the Plan Administrator under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:

Lonna Wiersma

Mercantile Bank of Michigan

310 Leonard St. N.W.

Grand Rapids, MI 49504

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or the receipt for registration or certification.

Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Participant.

11.14 Deduction Limitation on Benefit Payments. If the Company reasonably anticipates that the Company's deduction with respect to any distribution to an Executive under this Plan would be limited or eliminated by application of Code Section 162(m), then to the extent deemed necessary by the Company to ensure that the entire amount of any distribution from this Plan is deductible, the Company may delay payment of any amount that would otherwise be distributed under this Plan. The delayed amounts shall be distributed to the Executive (or the Beneficiary in the event of the Executive's death) at the earliest date the Company reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m).

18

11.15 Compliance with Section 409A. This Plan shall be interpreted and administered consistent with Code Section 409A and any and all regulations thereunder, including such regulations as may be promulgated after the Effective Date of this Plan.

11.16 Rescission. Any modification to the terms of this Plan that would inadvertently result in an additional tax liability on the part of any Participant, shall have no effect provided the change in the terms of the plan is rescinded by the earlier of a date before the right is exercised (if the change grants a discretionary right) and the last day of the calendar year during which such change occurred.

IN WITNESS WHEREOF, the Company has signed this Plan as of November 13, 2014.

Company: MERCANTILE BANK OF MICHIGAN
By:	Lonna Wiersma
Title:	SVP, Human Resource Director

19

SCHEDULE 1

Executive Deferred Compensation Agreements

Incorporated Into this Plan

 Name of Executive           Date(s) of Agreement

20

PARTICIPATION AGREEMENT

THIS PARTICIPATION AGREEMENT (this "Agreement") is entered into as of ________ ___, 20___ between Mercantile Bank of Michigan, a state-chartered commercial bank located in Grand Rapids, Michigan (the "Company"), and ____________________ (the "Participant").

Recitals

A.	The Company has adopted, effective as of ____________, 2014, the Mercantile Bank of Michigan Amended and Restated Deferred Compensation Plan, as amended and restated from time to time (the "Plan"), and the Participant has been selected to participate in the Plan.
B.	The Participant desires to participate in the Plan.

Agreement

NOW THEREFORE, it is mutually agreed that:

1.	Definitions. Unless otherwise provided in this Agreement, the capitalized terms in this Agreement shall have the same meaning as under the Plan's master plan document (the "Plan Document").
2.	Integrated Agreement; Parties Bound. The Plan Document, a copy of which has been made available to the Participant, is hereby incorporated into and made a part of this Agreement as though set forth in full in this Agreement. The parties to this Agreement agree to and shall be bound by, and have the benefit of, each and every provision of the Plan as set forth in the Plan Document. This Agreement and the Plan Document, collectively, shall be considered one complete contract between the parties.
3.	Acknowledgment. The Participant hereby acknowledges that he or she has read and understands this Agreement and the Plan Document.
4.	Conditions to Participation. As a condition to participation in the Plan, the Participant must complete, sign, date and return to the Plan Administrator an original copy of this Agreement, the Deferral Election Form as required by the Plan Administrator, and a Beneficiary Designation Form.
5.	Successors and Assigns. This Agreement shall inure to the benefit of, and be binding upon the Company, its successors and assigns, and the Participant.

21

IN WITNESS WHEREOF, the Participant has signed and the Company has accepted this Participation Agreement as of the date first written above.

	PARTICIPANT:
_____________________	___________________________________
Date	Signature of Participant
	___________________________________
	Type or Print Name
AGREED AND ACCEPTED BY THE PLAN ADMINISTRATOR ON BEHALF OF THE COMPANY:
	PLAN ADMINISTRATOR:
	____________________________________
	Signature of Plan Administrator
__________________________	____________________________________
Date	Type or Print Name

22

Addendum for an Executive

Previously Party to an Executive

Deferred Compensation Agreement

This Addendum to the Participation Agreement is entered into as of ______________, 2014 between Mercantile Bank of Michigan (the "Company") and _________________________ (the "Participant").

Recitals

A.     The Company and the Participant are parties to an Executive Deferred Compensation Agreement dated as of __________________, as amended (the "Agreement").

B.     The Company and the Participant wish to have the terms of this Plan replace and supersede the terms of the Agreement.

Agreement

NOW, THEREFORE, it is mutually agreed that:

1.     The terms of this Plan shall amend, replace and supersede the terms of the Agreement and Participant shall be a Participant in the Plan as of January 1, 2015.

2.     Participant acknowledges that, effective as of January 1, 2015, his or her Deferral Account shall be held under this Plan and all rights and benefits with regard to the Deferral Account shall be determined under this Plan.

3.     The Plan Administrator shall give effect to all Distribution Election Forms and Beneficiary Designation Forms executed by the Participant under the Agreement, unless changed by the Participant pursuant to this Plan.

IN WITNESS WHEREOF, the Participant and the Company have signed this Addendum to Participation Agreement as of the date first above written.

PARTICIPANT: Signature of Participant PLAN ADMINISTRATOR ON BEHALF OF THE COMPANY: Signature of Plan Administrator _________________________________ Type or Print Name

23

Specified Time Distribution Election — For Amount Deferred
On or Before December 31, 2008

THIS ELECTION MUST BE MADE BY NOVEMBER 30, 2008 

Amount of Specified Time Distribution

[Initial and Complete One]

A.____            I elect to receive ______% of my Deferral Account balance as of December 31, 2008, in the manner described below commencing on ____________________________________ (must be on or after March 1, 2009).

B.                      I elect not to receive any of my Deferral Account balance as of December 31, 2008 prior to Separation from Service (unless I have an Unforeseen Emergency and apply for a hardship distribution.)

Special Rules if You Elect a Specified Time Distribution under Paragraph A:

• If my Separation from Service occurs before the distribution commencement date elected above, then this election is ignored and my entire Deferral Account balance will be paid in accordance with the election I made on my Distribution Election Form. My "Distribution Election Form" means my Initial Election Form or Change in Election Form, as applicable, on which I have elected the form and timing of distributions that are to be made after my Separation from Service.

• If I elected a distribution of less than 100% of my Deferral Account balance as of December 31, 2008, then any remainder will be paid in accordance with my election on the Distribution Election Form.

Form of Distribution for a Specified Time Distribution Elected in Paragraph A

for Amounts Deferred on or before December 31, 2008

Benefit	Distribution of Benefit
	Lump sum (initial below)	Equal annual installments for _____ years (indicate number of years here (up to 3 years) and initial below)
§ 4.0.1.2—Deferrals Made on or Before December 31, 2008 Benefit

24

ANY CHANGE TO THE FORM OR TIME OF A SPECIFIED TIME DISTRIBUTION ELECTION IS SUBJECT TO THE RESTRICTIONS DESCRIBED IN THE PLAN (SEE SECTION 4.8 OF THE PLAN AND THE "CHANGE IN ELECTION" FORM FOR THE CURRENT RESTRICTIONS.)

I agree to the elections set forth above.

Printed Name:

Signature:

Date:

Received by the Plan Administrator this _____ day of ____________________, 20___

By:

Title:

25

Fees Election for Plan Year ________

(Director)

A.     Fee Deferral Election

Amount of Deferral	Duration
[Initial and Complete One] __      I elect to defer [option: ___% or $_______] of my Fees (amount not to exceed [option: __% or $_____]).            I elect not to defer any of my Fees.	[Initial and Complete One] ____   For ____ year(s) ____   For all future Plan Years

B.     Specified Time Distribution of Fee Deferral

Complete this Section B only if you wish to elect a Specified Time Distribution for your Fee Deferral.

I elect to receive on the distribution date indicated below all or a portion of my Fee deferred under this Form for the Plan Year listed above. This distribution date cannot be less than one (1) full calendar year after the commencement of the Plan Year to which this election applies. Your distribution will be paid in the form of a lump sum.

Plan Year 1) Distribution Amount or 2) Percentage of Plan Year's Fee Deferrals plus interest Distribution Date*

*The distribution date must specify month, day, and year of distribution.

Special Rules:

• If my Separation from Service occurs before the Distribution Date elected in the table above, then my election of a Specified Time Distribution in Section B is ignored and my entire Deferral Account balance will be paid in accordance with the election I made on my Distribution Election Form. My "Distribution Election Form" means my Initial Election Form or Change in Election Form, as applicable, on which I have elected the form and timing of distributions that are to be made after my Separation from Service.

• If I elected in the table above a distribution of less than 100% of my Fees that are deferred under Section A for the Plan Year listed above, then any remainder will be paid in accordance with my election on the Distribution Election Form.

26

ANY CHANGE TO THE TIME OF A SPECIFIED TIME DISTRIBUTION ELECTION AFTER THE BEGINNING OF THE PLAN YEAR IS SUBJECT TO THE RESTRICTIONS DESCRIBED IN THE PLAN (SEE SECTION 4.8 OF THE PLAN AND THE "CHANGE IN ELECTION" FORM FOR THE CURRENT RESTRICTIONS.)

I agree to the elections set forth above.

Printed Name:

Signature:

Date:

Received by the Plan Administrator this _____ day of ____________________, 20___

By:

Title:

27

Base Salary Deferral Election for Plan Year _______________

(Executive)

A. Base Salary Deferral Election

Amount of Deferral

[Initial and complete one]

____    I elect to defer ______% of my Base Salary (amount not to exceed ______%).

____    I elect to defer $______________ of my Base Salary (amount not to exceed $______________).

             I elect not to defer any of my Base Salary.

B. Specified Time Distribution of Base Salary Deferral

Complete this Section B only if you wish to elect a Specified Time Distribution for your Base Salary Deferral.

I elect to receive on the distribution date indicated below all or a portion of my Base Salary deferred under this Form for the Plan Year listed above. This distribution date cannot be less than one (1) full calendar year after the commencement of the Plan Year to which this election applies. Your distribution will be paid in the form of a lump sum.

Plan Year 1) Distribution Amount or 2) Percentage of Plan Year's Base Salary-related Deferrals plus interest Distribution Date*

*The distribution date must specify month, day, and year of distribution.

Special Rules:

• If my Separation from Service occurs before the Distribution Date elected in the table above, then my election of a Specified Time Distribution in Section B is ignored and my entire Deferral Account balance will be paid in accordance with the election I made on my Distribution Election Form. My "Distribution Election Form" means my Initial Election Form or Change in Election Form, as applicable, on which I have elected the form and timing of distributions that are to be made after my Separation from Service.

• If I elected in the table above a distribution of less than 100% of my Base Salary that is deferred under Section A for the Plan Year listed above, then any remainder will be paid in accordance with my election on the Distribution Election Form.

28

ANY CHANGE TO THE TIME OF A SPECIFIED TIME DISTRIBUTION ELECTION AFTER THE BEGINNING OF THE PLAN YEAR IS SUBJECT TO THE RESTRICTIONS DESCRIBED IN THE PLAN (SEE SECTION 4.8 OF THE PLAN AND THE "CHANGE IN ELECTION" FORM FOR THE CURRENT RESTRICTIONS.)

I agree to the elections set forth above.

Printed Name:

Signature:

Date:

Received by the Plan Administrator this _____ day of ____________________, 20___

By:

Title:

29

Bonus Deferral Election for Plan Year ___________

(Executive)

A. Bonus Deferral Election

Amount of Deferral

[Initial and complete one]

____     I elect to defer ______% of my Bonus (amount not to exceed ______%).

____     I elect to defer $______________ of my Bonus (amount not to exceed $______________).

              I elect not to defer any of my Bonus.

B. Specified Time Distribution of Bonus Deferral

Complete this Section B only if you wish to elect a Specified Time Distribution for your Bonus Deferral.

I elect to receive on the distribution date indicated below all or a portion of my Bonus deferred under this Form for the Plan Year listed above. This distribution date cannot be less than one (1) full calendar year from the commencement of the Plan Year to which this election applies. Your distribution will be paid in the form of a lump sum.

Plan Year 1) Distribution Amount or 2) Percentage of Plan Year's Bonus-related Deferrals plus interest Distribution Date*

*The distribution date must specify month, day, and year of distribution.

Special Rules:

• If my Separation from Service occurs before the Distribution Date elected in the table above, then my election of a Specified Time Distribution in Section B is ignored and my entire Deferral Account balance will be paid in accordance with the election I made on my Distribution Election Form. My "Distribution Election Form" means my Initial Election Form or Change in Election Form, as applicable, on which I have elected the form and timing of distributions that are to be made after my Separation from Service.

• If I elected in the table above a distribution of less than 100% of my Bonus deferred under Section A above for the Plan Year listed above, then any remainder will be paid in accordance with my election on the Distribution Election Form.

30

ANY CHANGE TO THE TIME OF A SPECIFIED TIME DISTRIBUTION ELECTION AFTER THE BEGINNING OF THE PLAN YEAR IS SUBJECT TO THE RESTRICTIONS DESCRIBED IN THE PLAN (SEE SECTION 4.8 OF THE PLAN AND THE "CHANGE IN ELECTION" FORM FOR THE CURRENT RESTRICTIONS.)

I agree to the elections set forth above.

Printed Name:

Signature:

Date:

Received by the Plan Administrator this _____ day of ____________________, 20___

By:

Title:

31

Performance-Based Compensation Deferral Election
for Plan Year __________

(Executive)

A. Performance-Based Compensation Deferral 

Amount of Deferral

[Initial and complete one]

____     I elect to defer ______% of my Performance-Based Compensation (amount not to exceed ______%).

____     I elect to defer $______________ of my Performance-Based Compensation (amount not to exceed $______________).

              I elect not to defer any of my Performance-Based Compensation.

B. Specified Time Distribution of Performance-Based Compensation Deferral 

     Complete this Section B only if you wish to elect a Specified Time Distribution for your Performance-Based Compensation Deferral.

I elect to receive on the distribution date indicated below all or a portion of my Performance-Based Compensation deferred under this Form for the Plan Year listed above. This distribution date cannot be less than one (1) full calendar year from the commencement of the Plan Year to which this election applies. Your distribution will be paid in the form of a lump sum.

Plan Year 1) Distribution Amount or 2) Percentage of Plan Year's Performance-Based Compensation Deferrals plus interest Distribution Date*

*The distribution date must specify month, day, and year of distribution.

Special Rules:

• If my Separation from Service occurs before the Distribution Date elected in the table above, then my election of a Specified Time Distribution under Section B is ignored and my entire Deferral Account balance will be paid in accordance with the election I made on my Distribution Election Form. My "Distribution Election Form" means my Initial Election Form or Change in Election Form, as applicable, on which I have elected the form and timing of distributions that are to be made after my Separation from Service.

• If I elected in the table above a distribution of less than 100% of my Performance-Based Compensation deferred under Section A for the Plan Year listed above, then any remainder will be paid in accordance with my election on the Distribution Election Form.

32

ANY CHANGE TO THE TIME OF A SPECIFIED TIME DISTRIBUTION ELECTION AFTER JUNE 30 OF THE PLAN YEAR LISTED ABOVE IS SUBJECT TO THE RESTRICTIONS DESCRIBED IN THE PLAN (SEE SECTION 4.8 OF THE PLAN AND THE "CHANGE IN ELECTION" FORM FOR THE CURRENT RESTRICTIONS.)

I agree to the elections set forth above.

Printed Name:

Signature:

Date:

Received by the Plan Administrator this _____ day of ____________________, 20___

By:

Title:

33

DISTRIBUTION ELECTION FORM

INITIAL ELECTION

(Newly Eligible Executive)

Form and Timing of Distributions
Benefit	Distribution of Benefit
	Lump Sum (Initial)	Equal installments for the number of months shown, not to exceed 120 months. (Initial and indicate number of months)
§4.1.2-Normal Retirement Benefit
§4.2.2-Early Termination Benefit
§4.3.2-Disability Benefit
§4.4.2-Change of Control Benefit
Article 5-Death Benefit

Printed Name:     

Signature:     

Date:

Received by the Plan Administrator this _____ day of _______________, 2_____

By:     

Title:     

34

DISTRIBUTION ELECTION FORM

CHANGE IN ELECTION

(Executive)

Form and Timing of Distributions
Benefit	Distribution of Benefit
	Lump Sum (Initial)	Equal installments for the number of months shown, not to exceed 120 months. (Initial and indicate number of months)
§4.1.2-Normal Retirement Benefit
§4.2.2-Early Termination Benefit
§4.3.2-Disability Benefit
§4.4.2-Change of Control Benefit
Article 5-Death Benefit

Printed Name:     

Signature:     

Date:

Received by the Plan Administrator this _____ day of _______________, 2_____

By:     

Title:     

Any change in the form or timing of distributions is subject to the following requirements:

(i)	The change will not take effect until 12 months following the date it is received by the Plan Administrator;
(ii)	Distributions (except distributions on death, disability and emergency) must be delayed at least 5 years from the date the distributions otherwise would have been made; and
(iii)	Any election related to distribution at a specified time or pursuant to a fixed schedule must be made 12 months prior to the date the distribution is scheduled to be paid.

35

DISTRIBUTION ELECTION FORM

INITIAL ELECTION

(Director)

Form and Timing of Distributions
Benefit	Distribution of Benefit
	Lump Sum (Initial)	Equal installments for the number of months shown, not to exceed 120 months (Initial and indicate number of months)
§4.2.2-Separation from Service Benefit
Article 5 – Death Benefit

Printed Name:     

Signature:     

Date:

Received by the Plan Administrator this _____ day of _______________, 2_____

By:     

Title:     

36

DISTRIBUTION ELECTION FORM

CHANGE IN ELECTION

(Director)

Form and Timing of Distributions
Benefit	Distribution of Benefit
	Lump Sum (Initial)	Equal installments for the number of months shown, not to exceed 120 months (Initial and indicate number of months)
§4.2.2-Separation from Service Benefit
Article 5 – Death Benefit

Printed Name:     

Signature:     

Date:

Received by the Plan Administrator this _____ day of _______________, 2_____

By:     

Title:     

After 2006, any change in the form or timing of distributions is subject to the following requirements:

(i)	The change will not take effect until 12 months following the date it is received by the Plan Administrator;
(ii)	Distributions (except distributions on death, disability and emergency) must be delayed at least 5 years from the date the distributions otherwise would have been made; and
(iii)	Any election related to distribution at a specified time or pursuant to a fixed schedule must be made 12 months prior to the date the distribution is scheduled to be paid.

37

BENEFICIARY DESIGNATION FORM

{   }     New Designation

{   }     Change in Designation

I, ________________________, designate the following as Beneficiary under the Plan:

Primary:	% %
Contingent:	%                               %

Notes:

• Please PRINT CLEARLY or TYPE the names of the beneficiaries.

• To name a trust as Beneficiary, please provide the name of the trustee(s) and the exact name and date of the trust agreement.

• To name your estate as Beneficiary, please write "Estate of _[your name]_".

• Be aware that none of the contingent beneficiaries will receive anything unless ALL of the primary beneficiaries predecease you.

I understand that I may change these beneficiary designations by delivering a new written designation to the Plan Administrator, which shall be effective only upon receipt and acknowledgment by the Plan Administrator prior to my death. I further understand that the designations will be automatically revoked if the Beneficiary predeceases me, or, if I have named my spouse as Beneficiary and our marriage is subsequently dissolved.

Printed Name:     

Signature:     

Date:

Received by the Plan Administrator this _____ day of _______________, 2_____

By:     

Title:     

38

EX-10.16

EXHIBIT 10.16

DIRECTOR FEE SUMMARY

Set forth below is a summary of the current director fee arrangements for non-employee directors serving on the Boards of Directors of Mercantile Bank Corporation (“Mercantile”) and its wholly-owned subsidiary, Mercantile Bank of Michigan (“Bank”).

Effective June 1, 2014, the directors' annual retainer fee is paid in the form of stock rather than in cash. The annual retainer fee is a number of shares of our common stock equivalent to an annual fee of $15,000. One annual retainer fee is also paid to each director who serves as Chairman of our Audit Committee, Compensation Committee and Governance and Nominating Committee. The annual retainer is a number of shares of our common stock equivalent to an annual fee as follows:

Committee	Annual Retainer
Audit	$7,000
Compensation	$5,000
Governance and Nominating	$3,000

Beginning on June 1, 2014, our non-employee directors are paid a fee of $800 for each meeting of the Board of Directors that they attend, and $750 for each meeting of the Bank's Board of Directors that they attend. In addition, non-employee directors are paid a meeting fee of $700 for each meeting of the Executive Committee, $700 for each meeting of the Audit Committee and $600 for each meeting of the Compensation Committee and the Governance and Nominating Committee that they attend. For meetings that were held by telephone or other remote communications equipment, the meeting fees were one-half the amount described above. The director who serves as Facilitator for executive sessions of our Board of Directors receives a meeting fee of $400 for each executive session of the Board for which the director serves as Facilitator.

Under the Bank’s deferred compensation plan for non-employee directors, directors who are also directors of the bank may elect to defer the receipt of the annual retainer and meeting fees until they are no longer serving on the Board or until specific dates that they select. Directors are eligible to receive stock-based awards under the Stock Incentive Plan of 2006.

EX-21

EXHIBIT 21

SUBSIDIARIES OF MERCANTILE BANK CORPORATION

Mercantile Bank of Michigan, a Michigan banking corporation

Wholly-owned bank subsidiary of Mercantile Bank Corporation

Mercantile Bank Capital Trust I, Firstbank Capital Trust I, Firstbank Capital Trust II, Firstbank Capital Trust III, and Firstbank Capital Trust IV

Each a Delaware business trust subsidiary of Mercantile Bank Corporation

Mercantile Insurance Center, Inc., a Michigan business corporation

Wholly-owned subsidiary of Mercantile Bank of Michigan

Mercantile Bank Real Estate Co., LLC, a Michigan limited liability company

99% owned by Mercantile Bank of Michigan and 1% owned by Mercantile Insurance Center, Iinc.

West Lake Associates, LLC, a Michigan limited liability company

Wholly-owned subsidiary of Mercantile Bank of Michigan

Saint J. Properties, LLC, a Michigan limited liability company

Wholly-owned subsidiary of Mercantile Bank of Michigan

Niles Agency, Inc., a Michigan corporation

Wholly-owned subsidiary of Mercantile Bank of Michigan

1^st Title Agency, Inc., a Michigan corporation

Wholly-owned subsidiary of Mercantile Bank of Michigan

1^st Investors Title, LLC

44%-owned subsidiary of Mercantile Bank of Michigan

With the exception of the capital trusts, all of the subsidiaries named above were organized under the laws of the State of Michigan. The capital trusts were organized under the laws of the State of Delaware.

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Mercantile Bank Corporation

Grand Rapids, MI

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Registration No. 333-198067) and Form S-8 (Registration Nos. 333-91434, 333-103242, 333-117763, 333-119767, 333-138328, 333-152254, 333-170026 and 333-197072) of Mercantile Bank Corporation of our reports dated March 10, 2015 relating to the consolidated financial statements and the effectiveness of Mercantile Bank Corporation’s internal control over financial reporting, which appear in this Annual Report on Form 10-K.

/s/ BDO USA, LLP

BDO USA, LLP

Grand Rapids, Michigan

March 10, 2015 

EX-31

EXHIBIT 31

RULE 13a-14(a) CERTIFICATIONS

I, Michael H. Price, President and Chief Executive Officer of Mercantile Bank Corporation, certify that:

1. I have reviewed this report on Form 10-K of Mercantile Bank Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 10, 2015	/s/ Michael H. Price
	Michael H. Price
	President and Chief Executive Officer

I, Charles E. Christmas, Senior Vice President, Chief Financial Officer and Treasurer of Mercantile Bank Corporation, certify that:

1. I have reviewed this report on Form 10-K of Mercantile Bank Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 10, 2015	/s/ Charles E. Christmas
	Charles E. Christmas.
	Senior Vice President, Chief Financial Officer and Treasurer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, and accompanies the annual report on Form 10-K for the year ended December 31, 2014 (the “Form 10-K”) of Mercantile Bank Corporation (the “Issuer”).

I, Michael H. Price, President and Chief Executive Officer of the Issuer, certify that to my knowledge:

(i) the Form 10-K fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(ii) the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

Dated: March 10, 2015

/s/ Michael H. Price

Michael H. Price

President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, and accompanies the annual report on Form 10-K for the year ended December 31, 2014 (the “Form 10-K”) of Mercantile Bank Corporation (the “Issuer”).

I, Charles E. Christmas, Senior Vice President, Chief Financial Officer and Treasurer of the Issuer, certify that to my knowledge:

(i) the Form 10-K fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(ii) the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

Dated: March 10, 2015

/s/ Charles E. Christmas

Charles E. Christmas

Senior Vice President, Chief Financial Officer

and Treasurer

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Note 5 - Premises and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	2014		2013
Land and improvements	$	16,579,000	$	8,556,000
Buildings		38,761,000		24,733,000
Furniture and equipment		16,622,000		12,718,000
		71,962,000		46,007,000
Less: accumulated depreciation		23,150,000		21,109,000
Total premises and equipment	$	48,812,000	$	24,898,000

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Note 14 - Commitments and Off-balance-sheet Risk (Details) - Exposure to Credit Losses (USD $)	Dec. 31, 2014	Dec. 31, 2013
Note 14 - Commitments and Off-balance-sheet Risk (Details) - Exposure to Credit Losses [Line Items]
Contractual amounts of financial instruments with off-balance sheet risk	$ 781,748,000	$ 374,543,000
Unused lines of Credit [Member] | Commercial Portfolio Segment [Member]
Note 14 - Commitments and Off-balance-sheet Risk (Details) - Exposure to Credit Losses [Line Items]
Contractual amounts of financial instruments with off-balance sheet risk	554,856,000	257,937,000
Unused lines of Credit [Member] | Retail 1-4 Family Mortgages [Member]
Note 14 - Commitments and Off-balance-sheet Risk (Details) - Exposure to Credit Losses [Line Items]
Contractual amounts of financial instruments with off-balance sheet risk	60,983,000	23,429,000
Unused lines of Credit [Member] | Consumer Credit Card Financing Receivable [Member]
Note 14 - Commitments and Off-balance-sheet Risk (Details) - Exposure to Credit Losses [Line Items]
Contractual amounts of financial instruments with off-balance sheet risk	11,649,000	9,013,000
Unused lines of Credit [Member] | Consumer Other Financing Receivable [Member]
Note 14 - Commitments and Off-balance-sheet Risk (Details) - Exposure to Credit Losses [Line Items]
Contractual amounts of financial instruments with off-balance sheet risk	8,673,000	5,695,000
Loan Origination Commitments [Member]
Note 14 - Commitments and Off-balance-sheet Risk (Details) - Exposure to Credit Losses [Line Items]
Contractual amounts of financial instruments with off-balance sheet risk	110,126,000	58,799,000
Standby Letters of Credit [Member]
Note 14 - Commitments and Off-balance-sheet Risk (Details) - Exposure to Credit Losses [Line Items]
Contractual amounts of financial instruments with off-balance sheet risk	$ 35,461,000	$ 19,670,000

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Note 24 - Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information [Table Text Block]

	Interest		Net Interest		Net		Earnings per Share
	Income		Income		Income		Basic		Diluted
2014
First quarter	$	13,588,000	$	11,064,000	$	3,580,000	$	0.41	$	0.41
Second quarter		18,483,000		15,552,000		1,510,000		0.13		0.13
Third quarter		28,900,000		25,989,000		5,948,000		0.35		0.35
Fourth quarter		28,147,000		25,173,000		6,293,000		0.37		0.37
2013
First quarter	$	14,210,000	$	11,455,000	$	4,401,000	$	0.51	$	0.50
Second quarter		13,992,000		11,312,000		4,016,000		0.46		0.46
Third quarter		14,667,000		11,994,000		3,453,000		0.40		0.40
Fourth quarter		15,373,000		12,695,000		5,163,000		0.59		0.59

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Note 14 - Commitments and Off-balance-sheet Risk (Tables)

12 Months Ended

Dec. 31, 2014

Disclosure Text Block Supplement [Abstract]

Summary of Contractual Amounts of Financial Instruments with Off-balance Sheet Risk [Table Text Block]

	2014		2013
Commercial unused lines of credit	$	554,856,000	$	257,937,000
Unused lines of credit secured by 1 – 4 family residential properties		60,983,000		23,429,000
Credit card unused lines of credit		11,649,000		9,013,000
Other consumer unused lines of credit		8,673,000		5,695,000
Commitments to make loans		110,126,000		58,799,000
Standby letters of credit		35,461,000		19,670,000
Total commitments	$	781,748,000	$	374,543,000

Schedule of Fair Value, Off-balance Sheet Risks [Table Text Block]

	2014				2013
	Contract		Carrying		Contract		Carrying
	Amount		Value		Amount		Value
Standby letters of credit	$	35,461,000	$	150,000	$	19,670,000	$	148,000

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Note 19 - Earnings Per Share (Details) - Earnings Per Share (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Basic
Net income attributable to common shares (in Dollars)	$ 6,293,000	$ 5,948,000	$ 1,510,000	$ 3,580,000	$ 5,163,000	$ 3,453,000	$ 4,016,000	$ 4,401,000	$ 17,331,000	$ 17,033,000	$ 11,505,000
Net income attributable to common shares (in Dollars)									$ 17,331,000	$ 17,033,000	$ 11,505,000
Weighted average common shares outstanding									13,510,991	8,710,677	8,625,198
Basic earnings per common share (in Dollars per share)	$ 0.37	$ 0.35	$ 0.13	$ 0.41	$ 0.59	$ 0.40	$ 0.46	$ 0.51	$ 1.28	$ 1.96	$ 1.33
Add: Dilutive effects of share-based awards									30,913	14,031	224,429
Average shares and dilutive potential common shares									13,541,904	8,724,708	8,849,627
Diluted earnings per common share (in Dollars per share)	$ 0.37	$ 0.35	$ 0.13	$ 0.41	$ 0.59	$ 0.40	$ 0.46	$ 0.50	$ 1.28	$ 1.95	$ 1.30

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Note 4 - Loans and Allowance for Loan Losses (Details) - Acquired Impaired Loans Accretable Yield (USD $)	7 Months Ended
	Dec. 31, 2014	May 31, 2014
Acquired Impaired Loans Accretable Yield [Abstract]
Balance	$ 4,998,000	$ 0
Additions	2,514,000
Accretion	(786,000)
Net reclassification from nonaccretable to accretable	3,537,000
Disposals	(40,000)
Other activity	$ (227,000)

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Note 21 - Regulatory Matters (Details) (USD $)	0 Months Ended					12 Months Ended	0 Months Ended
	Dec. 24, 2014	Sep. 24, 2014	Jun. 25, 2014	May 29, 2014	Mar. 10, 2014	Dec. 31, 2014	Jan. 15, 2015	Dec. 31, 2013	Dec. 31, 2009	Jan. 30, 2015
Note 21 - Regulatory Matters (Details) [Line Items]
Statutory Accounting Practices, Statutory Amount Available for Dividend Payments without Regulatory Approval						$ 87,700,000
Common Stock, Dividends, Per Share, Cash Paid (in Dollars per share)	$ 0.12	$ 0.12	$ 0.12	$ 2.00	$ 0.12
Trust Preferred Securities Included in Tier One Capital						52,400,000		32,000,000
Maximum Restricted Core Element Allowed in Tier One Capital, Percent						25.00%
Maximum Level of Consolidated Aggregate Assets Allowing for Inclusion of Trust Preferred Securities in Tier One Capital									15,000,000,000
Preferred Securities of Subsidiary Trust						52,400,000		32,000,000
Subsequent Event [Member]
Note 21 - Regulatory Matters (Details) [Line Items]
Common Stock, Dividends, Per Share, Declared (in Dollars per share)							$ 0.14
Stock Repurchase Program, Authorized Amount										$ 20,000,000

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Note 25 - Mercantile Bank Corporation (Parent Company Only) Condensed Financial Statements (Tables)

12 Months Ended

Dec. 31, 2014

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Balance Sheet [Table Text Block]

	2014		2013
ASSETS
Cash and cash equivalents	$	1,441,000	$	2,506,000
Investment in bank subsidiary		361,355,000		179,706,000
Other assets		20,948,000		4,740,000
Total assets	$	383,744,000	$	186,952,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities	$	1,134,000	$	637,000
Subordinated debentures		54,472,000		32,990,000
Shareholders’ equity		328,138,000		153,325,000
Total liabilities and shareholders’ equity	$	383,744,000	$	186,952,000

Condensed Income Statement [Table Text Block]

	2014			2013			2012
Income
Interest and dividends from subsidiaries	$	12,139,000		$	5,516,000		$	32,532,000
Total income		12,139,000			5,516,000			32,532,000
Expenses
Interest expense		2,145,000			1,213,000			884,000
Other operating expenses		3,552,000			2,773,000			1,048,000
Total expenses		5,697,000			3,986,000			1,932,000
Income before income tax benefit and equity in undistributed net income (loss) of subsidiary		6,442,000			1,530,000			30,600,000
Federal income tax benefit		(1,758,000	)		(1,042,000	)		(665,000	)
Equity in undistributed net income (loss) of subsidiary		9,131,000			14,461,000			(18,730,000	)
Net income		17,331,000			17,033,000			12,535,000
Preferred stock dividends and accretion		0			0			1,030,000
Net income attributable to common shares	$	17,331,000		$	17,033,000		$	11,505,000
Comprehensive income	$	22,920,000		$	9,810,000		$	10,857,000

Condensed Cash Flow Statement [Table Text Block]

	2014			2013			2012
Cash flows from operating activities
Net income	$	17,331,000		$	17,033,000		$	12,535,000
Adjustments to reconcile net income to net cash from operating activities:
Equity in undistributed (income) loss of subsidiary		(9,131,000	)		(14,461,000	)		18,730,000
Stock-based compensation expense		714,000			473,000			54,000
Change in other assets		(8,163,000	)		3,244,000			(3,006,000	)
Change in other liabilities		21,979,000			(708,000	)		1,073,000
Net cash from operating activities		22,730,000			5,581,000			29,386,000
Cash flows from investing activities
Net capital investment into subsidiaries		0			0			0
Net cash for investing activities		0			0			0
Cash flows from financing activities
Repurchase of preferred stock		0			0			(21,000,000	)
Repurchase of common stock warrant		0			0			(7,465,000	)
Stock option exercises, net of cashless exercises		282,000			289,000			227,000
Employee stock purchase plan		23,000			19,000			39,000
Dividend reinvestment plan		209,000			33,000			14,000
Stock grants to directors for retainer fees		155,000			0			0
Cash dividends on preferred stock		0			0			(496,000	)
Cash dividends on common stock		(24,464,000	)		(3,889,000	)		(774,000	)
Net cash for financing activities		(23,795,000	)		(3,548,000	)		(29,455,000	)
Net change in cash and cash equivalents		(1,065,000	)		2,033,000			(69,000	)
Cash and cash equivalents at beginning of period		2,506,000			473,000			542,000
Cash and cash equivalents at end of period	$	1,441,000		$	2,506,000		$	473,000

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Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Commercial:
Loans modified, number of contracts		10
Loans modified, pre-modification recorded principal balance		$ 7,231,000
Loans modified, post-modification recorded principal balance		7,231,000
Commercial and Industrial [Member] | Originated Loan [Member]
Commercial:
Loans modified, number of contracts	2	3
Loans modified, pre-modification recorded principal balance	5,994,000	741,000
Loans modified, post-modification recorded principal balance	6,094,000	741,000
Commercial and Industrial [Member] | Acquired Loan [Member]
Commercial:
Loans modified, number of contracts	7
Loans modified, pre-modification recorded principal balance	1,604,000
Loans modified, post-modification recorded principal balance	1,604,000
Commercial Vacant Land and Land Development and Residential Construction Loan [Member] | Originated Loan [Member]
Commercial:
Loans modified, number of contracts	0	2
Loans modified, pre-modification recorded principal balance	0	3,610,000
Loans modified, post-modification recorded principal balance	0	3,610,000
Commercial Vacant Land and Land Development and Residential Construction Loan [Member] | Acquired Loan [Member]
Commercial:
Loans modified, number of contracts	0
Loans modified, pre-modification recorded principal balance	0
Loans modified, post-modification recorded principal balance	0
Commercial Real Estate Owner Occupied Loan [Member] | Originated Loan [Member]
Commercial:
Loans modified, number of contracts	2	2
Loans modified, pre-modification recorded principal balance	16,787,000	715,000
Loans modified, post-modification recorded principal balance	16,787,000	715,000
Commercial Real Estate Owner Occupied Loan [Member] | Acquired Loan [Member]
Commercial:
Loans modified, number of contracts	2
Loans modified, pre-modification recorded principal balance	1,619,000
Loans modified, post-modification recorded principal balance	1,619,000
Commercial Real Estate Non Owner Occupied Loan [Member] | Originated Loan [Member]
Commercial:
Loans modified, number of contracts	1	1
Loans modified, pre-modification recorded principal balance	146,000	45,000
Loans modified, post-modification recorded principal balance	146,000	45,000
Commercial Real Estate Non Owner Occupied Loan [Member] | Acquired Loan [Member]
Commercial:
Loans modified, number of contracts	1
Loans modified, pre-modification recorded principal balance	65,000
Loans modified, post-modification recorded principal balance	65,000
Commercial Real Estate Multi Family and Residential Rental Loan [Member] | Originated Loan [Member]
Commercial:
Loans modified, number of contracts	0	1
Loans modified, pre-modification recorded principal balance	0	241,000
Loans modified, post-modification recorded principal balance	0	241,000
Commercial Real Estate Multi Family and Residential Rental Loan [Member] | Acquired Loan [Member]
Commercial:
Loans modified, number of contracts	4
Loans modified, pre-modification recorded principal balance	394,000
Loans modified, post-modification recorded principal balance	394,000
Commercial Portfolio Segment [Member] | Originated Loan [Member]
Commercial:
Loans modified, number of contracts	5	9
Loans modified, pre-modification recorded principal balance	22,927,000	5,352,000
Loans modified, post-modification recorded principal balance	23,027,000	5,352,000
Commercial Portfolio Segment [Member] | Acquired Loan [Member]
Commercial:
Loans modified, number of contracts	14
Loans modified, pre-modification recorded principal balance	3,682,000
Loans modified, post-modification recorded principal balance	3,682,000
Retail Home Equity and Other [Member] | Originated Loan [Member]
Commercial:
Loans modified, number of contracts	0
Loans modified, pre-modification recorded principal balance	0
Loans modified, post-modification recorded principal balance	0
Retail Home Equity and Other [Member] | Acquired Loan [Member]
Commercial:
Loans modified, number of contracts	1
Loans modified, pre-modification recorded principal balance	26,000
Loans modified, post-modification recorded principal balance	26,000
Retail Home Equity and Other [Member]
Commercial:
Loans modified, number of contracts		0
Loans modified, pre-modification recorded principal balance		0
Loans modified, post-modification recorded principal balance		0
Retail 1-4 Family Mortgages [Member] | Originated Loan [Member]
Commercial:
Loans modified, number of contracts	0
Loans modified, pre-modification recorded principal balance	0
Loans modified, post-modification recorded principal balance	0
Retail 1-4 Family Mortgages [Member] | Acquired Loan [Member]
Commercial:
Loans modified, number of contracts	1
Loans modified, pre-modification recorded principal balance	179,000
Loans modified, post-modification recorded principal balance	179,000
Retail 1-4 Family Mortgages [Member]
Commercial:
Loans modified, number of contracts		1
Loans modified, pre-modification recorded principal balance		1,879,000
Loans modified, post-modification recorded principal balance		1,879,000
Retail Loan [Member] | Originated Loan [Member]
Commercial:
Loans modified, number of contracts	0
Loans modified, pre-modification recorded principal balance	0
Loans modified, post-modification recorded principal balance	0
Retail Loan [Member] | Acquired Loan [Member]
Commercial:
Loans modified, number of contracts	2
Loans modified, pre-modification recorded principal balance	205,000
Loans modified, post-modification recorded principal balance	205,000
Retail Loan [Member]
Commercial:
Loans modified, number of contracts		1
Loans modified, pre-modification recorded principal balance		1,879,000
Loans modified, post-modification recorded principal balance		1,879,000
Originated Loan [Member]
Commercial:
Loans modified, number of contracts	5
Loans modified, pre-modification recorded principal balance	22,927,000
Loans modified, post-modification recorded principal balance	23,027,000
Acquired Loan [Member]
Commercial:
Loans modified, number of contracts	16
Loans modified, pre-modification recorded principal balance	3,887,000
Loans modified, post-modification recorded principal balance	$ 3,887,000

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Note 12 - Stock-based Compensation (Details) - Stock Option Valuation Assumptions (Employee Stock Option [Member])	12 Months Ended
	Dec. 31, 2014
Employee Stock Option [Member]
Note 12 - Stock-based Compensation (Details) - Stock Option Valuation Assumptions [Line Items]
Risk-free interest rate	1.56%
Expected option life (Years)	5 years
Expected stock price volatility	26.00%
Dividend yield	2.50%

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Note 12 - Stock-based Compensation (Tables)

12 Months Ended

Dec. 31, 2014

Note 12 - Stock-based Compensation (Tables) [Line Items]

Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block]

	2014					2013					2012
				Weighted					Weighted					Weighted
				Average					Average					Average
	Shares			Fair Value		Shares			Fair Value		Shares			Fair Value
Nonvested at beginning of year		63,800		$	14.30		66,100		$	14.30		38,650		$	6.20
Granted		101,490			20.13		0		NA			66,100			14.30
Vested		(63,300	)		14.30		0		NA			(38,266	)		6.20
Forfeited		(500	)		14.30		(2,300	)		14.30		(384	)		6.20
Nonvested at end of year		101,490		$	20.13		63,800		$	14.30		66,100		$	14.30

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	2014					2013					2012
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
Outstanding at beginning of year		60,876		$	33.11		152,896		$	26.15		214,903		$	22.40
Granted		6,488			22.15		0		NA			0		NA
Exercised		(2,845	)		17.74		(51,055	)		13.72		(50,930	)		10.83
Forfeited or expired		(29,184	)		34.60		(40,965	)		31.30		(11,077	)		23.77
Outstanding at end of year		35,335		$	31.09		60,876		$	33.11		152,896		$	26.15
Options exercisable at year-end		28,847		$	33.11		60,876		$	33.11		152,896		$	26.15

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	2014
Risk-free interest rate		1.56	%
Expected option life (Years)		5
Expected stock price volatility		26	%
Dividend yield		2.5	%

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]

			Outstanding					Exercisable
					Weighted Average	Weighted				Weighted
Range of					Remaining	Average				Average
Exercise					Contractual	Exercise				Exercise
Prices			Number		Life (Years)	Price		Number		Price
$6.21	-	$ 8.00		2,700	0.9	$	6.21		2,700	$	6.21
$20.01	-	$24.00		6,488	6.9		22.15		0	NA
$32.01	-	$36.00		26,147	0.9		35.88		26,147		35.88
Outstanding at year end				35,335	2.0	$	31.09		28,847	$	33.11

			Outstanding					Exercisable
					Weighted Average	Weighted				Weighted
Range of					Remaining	Average				Average
Exercise					Contractual	Exercise				Exercise
Prices			Number		Life (Years)	Price		Number		Price
$4.00	-	$8.00		63,590	4.9	$	6.53		56,385	$	6.70
$8.01	-	$12.00		68,430	3.7		13.20		68,430		13.20
$20.01	-	$25.00		85,962	1.4		22.43		85,962		22.43
Outstanding at year end				217,982	3.1	$	14.89		210,777	$	15.22

Schedule of Share-based Compensation Shares Authorized under Stock Option Plans Information Related to Option Outstanding [Table Text Block]

	2014		2013		2012
Minimum exercise price	$	6.21	$	6.21	$	6.21
Maximum exercise price		35.88		40.28		40.28
Average remaining option term (Years)	2.0		1.4		1.9

	2014
Minimum exercise price	$	5.19
Maximum exercise price		24.46
Average remaining option term (Years)	3.1

Schedule of Share-based Compensation Arrangement by Share-based Payment Award Options Information Related to Stock Option Grants and Exercised [Table Text Block]

	2014		2013		2012
Aggregate intrinsic value of stock options exercised	$	11,000	$	408,000	$	307,000
Cash received from stock option exercises		50,000		289,000		227,000
Tax benefit realized from stock option exercises		0		0		0
Weighted average per share fair value of stock options granted	$	2.72		NA		NA

	2014
Aggregate intrinsic value of stock options exercised	$	333,000
Cash received from stock option exercises		232,000
Tax benefit realized from stock option exercises		116,000
Weighted average per share fair value of stock options granted	NA

Firstbank Plans [Member]

Note 12 - Stock-based Compensation (Tables) [Line Items]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	2014
				Weighted
				Average
				Exercise
	Shares			Price
Outstanding at beginning of year		0			0
Granted		0			0
Replaced as part of merger		282,178			15.48
Exercised		(27,740	)		8.34
Forfeited or expired		(36,456	)		24.46
Outstanding at end of year		217,982		$	14.89
Options exercisable at year-end		210,777		$	15.22

XML

Note 25 - Mercantile Bank Corporation (Parent Company Only) Condensed Financial Statements

12 Months Ended

Dec. 31, 2014

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Financial Information of Parent Company Only Disclosure [Text Block]

NOTE 25 – MERCANTILE BANK CORPORATION (PARENT COMPANY ONLY)

CONDENSED FINANCIAL STATEMENTS

CONDENSED BALANCE SHEETS

	2014		2013
ASSETS
Cash and cash equivalents	$	1,441,000	$	2,506,000
Investment in bank subsidiary		361,355,000		179,706,000
Other assets		20,948,000		4,740,000
Total assets	$	383,744,000	$	186,952,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities	$	1,134,000	$	637,000
Subordinated debentures		54,472,000		32,990,000
Shareholders’ equity		328,138,000		153,325,000
Total liabilities and shareholders’ equity	$	383,744,000	$	186,952,000

CONDENSED STATEMENTS OF INCOME

	2014			2013			2012
Income
Interest and dividends from subsidiaries	$	12,139,000		$	5,516,000		$	32,532,000
Total income		12,139,000			5,516,000			32,532,000
Expenses
Interest expense		2,145,000			1,213,000			884,000
Other operating expenses		3,552,000			2,773,000			1,048,000
Total expenses		5,697,000			3,986,000			1,932,000
Income before income tax benefit and equity in undistributed net income (loss) of subsidiary		6,442,000			1,530,000			30,600,000
Federal income tax benefit		(1,758,000	)		(1,042,000	)		(665,000	)
Equity in undistributed net income (loss) of subsidiary		9,131,000			14,461,000			(18,730,000	)
Net income		17,331,000			17,033,000			12,535,000
Preferred stock dividends and accretion		0			0			1,030,000
Net income attributable to common shares	$	17,331,000		$	17,033,000		$	11,505,000
Comprehensive income	$	22,920,000		$	9,810,000		$	10,857,000

CONDENSED STATEMENTS OF CASH FLOWS

	2014			2013			2012
Cash flows from operating activities
Net income	$	17,331,000		$	17,033,000		$	12,535,000
Adjustments to reconcile net income to net cash from operating activities:
Equity in undistributed (income) loss of subsidiary		(9,131,000	)		(14,461,000	)		18,730,000
Stock-based compensation expense		714,000			473,000			54,000
Change in other assets		(8,163,000	)		3,244,000			(3,006,000	)
Change in other liabilities		21,979,000			(708,000	)		1,073,000
Net cash from operating activities		22,730,000			5,581,000			29,386,000
Cash flows from investing activities
Net capital investment into subsidiaries		0			0			0
Net cash for investing activities		0			0			0
Cash flows from financing activities
Repurchase of preferred stock		0			0			(21,000,000	)
Repurchase of common stock warrant		0			0			(7,465,000	)
Stock option exercises, net of cashless exercises		282,000			289,000			227,000
Employee stock purchase plan		23,000			19,000			39,000
Dividend reinvestment plan		209,000			33,000			14,000
Stock grants to directors for retainer fees		155,000			0			0
Cash dividends on preferred stock		0			0			(496,000	)
Cash dividends on common stock		(24,464,000	)		(3,889,000	)		(774,000	)
Net cash for financing activities		(23,795,000	)		(3,548,000	)		(29,455,000	)
Net change in cash and cash equivalents		(1,065,000	)		2,033,000			(69,000	)
Cash and cash equivalents at beginning of period		2,506,000			473,000			542,000
Cash and cash equivalents at end of period	$	1,441,000		$	2,506,000		$	473,000

XML

Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due (USD $)	12 Months Ended		7 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014
Commercial and Industrial [Member] | Originated Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts	0	0
Recorded principal balance	$ 0	$ 0
Commercial and Industrial [Member] | Acquired Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts			0
Recorded principal balance			0
Commercial Vacant Land and Land Development and Residential Construction Loan [Member] | Originated Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts	0	0
Recorded principal balance	0	0
Commercial Vacant Land and Land Development and Residential Construction Loan [Member] | Acquired Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts			0
Recorded principal balance			0
Commercial Real Estate Owner Occupied Loan [Member] | Originated Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts	0	1
Recorded principal balance	0	65,000
Commercial Real Estate Owner Occupied Loan [Member] | Acquired Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts			0
Recorded principal balance			0
Commercial Real Estate Non Owner Occupied Loan [Member] | Originated Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts	0	0
Recorded principal balance	0	0
Commercial Real Estate Non Owner Occupied Loan [Member] | Acquired Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts			0
Recorded principal balance			0
Commercial Real Estate Multi Family and Residential Rental Loan [Member] | Originated Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts	0	0
Recorded principal balance	0	0
Commercial Real Estate Multi Family and Residential Rental Loan [Member] | Acquired Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts			0
Recorded principal balance			0
Commercial Portfolio Segment [Member] | Originated Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts	0	1
Recorded principal balance	0	65,000
Commercial Portfolio Segment [Member] | Acquired Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts			0
Recorded principal balance			0
Retail Home Equity and Other [Member] | Originated Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts	0	0
Recorded principal balance	0	0
Retail Home Equity and Other [Member] | Acquired Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts			0
Recorded principal balance			0
Retail 1-4 Family Mortgages [Member] | Originated Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts	0	0
Recorded principal balance	0	0
Retail 1-4 Family Mortgages [Member] | Acquired Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts			0
Recorded principal balance			0
Retail Loan [Member] | Originated Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts	0	0
Recorded principal balance	0	0
Retail Loan [Member] | Acquired Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts			0
Recorded principal balance			0
Originated Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts	0	1
Recorded principal balance	0	65,000
Acquired Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Loans Modified as Troubled Debt Restructurings within the Previous Twelve Months That Became Over 30 Days Past Due [Line Items]
Number of contracts			0
Recorded principal balance			$ 0

XML

Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis (USD $)	Dec. 31, 2014		Dec. 31, 2013
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	$ 432,912,000	[1]	$ 131,178,000	[1]
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	0
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			0
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	193,468,000
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			98,477,000
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	0
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			0
US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	193,468,000
US Government Agencies Debt Securities [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	193,468,000		98,477,000
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	0
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			0
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	93,561,000
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			13,558,000
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	0
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			0
Collateralized Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	93,561,000
Collateralized Mortgage Backed Securities [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	93,561,000		13,558,000
Municipal General Obligation Bonds [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	0
Municipal General Obligation Bonds [Member] | Fair Value, Inputs, Level 1 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			0
Municipal General Obligation Bonds [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	122,801,000
Municipal General Obligation Bonds [Member] | Fair Value, Inputs, Level 2 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			16,872,000
Municipal General Obligation Bonds [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	10,281,000
Municipal General Obligation Bonds [Member] | Fair Value, Inputs, Level 3 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			0
Municipal General Obligation Bonds [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	133,082,000
Municipal General Obligation Bonds [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	133,082,000		16,872,000
Municipal Revenue Bonds [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	0
Municipal Revenue Bonds [Member] | Fair Value, Inputs, Level 1 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			0
Municipal Revenue Bonds [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	10,873,000
Municipal Revenue Bonds [Member] | Fair Value, Inputs, Level 2 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			916,000
Municipal Revenue Bonds [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	0
Municipal Revenue Bonds [Member] | Fair Value, Inputs, Level 3 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			0
Municipal Revenue Bonds [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	10,873,000
Municipal Revenue Bonds [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	10,873,000		916,000
Other Debt Obligations [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	0
Other Debt Obligations [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	1,928,000
Other Debt Obligations [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	0
Other Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	1,928,000
Other Debt Obligations [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities	1,928,000
Mutual Funds [Member] | Fair Value, Inputs, Level 1 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			0
Mutual Funds [Member] | Fair Value, Inputs, Level 2 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			1,355,000
Mutual Funds [Member] | Fair Value, Inputs, Level 3 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			0
Mutual Funds [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Available for sale securities			1,355,000
Fair Value, Inputs, Level 1 [Member] | Interest Rate Swap [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Derivative	0		0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Assets and Liabilities measured at fair value on recurring basis	0		0
Fair Value, Inputs, Level 2 [Member] | Interest Rate Swap [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Derivative	(253,000)		(264,000)
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Assets and Liabilities measured at fair value on recurring basis	422,378,000		130,914,000
Fair Value, Inputs, Level 3 [Member] | Interest Rate Swap [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Derivative	0		0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Assets and Liabilities measured at fair value on recurring basis	10,281,000		0
Interest Rate Swap [Member] | Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Derivative	(253,000)		(264,000)
Fair Value, Measurements, Recurring [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis [Line Items]
Assets and Liabilities measured at fair value on recurring basis	$ 432,659,000		$ 130,914,000

[1] See Note 18 for a description of the fair value hierarchy as well as a disclosure of levels for classes of financial assets and liabilities.

XML

Note 23 - Accumulated Other Comprehensive Income (Loss) (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Note 23 - Accumulated Other Comprehensive Income (Loss) (Details) [Line Items]
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax	$ 200,000	$ 5,400,000	$ 2,400,000
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax	7,000	551,000	(723,000)
Interest Rate Swap [Member]
Note 23 - Accumulated Other Comprehensive Income (Loss) (Details) [Line Items]
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax	$ (200,000)	$ (200,000)	$ (700,000)

XML

Note 4 - Loans and Allowance for Loan Losses (Details) - Age Analysis of Past Due Loans (USD $)	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Commercial:
Loans	$ 2,089,277,000	$ 1,053,243,000	$ 1,041,189,000
Originated Loan [Member] | Commercial and Industrial [Member]
Commercial:
Loans- 30 to 59 days past due	0	0
Loans- 60 to 89 days past due	0	0
Loans- Greater than 89 days past due	0	309,000
Loans- Total past due	0	309,000
Loans- Current	384,570,000	286,064,000
Loans	384,570,000	286,373,000
Loans- Recorded Balance >89days and accruing	0	0
Originated Loan [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Commercial:
Loans- 30 to 59 days past due	0	0
Loans- 60 to 89 days past due	0	0
Loans- Greater than 89 days past due	0	0
Loans- Total past due	0	0
Loans- Current	29,826,000	36,741,000
Loans	29,826,000	36,741,000
Loans- Recorded Balance >89days and accruing	0	0
Originated Loan [Member] | Commercial Real Estate Owner Occupied Loan [Member]
Commercial:
Loans- 30 to 59 days past due	0	65,000
Loans- 60 to 89 days past due	0	0
Loans- Greater than 89 days past due	120,000	50,000
Loans- Total past due	120,000	115,000
Loans- Current	291,638,000	261,762,000
Loans	291,758,000	261,877,000
Loans- Recorded Balance >89days and accruing	0	0
Originated Loan [Member] | Commercial Real Estate Non Owner Occupied Loan [Member]
Commercial:
Loans- 30 to 59 days past due	0	0
Loans- 60 to 89 days past due	0	0
Loans- Greater than 89 days past due	116,000	0
Loans- Total past due	116,000	0
Loans- Current	410,861,000	364,066,000
Loans	410,977,000	364,066,000
Loans- Recorded Balance >89days and accruing	0	0
Originated Loan [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Commercial:
Loans- 30 to 59 days past due	0	0
Loans- 60 to 89 days past due	0	0
Loans- Greater than 89 days past due	0	64,000
Loans- Total past due	0	64,000
Loans- Current	36,058,000	37,575,000
Loans	36,058,000	37,639,000
Loans- Recorded Balance >89days and accruing	0	0
Originated Loan [Member] | Commercial Portfolio Segment [Member]
Commercial:
Loans- 30 to 59 days past due	0	65,000
Loans- 60 to 89 days past due	0	0
Loans- Greater than 89 days past due	236,000	423,000
Loans- Total past due	236,000	488,000
Loans- Current	1,152,953,000	986,208,000
Loans	1,153,189,000	986,696,000
Loans- Recorded Balance >89days and accruing	0	0
Originated Loan [Member] | Retail Home Equity and Other [Member]
Commercial:
Loans- 30 to 59 days past due	38,000	14,000
Loans- 60 to 89 days past due	3,000	0
Loans- Greater than 89 days past due	0	0
Loans- Total past due	41,000	14,000
Loans- Current	50,018,000	35,066,000
Loans	50,059,000	35,080,000
Loans- Recorded Balance >89days and accruing	0	0
Originated Loan [Member] | Retail 1-4 Family Mortgages [Member]
Commercial:
Loans- 30 to 59 days past due	0	21,000
Loans- 60 to 89 days past due	0	44,000
Loans- Greater than 89 days past due	366,000	375,000
Loans- Total past due	366,000	440,000
Loans- Current	42,502,000	31,027,000
Loans	42,868,000	31,467,000
Loans- Recorded Balance >89days and accruing	0	0
Originated Loan [Member] | Retail Loan [Member]
Commercial:
Loans- 30 to 59 days past due	38,000	35,000
Loans- 60 to 89 days past due	3,000	44,000
Loans- Greater than 89 days past due	366,000	375,000
Loans- Total past due	407,000	454,000
Loans- Current	92,520,000	66,093,000
Loans	92,927,000	66,547,000
Loans- Recorded Balance >89days and accruing	0	0
Originated Loan [Member]
Commercial:
Loans- 30 to 59 days past due	38,000	100,000
Loans- 60 to 89 days past due	3,000	44,000
Loans- Greater than 89 days past due	602,000	798,000
Loans- Total past due	643,000	942,000
Loans- Current	1,245,473,000	1,052,301,000
Loans	1,246,116,000	1,053,243,000
Loans- Recorded Balance >89days and accruing	0	0
Acquired Loan [Member] | Commercial and Industrial [Member]
Commercial:
Loans- 30 to 59 days past due	29,000
Loans- 60 to 89 days past due	32,000
Loans- Greater than 89 days past due	76,000
Loans- Total past due	137,000
Loans- Current	165,900,000
Loans	166,037,000	0
Loans- Recorded Balance >89days and accruing	0
Acquired Loan [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Commercial:
Loans- 30 to 59 days past due	0
Loans- 60 to 89 days past due	38,000
Loans- Greater than 89 days past due	0
Loans- Total past due	38,000
Loans- Current	22,110,000
Loans	22,148,000	0
Loans- Recorded Balance >89days and accruing	0
Acquired Loan [Member] | Commercial Real Estate Owner Occupied Loan [Member]
Commercial:
Loans- 30 to 59 days past due	51,000
Loans- 60 to 89 days past due	425,000
Loans- Greater than 89 days past due	1,625,000
Loans- Total past due	2,101,000
Loans- Current	136,529,000
Loans	138,630,000	0
Loans- Recorded Balance >89days and accruing	0
Acquired Loan [Member] | Commercial Real Estate Non Owner Occupied Loan [Member]
Commercial:
Loans- 30 to 59 days past due	68,000
Loans- 60 to 89 days past due	598,000
Loans- Greater than 89 days past due	395,000
Loans- Total past due	1,061,000
Loans- Current	147,536,000
Loans	148,597,000	0
Loans- Recorded Balance >89days and accruing	0
Acquired Loan [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Commercial:
Loans- 30 to 59 days past due	37,000
Loans- 60 to 89 days past due	0
Loans- Greater than 89 days past due	105,000
Loans- Total past due	142,000
Loans- Current	86,560,000
Loans	86,702,000	0
Loans- Recorded Balance >89days and accruing	0
Acquired Loan [Member] | Commercial Portfolio Segment [Member]
Commercial:
Loans- 30 to 59 days past due	185,000
Loans- 60 to 89 days past due	1,093,000
Loans- Greater than 89 days past due	2,201,000
Loans- Total past due	3,479,000
Loans- Current	558,635,000
Loans	562,114,000	0
Loans- Recorded Balance >89days and accruing	0
Acquired Loan [Member] | Retail Home Equity and Other [Member]
Commercial:
Loans- 30 to 59 days past due	445,000
Loans- 60 to 89 days past due	419,000
Loans- Greater than 89 days past due	155,000
Loans- Total past due	1,019,000
Loans- Current	108,200,000
Loans	109,219,000	0
Loans- Recorded Balance >89days and accruing	26,000
Acquired Loan [Member] | Retail 1-4 Family Mortgages [Member]
Commercial:
Loans- 30 to 59 days past due	1,087,000
Loans- 60 to 89 days past due	408,000
Loans- Greater than 89 days past due	750,000
Loans- Total past due	2,245,000
Loans- Current	169,583,000
Loans	171,828,000	0
Loans- Recorded Balance >89days and accruing	0
Acquired Loan [Member] | Retail Loan [Member]
Commercial:
Loans- 30 to 59 days past due	1,532,000
Loans- 60 to 89 days past due	827,000
Loans- Greater than 89 days past due	905,000
Loans- Total past due	3,264,000
Loans- Current	277,783,000
Loans	281,047,000	0
Loans- Recorded Balance >89days and accruing	26,000
Acquired Loan [Member]
Commercial:
Loans- 30 to 59 days past due	1,717,000
Loans- 60 to 89 days past due	1,920,000
Loans- Greater than 89 days past due	3,106,000
Loans- Total past due	6,743,000
Loans- Current	836,418,000
Loans	843,161,000	0
Loans- Recorded Balance >89days and accruing	26,000
Commercial and Industrial [Member]
Commercial:
Loans	550,607,000	286,373,000
Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Commercial:
Loans	51,974,000	36,741,000
Commercial Real Estate Owner Occupied Loan [Member]
Commercial:
Loans	430,388,000	261,877,000
Commercial Real Estate Non Owner Occupied Loan [Member]
Commercial:
Loans	559,574,000	364,066,000
Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Commercial:
Loans	122,760,000	37,639,000
Commercial Portfolio Segment [Member]
Commercial:
Loans	1,715,303,000	986,696,000	968,506,000
Retail Home Equity and Other [Member]
Commercial:
Loans	159,278,000	35,080,000
Retail 1-4 Family Mortgages [Member]
Commercial:
Loans	214,696,000	31,467,000
Retail Loan [Member]
Commercial:
Loans	$ 373,974,000	$ 66,547,000	$ 72,683,000

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Note 7 - Core Deposit Intangible Assets, Net (Details) - Estimated Amortization Expense on Core Deposit Intangible Assets (Core Deposits [Member], USD $)	Dec. 31, 2014
Core Deposits [Member]
Note 7 - Core Deposit Intangible Assets, Net (Details) - Estimated Amortization Expense on Core Deposit Intangible Assets [Line Items]
2015	$ 2,992,000
2016	2,675,000
2017	2,357,000
2018	2,039,000
2019	1,721,000
Thereafter	$ 3,839,000

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Note 1 - Summary of Significant Accounting Policies (Details) - Year-end Mortgage Loans Held for Sale (USD $)	Dec. 31, 2014	Dec. 31, 2013
Year-end Mortgage Loans Held for Sale [Abstract]
Mortgage loans held for sale	$ 1,574,000	$ 1,115,000
Less: Allowance to adjust to lower of cost or market	0	0
Mortgage loans held for sale, net	$ 1,574,000	$ 1,115,000

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Note 13 - Related Parties (Details) (Directors and Executive Officers [Member], USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Directors and Executive Officers [Member]
Note 13 - Related Parties (Details) [Line Items]
Loan Commitments to Related Parties	$ 15,800,000	$ 7,800,000
Loans and Leases Receivable, Related Parties	9,002,000	6,884,000	1,418,000
Related Party Deposits and Repurchase Agreements	$ 16,600,000	$ 3,900,000

XML

Note 4 - Loans and Allowance for Loan Losses (Details) - Retail Credit Risk by Collateral Type (USD $)	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment [Line Items]
Total retail	$ 2,089,277,000	$ 1,053,243,000	$ 1,041,189,000
Originated Loan [Member] | Retail Home Equity and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total retail	50,059,000	35,080,000
Originated Loan [Member] | Retail 1-4 Family Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Total retail	42,868,000	31,467,000
Originated Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Total retail	1,246,116,000	1,053,243,000
Acquired Loan [Member] | Retail Home Equity and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total retail	109,219,000	0
Acquired Loan [Member] | Retail 1-4 Family Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Total retail	171,828,000	0
Acquired Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Total retail	843,161,000	0
Retail Home Equity and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total retail	159,278,000	35,080,000
Retail 1-4 Family Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Total retail	$ 214,696,000	$ 31,467,000

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Note 6 - Mortgage Loan Servicing (Details) - Activity for Capitalized Mortgage Loan Servicing Rights (USD $)	12 Months Ended
	Dec. 31, 2014
Servicing Assets at Fair Value [Line Items]
Balance at January 1, 2014	$ 0
Additions	575,000
Amortized to expense	(1,252,000)
Balance at December 31, 2014	6,712,000
Firstbank Corporation [Member]
Servicing Assets at Fair Value [Line Items]
Additions	$ 7,389,000

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Note 4 - Loans and Allowance for Loan Losses (Details) - Allowance Related to Troubled Debt Restructurings (USD $)	Dec. 31, 2014	Dec. 31, 2013
Commercial:
Allowance for losses, troubled debt restructurings	$ 5,793,000	$ 10,399,000
Commercial and Industrial [Member]
Commercial:
Allowance for losses, troubled debt restructurings	16,000	187,000
Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Commercial:
Allowance for losses, troubled debt restructurings	151,000	798,000
Commercial Real Estate Owner Occupied Loan [Member]
Commercial:
Allowance for losses, troubled debt restructurings	182,000	528,000
Commercial Real Estate Non Owner Occupied Loan [Member]
Commercial:
Allowance for losses, troubled debt restructurings	4,778,000	7,828,000
Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Commercial:
Allowance for losses, troubled debt restructurings	666,000	1,010,000
Commercial Portfolio Segment [Member]
Commercial:
Allowance for losses, troubled debt restructurings	5,793,000	10,351,000
Retail Home Equity and Other [Member]
Commercial:
Allowance for losses, troubled debt restructurings	0	0
Retail 1-4 Family Mortgages [Member]
Commercial:
Allowance for losses, troubled debt restructurings	0	48,000
Retail Loan [Member]
Commercial:
Allowance for losses, troubled debt restructurings	$ 0	$ 48,000

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Note 6 - Mortgage Loan Servicing (Details) - Estimated Amortization (USD $)	Dec. 31, 2014
Estimated Amortization [Abstract]
2015	$ 1,560,000
2016	1,256,000
2017	1,023,000
2018	857,000
2019	722,000
Thereafter	$ 1,294,000

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Note 4 - Loans and Allowance for Loan Losses (Details) - Activity in Allowance for Loan Losses and the Recorded Investments in Loans (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses	$ 22,821,000	$ 28,677,000	$ 36,532,000
Allowance for loan losses: individually evaluated for impairment		12,386,000	17,189,000
Allowance for loan losses: collectively evaluated for impairment		10,435,000	11,488,000
Total loans:
Loans	2,089,277,000	1,053,243,000	1,041,189,000
Loans: individually evaluated for impairment		36,868,000	57,279,000
Loans: collectively evaluated for impairment		1,016,375,000	983,910,000
Provision for loan losses	(3,000,000)	(7,200,000)	(3,100,000)
Charge-offs		(5,290,000)	(12,644,000)
Recoveries		6,634,000	7,889,000
Allowance for loan losses		22,821,000	28,677,000
Originated Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses	20,455,000
Allowance for loan losses: individually evaluated for impairment	9,374,000
Allowance for loan losses: collectively evaluated for impairment	8,362,000
Total loans:
Loans	1,153,189,000	986,696,000
Loans: individually evaluated for impairment	45,021,000
Loans: collectively evaluated for impairment	1,108,168,000
Provision for loan losses	(3,140,000)
Charge-offs	(876,000)
Recoveries	1,297,000
Allowance for loan losses	17,736,000
Originated Loan [Member] | Retail Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses	2,358,000
Allowance for loan losses: individually evaluated for impairment	777,000
Allowance for loan losses: collectively evaluated for impairment	710,000
Total loans:
Loans	92,927,000	66,547,000
Loans: individually evaluated for impairment	2,835,000
Loans: collectively evaluated for impairment	90,092,000
Provision for loan losses	(721,000)
Charge-offs	(554,000)
Recoveries	404,000
Allowance for loan losses	1,487,000
Originated Loan [Member] | Unallocated Financing Receivables [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses	8,000
Allowance for loan losses: individually evaluated for impairment	0
Allowance for loan losses: collectively evaluated for impairment	76,000
Total loans:
Provision for loan losses	68,000
Charge-offs	0
Recoveries	0
Allowance for loan losses	76,000
Originated Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses	22,821,000
Allowance for loan losses: individually evaluated for impairment	10,151,000
Allowance for loan losses: collectively evaluated for impairment	9,148,000
Total loans:
Loans	1,246,116,000	1,053,243,000
Loans: individually evaluated for impairment	47,856,000
Loans: collectively evaluated for impairment	1,198,260,000
Provision for loan losses	(3,793,000)
Charge-offs	(1,430,000)
Recoveries	1,701,000
Allowance for loan losses	19,299,000
Acquired Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses	0
Total loans:
Loans	562,114,000	0
Provision for loan losses	734,000
Charge-offs	(55,000)
Recoveries	2,000
Allowance for loan losses	681,000
Acquired Loan [Member] | Retail Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses	0
Total loans:
Loans	281,047,000	0
Provision for loan losses	59,000
Charge-offs	(16,000)
Recoveries	18,000
Allowance for loan losses	61,000
Acquired Loan [Member] | Unallocated Financing Receivables [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses	0
Total loans:
Provision for loan losses	0
Charge-offs	0
Recoveries	0
Allowance for loan losses	0
Acquired Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses	0
Total loans:
Loans	843,161,000	0
Provision for loan losses	793,000
Charge-offs	(71,000)
Recoveries	20,000
Allowance for loan losses	742,000
Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses		26,043,000	33,431,000
Allowance for loan losses: individually evaluated for impairment		11,260,000	16,860,000
Allowance for loan losses: collectively evaluated for impairment		9,195,000	9,183,000
Total loans:
Loans	1,715,303,000	986,696,000	968,506,000
Loans: individually evaluated for impairment		33,240,000	55,138,000
Loans: collectively evaluated for impairment		953,456,000	913,368,000
Provision for loan losses		(6,730,000)	(2,800,000)
Charge-offs		(5,120,000)	(12,075,000)
Recoveries		6,262,000	7,487,000
Allowance for loan losses		20,455,000	26,043,000
Retail Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses		2,645,000	3,019,000
Allowance for loan losses: individually evaluated for impairment		1,126,000	329,000
Allowance for loan losses: collectively evaluated for impairment		1,232,000	2,316,000
Total loans:
Loans	373,974,000	66,547,000	72,683,000
Loans: individually evaluated for impairment		3,628,000	2,141,000
Loans: collectively evaluated for impairment		62,919,000	70,542,000
Provision for loan losses		(489,000)	(207,000)
Charge-offs		(170,000)	(569,000)
Recoveries		372,000	402,000
Allowance for loan losses		2,358,000	2,645,000
Unallocated Financing Receivables [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses		(11,000)	82,000
Allowance for loan losses: individually evaluated for impairment		0	0
Allowance for loan losses: collectively evaluated for impairment		8,000	(11,000)
Total loans:
Provision for loan losses		19,000	(93,000)
Charge-offs		0	0
Recoveries		0	0
Allowance for loan losses		$ 8,000	$ (11,000)

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Note 4 - Loans and Allowance for Loan Losses (Details) - Concentrations Within the Loan Portfolio (USD $)	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Note 4 - Loans and Allowance for Loan Losses (Details) - Concentrations Within the Loan Portfolio [Line Items]
Commercial real estate loans to lessors of non-residential buildings	$ 2,089,277,000	$ 1,053,243,000	$ 1,041,189,000
Commercial Real Estate Loans to Lessors of Non-Residential Buildings [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Concentrations Within the Loan Portfolio [Line Items]
Commercial real estate loans to lessors of non-residential buildings	$ 480,170,000	$ 299,446,000
Commercial real estate loans to lessors of non-residential buildings	23.00%	28.40%

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Note 17 - Fair Values of Financial Instruments

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE 17 – FAIR VALUES OF FINANCIAL INSTRUMENTS

Carrying amount, estimated fair value and level within the fair value hierarchy of financial instruments were as follows at year-end (dollars in thousands):

	Level in		2014				2013
	Fair Value		Carrying		Fair		Carrying		Fair
	Hierarchy		Amount		Value		Amount		Value
Financial assets
Cash	Level 1		$	13,261	$	13,261	$	1,464	$	1,464
Cash equivalents	Level 2			159,477		159,477		145,501		145,501
Securities available for sale		(1)		432,912		432,912		131,178		131,178
Federal Home Loan Bank stock		(2)		13,699		13,699		11,961		11,961
Loans, net	Level 3			2,069,236		2,064,140		1,030,422		1,027,300
Bank owned life insurance	Level 2			57,861		57,861		51,377		51,377
Accrued interest receivable	Level 2			8,033		8,033		3,649		3,649
Financial liabilities
Deposits	Level 2			2,276,915		2,254,749		1,118,911		1,120,576
Securities sold under agreements to repurchase	Level 2			167,569		167,569		69,305		69,305
Federal Home Loan Bank advances	Level 2			54,022		54,720		45,000		45,139
Subordinated debentures	Level 2			54,472		54,508		32,990		32,974
Accrued interest payable	Level 2			1,942		1,942		2,041		2,041
Interest rate swap		(1)		253		253		264		264

(1)	See Note 18 for a description of the fair value hierarchy as well as a disclosure of levels for classes of financial assets and liabilities.
(2)	It is not practical to determine the fair value of FHLB stock due to transferability restrictions.

Carrying amount is the estimated fair value for cash and cash equivalents, Federal Home Loan Bank stock, accrued interest receivable and payable, bank owned life insurance, demand deposits, securities sold under agreements to repurchase, and variable rate loans and deposits that reprice frequently and fully. Security fair values are based on market prices or dealer quotes, and if no such information is available, on the rate and term of the security and information about the issuer. For fixed rate loans and deposits and for variable rate loans and deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. Fair value of subordinated debentures and Federal Home Loan Bank advances is based on current rates for similar financing. Fair value of the interest rate swap is determined primarily utilizing market-consensus forecasted yield curves. Fair value of off-balance sheet items is estimated to be nominal. 

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Note 18 - Fair Values Measurements (Tables)

12 Months Ended

Dec. 31, 2014

Disclosure Text Block [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

				Quoted Prices
				in Active		Significant
				Markets for		Other			Significant
				Identical		Observable			Unobservable
				Assets		Inputs			Inputs
	Total			(Level 1)		(Level 2)			(Level 3)
Available for sale securities
U.S. Government agency debt obligations	$	193,468,000		$	0	$	193,468,000		$	0
Mortgage-backed securities		93,561,000			0		93,561,000			0
Municipal general obligation bonds		133,082,000			0		122,801,000			10,281,000
Municipal revenue bonds		10,873,000			0		10,873,000			0
Other investments		1,928,000			0		1,928,000			0
Derivatives
Interest rate swap agreement		(253,000	)		0		(253,000	)		0
Total	$	432,659,000		$	0	$	422,378,000		$	10,281,000

				Quoted Prices
				in Active		Significant
				Markets for		Other			Significant
				Identical		Observable			Unobservable
				Assets		Inputs			Inputs
	Total			(Level 1)		(Level 2)			(Level 3)
Available for sale securities U.S. Government agency debt obligations	$	98,477,000		$	0	$	98,477,000		$	0
Mortgage-backed securities		13,558,000			0		13,558,000			0
Municipal general obligation bonds		16,872,000			0		16,872,000			0
Municipal revenue bonds		916,000			0		916,000			0
Mutual funds		1,355,000			0		1,355,000			0
Derivatives
Interest rate swap agreement		(264,000	)		0		(264,000	)		0
Total	$	130,914,000		$	0	$	130,914,000		$	0

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans (1)	$	17,097,000	$	0	$	0	$	17,097,000
Foreclosed assets (1)		1,995,000		0		0		1,995,000
Total	$	19,092,000	$	0	$	0	$	19,092,000

			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans (1)	$	23,405,000	$	0	$	0	$	23,405,000
Foreclosed assets (1)		2,851,000		0		0		2,851,000
Total	$	26,256,000	$	0	$	0	$	26,256,000

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Note 8 - Deposits (Tables)

12 Months Ended

Dec. 31, 2014

Disclosure Text Block [Abstract]

Summary of Deposits and Percentage Change in Deposits [Table Text Block]

											Percent
	December 31, 2014					December 31, 2013					Increase
	Balance		%			Balance		%			(Decrease)
Noninterest-bearing demand	$	558,738,000		24.5	%	$	224,580,000		20.1	%		148.8	%
Interest-bearing checking		413,382,000		18.2			197,388,000		17.6			109.4
Money market		235,587,000		10.3			133,369,000		11.9			76.6
Savings		330,459,000		14.5			52,606,000		4.7			528.2
Time, under $100,000		181,026,000		8.0			43,251,000		3.9			318.5
Time, $100,000 and over		382,120,000		16.8			254,600,000		22.8			50.1
		2,101,312,000		92.3			905,794,000		81.0			132.0
Out-of-area time, under $100,000		2,422,000		0.1			4,078,000		0.4			(40.6	)
Out-of-area time, $100,000 and over		173,181,000		7.6			209,039,000		18.6			(17.2	)
		175,603,000		7.7			213,117,000		19.0			(17.6	)
Total deposits	$	2,276,915,000		100.0	%	$	1,118,911,000		100.0	%		103.5

ContractualMaturities of Certificates of Deposits [Table Text Block]

	2014		2013
In one year or less	$	368,163,000	$	213,454,000
In one to two years		153,346,000		80,138,000
In two to three years		118,919,000		73,271,000
In three to four years		60,953,000		95,979,000
In four to five years		37,368,000		48,126,000
Total certificates of deposit	$	738,749,000	$	510,968,000

Contractual Maturities of Certificates of Deposits of More Than Specified Amount [Table Text Block]

	2014		2013
Up to three months	$	75,356,000	$	57,469,000
Three months to six months		65,838,000		41,237,000
Six months to twelve months		125,492,000		93,920,000
Over twelve months		288,615,000		271,013,000
Total certificates of deposit	$	555,301,000	$	463,639,000

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Note 4 - Loans and Allowance for Loan Losses (Details) - Loans by Credit Quality Indicators (USD $)	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Internal credit risk grade groupings:
Loans	$ 2,089,277,000	$ 1,053,243,000	$ 1,041,189,000
Originated Loan [Member] | Commercial and Industrial [Member] | Grade 1 - 4 [Member]
Internal credit risk grade groupings:
Loans	266,631,000	208,151,000
Originated Loan [Member] | Commercial and Industrial [Member] | Grade 5 - 7 [Member]
Internal credit risk grade groupings:
Loans	109,639,000	76,237,000
Originated Loan [Member] | Commercial and Industrial [Member] | Grade 8 - 9 [Member]
Internal credit risk grade groupings:
Loans	8,300,000	1,985,000
Originated Loan [Member] | Commercial and Industrial [Member]
Internal credit risk grade groupings:
Loans	384,570,000	286,373,000
Originated Loan [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member] | Grade 1 - 4 [Member]
Internal credit risk grade groupings:
Loans	11,242,000	6,973,000
Originated Loan [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member] | Grade 5 - 7 [Member]
Internal credit risk grade groupings:
Loans	16,375,000	25,535,000
Originated Loan [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member] | Grade 8 - 9 [Member]
Internal credit risk grade groupings:
Loans	2,209,000	4,233,000
Originated Loan [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Internal credit risk grade groupings:
Loans	29,826,000	36,741,000
Originated Loan [Member] | Commercial Real Estate Owner Occupied Loan [Member] | Grade 1 - 4 [Member]
Internal credit risk grade groupings:
Loans	190,656,000	156,230,000
Originated Loan [Member] | Commercial Real Estate Owner Occupied Loan [Member] | Grade 5 - 7 [Member]
Internal credit risk grade groupings:
Loans	83,123,000	103,066,000
Originated Loan [Member] | Commercial Real Estate Owner Occupied Loan [Member] | Grade 8 - 9 [Member]
Internal credit risk grade groupings:
Loans	17,979,000	2,581,000
Originated Loan [Member] | Commercial Real Estate Owner Occupied Loan [Member]
Internal credit risk grade groupings:
Loans	291,758,000	261,877,000
Originated Loan [Member] | Commercial Real Estate Non Owner Occupied Loan [Member] | Grade 1 - 4 [Member]
Internal credit risk grade groupings:
Loans	285,035,000	219,325,000
Originated Loan [Member] | Commercial Real Estate Non Owner Occupied Loan [Member] | Grade 5 - 7 [Member]
Internal credit risk grade groupings:
Loans	113,982,000	122,717,000
Originated Loan [Member] | Commercial Real Estate Non Owner Occupied Loan [Member] | Grade 8 - 9 [Member]
Internal credit risk grade groupings:
Loans	11,960,000	22,024,000
Originated Loan [Member] | Commercial Real Estate Non Owner Occupied Loan [Member]
Internal credit risk grade groupings:
Loans	410,977,000	364,066,000
Originated Loan [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member] | Grade 1 - 4 [Member]
Internal credit risk grade groupings:
Loans	12,394,000	15,465,000
Originated Loan [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member] | Grade 5 - 7 [Member]
Internal credit risk grade groupings:
Loans	22,282,000	19,469,000
Originated Loan [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member] | Grade 8 - 9 [Member]
Internal credit risk grade groupings:
Loans	1,382,000	2,705,000
Originated Loan [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Internal credit risk grade groupings:
Loans	36,058,000	37,639,000
Originated Loan [Member]
Internal credit risk grade groupings:
Loans	1,246,116,000	1,053,243,000
Acquired Loan [Member] | Commercial and Industrial [Member] | Grade 1 - 4 [Member]
Internal credit risk grade groupings:
Loans	72,411,000
Acquired Loan [Member] | Commercial and Industrial [Member] | Grade 5 - 7 [Member]
Internal credit risk grade groupings:
Loans	90,320,000
Acquired Loan [Member] | Commercial and Industrial [Member] | Grade 8 - 9 [Member]
Internal credit risk grade groupings:
Loans	3,306,000
Acquired Loan [Member] | Commercial and Industrial [Member]
Internal credit risk grade groupings:
Loans	166,037,000	0
Acquired Loan [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member] | Grade 1 - 4 [Member]
Internal credit risk grade groupings:
Loans	5,875,000
Acquired Loan [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member] | Grade 5 - 7 [Member]
Internal credit risk grade groupings:
Loans	14,472,000
Acquired Loan [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member] | Grade 8 - 9 [Member]
Internal credit risk grade groupings:
Loans	1,801,000
Acquired Loan [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Internal credit risk grade groupings:
Loans	22,148,000	0
Acquired Loan [Member] | Commercial Real Estate Owner Occupied Loan [Member] | Grade 1 - 4 [Member]
Internal credit risk grade groupings:
Loans	39,496,000
Acquired Loan [Member] | Commercial Real Estate Owner Occupied Loan [Member] | Grade 5 - 7 [Member]
Internal credit risk grade groupings:
Loans	92,212,000
Acquired Loan [Member] | Commercial Real Estate Owner Occupied Loan [Member] | Grade 8 - 9 [Member]
Internal credit risk grade groupings:
Loans	6,922,000
Acquired Loan [Member] | Commercial Real Estate Owner Occupied Loan [Member]
Internal credit risk grade groupings:
Loans	138,630,000	0
Acquired Loan [Member] | Commercial Real Estate Non Owner Occupied Loan [Member] | Grade 1 - 4 [Member]
Internal credit risk grade groupings:
Loans	65,886,000
Acquired Loan [Member] | Commercial Real Estate Non Owner Occupied Loan [Member] | Grade 5 - 7 [Member]
Internal credit risk grade groupings:
Loans	78,103,000
Acquired Loan [Member] | Commercial Real Estate Non Owner Occupied Loan [Member] | Grade 8 - 9 [Member]
Internal credit risk grade groupings:
Loans	4,608,000
Acquired Loan [Member] | Commercial Real Estate Non Owner Occupied Loan [Member]
Internal credit risk grade groupings:
Loans	148,597,000	0
Acquired Loan [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member] | Grade 1 - 4 [Member]
Internal credit risk grade groupings:
Loans	35,858,000
Acquired Loan [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member] | Grade 5 - 7 [Member]
Internal credit risk grade groupings:
Loans	49,781,000
Acquired Loan [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member] | Grade 8 - 9 [Member]
Internal credit risk grade groupings:
Loans	1,063,000
Acquired Loan [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Internal credit risk grade groupings:
Loans	86,702,000	0
Acquired Loan [Member]
Internal credit risk grade groupings:
Loans	843,161,000	0
Commercial and Industrial [Member]
Internal credit risk grade groupings:
Loans	550,607,000	286,373,000
Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Internal credit risk grade groupings:
Loans	51,974,000	36,741,000
Commercial Real Estate Owner Occupied Loan [Member]
Internal credit risk grade groupings:
Loans	430,388,000	261,877,000
Commercial Real Estate Non Owner Occupied Loan [Member]
Internal credit risk grade groupings:
Loans	559,574,000	364,066,000
Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Internal credit risk grade groupings:
Loans	$ 122,760,000	$ 37,639,000

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Note 11 - Federal Income Taxes (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013	Jun. 01, 2014
Note 11 - Federal Income Taxes (Details) [Line Items]
Deferred Tax Assets, Valuation Allowance	$ 450,000	$ 0
Federal Alternative Minimum Tax Credits	2,800,000
Losses on Capital Investments Acquired [Member]
Note 11 - Federal Income Taxes (Details) [Line Items]
Deferred Tax Assets, Valuation Allowance			500,000
General Business Tax Credit Carryforward [Member]
Note 11 - Federal Income Taxes (Details) [Line Items]
Tax Credit Carryforward, Amount	$ 600,000

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Note 3 - Securities (Tables)

12 Months Ended

Dec. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Available-for-sale Securities [Table Text Block]

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
2014
U.S. Government agency debt obligations	$	194,894,000	$	1,612,000	$	(3,038,000	)	$	193,468,000
Mortgage-backed securities		92,656,000		1,123,000		(218,000	)		93,561,000
Municipal general obligation bonds		132,347,000		1,042,000		(307,000	)		133,082,000
Municipal revenue bonds		10,769,000		117,000		(13,000	)		10,873,000
Other investments		1,925,000		3,000		0			1,928,000
	$	432,591,000	$	3,897,000	$	(3,576,000	)	$	432,912,000
2013
U.S. Government agency debt obligations	$	108,279,000	$	263,000	$	(10,065,000	)	$	98,477,000
Mortgage-backed securities		12,456,000		1,102,000		0			13,558,000
Municipal general obligation bonds		16,488,000		388,000		(4,000	)		16,872,000
Municipal revenue bonds		878,000		38,000		0			916,000
Mutual funds		1,386,000		0		(31,000	)		1,355,000
	$	139,487,000	$	1,791,000	$	(10,100,000	)	$	131,178,000

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Table Text Block]

	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
2014
U.S. Government agency debt obligations	$	81,891,000	$	202,000	$	74,120,000	$	2,836,000	$	156,011,000	$	3,038,000
Mortgage-backed securities		49,940,000		218,000		0		0		49,940,000		218,000
Municipal general obligation bonds		54,104,000		307,000		0		0		54,104,000		307,000
Municipal revenue bonds		4,644,000		13,000		0		0		4,644,000		13,000
Other investments		0		0		0		0		0		0
	$	190,579,000	$	740,000	$	74,120,000	$	2,836,000	$	264,699,000	$	3,576,000
2013
U.S. Government agency debt obligations	$	57,117,000	$	5,798,000	$	29,679,000	$	4,267,000	$	86,796,000	$	10,065,000
Mortgage-backed securities		0		0		0		0		0		0
Municipal general obligation bonds		295,000		4,000		0		0		295,000		4,000
Municipal revenue bonds		0		0		0		0		0		0
Mutual funds		1,355,000		31,000		0		0		1,355,000		31,000
	$	58,767,000	$	5,833,000	$	29,679,000	$	4,267,000	$	88,446,000	$	10,100,000

Investments Classified by Contractual Maturity Date [Table Text Block]

	Weighted
	Average			Amortized		Fair
	Yield			Cost		Value
Due in one year or less		0.72	%	$	27,651,000	$	27,662,000
Due from one to five years		1.35			148,233,000		147,974,000
Due from five to ten years		2.99			70,282,000		70,191,000
Due after ten years		3.62			91,844,000		91,596,000
Mortgage-backed securities		1.79			92,656,000		93,561,000
Other investments		2.57			1,925,000		1,928,000
		2.17	%	$	432,591,000	$	432,912,000

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Note 20 - Subordinated Debentures (Tables)

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Schedule of Subordinated Borrowing [Table Text Block]

	Preferred Securities
Trust Name	Outstanding	Interest Rate	Maturity Date
Mercantile Bank Capital Trust I	$32,000,000	3 Month Libor + 218 bps	September 16, 2034
Firstbank Capital Trust I	$10,000,000	3 Month Libor + 199 bps	October 18, 2034
Firstbank Capital Trust II	$10,000,000	3 Month Libor + 127 bps	April 7, 2036
Firstbank Capital Trust III	$7,500,000	3 Month Libor + 135 bps	July 30, 2037
Firstbank Capital Trust IV	$7,500,000	3 Month Libor + 135 bps	July 30, 2037

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Note 3 - Securities (Details) - Debt Securities by Maturity (USD $)	Dec. 31, 2014
Note 3 - Securities (Details) - Debt Securities by Maturity [Line Items]
Due in one year or less	0.72%
Due in one year or less	$ 27,651,000
Due in one year or less	27,662,000
Due from one to five years	1.35%
Due from one to five years	148,233,000
Due from one to five years	147,974,000
Due from five to ten years	2.99%
Due from five to ten years	70,282,000
Due from five to ten years	70,191,000
Due after ten years	3.62%
Due after ten years	91,844,000
Due after ten years	91,596,000
	2.17%
	432,591,000
	432,912,000
Collateralized Mortgage Backed Securities [Member]
Note 3 - Securities (Details) - Debt Securities by Maturity [Line Items]
No single maturity, weighted average yield	1.79%
No single maturity, amortized cost	92,656,000
No single maturity, fair value	93,561,000
Other Debt Obligations [Member]
Note 3 - Securities (Details) - Debt Securities by Maturity [Line Items]
No single maturity, weighted average yield	2.57%
No single maturity, amortized cost	1,925,000
No single maturity, fair value	$ 1,928,000

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Note 14 - Commitments and Off-balance-sheet Risk (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Note 14 - Commitments and Off-balance-sheet Risk (Details) [Line Items]
Reserve or Liability Balance for Financial Instruments with Off-balance Sheet Risk	$ 0	$ 0
Mortgage Loans on Real Estate, Minimum Interest Rate in Range	4.00%
Mortgage Loans on Real Estate, Maximum Interest Rate in Range	7.00%
Term Debt Secured by Real Estate Balloon Payment Period	5 years
Term Debt Secured by Non-Real Estate Collateral Maturity Period	5 years
Liabilities for Accreted Fee Collected from Customer	100,000	100,000
Amount of Federal Reserve Requirement	8,400,000	1,500,000
Interest Rate Swap [Member]
Note 14 - Commitments and Off-balance-sheet Risk (Details) [Line Items]
Derivative, Notional Amount	15,400,000
Derivative, Fair Value, Net	$ (2,900,000)
Minimum [Member]
Note 14 - Commitments and Off-balance-sheet Risk (Details) [Line Items]
Amortization Period for Term Debt Secured by Real Estate	10 years
Interest Rates on Loans Secured by Non-Real Estate Collateral	4.00%
Fees Accreted Into Income During Interest Rate Swap Agreements Term	4 years
Maximum [Member]
Note 14 - Commitments and Off-balance-sheet Risk (Details) [Line Items]
Amortization Period for Term Debt Secured by Real Estate	20 years
Interest Rates on Loans Secured by Non-Real Estate Collateral	7.50%
Fees Accreted Into Income During Interest Rate Swap Agreements Term	15 years

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Note 2 - Business Combination (Details) - Pro Forma Information (Firstbank Corporation [Member], USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Firstbank Corporation [Member]
Note 2 - Business Combination (Details) - Pro Forma Information [Line Items]
Net interest income	$ 98,607,000	$ 93,862,000
Noninterest expense	81,295,000	93,263,000
Net income	$ 22,659,000	$ 16,068,000
Net income per diluted share (in Dollars per share)	$ 1.33	$ 0.96

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Note 13 - Related Parties (Tables)

12 Months Ended

Dec. 31, 2014

Related Party Transactions [Abstract]

Schedule of Related Party Transactions [Table Text Block]

	2014			2013
Beginning balance	$	6,884,000		$	1,418,000
New loans		781,000			6,309,000
Repayments		(381,000	)		(252,000	)
Adjustments		1,718,000			(591,000	)
Ending balance	$	9,002,000		$	6,884,000

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Note 1 - Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The consolidated financial statements include the accounts of Mercantile Bank Corporation (“Mercantile”) and its subsidiary, Mercantile Bank of Michigan (“Bank”), and of Mercantile Bank Real Estate Co., L.L.C. (“Mercantile Real Estate”) and Mercantile Insurance Center, Inc. (“Mercantile Insurance”), subsidiaries of our Bank, after elimination of significant intercompany transactions and accounts.

We have five separate business trusts: Mercantile Bank Capital Trust I, Firstbank Capital Trust I, Firstbank Capital Trust II, Firstbank Capital Trust III and Firstbank Capital Trust IV (“our trusts”). Our trusts were formed to issue trust preferred securities. We issued subordinated debentures to our trusts in return for the proceeds raised from the issuance of the trust preferred securities. Our trusts are not consolidated, but instead we report the subordinated debentures issued to the trusts as liabilities.

Nature of Operations: Mercantile was incorporated on July 15, 1997 to establish and own the Bank based in Grand Rapids, Michigan. The Bank began operations on December 15, 1997. We completed the merger of Firstbank Corporation (“Firstbank”), a Michigan corporation with approximately $1.5 billion in total assets and 46 branch locations, into Mercantile as of June 1, 2014.

The Bank is a community-based financial institution. The Bank’s primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are commercial loans, residential mortgage loans, and instalment loans. Substantially all loans are secured by specific items of collateral including business assets, real estate or consumer assets. Commercial loans are expected to be repaid from cash flow from operations of businesses. Real estate loans are secured by commercial or residential real estate. The Bank’s loan accounts and retail deposits are primarily with customers located in the communities in which we have bank office locations. As an alternative source of funds, the Bank has also issued certificates of deposit to depositors outside of its primary market areas. Substantially all revenues are derived from banking products and services and investment securities. While we monitor the revenue streams of the various products and services offered, we manage our business on the basis of one operating segment, banking.

Mercantile Insurance was formed during 2002 through the acquisition of an existing shelf insurance agency. Insurance products are offered through an Agency and Institutions Agreement among Mercantile Insurance, the Bank and Hub International. The insurance products are marketed through a central facility operated by the Michigan Bankers Insurance Association, members of which include the insurance subsidiaries of various Michigan-based financial institutions and Hub International. Mercantile Insurance receives commissions based upon written premiums produced under the Agency and Institutions Agreement.

Mercantile Real Estate was organized on July 21, 2003, principally to develop, construct, and own a facility in downtown Grand Rapids that serves as our Bank’s main office and Mercantile’s headquarters. This facility was placed into service during the second quarter of 2005.

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. The allowance for loan losses and the fair values of financial instruments are particularly subject to change.

Cash Flow Reporting: Cash and cash equivalents include cash on hand, demand deposits with other financial institutions, short-term investments (including securities with daily put provisions) and federal funds sold. Cash flows are reported net for customer loan and deposit transactions, interest-bearing time deposits with other financial institutions and short-term borrowings with maturities of 90 days or less.

Securities: Debt securities classified as held to maturity are carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available for sale when they might be sold prior to maturity. Equity securities with readily determinable fair values are classified as available for sale. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax. Federal Home Loan Bank stock is carried at cost.

Interest income includes amortization of purchase premiums and accretion of discounts. Premiums and discounts on securities are amortized or accreted on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

Declines in the fair value of debt securities below their amortized cost that are other than temporary (“OTTI”) are reflected in earnings or other comprehensive income, as appropriate. For those debt securities whose fair value is less than their amortized cost, we consider our intent to sell the security, whether it is more likely than not that we will be required to sell the security before recovery and whether we expect to recover the entire amortized cost of the security based on our assessment of the issuer’s financial condition. In analyzing an issuer’s financial condition, we consider whether the securities are issued by the federal government or its agencies, and whether downgrades by bond rating agencies have occurred. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement, and 2) OTTI related to other factors, such as liquidity conditions in the market or changes in market interest rates, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost.

Loans: Loans that we have the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs and an allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments. Net unamortized deferred loan fees amounted to $1.1 million and $0.5 million at December 31, 2014 and 2013, respectively.

Interest income on commercial loans and mortgage loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer and credit card loans are typically charged off no later than when they are 120 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal and interest is considered doubtful.

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Loans Held for Sale: Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings. Prior to the merger with Firstbank, such mortgage loans were sold servicing released. Subsequent to the merger, mortgage loans held for sale are generally sold with servicing rights retained. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related mortgage loan sold, which is reduced by the cost allocated to the servicing right. We generally lock in the sale price to the purchaser of the mortgage loan at the same time we make an interest rate commitment to the borrower.

Year-end mortgage loans held for sale were as follows:

	2014		2013
Mortgage loans held for sale	$	1,574,000	$	1,115,000
Less: Allowance to adjust to lower of cost or market		0		0
Mortgage loans held for sale, net	$	1,574,000	$	1,115,000

Mortgage Loan Derivatives: From time to time, we enter into mortgage loan derivatives such as forward contracts and interest rate lock commitments in the ordinary course of business. The derivatives are not designated as hedges and are carried at fair value. The net gain or loss on mortgage loan derivatives is included in mortgage banking activities in the income statement. The balance of mortgage loan derivatives was immaterial at December 31, 2014 and 2013.

Mortgage Banking Activities: Mortgage loan servicing rights are recognized as assets based on the allocated value of retained servicing rights on mortgage loans sold. Mortgage loan servicing rights are carried at the lower of amortized cost or fair value and are expensed in proportion to, and over the period of, estimated net servicing revenues. Impairment is evaluated based on the fair value of the rights using groupings of the underlying mortgage loans as to interest rates. Any impairment of a grouping is reported as a valuation allowance.

Servicing fee income is recorded for fees earned for serving mortgage loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. Amortization of mortgage loan servicing rights is netted against mortgage loan servicing income and recorded in mortgage banking activities in the income statement.

Troubled Debt Restructurings: A loan is accounted for as a troubled debt restructuring if we, for economic or legal reasons, grant a concession to a borrower considered to be experiencing financial difficulties that we would not otherwise consider. A troubled debt restructuring may involve the receipt of assets from the debtor in partial or full satisfaction of the loan, or a modification of terms such as a reduction of the stated interest rate or balance of the loan, a reduction of accrued interest, an extension of the maturity date or renewal of the loan at a stated interest rate lower than the current market rate for a new loan with similar risk, or some combination of these concessions. Troubled debt restructurings can be in either accrual or nonaccrual status. Nonaccrual troubled debt restructurings are included in nonperforming loans. Accruing troubled debt restructurings are generally excluded from nonperforming loans as it is considered probable that all contractual principal and interest due under the restructured terms will be collected.

Loans modified as troubled debt restructurings are, by definition, considered to be impaired loans. Impairment for these loans is measured on a loan-by-loan basis similar to other impaired loans as described below under “Allowance for Loan Losses.” Certain loans modified as troubled debt restructurings may have been previously measured for impairment under a general allowance methodology (i.e., pooling), thus at the time the loan is modified as a troubled debt restructuring the allowance will be impacted by the difference between the results of these two measurement methodologies. Loans modified as troubled debt restructurings that subsequently default are factored into the determination of the allowance for loan losses in the same manner as other defaulted loans.

Allowance for Loan Losses: The allowance for loan losses (“allowance”) is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when we believe the uncollectability of a loan is confirmed. Subsequent recoveries, if any, are credited to the allowance. We estimate the allowance balance required using past loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. We estimate credit losses based on individual loans determined to be impaired and on all other loans grouped on similar risk characteristics. Our historical loss component is the most significant of the allowance components and is based on historical loss experience by credit risk grade for commercial loans and payment status for mortgage and consumer loans. Loans are pooled based on similar risk characteristics supported by observable data. The historical loss experience component of the allowance represents the results of migration analysis of historical net charge-offs for portfolios of loans, including groups of commercial loans within each credit risk grade. For measuring loss exposure in a pool of loans, the historical net charge-off or migration experience is utilized to estimate expected future losses to be realized from the pool of loans. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in our judgment, should be charged-off.

A loan is considered impaired when, based on current information and events, it is probable we will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Factors considered in determining impairment include payment status and collateral value. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. We determine the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of delay, the reasons for delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment.

Transfers of Financial Assets: Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when: (1) the assets have been isolated from the Bank and put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. Our transfers of financial assets are generally limited to commercial loan participations sold and residential mortgage loans sold in the secondary market.

Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 5 to 33 years. Furniture, fixtures and equipment are depreciated using the straight-line method with useful lives ranging from 3 to 7 years. Maintenance, repairs and minor alterations are charged to current operations as expenditures occur and major improvements are capitalized.

Long-lived Assets: Premises and equipment and other long-lived assets are reviewed for impairment when events indicate their carrying amount may not be recoverable based on future undiscounted cash flows. If impaired, the assets are recorded at the lower of carrying value or fair value.

Foreclosed Assets: Assets acquired through or in lieu of foreclosure are initially recorded at their estimated fair value net of estimated selling costs, establishing a new cost basis. If fair value subsequently declines, a valuation allowance is recorded through noninterest expense, as are collection and operating costs after acquisition. Foreclosed assets totaled $2.0 million and $2.9 million as of December 31, 2014 and 2013, respectively.

Bank Owned Life Insurance: The Bank has purchased life insurance policies on certain key officers. Bank owned life insurance is recorded at its cash surrender value, or the amount that can be realized.

Goodwill and Core Deposit Intangible: Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment and any such impairment is recognized in the period identified. A more frequent assessment is performed should events or changes in circumstances indicate the carrying value of the goodwill may not be recoverable. We may elect to perform a qualitative assessment for the annual impairment test. If the qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we elect not to perform a qualitative assessment, then we would be required to perform a quantitative test for goodwill impairment. The quantitative test is a two-step process consisting of comparing the carrying value of the reporting unit to an estimate of its fair value. If the estimated fair value of the reporting unit is less than the carrying value, goodwill is impaired and is written down to its estimated fair value. In 2014, we elected to perform a qualitative assessment for our annual impairment test and concluded our fair value was greater than its carrying amount; therefore, no further testing was required.

The core deposit intangible that arose from the merger with Firstbank was initially measured at fair value and is being amortized into noninterest expense over a ten-year period using the sum-of-the-years-digits methodology.

Repurchase Agreements: The Bank sells certain securities under agreements to repurchase. The agreements are treated as collateralized financing transactions, with the obligations to repurchase the securities sold reflected as liabilities and the securities underlying the agreements remaining in assets in the Consolidated Balance Sheets.

Financial Instruments and Loan Commitments: Financial instruments include off-balance-sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded. Instruments, such as standby letters of credit, that are considered financial guarantees are recorded at fair value.

Stock-Based Compensation: Compensation cost for equity-based awards is measured on the grant date based on the fair value of the award at that date, and is recognized over the requisite service period, net of estimated forfeitures. Fair value of stock option awards is estimated using a closed option valuation (Black-Scholes) model. Fair value of restricted stock awards is based upon the quoted market price of the common stock on the date of grant.

Advertising Costs: Advertising costs are expensed as incurred.

Income Taxes: Income tax expense is the total of the current year income tax due or refundable, the change in deferred income tax assets and liabilities, and any adjustments related to unrecognized tax benefits. Deferred income tax assets and liabilities are recognized for the tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates applicable to future years. A valuation allowance, if needed, reduces deferred income tax assets to the amount expected to be realized.

Fair Values of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates. The fair value estimates of existing on- and off-balance sheet financial instruments do not include the value of anticipated future business or the values of assets and liabilities not considered financial instruments.

Earnings Per Share: Basic earnings per share is based on the weighted average number of common shares and participating securities outstanding during the period. Diluted earnings per share include the dilutive effect of additional potential common shares issuable under our stock-based compensation plans using the treasury stock method. In addition, diluted earnings per share for 2012 include the dilutive effect of our common stock warrant granted to the U.S. Department of Treasury that we repurchased on July 3, 2012, also using the treasury stock method. Our unvested stock awards, which contain non-forfeitable rights to dividends whether paid or unpaid (i.e., participating securities), are included in the number of shares outstanding for both basic and diluted earnings per share calculations. In the event of a net loss, our unvested stock awards are excluded from the calculations of both basic and diluted earnings per share.

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale and interest rate swaps which are also recognized as a separate component of equity.

Derivatives: Derivative financial instruments are recognized as assets or liabilities at fair value. The accounting for changes in the fair value of derivatives depends on the use of the derivatives and whether the derivatives qualify for hedge accounting. Used as part of our asset and liability management to help manage interest rate risk, our derivatives have historically generally consisted of interest rate swap agreements that qualified for hedge accounting. We do not use derivatives for trading purposes.

Changes in the fair value of derivatives that are designated, for accounting purposes, as a hedge of the variability of cash flows to be received on various assets and liabilities and are effective are reported in other comprehensive income. They are later reclassified into earnings in the same periods during which the hedged transaction affects earnings and are included in the line item in which the hedged cash flows are recorded. If hedge accounting does not apply, changes in the fair value of derivatives are recognized immediately in current earnings as interest income or expense.

If designated as a hedge, we formally document the relationship between the derivative instrument and the hedged item, as well as the risk-management objective and the strategy for undertaking the hedge transaction. This documentation includes linking cash flow hedges to specific assets on the balance sheet. If designated as a hedge, we also formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivative instrument that is used is highly effective in offsetting changes in cash flows of the hedged items. Ineffective hedge gains and losses are recognized immediately in current earnings as noninterest income or expense. We discontinue hedge accounting when we determine the derivative is no longer effective in offsetting changes in the cash flows of the hedged item, the derivative is settled or terminates, or treatment of the derivatives as a hedge is no longer appropriate or intended.

Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. We do not believe there are any such matters outstanding that would have a material effect on the financial statements.

Reclassifications: Certain items in the prior years’ financial statements have been reclassified to conform to the current year presentation.

Accounting Standards Updates: In January of 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. This ASU clarifies that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The ASU also requires additional related interim and annual disclosures. The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2014, and is not expected to have a material effect on our financial position or results of operations when adopted.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU establishes a comprehensive revenue recognition standard for virtually all industries under U.S. GAAP, including those that previously followed industry-specific guidance such as the real estate, construction and software industries. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires five basic steps: i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2016, with three transition methods available – full retrospective, retrospective and cumulative effect approach. Although we are in process of evaluating the impact, the adoption of this ASU is not expected to have a material effect on our financial position or results of operations.

In June 2014, the FASB issued ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. This ASU requires two accounting changes. First, repurchase-to-maturity transactions will be accounted for as secured borrowing transactions on the balance sheet, rather than sales. Second, for repurchase financing arrangements, the ASU requires separate accounting for a transfer of a financial asset executed contemporaneously with (or in contemplation of) a repurchase agreement with the same counterparty, which also will generally result in secured borrowing accounting for the repurchase agreement. The ASU also introduces new disclosures to increase transparency about the types of collateral pledged for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions that are accounted for as secured borrowings. The ASU also requires a transferor to disclose information about transactions accounted for as a sale in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets through an agreement with the transferee. The accounting changes and disclosure for certain transactions accounted for as a sale are effective for the first annual and interim periods beginning after December 15, 2014. The disclosure for transactions accounted for as secured borrowings is required for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Adoption of this ASU is not expected to have a material effect on our financial position or results of operations.

In August 2014, the FASB issued ASU 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure. This ASU requires that certain government-guaranteed mortgage loans, including those guaranteed by the Federal Housing Administration, be derecognized and that a separate other receivable be recognized upon foreclosure if certain conditions are met. Upon foreclosure on the loans that meet these criteria, a separate receivable should be recorded based on the amount of the loan balance expected to be recovered from the guarantor. The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2014, and is not expected to have a material effect on our financial position or results of operations when adopted.

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Note 17 - Fair Values of Financial Instruments (Details) - Fair Value Hierarchy of Financial Instruments (USD $)	Dec. 31, 2014		Dec. 31, 2013
Financial assets
Securities available for sale	$ 432,912,000	[1]	$ 131,178,000	[1]
Federal Home Loan Bank stock	13,699,000	[2]	11,961,000	[2]
Federal Home Loan Bank stock	13,699,000	[2]	11,961,000	[2]
Bank owned life insurance	57,861,000		51,377,000
Financial liabilities
Deposits	2,276,915,000		1,118,911,000
Securities sold under agreements to repurchase	167,569,000		69,305,000
Accrued interest payable	12,263,000		7,435,000
Fair Value, Inputs, Level 1 [Member]
Financial assets
Cash	13,261,000		1,464,000
Cash	13,261,000		1,464,000
Fair Value, Inputs, Level 2 [Member]
Financial assets
Cash equivalents	159,477,000		145,501,000
Cash equivalents	159,477,000		145,501,000
Bank owned life insurance	57,861,000		51,377,000
Bank owned life insurance	57,861,000		51,377,000
Accrued interest receivable	8,033,000		3,649,000
Accrued interest receivable	8,033,000		3,649,000
Financial liabilities
Deposits	2,276,915,000		1,118,911,000
Deposits	2,254,749,000		1,120,576,000
Securities sold under agreements to repurchase	167,569,000		69,305,000
Securities sold under agreements to repurchase	167,569,000		69,305,000
Federal Home Loan Bank advances	54,022,000		45,000,000
Federal Home Loan Bank advances	54,720,000		45,139,000
Subordinated debentures	54,472,000		32,990,000
Subordinated debentures	54,508,000		32,974,000
Accrued interest payable	1,942,000		2,041,000
Accrued interest payable	1,942,000		2,041,000
Fair Value, Inputs, Level 3 [Member]
Financial assets
Loans, net	2,069,236,000		1,030,422,000
Loans, net	2,064,140,000		1,027,300,000
Interest Rate Swap [Member]
Financial liabilities
Interest rate swap	253,000	[1]	264,000	[1]
Interest rate swap	$ 253,000	[1]	$ 264,000	[1]

[1] See Note 18 for a description of the fair value hierarchy as well as a disclosure of levels for classes of financial assets and liabilities.

[2] It is not practical to determine the fair value of FHLB stock due to transferability restrictions.

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Note 2 - Business Combination (Details) - Acquired Loans Fair Value (Firstbank Corporation [Member], USD $)	Jun. 01, 2014
Commercial Loans:
Loans	$ 943,662,000
Commercial and Industrial [Member] | Nonperforming Financing Receivable [Member]
Commercial Loans:
Loans	878,000
Commercial and Industrial [Member] | Performing Financing Receivable [Member]
Commercial Loans:
Loans	163,316,000
Commercial and Industrial [Member]
Commercial Loans:
Loans	164,194,000
Commercial Real Estate Portfolio Segment [Member] | Nonperforming Financing Receivable [Member]
Commercial Loans:
Loans	12,973,000
Commercial Real Estate Portfolio Segment [Member] | Performing Financing Receivable [Member]
Commercial Loans:
Loans	378,016,000
Commercial Real Estate Portfolio Segment [Member]
Commercial Loans:
Loans	390,989,000
Commercial Real Estate Construction Financing Receivable [Member] | Nonperforming Financing Receivable [Member]
Commercial Loans:
Loans	1,289,000
Commercial Real Estate Construction Financing Receivable [Member] | Performing Financing Receivable [Member]
Commercial Loans:
Loans	33,726,000
Commercial Real Estate Construction Financing Receivable [Member]
Commercial Loans:
Loans	35,015,000
Commercial Portfolio Segment [Member] | Nonperforming Financing Receivable [Member]
Commercial Loans:
Loans	15,140,000
Commercial Portfolio Segment [Member] | Performing Financing Receivable [Member]
Commercial Loans:
Loans	575,058,000
Commercial Portfolio Segment [Member]
Commercial Loans:
Loans	590,198,000
Residential Portfolio Segment [Member] | Nonperforming Financing Receivable [Member]
Commercial Loans:
Loans	9,694,000
Residential Portfolio Segment [Member] | Performing Financing Receivable [Member]
Commercial Loans:
Loans	216,653,000
Residential Portfolio Segment [Member]
Commercial Loans:
Loans	226,347,000
Consumer Installment Portfolio Segment [Member] | Nonperforming Financing Receivable [Member]
Commercial Loans:
Loans	167,000
Consumer Installment Portfolio Segment [Member] | Performing Financing Receivable [Member]
Commercial Loans:
Loans	61,657,000
Consumer Installment Portfolio Segment [Member]
Commercial Loans:
Loans	61,824,000
Consumer Home Equity Line Portfolio Segment [Member] | Nonperforming Financing Receivable [Member]
Commercial Loans:
Loans	288,000
Consumer Home Equity Line Portfolio Segment [Member] | Performing Financing Receivable [Member]
Commercial Loans:
Loans	52,054,000
Consumer Home Equity Line Portfolio Segment [Member]
Commercial Loans:
Loans	52,342,000
Consumer Construction Portfolio Segment [Member] | Nonperforming Financing Receivable [Member]
Commercial Loans:
Loans	76,000
Consumer Construction Portfolio Segment [Member] | Performing Financing Receivable [Member]
Commercial Loans:
Loans	12,875,000
Consumer Construction Portfolio Segment [Member]
Commercial Loans:
Loans	12,951,000
Consumer Portfolio Segment [Member] | Nonperforming Financing Receivable [Member]
Commercial Loans:
Loans	10,225,000
Consumer Portfolio Segment [Member] | Performing Financing Receivable [Member]
Commercial Loans:
Loans	343,239,000
Consumer Portfolio Segment [Member]
Commercial Loans:
Loans	353,464,000
Nonperforming Financing Receivable [Member]
Commercial Loans:
Loans	25,365,000
Performing Financing Receivable [Member]
Commercial Loans:
Loans	$ 918,297,000

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Note 24 - Quarterly Financial Data (Unaudited) (Details) - Quarterly Financial Data (Unaudited) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
2014
Interest Income	$ 28,147,000	$ 28,900,000	$ 18,483,000	$ 13,588,000	$ 15,373,000	$ 14,667,000	$ 13,992,000	$ 14,210,000	$ 89,118,000	$ 58,242,000	$ 59,917,000
Net Interest Income	25,173,000	25,989,000	15,552,000	11,064,000	12,695,000	11,994,000	11,312,000	11,455,000	77,778,000	47,456,000	46,701,000
Net Income	$ 6,293,000	$ 5,948,000	$ 1,510,000	$ 3,580,000	$ 5,163,000	$ 3,453,000	$ 4,016,000	$ 4,401,000	$ 17,331,000	$ 17,033,000	$ 11,505,000
Basic Earnings per Share (in Dollars per share)	$ 0.37	$ 0.35	$ 0.13	$ 0.41	$ 0.59	$ 0.40	$ 0.46	$ 0.51	$ 1.28	$ 1.96	$ 1.33
Diluted Earnings per Share (in Dollars per share)	$ 0.37	$ 0.35	$ 0.13	$ 0.41	$ 0.59	$ 0.40	$ 0.46	$ 0.50	$ 1.28	$ 1.95	$ 1.30

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Note 9 - Securities Sold Under Agreements to Repurchase (Tables)

12 Months Ended

Dec. 31, 2014

Disclosure Text Block [Abstract]

Schedule of Repurchase Agreements [Table Text Block]

	2014			2013
Outstanding balance at year-end	$	167,569,000		$	69,305,000
Weighted average interest rate at year-end		0.11	%		0.12	%
Average daily balance during the year	$	105,474,000		$	65,939,000
Weighted average interest rate during the year		0.12	%		0.12	%
Maximum daily balance during the year	$	178,042,000		$	78,960,000

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Note 21 - Regulatory Matters

12 Months Ended

Dec. 31, 2014

Disclosure Text Block [Abstract]

Regulatory Capital Requirements under Banking Regulations [Text Block]

NOTE 21 - REGULATORY MATTERS

We are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors, and the regulators can lower classifications in certain cases. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the financial statements.

The prompt corrective action regulations provide five classifications, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If an institution is not well capitalized, regulatory approval is required to accept brokered deposits. Subject to limited exceptions, no institution may make a capital distribution if, after making the distribution, it would be undercapitalized. If an institution is undercapitalized, it is subject to close monitoring by its principal federal regulator, its asset growth and expansion are restricted, and plans for capital restoration are required. In addition, further specific types of restrictions may be imposed on the institution at the discretion of the federal regulator. At year-end 2014 and 2013, our Bank was in the well capitalized category under the regulatory framework for prompt corrective action. There are no conditions or events since December 31, 2014 that we believe have changed our Bank’s categorization.

Our actual capital levels (dollars in thousands) and minimum required levels were:

											Minimum Required
											to be Well
						Minimum Required					Capitalized Under
						for Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Regulations
	Amount		Ratio			Amount		Ratio			Amount		Ratio
2014
Total capital (to risk weighted assets)
Consolidated	$	334,793		14.4	%	$	185,553		8.0	%	$	NA		NA
Bank		332,749		14.4			185,309		8.0			231,636		10.0	%
Tier 1 capital (to risk weighted assets)
Consolidated		314,752		13.6			92,777		4.0			NA		NA
Bank		312,708		13.5			92,655		4.0			138,982		6.0
Tier 1 capital (to average assets)
Consolidated		314,752		11.2			112,949		4.0			NA		NA
Bank		312,708		11.1			112,856		4.0			141,070		5.0
2013
Total capital (to risk weighted assets)
Consolidated	$	193,925		15.9	%	$	97,498		8.0	%	$	NA		NA
Bank		190,493		15.7			97,329		8.0			121,662		10.0	%
Tier 1 capital (to risk weighted assets)
Consolidated		178,598		14.7			48,749		4.0			NA		NA
Bank		175,192		14.4			48,665		4.0			72,997		6.0
Tier 1 capital (to average assets)
Consolidated		178,598		12.5			57,006		4.0			NA		NA
Bank		175,192		12.3			56,860		4.0			71,075		5.0

Federal and state banking laws and regulations place certain restrictions on the amount of dividends our Bank can transfer to Mercantile and on the capital levels that must be maintained. At year-end 2014, under the most restrictive of these regulations, our Bank could distribute approximately $87.7 million to Mercantile as dividends without prior regulatory approval.

Our and our bank’s ability to pay cash and stock dividends is subject to limitations under various laws and regulations and to prudent and sound banking practices. On January 16, 2014, our Board of Directors declared a cash dividend on our common stock in the amount of $0.12 per share that was paid on March 10, 2014 to shareholders of record as of February 10, 2014. On May 9, 2014, our Board of Directors declared a cash dividend on our common stock in the amount of $0.12 per share that was paid on June 25, 2014 to shareholders of record as of June 13, 2014. On July 17, 2014, our Board of Directors declared a cash dividend on our common stock in the amount of $0.12 per share that was paid on September 24, 2014 to shareholders of record as of September 12, 2014. On October 16, 2014, our Board of Directors declared a cash dividend on our common stock in the amount of $0.12 per share that was paid on December 24, 2014 to shareholders of record as of December 12, 2014. In addition, on May 9, 2014, our Board of Directors declared a special cash dividend on our common stock in the amount of $2.00 per share that was paid on May 29, 2014 to shareholders of record as of May 22, 2014. The special cash dividend, in contemplation of the plan of merger with Firstbank, was paid to Mercantile shareholders prior to the effective date of the merger with Firstbank and before the issuance of Mercantile shares in exchange for Firstbank shares.

On January 15, 2015, our Board of Directors declared a cash dividend on our common stock in the amount of $0.14 per share that will be paid on March 25, 2015 to shareholders of record as of March 13, 2015. In addition, on January 30, 2015, we announced that our Board of Directors had authorized a new program to repurchase up to $20.0 million of our common stock from time to time in open market transactions at prevailing market prices or by other means in accordance with applicable regulations. We expect to fund a majority of such repurchases from cash dividends paid to us from our Bank.

Our consolidated capital levels as of December 31, 2014 and 2013 include $52.4 million and $32.0 million, respectively, of trust preferred securities subject to certain limitations. Under applicable Federal Reserve guidelines, the trust preferred securities constitute a restricted core capital element. The guidelines provide that the aggregate amount of restricted core elements that may be included in Tier 1 capital must not exceed 25% of the sum of all core capital elements, including restricted core capital elements, net of goodwill less any associated deferred tax liability. Our ability to include the trust preferred securities in Tier 1 capital in accordance with the guidelines is not affected by the provision of the Dodd-Frank Act generally restricting such treatment, because (i) the trust preferred securities were issued before May 19, 2010, and (ii) our total consolidated assets as of December 31, 2009 were less than $15.0 billion. At December 31, 2014 and 2013, all $52.4 million and $32.0 million, respectively, of the trust preferred securities were included as Tier 1 capital of Mercantile.

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Note 20 - Subordinated Debentures

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE 20 – SUBORDINATED DEBENTURES

We have five business trusts that are wholly-owned subsidiaries of Mercantile, four of which were assumed by Mercantile in conjunction with the Firstbank merger. A fair value discount of $15.0 million was recorded at the time of the merger, which is being amortized at $0.7 million annually over the next 21.5 years. Each of the trusts was formed to issue Preferred Securities that were sold in private sales, as well as selling Common Securities to Mercantile. The proceeds from the Preferred and Common Securities sales were used by the trusts to purchase Floating Rate Notes issued by Mercantile. 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 the 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. The Floating Rate Notes are categorized on our Consolidated Balance Sheets as subordinated debentures and the interest expense is recorded on our Consolidated Statements of Income under interest expense on other borrowings.

The following table depicts our five business trusts as of December 31, 2014:

	Preferred Securities
Trust Name	Outstanding	Interest Rate	Maturity Date
Mercantile Bank Capital Trust I	$32,000,000	3 Month Libor + 218 bps	September 16, 2034
Firstbank Capital Trust I	$10,000,000	3 Month Libor + 199 bps	October 18, 2034
Firstbank Capital Trust II	$10,000,000	3 Month Libor + 127 bps	April 7, 2036
Firstbank Capital Trust III	$7,500,000	3 Month Libor + 135 bps	July 30, 2037
Firstbank Capital Trust IV	$7,500,000	3 Month Libor + 135 bps	July 30, 2037

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Note 11 - Federal Income Taxes (Details) - Significant Components of Deferred Tax Assets and Liabilities (USD $)	Dec. 31, 2014	Dec. 31, 2013
Deferred income tax assets
Allowance for loan losses	$ 7,014,000	$ 7,987,000
Tax credit carryforwards	3,395,000	1,397,000
Nonaccrual loan interest income	471,000	605,000
Deferred compensation	1,304,000	567,000
Deferred loan fees	445,000	273,000
Fair value write-downs on foreclosed properties	212,000	241,000
Fair value of interest rate swap	89,000	92,000
Losses on capital investments	450,000	0
Stock compensation	521,000	207,000
Net operating loss carryforward	0	4,050,000
Unrealized loss on securities	0	2,908,000
Other	725,000	136,000
	14,626,000	18,463,000
Deferred income tax liabilities
Depreciation	1,217,000	419,000
Prepaid expenses	425,000	192,000
Core deposit intangible	5,386,000	0
Mortgage loan servicing rights	2,349,000	0
Unrealized gain on securities	112,000	0
Other	476,000	98,000
	9,965,000	709,000
Net deferred tax asset before valuation allowance	4,661,000	17,754,000
Valuation allowance	(450,000)	0
Total net deferred tax asset	$ 4,211,000	$ 17,754,000

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Note 1 - Summary of Significant Accounting Policies (Details) (USD $)	0 Months Ended	12 Months Ended
	Jun. 01, 2014	Dec. 31, 2014	Dec. 31, 2013
Note 1 - Summary of Significant Accounting Policies (Details) [Line Items]
Entity Incorporation, Date of Incorporation		Jul. 15, 1997
Entity Incorporation Date of Operations		Dec. 15, 1997
Business Acquisition, Effective Date of Acquisition	Jun. 01, 2014
Number of Operating Segments		1
Loans and Leases Receivable, Deferred Income		$ 1,100,000	$ 500,000
Interest Income on Commercial and Mortgage Loans, Discontinued Period		90 days
Maximum Delinquency Period for Consumer and Credit Card Loans to be Charged-off		120 days
Repossessed Assets		2,000,000	2,900,000
Building Improvements [Member] | Minimum [Member]
Note 1 - Summary of Significant Accounting Policies (Details) [Line Items]
Property, Plant and Equipment, Useful Life		5 years
Building Improvements [Member] | Maximum [Member]
Note 1 - Summary of Significant Accounting Policies (Details) [Line Items]
Property, Plant and Equipment, Useful Life		33 years
Furniture and Fixtures [Member] | Minimum [Member]
Note 1 - Summary of Significant Accounting Policies (Details) [Line Items]
Property, Plant and Equipment, Useful Life		3 years
Furniture and Fixtures [Member] | Maximum [Member]
Note 1 - Summary of Significant Accounting Policies (Details) [Line Items]
Property, Plant and Equipment, Useful Life		7 years
Core Deposits [Member]
Note 1 - Summary of Significant Accounting Policies (Details) [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		10 years
Firstbank Corporation [Member]
Note 1 - Summary of Significant Accounting Policies (Details) [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets	1,452,880,000
Business Combination, Branches Acquired	46
Mercantile Real Estate [Member]
Note 1 - Summary of Significant Accounting Policies (Details) [Line Items]
Business Initiation Date of Company		Jul. 21, 2003

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Note 10 - Federal Home Loan Bank Advances (Tables)

12 Months Ended

Dec. 31, 2014

Disclosure Text Block [Abstract]

Maturities of Currently Outstanding FHLB Advances [Table Text Block]

Maturities over the next five years are:
2015	$	6,022,000
2016		3,000,000
2017		45,000,000
2018		0
2019		0

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Note 22 - U.S. Treasury Capital Purchase Program Participation

12 Months Ended

Dec. 31, 2014

US Treasury Capital Purchase Program Participation [Abstract]

US Treasury Capital Purchase Program Participation [Text Block]

NOTE 22 – U.S. TREASURY CAPITAL PURCHASE PROGRAM PARTICIPATION

On May 15, 2009, we completed the sale of preferred stock and a warrant for common stock to the United States Treasury Department (“Treasury”) for $21.0 million under the Treasury’s Capital Purchase Program.  The program was designed to attract broad participation by healthy banking institutions to help stabilize the financial system and increase lending for the benefit of the U.S. economy.  Under the terms of the sale, the Treasury received 21,000 shares of fixed rate cumulative perpetual preferred stock with a liquidation value of $1,000 per share and a warrant to purchase 616,438 shares of our common stock, no par value, in exchange for $21.0 million.  The preferred stock qualified as Tier 1 capital and paid cumulative dividends at a rate of 5.00% for the first five years, and 9.00% thereafter.  The common stock warrant had a 10-year term and was immediately exercisable upon its issuance, with an exercise price equal to $5.11 per share.  The Treasury agreed not to exercise voting power with respect to any shares of common stock issued upon exercise of the warrant, while it held the shares.

During the second quarter of 2012, we consummated the repurchase of the $21.0 million in preferred stock at par from the Treasury following approval from the Federal Reserve and consultation with the Federal Deposit Insurance Corporation.  To fund the repurchase, our bank paid us cash dividends aggregating approximately the same amount.  We recorded a reduction of retained earnings of approximately $0.6 million in the second quarter of 2012 resulting from the accelerated discount on the preferred stock which was being amortized over an original period of five years from the issuance date of May 15, 2009. During the third quarter of 2012, we consummated the repurchase of the warrant for approximately $7.5 million from the Treasury.  To fund the repurchase, our bank paid us a cash dividend of approximately the same amount. As part of the repurchase, we recorded a reduction in shareholders’ equity of approximately $7.5 million during the third quarter of 2012.

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Note 23 - Accumulated Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2014

Disclosure Text Block [Abstract]

Comprehensive Income (Loss) Note [Text Block]

NOTE 23 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

At December 31, 2014, accumulated other comprehensive loss, net of tax effects (as applicable), consists of a net unrealized gain on available for sale securities of $0.2 million and the fair value of an interest rate swap of negative $0.2 million. At December 31, 2013, accumulated other comprehensive income, net of tax effects (as applicable), consists of a net unrealized loss on available for sale securities of $5.4 million and the fair value of an interest rate swap of negative $0.2 million. At December 31, 2012, accumulated other comprehensive income, net of tax effects (as applicable), consists of a net unrealized gain on available for sale securities of $2.4 million and the fair value of an interest rate swap of negative $0.7 million.

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Consolidated Statements of Cash Flows (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities
Net income	$ 17,331,000	$ 17,033,000	$ 12,535,000
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	7,613,000	2,208,000	2,238,000
Accretion of acquired loans	(3,194,000)	0	0
Provision for loan losses	(3,000,000)	(7,200,000)	(3,100,000)
Deferred income tax expense	4,506,000	8,092,000	5,636,000
Stock-based compensation expense	714,000	473,000	54,000
Stock grants to directors for retainer fee	155,000	0	0
Proceeds from sales of mortgage loans held for sale	67,422,000	51,373,000	83,713,000
Origination of mortgage loans held for sale	(65,392,000)	(48,321,000)	(83,986,000)
Net gain on sales of mortgage loans held for sale	(1,625,000)	(658,000)	(1,247,000)
Net (gain) loss on sale and valuation write-downs of foreclosed assets	(894,000)	(1,585,000)	1,725,000
Earnings on bank owned life insurance	(1,184,000)	(1,329,000)	(1,528,000)
Net change in:
Accrued interest receivable	(11,000)	225,000	529,000
Other assets	1,795,000	8,465,000	(1,805,000)
Accrued interest and other liabilities	(9,822,000)	(94,000)	2,267,000
Net cash from operating activities	14,414,000	28,682,000	17,031,000
Cash flows from investing activities
Cash received in merger	91,806,000	0	0
Securities available for sale	(19,874,000)	(49,812,000)	(69,956,000)
Proceeds from:
Maturities, calls and repayments of securities available for sale	75,880,000	34,809,000	102,672,000
Proceeds from sales of securities available for sale	0	10,310,000	0
Proceeds from Federal Home Loan Bank stock redemption	5,527,000	0	0
Loan originations and payments, net	(90,853,000)	(15,298,000)	16,237,000
Purchases of premises and equipment, net	(2,150,000)	(326,000)	(571,000)
Proceeds from sale of foreclosed assets	4,427,000	7,898,000	18,348,000
Net cash from (for) investing activities	64,763,000	(12,419,000)	66,730,000
Cash flows from financing activities
Net decrease in time deposits	(58,927,000)	(23,038,000)	(47,257,000)
Net increase (decrease) in all other deposits	(11,307,000)	6,745,000	70,386,000
Net increase (decrease) in securities sold under agreements to repurchase	43,780,000	4,540,000	(7,804,000)
Proceeds from Federal Home Loan Bank advances	0	10,000,000	20,000,000
Maturities and prepayments of Federal Home Loan Bank advances	(3,000,000)	0	(30,000,000)
Repurchase of preferred stock	0	0	(21,000,000)
Repurchase of common stock warrant	0	0	(7,465,000)
Proceeds from stock option exercises, net of cashless exercises	282,000	289,000	227,000
Employee stock purchase plan	23,000	19,000	39,000
Dividend reinvestment plan	209,000	33,000	14,000
Payment of cash dividends on preferred stock	0	0	(496,000)
Payment of cash dividends to common shareholders	(24,464,000)	(3,889,000)	(774,000)
Net cash for financing activities	(53,404,000)	(5,301,000)	(24,130,000)
Net change in cash and cash equivalents	25,773,000	10,962,000	59,631,000
Cash and cash equivalents at beginning of period	146,965,000	136,003,000	76,372,000
Cash and cash equivalents at end of period	172,738,000	146,965,000	136,003,000
Cash paid during the year for:
Interest	11,439,000	11,059,000	13,741,000
Federal income taxes	2,625,000	0	0
Noncash financing and investing activities:
Transfers from loans to foreclosed assets	1,490,000	2,194,000	11,761,000
Common stock issued in connection with the Firstbank merger	$ 173,310,000	$ 0	$ 0

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Note 24 - Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information [Text Block]

NOTE 24 - QUARTERLY FINANCIAL DATA (Unaudited)

	Interest		Net Interest		Net		Earnings per Share
	Income		Income		Income		Basic		Diluted
2014
First quarter	$	13,588,000	$	11,064,000	$	3,580,000	$	0.41	$	0.41
Second quarter		18,483,000		15,552,000		1,510,000		0.13		0.13
Third quarter		28,900,000		25,989,000		5,948,000		0.35		0.35
Fourth quarter		28,147,000		25,173,000		6,293,000		0.37		0.37
2013
First quarter	$	14,210,000	$	11,455,000	$	4,401,000	$	0.51	$	0.50
Second quarter		13,992,000		11,312,000		4,016,000		0.46		0.46
Third quarter		14,667,000		11,994,000		3,453,000		0.40		0.40
Fourth quarter		15,373,000		12,695,000		5,163,000		0.59		0.59

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Note 5 - Premises and Equipment, Net (Details) - Summary of Premises and Equipment (USD $)	Dec. 31, 2014	Dec. 31, 2013
Property, Plant and Equipment [Line Items]
Premises and equipment	$ 71,962,000	$ 46,007,000
Less: accumulated depreciation	23,150,000	21,109,000
Total premises and equipment	48,812,000	24,898,000
Land and Land Improvements [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment	16,579,000	8,556,000
Building [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment	38,761,000	24,733,000
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment	$ 16,622,000	$ 12,718,000

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Note 15 - Benefit Plans (Details) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended			12 Months Ended
	Jan. 01, 2014	Oct. 01, 2012	Jan. 01, 2012	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Note 15 - Benefit Plans (Details) [Line Items]
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay	4.25%	4.00%	3.00%
Defined Contribution Plan, Cost Recognized				$ 0.9	$ 0.5	$ 0.4
Deferred Compensation Liability, Current and Noncurrent				$ 3.7	$ 1.6
Stock Issued During Period, Shares, Employee Stock Purchase Plans (in Shares)				1,150	1,098
Stock Purchase Plan [Member]
Note 15 - Benefit Plans (Details) [Line Items]
Common Stock, Capital Shares Reserved for Future Issuance (in Shares)				250,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares)				28,850

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Note 6 - Mortgage Loan Servicing (Tables)

12 Months Ended

Dec. 31, 2014

Mortgage Loan Servicing [Abstract]

Mortgage Loans Serviced for Others [Table Text Block]

	2014
Mortgage loan portfolios serviced for:
Federal Home Loan Mortgage Corporation	$	589,118,000
Federal Home Loan Bank		1,702,000
Total mortgage loans serviced for others	$	590,820,000

Schedule of Servicing Assets at Fair Value [Table Text Block]

	2014
Balance at January 1, 2014	$	0
Firstbank merger		7,389,000
Additions		575,000
Amortized to expense		(1,252,000	)
Balance at December 31, 2014	$	6,712,000

Servicing Asset at Amortized Cost [Table Text Block]

2015	$	1,560,000
2016		1,256,000
2017		1,023,000
2018		857,000
2019		722,000
Thereafter		1,294,000

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Note 21 - Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2014

Disclosure Text Block [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

											Minimum Required
											to be Well
						Minimum Required					Capitalized Under
						for Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Regulations
	Amount		Ratio			Amount		Ratio			Amount		Ratio
2014
Total capital (to risk weighted assets)
Consolidated	$	334,793		14.4	%	$	185,553		8.0	%	$	NA		NA
Bank		332,749		14.4			185,309		8.0			231,636		10.0	%
Tier 1 capital (to risk weighted assets)
Consolidated		314,752		13.6			92,777		4.0			NA		NA
Bank		312,708		13.5			92,655		4.0			138,982		6.0
Tier 1 capital (to average assets)
Consolidated		314,752		11.2			112,949		4.0			NA		NA
Bank		312,708		11.1			112,856		4.0			141,070		5.0
2013
Total capital (to risk weighted assets)
Consolidated	$	193,925		15.9	%	$	97,498		8.0	%	$	NA		NA
Bank		190,493		15.7			97,329		8.0			121,662		10.0	%
Tier 1 capital (to risk weighted assets)
Consolidated		178,598		14.7			48,749		4.0			NA		NA
Bank		175,192		14.4			48,665		4.0			72,997		6.0
Tier 1 capital (to average assets)
Consolidated		178,598		12.5			57,006		4.0			NA		NA
Bank		175,192		12.3			56,860		4.0			71,075		5.0

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Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans (USD $)	Dec. 31, 2014	Dec. 31, 2013
Originated Loan [Member] | Commercial and Industrial [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	$ 0	$ 0
Originated Loan [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0	0
Originated Loan [Member] | Commercial Real Estate Owner Occupied Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0	0
Originated Loan [Member] | Commercial Real Estate Non Owner Occupied Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0	0
Originated Loan [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0	0
Originated Loan [Member] | Commercial Portfolio Segment [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0	0
Originated Loan [Member] | Retail Home Equity and Other [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0	0
Originated Loan [Member] | Retail 1-4 Family Mortgages [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0	0
Originated Loan [Member] | Retail Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0	0
Originated Loan [Member] | Nonperforming Financing Receivable [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0	0
Nonaccrual loans	26,048,000	6,718,000
Nonperforming loans	26,048,000	6,718,000
Originated Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0	0
Acquired Loan [Member] | Commercial and Industrial [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0
Acquired Loan [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0
Acquired Loan [Member] | Commercial Real Estate Owner Occupied Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0
Acquired Loan [Member] | Commercial Real Estate Non Owner Occupied Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0
Acquired Loan [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0
Acquired Loan [Member] | Commercial Portfolio Segment [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0
Acquired Loan [Member] | Retail Home Equity and Other [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	26,000
Acquired Loan [Member] | Retail 1-4 Family Mortgages [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	0
Acquired Loan [Member] | Retail Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	26,000
Acquired Loan [Member] | Nonperforming Financing Receivable [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	26,000
Nonaccrual loans	3,358,000
Nonperforming loans	3,384,000
Acquired Loan [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Loans past due 90 days or more still accruing interest	26,000
Commercial and Industrial [Member] | Nonperforming Financing Receivable [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Nonperforming loans	6,478,000	1,501,000
Commercial Vacant Land and Land Development and Residential Construction Loan [Member] | Nonperforming Financing Receivable [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Nonperforming loans	209,000	785,000
Commercial Real Estate Owner Occupied Loan [Member] | Nonperforming Financing Receivable [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Nonperforming loans	18,062,000	389,000
Commercial Real Estate Non Owner Occupied Loan [Member] | Nonperforming Financing Receivable [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Nonperforming loans	378,000	168,000
Commercial Real Estate Multi Family and Residential Rental Loan [Member] | Nonperforming Financing Receivable [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Nonperforming loans	106,000	208,000
Commercial Portfolio Segment [Member] | Nonperforming Financing Receivable [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Nonperforming loans	25,233,000	3,051,000
Retail Home Equity and Other [Member] | Nonperforming Financing Receivable [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Nonperforming loans	800,000	788,000
Retail 1-4 Family Mortgages [Member] | Nonperforming Financing Receivable [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Nonperforming loans	3,399,000	2,879,000
Retail Loan [Member] | Nonperforming Financing Receivable [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Nonperforming loans	4,199,000	3,667,000
Nonperforming Financing Receivable [Member]
Note 4 - Loans and Allowance for Loan Losses (Details) - Nonperforming Loans [Line Items]
Nonperforming loans	$ 29,432,000	$ 6,718,000

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Consolidated Balance Sheets (USD $)	Dec. 31, 2014		Dec. 31, 2013
ASSETS
Cash and due from banks	$ 43,754,000		$ 17,149,000
Interest-bearing deposits	117,777,000		6,389,000
Federal funds sold	11,207,000		123,427,000
Total cash and cash equivalents	172,738,000		146,965,000
Securities available for sale	432,912,000	[1]	131,178,000	[1]
Federal Home Loan Bank stock	13,699,000	[2]	11,961,000	[2]
Loans	2,089,277,000		1,053,243,000
Allowance for loan losses	(20,041,000)		(22,821,000)
Loans, net	2,069,236,000		1,030,422,000
Premises and equipment, net	48,812,000		24,898,000
Bank owned life insurance	57,861,000		51,377,000
Goodwill	49,473,000		0
Cored deposit intangible	15,624,000		0
Other assets	33,024,000		30,165,000
Total assets	2,893,379,000		1,426,966,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing	558,738,000		224,580,000
Interest-bearing	1,718,177,000		894,331,000
Total deposits	2,276,915,000		1,118,911,000
Securities sold under agreements to repurchase	167,569,000		69,305,000
Federal Home Loan Bank advances	54,022,000		45,000,000
Subordinated debentures	54,472,000		32,990,000
Accrued interest and other liabilities	12,263,000		7,435,000
Total liabilities	2,565,241,000		1,273,641,000
Shareholders' equity
Preferred stock, no par value; 1,000,000 shares authorized; 0 shares outstanding at December 31, 2014 and December 31, 2013	0		0
Common stock, no par value; 40,000,000 shares authorized; 16,976,839 shares outstanding at December 31, 2014 and 8,739,108 shares outstanding at December 31, 2013	317,904,000		162,999,000
Retained earnings (deficit)	10,218,000		(4,101,000)
Accumulated other comprehensive income (loss)	16,000		(5,573,000)
Total shareholders’ equity	328,138,000		153,325,000
Total liabilities and shareholders’ equity	$ 2,893,379,000		$ 1,426,966,000

[1] See Note 18 for a description of the fair value hierarchy as well as a disclosure of levels for classes of financial assets and liabilities.

[2] It is not practical to determine the fair value of FHLB stock due to transferability restrictions.

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Note 11 - Federal Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	2014		2013		2012
Current expense	$	3,359,000	$	0	$	0
Deferred expense		4,506,000		8,092,000		5,636,000
Tax expense	$	7,865,000	$	8,092,000	$	5,636,000

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	2014			2013			2012
Tax at statutory rate (35%)	$	8,819,000		$	8,794,000		$	6,360,000
Increase (decrease) from
Tax-exempt interest		(621,000	)		(347,000	)		(486,000	)
Bank owned life insurance		(415,000	)		(465,000	)		(535,000	)
Other		82,000			110,000			297,000
Tax expense	$	7,865,000		$	8,092,000		$	5,636,000

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	2014			2013
Deferred income tax assets
Allowance for loan losses	$	7,014,000		$	7,987,000
Tax credit carryforwards		3,395,000			1,397,000
Nonaccrual loan interest income		471,000			605,000
Deferred compensation		1,304,000			567,000
Deferred loan fees		445,000			273,000
Fair value write-downs on foreclosed properties		212,000			241,000
Fair value of interest rate swap		89,000			92,000
Losses on capital investments		450,000			0
Stock compensation		521,000			207,000
Net operating loss carryforward		0			4,050,000
Unrealized loss on securities		0			2,908,000
Other		725,000			136,000
		14,626,000			18,463,000
Deferred income tax liabilities
Depreciation		1,217,000			419,000
Prepaid expenses		425,000			192,000
Core deposit intangible		5,386,000			0
Mortgage loan servicing rights		2,349,000			0
Unrealized gain on securities		112,000			0
Other		476,000			98,000
		9,965,000			709,000
Net deferred tax asset before valuation allowance		4,661,000			17,754,000
Valuation allowance		(450,000	)		0
Total net deferred tax asset	$	4,211,000		$	17,754,000

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Note 10 - Federal Home Loan Bank Advances (Details) - Maturities of Currently Outstanding FHLB Advances (USD $)	Dec. 31, 2014
Maturities over the next five years are:
2015	$ 6,022,000
2016	3,000,000
2017	45,000,000
2018	0
2019	$ 0

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Note 14 - Commitments and Off-balance-sheet Risk (Details) - Instruments Carried at Fair Values (Standby Letters of Credit [Member], USD $)	Dec. 31, 2014	Dec. 31, 2013
Standby Letters of Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Standby letters of credit	$ 35,461,000	$ 19,670,000
Standby letters of credit	$ 150,000	$ 148,000

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Consolidated Statements of Changes in Shareholders' Equity (USD $)	Preferred Stock [Member]	Common Stock [Member]	Common Stock Warrant [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balances at Dec. 31, 2011	$ 20,331,000	$ 172,841,000	$ 1,138,000	$ (32,639,000)	$ 3,328,000	$ 164,999,000
Repurchase of preferred stock	(21,000,000)					(21,000,000)
Preferred stock dividends				(361,000)		(361,000)
Accretion of preferred stock	669,000			(669,000)		0
Repurchase of stock warrant		(6,327,000)	(1,138,000)			(7,465,000)
Employee stock purchase plan		39,000				39,000
Dividend reinvestment plan		14,000				14,000
Stock option exercises		551,000				551,000
Stock tendered for stock option exercises		(324,000)				(324,000)
Stock-based compensation expense		54,000				54,000
Cash dividends		(774,000)				(774,000)
Net income				12,535,000		12,535,000
Change in net unrealized gain on securities available for sale, net of tax effect					(955,000)	(955,000)
Change in fair value of interest rate swap, net tax effect					(723,000)	(723,000)
Balances at Dec. 31, 2012	0	166,074,000	0	(21,134,000)	1,650,000	146,590,000
Employee stock purchase plan		19,000				19,000
Dividend reinvestment plan		33,000				33,000
Stock option exercises		700,000				700,000
Stock tendered for stock option exercises		(411,000)				(411,000)
Stock-based compensation expense		473,000				473,000
Cash dividends		(3,889,000)				(3,889,000)
Net income				17,033,000		17,033,000
Change in net unrealized gain on securities available for sale, net of tax effect					(7,774,000)	(7,774,000)
Change in fair value of interest rate swap, net tax effect					551,000	551,000
Balances at Dec. 31, 2013	0	162,999,000	0	(4,101,000)	(5,573,000)	153,325,000
Common stock issued in connection with Firstbank merger (8,087,272 shares)		173,310,000				173,310,000
Issuance of stock options to replace existing Firstbank options at merger date		1,664,000				1,664,000
Employee stock purchase plan		23,000				23,000
Dividend reinvestment plan		209,000				209,000
Stock option exercises		282,000				282,000
Stock grants to directors for retainer fees (7,375 shares)		155,000				155,000
Stock-based compensation expense		714,000				714,000
Cash dividends		(21,452,000)		(3,012,000)		(24,464,000)
Net income				17,331,000		17,331,000
Change in net unrealized gain on securities available for sale, net of tax effect					5,582,000	5,582,000
Change in fair value of interest rate swap, net tax effect					7,000	7,000
Balances at Dec. 31, 2014	$ 0	$ 317,904,000	$ 0	$ 10,218,000	$ 16,000	$ 328,138,000

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Note 9 - Securities Sold Under Agreements to Repurchase (Details) - Securities Sold Under Agreement To Repurchase (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Securities Sold Under Agreement To Repurchase [Abstract]
Outstanding balance at year-end	$ 167,569,000	$ 69,305,000
Weighted average interest rate at year-end	0.11%	0.12%
Average daily balance during the year	105,474,000	65,939,000
Weighted average interest rate during the year	0.12%	0.12%
Maximum daily balance during the year	$ 178,042,000	$ 78,960,000

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Note 2 - Business Combination (Details) - Purchase Price (Firstbank Corporation [Member], USD $)	0 Months Ended	6 Months Ended
	Jun. 01, 2014	Jun. 30, 2014
Firstbank Corporation [Member]
Purchase Price:
Mercantile common shares issued for Firstbank common shares (in Shares)	8,087,272	8,087,272
Price per share, based on Mercantile closing price on May 30, 2014 (in Dollars per share)		$ 21.43
Value of common stock issued		$ 173,310,000
Value of replacement stock options granted		1,664,000
Total purchase price		$ 174,974,000

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Note 11 - Federal Income Taxes (Details) - Effective Income Tax Rate Reconciliation (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Effective Income Tax Rate Reconciliation [Abstract]
Tax at statutory rate (35%)	$ 8,819,000	$ 8,794,000	$ 6,360,000
Increase (decrease) from
Tax-exempt interest	(621,000)	(347,000)	(486,000)
Bank owned life insurance	(415,000)	(465,000)	(535,000)
Other	82,000	110,000	297,000
Tax expense	$ 7,865,000	$ 8,092,000	$ 5,636,000

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Note 1 - Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Mortgage Loans Held for Sale [Table Text Block]

	2014		2013
Mortgage loans held for sale	$	1,574,000	$	1,115,000
Less: Allowance to adjust to lower of cost or market		0		0
Mortgage loans held for sale, net	$	1,574,000	$	1,115,000

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Note 25 - Mercantile Bank Corporation (Parent Company Only) Condensed Financial Statements (Details) - Condensed Statement of Cash Flows (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities
Net income	$ 17,331,000	$ 17,033,000	$ 12,535,000
Adjustments to reconcile net income to net cash from operating activities:
Stock-based compensation expense	714,000	473,000	54,000
Change in other assets	1,795,000	8,465,000	(1,805,000)
Net cash from operating activities	14,414,000	28,682,000	17,031,000
Cash flows from investing activities
Net cash for investing activities	64,763,000	(12,419,000)	66,730,000
Cash flows from financing activities
Repurchase of preferred stock	0	0	(21,000,000)
Repurchase of common stock warrant	0	0	(7,465,000)
Stock option exercises, net of cashless exercises	282,000	289,000	227,000
Employee stock purchase plan	23,000	19,000	39,000
Dividend reinvestment plan	209,000	33,000	14,000
Stock grants to directors for retainer fees	155,000	0	0
Cash dividends on preferred stock	0	0	(496,000)
Cash dividends on common stock	(24,464,000)	(3,889,000)	(774,000)
Net cash for financing activities	(53,404,000)	(5,301,000)	(24,130,000)
Net change in cash and cash equivalents	25,773,000	10,962,000	59,631,000
Parent Company [Member]
Cash flows from operating activities
Net income	17,331,000	17,033,000	12,535,000
Adjustments to reconcile net income to net cash from operating activities:
Equity in undistributed (income) loss of subsidiary	(9,131,000)	(14,461,000)	18,730,000
Stock-based compensation expense	714,000	473,000	54,000
Change in other assets	(8,163,000)	3,244,000	(3,006,000)
Change in other liabilities	21,979,000	(708,000)	1,073,000
Net cash from operating activities	22,730,000	5,581,000	29,386,000
Cash flows from investing activities
Net capital investment into subsidiaries	0	0	0
Net cash for investing activities	0	0	0
Cash flows from financing activities
Repurchase of preferred stock	0	0	(21,000,000)
Repurchase of common stock warrant	0	0	(7,465,000)
Stock option exercises, net of cashless exercises	282,000	289,000	227,000
Employee stock purchase plan	23,000	19,000	39,000
Dividend reinvestment plan	209,000	33,000	14,000
Stock grants to directors for retainer fees	155,000	0	0
Cash dividends on preferred stock	0	0	(496,000)
Cash dividends on common stock	(24,464,000)	(3,889,000)	(774,000)
Net cash for financing activities	(23,795,000)	(3,548,000)	(29,455,000)
Net change in cash and cash equivalents	(1,065,000)	2,033,000	(69,000)
Cash and cash equivalents at beginning of period	2,506,000	473,000	542,000
Cash and cash equivalents at end of period	$ 1,441,000	$ 2,506,000	$ 473,000

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Note 3 - Securities (Details) - Available-for-sale Securities (USD $)	Dec. 31, 2014		Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale, amortized cost	$ 432,591,000		$ 139,487,000
Securities available for sale, gross unrealized gains	3,897,000		1,791,000
Securities available for sale, gross unrealized losses	(3,576,000)		(10,100,000)
Securities available for sale	432,912,000	[1]	131,178,000	[1]
US Government Agencies Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale, amortized cost	194,894,000		108,279,000
Securities available for sale, gross unrealized gains	1,612,000		263,000
Securities available for sale, gross unrealized losses	(3,038,000)		(10,065,000)
Securities available for sale	193,468,000		98,477,000
Collateralized Mortgage Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale, amortized cost	92,656,000		12,456,000
Securities available for sale, gross unrealized gains	1,123,000		1,102,000
Securities available for sale, gross unrealized losses	(218,000)		0
Securities available for sale	93,561,000		13,558,000
Municipal General Obligation Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale, amortized cost	132,347,000		16,488,000
Securities available for sale, gross unrealized gains	1,042,000		388,000
Securities available for sale, gross unrealized losses	(307,000)		(4,000)
Securities available for sale	133,082,000		16,872,000
Municipal Revenue Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale, amortized cost	10,769,000		878,000
Securities available for sale, gross unrealized gains	117,000		38,000
Securities available for sale, gross unrealized losses	(13,000)		0
Securities available for sale	10,873,000		916,000
Other Debt Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale, amortized cost	1,925,000
Securities available for sale, gross unrealized gains	3,000
Securities available for sale, gross unrealized losses	0
Securities available for sale	1,928,000
Mutual Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale, amortized cost			1,386,000
Securities available for sale, gross unrealized gains			0
Securities available for sale, gross unrealized losses			(31,000)
Securities available for sale			$ 1,355,000

[1] See Note 18 for a description of the fair value hierarchy as well as a disclosure of levels for classes of financial assets and liabilities.

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Note 14 - Commitments and Off-balance-sheet Risk

12 Months Ended

Dec. 31, 2014

Disclosure Text Block Supplement [Abstract]

Commitments Contingencies and Guarantees [Text Block]

NOTE 14 – COMMITMENTS AND OFF-BALANCE-SHEET RISK

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit. Loan commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Standby letters of credit are conditional commitments issued by our Bank to guarantee the performance of a customer to a third party. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized, if any, in the balance sheet. Our maximum exposure to loan loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. Collateral, such as accounts receivable, securities, inventory, and property and equipment, is generally obtained based on management’s credit assessment of the borrower. If required, estimated loss exposure resulting from these instruments is expensed and recorded as a liability. There was no liability balance for these instruments as of December 31, 2014 and 2013.

At year-end 2014 and 2013, the rates on existing off-balance sheet instruments were substantially equivalent to current market rates, considering the underlying credit standing of the counterparties.

Our maximum exposure to credit losses for loan commitments and standby letters of credit outstanding at year-end was as follows:

	2014		2013
Commercial unused lines of credit	$	554,856,000	$	257,937,000
Unused lines of credit secured by 1 – 4 family residential properties		60,983,000		23,429,000
Credit card unused lines of credit		11,649,000		9,013,000
Other consumer unused lines of credit		8,673,000		5,695,000
Commitments to make loans		110,126,000		58,799,000
Standby letters of credit		35,461,000		19,670,000
Total commitments	$	781,748,000	$	374,543,000

Commitments to make loans generally reflect our binding obligations to existing and prospective customers to extend credit, including line of credit facilities secured by accounts receivable and inventory, and term debt secured by either real estate or equipment. In most instances, line of credit facilities are for a one-year term and are at a floating rate tied to the Mercantile Bank Prime Rate, the Wall Street Journal Prime Rate or the 30-Day Libor rate. For term debt secured by real estate, customers are generally offered a floating rate tied to the Mercantile Bank Prime Rate or Wall Street Journal Prime Rate, and a fixed rate currently ranging from 4.00% to 7.00%. These credit facilities generally balloon within five years, with payments based on amortizations ranging from 10 to 20 years. For term debt secured by non-real estate collateral, customers are generally offered a floating rate tied to the Mercantile Bank Prime Rate or Wall Street Journal Prime Rate, and a fixed rate currently ranging from 4.00% to 7.50%. These credit facilities generally mature and fully amortize within five years.

Certain of our commercial loan customers have entered into interest rate swap agreements directly with our correspondent banks. To assist our commercial loan customers in these transactions, and to encourage our correspondent banks to enter into the interest rate swap transactions with minimal credit underwriting analyses on their part, we have entered into risk participation agreements with the correspondent banks whereby we agree to make payments to the correspondent banks owed by our commercial loan customers under the interest rate swap agreement in the event that our commercial loan customers do not make the payments. We are not a party to the interest rate swap agreements under these arrangements. As of December 31, 2014, the total notional amount of the underlying interest rate swap agreements was $15.4 million, with a net fair value from our commercial loan customers’ perspective of negative $2.9 million. These risk participation agreements are considered financial guarantees in accordance with applicable accounting guidance and are therefore recorded as liabilities at fair value, generally equal to the fees collected at the time of their execution. These liabilities are accreted into income during the terms of the interest rate swap agreements, generally ranging from an original term of four to fifteen years, and totaled less than $0.1 million at December 31, 2014 and December 31, 2013.

The following instruments are considered financial guarantees under current accounting guidance. These instruments are carried at fair value.

	2014				2013
	Contract		Carrying		Contract		Carrying
	Amount		Value		Amount		Value
Standby letters of credit	$	35,461,000	$	150,000	$	19,670,000	$	148,000

We were required to have $8.4 million and $1.5 million of cash on hand or on deposit with the Federal Reserve Bank of Chicago to meet regulatory reserve and clearing requirements at year-end 2014 and 2013, respectively.

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Note 2 - Business Combination (Tables)

12 Months Ended

Dec. 31, 2014

Business Combinations [Abstract]

Schedule of Business Acquisitions by Acquisition, Equity Interest Issued or Issuable [Table Text Block]

Purchase Price:
Mercantile common shares issued for Firstbank common shares		8,087,272
Price per share, based on Mercantile closing price on May 30, 2014	$	21.43
Value of common stock issued		173,310,000
Value of replacement stock options granted		1,664,000
Total purchase price	$	174,974,000

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Preliminary Statement of Net Assets Acquired at Fair Value:
Assets
Cash and cash equivalents	$	91,806,000
Securities		358,599,000
Total loans		943,662,000
Premises and equipment		24,049,000
Core deposit intangible		17,478,000
Mortgage servicing rights		7,389,000
Other assets		9,897,000
Total Assets	$	1,452,880,000
Liabilities
Deposits	$	1,229,609,000
Borrowings		87,615,000
Other liabilities		10,155,000
Total Liabilities	$	1,327,379,000
Net Identifiable Assets Acquired			$	125,501,000
Goodwill			$	49,473,000

Business Acquisition, Pro Forma Information [Table Text Block]

	2014		2013
Net interest income	$	98,607,000	$	93,862,000
Noninterest expense		81,295,000		93,263,000
Net income		22,659,000		16,068,000
Net income per diluted share		1.33		0.96

Business Acquisition, Fair Value of Loans Acquired [Table Text Block]

	Acquired		Acquired		Acquired
	Impaired		Non-Impaired		Total Loans
Commercial Loans:
Commercial & industrial	$	878,000	$	163,316,000	$	164,194,000
Commercial real estate		12,973,000		378,016,000		390,989,000
Construction & development		1,289,000		33,726,000		35,015,000
Total Commercial Loans	$	15,140,000	$	575,058,000	$	590,198,000
Consumer Loans:
Residential mortgages	$	9,694,000	$	216,653,000	$	226,347,000
Instalment		167,000		61,657,000		61,824,000
Home equity lines		288,000		52,054,000		52,342,000
Construction		76,000		12,875,000		12,951,000
Total Consumer Loans	$	10,225,000	$	343,239,000	$	353,464,000
Total Loans	$	25,365,000	$	918,297,000	$	943,662,000

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Table Text Block]

	Acquired Impaired
Contractually required payments	$	44,936,000
Nonaccretable difference		17,057,000
Expected cash flows		27,879,000
Accretable yield		2,514,000
Carrying balance	$	25,365,000

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Note 11 - Federal Income Taxes (Details) - Consolidated Income Tax Expense (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Consolidated Income Tax Expense [Abstract]
Current expense	$ 3,359,000	$ 0	$ 0
Deferred expense	4,506,000	8,092,000	5,636,000
Tax expense	$ 7,865,000	$ 8,092,000	$ 5,636,000

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Note 20 - Subordinated Debentures (Details) - Business Trusts (USD $)	Dec. 31, 2014	Dec. 31, 2013
Subordinated Borrowing [Line Items]
Preferred securities outstanding	$ 52,400,000	$ 32,000,000
Mercantile Bank Capital Trust I [Member]
Subordinated Borrowing [Line Items]
Preferred securities outstanding	32,000,000
Firstbank Capital Trust I [Member]
Subordinated Borrowing [Line Items]
Preferred securities outstanding	10,000,000
Firstbank Capital Trust II [Member]
Subordinated Borrowing [Line Items]
Preferred securities outstanding	10,000,000
Firstbank Capital Trust III [Member]
Subordinated Borrowing [Line Items]
Preferred securities outstanding	7,500,000
Firstbank Capital Trust IV [Member]
Subordinated Borrowing [Line Items]
Preferred securities outstanding	$ 7,500,000

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Note 16 - Hedging Activities

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

NOTE 16 – HEDGING ACTIVITIES

Our interest rate risk policy includes guidelines for measuring and monitoring interest rate risk. Within these guidelines, parameters have been established for maximum fluctuations in net interest income. Possible fluctuations are measured and monitored using net interest income simulation. Our policy provides for the use of certain derivative instruments and hedging activities to aid in managing interest rate risk to within policy parameters.

In February 2012, we entered into an interest rate swap agreement with a correspondent bank to hedge the floating rate on the subordinated debentures issued to Mercantile Bank Capital Trust I, which became effective in January 2013 and matures in January 2018. The $32.0 million of subordinated debentures have a rate equal to the 90-Day Libor Rate plus a fixed spread of 218 basis points, and are subject to repricing quarterly. The interest rate swap agreement provides for us to pay our correspondent bank a fixed rate, while our correspondent bank will pay us the 90-Day Libor Rate on a $32.0 million notional amount. The quarterly re-set dates for the floating rate on the interest rate swap agreement are the same as the re-set dates for the floating rate on the subordinated debentures. The interest rate swap agreement qualifies for hedge accounting; therefore, fluctuations in the fair value of the interest rate swap agreement, net of tax effect, are recorded in other comprehensive income. As of December 31, 2014 and 2013, the fair value of the interest rate swap agreement was recorded as a liability in the amount of $0.3 million. 

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Note 4 - Loans and Allowance for Loan Losses (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Receivables [Abstract]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Outstanding Balance	$ 31.4
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net	18.6
Impaired Financing Receivable, Interest Income, Accrual Method	1.8	2.5	2.0
Loans and Leases Receivable, Nonaccrual Loans, Interest Income Recognized		1.9
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans	$ 0.1	$ 0.4	$ 0.8
Minimum Number of Days Past Due at Period End for Loans Modified as Troubled Debt Restructurings	30 days	30 days

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Note 12 - Stock-based Compensation (Details) - Summary of Stock Option Activity from Grants Issued under Various Firstbank Plans (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Note 12 - Stock-based Compensation (Details) - Summary of Stock Option Activity from Grants Issued under Various Firstbank Plans [Line Items]
Outstanding, shares	35,335	60,876	152,896	214,903
Outstanding, weighted average exercise price	$ 31.09	$ 33.11	$ 26.15	$ 22.40
Options exercisable at year-end	28,847	60,876	152,896
Options exercisable at year-end	$ 33.11	$ 33.11	$ 26.15
Granted	6,488	0	0
Granted	$ 22.15
Exercised	(2,845)	(51,055)	(50,930)
Exercised	$ 17.74	$ 13.72	$ 10.83
Forfeited or expired	(29,184)	(40,965)	(11,077)
Forfeited or expired	$ 34.60	$ 31.30	$ 23.77
Firstbank Plans [Member]
Note 12 - Stock-based Compensation (Details) - Summary of Stock Option Activity from Grants Issued under Various Firstbank Plans [Line Items]
Outstanding, shares	217,982	0
Outstanding, weighted average exercise price	$ 14.89	$ 0
Options exercisable at year-end	210,777
Options exercisable at year-end	$ 15.22
Granted	0
Granted	$ 0
Replaced as part of merger	282,178
Replaced as part of merger	$ 15.48
Exercised	(27,740)
Exercised	$ 8.34
Forfeited or expired	(36,456)
Forfeited or expired	$ 24.46

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Consolidated Statements of Changes in Shareholders' Equity (Parentheticals) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Sharеs issuеd using еmployее stock purchasе plan	1,150	1,098
Sharеs issuеd using stock option еxеrcisеs	2,845	51,055	50,930
Common Stock [Member]
Sharеs issuеd using еmployее stock purchasе plan	1,150	1,098	2,400
Sharеs issuеd using dividеnd rеinvеstmеnt plan	10,359	1,954	934
Sharеs issuеd using stock option еxеrcisеs	30,585	51,055	50,930
Number of shares tendered for stock option exercises		18,950	19,120
Cash dividends per common share (in Dollars per share)	2.48	0.45	0.09
Common stock issued in connection with Firstbank merger	8,087,272
Stock grants to directors for retainer fees	7,375

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Consolidated Balance Sheets (Parentheticals) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Preferred stock, par value (in Dollars per share)	$ 0	$ 0
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value (in Dollars per share)	$ 0	$ 0
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares outstanding	16,976,839	8,739,108

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Note 9 - Securities Sold Under Agreements to Repurchase

12 Months Ended

Dec. 31, 2014

Disclosure Text Block [Abstract]

Repurchase Agreements, Resale Agreements, Securities Borrowed, and Securities Loaned Disclosure [Text Block]

NOTE 9 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Information regarding securities sold under agreements to repurchase at year-end is summarized below:

	2014			2013
Outstanding balance at year-end	$	167,569,000		$	69,305,000
Weighted average interest rate at year-end		0.11	%		0.12	%
Average daily balance during the year	$	105,474,000		$	65,939,000
Weighted average interest rate during the year		0.12	%		0.12	%
Maximum daily balance during the year	$	178,042,000		$	78,960,000

Securities sold under agreements to repurchase (“repurchase agreements”) generally have original maturities of less than one year. Repurchase agreements are treated as financings, and the obligations to repurchase securities sold are reflected as liabilities. Securities involved with the repurchase agreements are recorded as assets of our Bank and are held in safekeeping by a correspondent bank. Repurchase agreements are offered principally to certain large deposit customers. Repurchase agreements are secured by securities with an aggregate fair value equal to the aggregate outstanding balance.

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Note 12 - Stock-based Compensation (Details) - Summary Of Stock Option Activity (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Summary Of Stock Option Activity [Abstract]
Outstanding	60,876	152,896	214,903
Outstanding (in Dollars per share)	$ 33.11	$ 26.15	$ 22.40
Options exercisable at year-end	28,847	60,876	152,896
Options exercisable at year-end (in Dollars per share)	$ 33.11	$ 33.11	$ 26.15
Granted	6,488	0	0
Granted (in Dollars per share)	$ 22.15
Exercised	(2,845)	(51,055)	(50,930)
Exercised (in Dollars per share)	$ 17.74	$ 13.72	$ 10.83
Forfeited or expired	(29,184)	(40,965)	(11,077)
Forfeited or expired (in Dollars per share)	$ 34.60	$ 31.30	$ 23.77
Outstanding	35,335	60,876	152,896
Outstanding (in Dollars per share)	$ 31.09	$ 33.11	$ 26.15

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Note 9 - Securities Sold Under Agreements to Repurchase (Details) (Maximum [Member])	12 Months Ended
	Dec. 31, 2014
Maximum [Member]
Note 9 - Securities Sold Under Agreements to Repurchase (Details) [Line Items]
Repurchase Agreement Counterparty, Weighted Average Maturity of Agreements	1 year

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Note 8 - Deposits (Details) - Maturity Distribution for Certificate of Deposits (USD $)	Dec. 31, 2014	Dec. 31, 2013
Maturity Distribution for Certificate of Deposits [Abstract]
In one year or less	$ 368,163,000	$ 213,454,000
In one to two years	153,346,000	80,138,000
In two to three years	118,919,000	73,271,000
In three to four years	60,953,000	95,979,000
In four to five years	37,368,000	48,126,000
Total certificates of deposit	$ 738,749,000	$ 510,968,000

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Note 20 - Subordinated Debentures (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended
	Jun. 01, 2014	Dec. 31, 2014	Jun. 01, 2014
Debt Disclosure [Abstract]
Number of Business Trusts		5
Business Combination, Debt Assumed, Number of Trusts		4
Fair Value Discount of Subordinated Debentures Related to Assumed Business Trusts at Time of Merger			$ 15.0
Amortization of Fair Value Discount Related to Subordinated Debentures of Assumed Business Trusts	$ 0.7
Amortization Period of Fair Value Discount Related to Subordinated Debentures of Assumed Business Trusts	21 years 6 months

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Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis (Fair Value, Measurements, Nonrecurring [Member], USD $)	Dec. 31, 2014		Dec. 31, 2013
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis [Line Items]
Impaired loans	$ 17,097,000	[1]	$ 23,405,000	[1]
Foreclosed assets	1,995,000	[1]	2,851,000	[1]
Assets and liabilities measured at fair value on a nonrecurring basis	19,092,000		26,256,000
Fair Value, Inputs, Level 1 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis [Line Items]
Impaired loans	0	[1]	0	[1]
Foreclosed assets	0	[1]	0	[1]
Assets and liabilities measured at fair value on a nonrecurring basis	0		0
Fair Value, Inputs, Level 2 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis [Line Items]
Impaired loans	0	[1]	0	[1]
Foreclosed assets	0	[1]	0	[1]
Assets and liabilities measured at fair value on a nonrecurring basis	0		0
Fair Value, Inputs, Level 3 [Member]
Note 18 - Fair Values Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis [Line Items]
Impaired loans	17,097,000	[1]	23,405,000	[1]
Foreclosed assets	1,995,000	[1]	2,851,000	[1]
Assets and liabilities measured at fair value on a nonrecurring basis	$ 19,092,000		$ 26,256,000

[1] Represents carrying value and related write-downs for which adjustments are based on the estimated value of the property or other assets.

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Document And Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Mar. 06, 2015	Jun. 30, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	MERCANTILE BANK CORPORATION
Document Type	10-K
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		16,888,530
Entity Public Float			$ 377,000,000
Amendment Flag	false
Entity Central Index Key	0001042729
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Dec. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY

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Note 21 - Regulatory Matters (Details) - Actual Capital Levels and Minimum Levels (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Consolidated Entities [Member]
Total capital (to risk weighted assets)
Total capital (to risk weighted assets), actual amount	$ 334,793	$ 193,925
Total capital (to risk weighted assets), actual ratio	14.40%	15.90%
Total capital (to risk weighted assets), minimum required for capital adequacy purposes amount	185,553	97,498
Total capital (to risk weighted assets), minimum required for capital adequacy purposes ratio	8.00%	8.00%
Total capital (to risk weighted assets), minimum required to be well capitalized under prompt corrective action regulations amount
Total capital (to risk weighted assets), minimum required to be well capitalized under prompt corrective action regulations ratio
Tier 1 capital (to risk weighted assets)
Tier 1 capital (to risk weighted assets), actual amount	314,752	178,598
Tier 1 capital (to risk weighted assets), actual ratio	13.60%	14.70%
Tier 1 capital (to risk weighted assets), minimum required for capital adequacy purposes amount	92,777	48,749
Tier 1 capital (to risk weighted assets), minimum required for capital adequacy purposes ratio	4.00%	4.00%
Tier 1 capital (to risk weighted assets), minimum required to be well capitalized under prompt corrective action regulations amount
Tier 1 capital (to risk weighted assets), minimum required to be well capitalized under prompt corrective action regulations ratio
Tier 1 capital (to average assets)
Tier 1 capital (to average assets), actual amount	314,752	178,598
Tier 1 capital (to average assets), actual ratio	11.20%	12.50%
Tier 1 capital (to average assets), minimum required for capital adequacy purposes amount	112,949	57,006
Tier 1 capital (to risk average assets), minimum required for capital adequacy purposes ratio	4.00%	4.00%
Tier 1 capital (to risk average assets), minimum required to be well capitalized under prompt corrective action regulations amount
Tier 1 capital (to risk average assets), minimum required to be well capitalized under prompt corrective action regulations ratio
Bank [Member]
Total capital (to risk weighted assets)
Total capital (to risk weighted assets), actual amount	332,749	190,493
Total capital (to risk weighted assets), actual ratio	14.40%	15.70%
Total capital (to risk weighted assets), minimum required for capital adequacy purposes amount	185,309	97,329
Total capital (to risk weighted assets), minimum required for capital adequacy purposes ratio	8.00%	8.00%
Total capital (to risk weighted assets), minimum required to be well capitalized under prompt corrective action regulations amount	231,636	121,662
Total capital (to risk weighted assets), minimum required to be well capitalized under prompt corrective action regulations ratio	10.00%	10.00%
Tier 1 capital (to risk weighted assets)
Tier 1 capital (to risk weighted assets), actual amount	312,708	175,192
Tier 1 capital (to risk weighted assets), actual ratio	13.50%	14.40%
Tier 1 capital (to risk weighted assets), minimum required for capital adequacy purposes amount	92,655	48,665
Tier 1 capital (to risk weighted assets), minimum required for capital adequacy purposes ratio	4.00%	4.00%
Tier 1 capital (to risk weighted assets), minimum required to be well capitalized under prompt corrective action regulations amount	138,982	72,997
Tier 1 capital (to risk weighted assets), minimum required to be well capitalized under prompt corrective action regulations ratio	6.00%	6.00%
Tier 1 capital (to average assets)
Tier 1 capital (to average assets), actual amount	312,708	175,192
Tier 1 capital (to average assets), actual ratio	11.10%	12.30%
Tier 1 capital (to average assets), minimum required for capital adequacy purposes amount	112,856	56,860
Tier 1 capital (to risk average assets), minimum required for capital adequacy purposes ratio	4.00%	4.00%
Tier 1 capital (to risk average assets), minimum required to be well capitalized under prompt corrective action regulations amount	$ 141,070	$ 71,075
Tier 1 capital (to risk average assets), minimum required to be well capitalized under prompt corrective action regulations ratio	5.00%	5.00%

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Note 10 - Federal Home Loan Bank Advances

12 Months Ended

Dec. 31, 2014

Disclosure Text Block [Abstract]

Federal Home Loan Bank Advances, Disclosure [Text Block]

NOTE 10 - FEDERAL HOME LOAN BANK ADVANCES

Federal Home Loan Bank (“FHLB”) advances totaled $54.0 million at December 31, 2014, and mature at varying dates from January 2015 through September 2017, with fixed rates of interest from 0.62% to 1.51% and averaging 1.26%. FHLB advances totaled $45.0 million at December 31, 2013, and were expected to mature at varying dates ranging from March 2017 through September 2017, with fixed rates of interest from 1.22% to 1.51% and averaging 1.34%.

Each advance is payable at its maturity date, and is subject to a prepayment fee if paid prior to the maturity date. The advances are generally collateralized by a blanket lien on our residential mortgage loan portfolio. Our borrowing line of credit as of December 31, 2014 totaled $409.5 million, with availability of $355.5 million.

Maturities over the next five years are:
2015	$	6,022,000
2016		3,000,000
2017		45,000,000
2018		0
2019		0

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Note 4 - Loans and Allowance for Loan Losses (Details) - Activity for Troubled Debt Restructurings (USD $)	12 Months Ended	7 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Commercial and Industrial [Member] | Originated Loan [Member]
Commercial Loan Portfolio:
Beginning Balance	$ 1,656,000
Ending Balance	7,026,000	7,026,000
Charge-Offs	(67,000)
Payments	(871,000)
Transfers to ORE	(21,000)
Net Additions/Deletions	6,329,000
Commercial and Industrial [Member] | Acquired Loan [Member]
Commercial Loan Portfolio:
Beginning Balance		0
Ending Balance	1,439,000	1,439,000
Charge-Offs		0
Payments		(2,000)
Transfers to ORE		0
Net Additions/Deletions		1,441,000
Commercial and Industrial [Member]
Commercial Loan Portfolio:
Beginning Balance			2,720,000	4,553,000
Ending Balance			1,656,000	2,720,000
Charge-Offs			(35,000)	(540,000)
Payments			(2,781,000)	(2,584,000)
Transfers to ORE			(74,000)	(96,000)
Net Additions/Deletions			1,826,000	1,387,000
Commercial Vacant Land and Land Development and Residential Construction Loan [Member] | Originated Loan [Member]
Commercial Loan Portfolio:
Beginning Balance	4,501,000
Ending Balance	2,680,000	2,680,000
Charge-Offs	0
Payments	(4,719,000)
Transfers to ORE	0
Net Additions/Deletions	2,898,000
Commercial Vacant Land and Land Development and Residential Construction Loan [Member] | Acquired Loan [Member]
Commercial Loan Portfolio:
Beginning Balance		0
Ending Balance	0	0
Charge-Offs		0
Payments		0
Transfers to ORE		0
Net Additions/Deletions		0
Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Commercial Loan Portfolio:
Beginning Balance			3,071,000	5,100,000
Ending Balance			4,501,000	3,071,000
Charge-Offs			(725,000)	(63,000)
Payments			(1,596,000)	(2,013,000)
Transfers to ORE			0	0
Net Additions/Deletions			3,751,000	47,000
Commercial Real Estate Owner Occupied Loan [Member] | Originated Loan [Member]
Commercial Loan Portfolio:
Beginning Balance	1,816,000
Ending Balance	17,160,000	17,160,000
Charge-Offs	(11,000)
Payments	(2,343,000)
Transfers to ORE	(48,000)
Net Additions/Deletions	17,746,000
Commercial Real Estate Owner Occupied Loan [Member] | Acquired Loan [Member]
Commercial Loan Portfolio:
Beginning Balance		0
Ending Balance	1,569,000	1,569,000
Charge-Offs		0
Payments		0
Transfers to ORE		0
Net Additions/Deletions		1,569,000
Commercial Real Estate Owner Occupied Loan [Member]
Commercial Loan Portfolio:
Beginning Balance			4,116,000	6,183,000
Ending Balance			1,816,000	4,116,000
Charge-Offs			(70,000)	(426,000)
Payments			(2,151,000)	(3,443,000)
Transfers to ORE			(363,000)	(65,000)
Net Additions/Deletions			284,000	1,867,000
Commercial Real Estate Non Owner Occupied Loan [Member] | Originated Loan [Member]
Commercial Loan Portfolio:
Beginning Balance	22,311,000
Ending Balance	17,439,000	17,439,000
Charge-Offs	0
Payments	(5,190,000)
Transfers to ORE	0
Net Additions/Deletions	318,000
Commercial Real Estate Non Owner Occupied Loan [Member] | Acquired Loan [Member]
Commercial Loan Portfolio:
Beginning Balance		0
Ending Balance	64,000	64,000
Charge-Offs		0
Payments		0
Transfers to ORE		0
Net Additions/Deletions		64,000
Commercial Real Estate Non Owner Occupied Loan [Member]
Commercial Loan Portfolio:
Beginning Balance			37,671,000	12,036,000
Ending Balance			22,312,000	37,671,000
Charge-Offs			(2,537,000)	(720,000)
Payments			(13,795,000)	(2,482,000)
Transfers to ORE			(1,153,000)	(1,045,000)
Net Additions/Deletions			2,126,000	29,882,000
Commercial Real Estate Multi Family and Residential Rental Loan [Member] | Originated Loan [Member]
Commercial Loan Portfolio:
Beginning Balance	2,620,000
Ending Balance	505,000	505,000
Charge-Offs	(420,000)
Payments	(1,695,000)
Transfers to ORE	0
Net Additions/Deletions	0
Commercial Real Estate Multi Family and Residential Rental Loan [Member] | Acquired Loan [Member]
Commercial Loan Portfolio:
Beginning Balance		0
Ending Balance	381,000	381,000
Charge-Offs		0
Payments		(18,000)
Transfers to ORE		0
Net Additions/Deletions		399,000
Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Commercial Loan Portfolio:
Beginning Balance			3,027,000	12,626,000
Ending Balance			2,620,000	3,027,000
Charge-Offs			(15,000)	(2,180,000)
Payments			(735,000)	(7,422,000)
Transfers to ORE			0	(186,000)
Net Additions/Deletions			343,000	189,000
Retail Home Equity and Other [Member] | Originated Loan [Member]
Commercial Loan Portfolio:
Beginning Balance	0
Ending Balance	0	0
Charge-Offs	0
Payments	0
Transfers to ORE	0
Net Additions/Deletions	0
Retail Home Equity and Other [Member] | Acquired Loan [Member]
Commercial Loan Portfolio:
Beginning Balance		0
Ending Balance	26,000	26,000
Charge-Offs		0
Payments		0
Transfers to ORE		0
Net Additions/Deletions		26,000
Retail Home Equity and Other [Member]
Commercial Loan Portfolio:
Beginning Balance			0	0
Ending Balance			0	0
Charge-Offs			0	0
Payments			0	0
Transfers to ORE			0	0
Net Additions/Deletions			0	0
Retail 1-4 Family Mortgages [Member] | Originated Loan [Member]
Commercial Loan Portfolio:
Beginning Balance	1,987,000
Ending Balance	1,967,000	1,967,000
Charge-Offs	0
Payments	(224,000)
Transfers to ORE	0
Net Additions/Deletions	204,000
Retail 1-4 Family Mortgages [Member] | Acquired Loan [Member]
Commercial Loan Portfolio:
Beginning Balance		0
Ending Balance	178,000	178,000
Charge-Offs		0
Payments		0
Transfers to ORE		0
Net Additions/Deletions		178,000
Retail 1-4 Family Mortgages [Member]
Commercial Loan Portfolio:
Beginning Balance			155,000	164,000
Ending Balance			1,987,000	155,000
Charge-Offs			0	0
Payments			(46,000)	(9,000)
Transfers to ORE			0	0
Net Additions/Deletions			$ 1,878,000	$ 0

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Note 8 - Deposits (Details) - Summary of Deposits (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Summary of Deposits [Abstract]
Noninterest-bearing demand (in Dollars)	$ 558,738,000	$ 224,580,000
Noninterest-bearing demand	24.50%	20.10%
Noninterest-bearing demand	148.80%
Interest-bearing checking (in Dollars)	413,382,000	197,388,000
Interest-bearing checking	18.20%	17.60%
Interest-bearing checking	109.40%
Money market (in Dollars)	235,587,000	133,369,000
Money market	10.30%	11.90%
Money market	76.60%
Savings (in Dollars)	330,459,000	52,606,000
Savings	14.50%	4.70%
Savings	528.20%
Time, under $100,000 (in Dollars)	181,026,000	43,251,000
Time, under $100,000	8.00%	3.90%
Time, under $100,000	318.50%
Time, $100,000 and over (in Dollars)	382,120,000	254,600,000
Time, $100,000 and over	16.80%	22.80%
Time, $100,000 and over	50.10%
(in Dollars)	2,101,312,000	905,794,000
	92.30%	81.00%
	132.00%
Out-of-area time, under $100,000 (in Dollars)	2,422,000	4,078,000
Out-of-area time, under $100,000	0.10%	0.40%
Out-of-area time, under $100,000	(40.60%)
Out-of-area time, $100,000 and over (in Dollars)	173,181,000	209,039,000
Out-of-area time, $100,000 and over	7.60%	18.60%
Out-of-area time, $100,000 and over	(17.20%)
(in Dollars)	175,603,000	213,117,000
	7.70%	19.00%
	(17.60%)
Total deposits (in Dollars)	$ 2,276,915,000	$ 1,118,911,000
Total deposits	100.00%	100.00%
Total deposits	103.50%

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Consolidated Statements of Income (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Interest income
Loans, including fees	$ 80,824,000	$ 52,924,000	$ 53,898,000
Securities, taxable	6,417,000	4,134,000	4,383,000
Securities, tax-exempt	1,643,000	951,000	1,415,000
Federal funds sold	124,000	212,000	192,000
Interest-bearing deposits	110,000	21,000	29,000
Total interest income	89,118,000	58,242,000	59,917,000
Interest expense
Deposits	8,378,000	8,912,000	11,137,000
Short-term borrowings	122,000	80,000	157,000
Federal Home Loan Bank advances	636,000	533,000	993,000
Subordinated debentures and other borrowings	2,204,000	1,261,000	929,000
Total interest expense	11,340,000	10,786,000	13,216,000
Net interest income	77,778,000	47,456,000	46,701,000
Provision for loan losses	(3,000,000)	(7,200,000)	(3,100,000)
Net interest income after provision for loan losses	80,778,000	54,656,000	49,801,000
Noninterest income
Service charges on deposit and sweep accounts	2,586,000	1,532,000	1,523,000
Credit and debit card fees	2,494,000	1,063,000	891,000
Mortgage banking activities	1,672,000	800,000	1,479,000
Earnings on bank owned life insurance	1,184,000	1,329,000	1,528,000
Payroll processing	782,000	660,000	591,000
Letter of credit fees	335,000	370,000	336,000
Rental income from other real estate owned	109,000	528,000	1,061,000
Other income	866,000	590,000	585,000
Total noninterest income	10,028,000	6,872,000	7,994,000
Noninterest expense
Salaries and benefits	33,703,000	20,298,000	19,367,000
Occupancy	4,637,000	2,547,000	2,501,000
Furniture and equipment rent, depreciation and maintenance	1,738,000	984,000	1,176,000
Data processing	5,869,000	3,440,000	3,193,000
Merger-related costs	5,447,000	1,246,000	0
Advertising	1,315,000	1,113,000	1,167,000
FDIC insurance costs	1,182,000	793,000	1,200,000
Problem asset costs	585,000	595,000	5,862,000
Other expense	11,134,000	5,387,000	5,158,000
Total noninterest expenses	65,610,000	36,403,000	39,624,000
Income before federal income tax expense	25,196,000	25,125,000	18,171,000
Federal income tax expense	7,865,000	8,092,000	5,636,000
Net income	17,331,000	17,033,000	12,535,000
Preferred stock dividends and accretion	0	0	1,030,000
Net income attributable to common shares	$ 17,331,000	$ 17,033,000	$ 11,505,000
Earnings per common share:
Basic (in Dollars per share)	$ 1.28	$ 1.96	$ 1.33
Diluted (in Dollars per share)	$ 1.28	$ 1.95	$ 1.30

XML

Note 4 - Loans and Allowance for Loan Losses

12 Months Ended

Dec. 31, 2014

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans originated for investment are stated at their principal amount outstanding adjusted for partial charge-offs, the allowance, and net deferred loan fees and costs. Interest income on loans is accrued over the term of the loans primarily using the simple interest method based on the principal balance outstanding. Interest is not accrued on loans where collectability is uncertain. Accrued interest is included in other assets in the Consolidated Balance Sheets. Loan origination fees and certain direct costs incurred to extend credit are deferred and amortized over the term of the loan or loan commitment period as an adjustment to the related loan yield.

Acquired loans are those purchased in the Firstbank merger (see Note 2 – Business Combination for further information). These loans were recorded at estimated fair value at the Merger Date with no carryover of the related allowance. The acquired loans were segregated between those considered to be performing (“acquired non-impaired loans”) and those with evidence of credit deterioration (“acquired impaired loans”). Acquired loans are considered impaired if there is evidence of credit deterioration and if it is probable, at acquisition, all contractually required payments will not be collected. Acquired loans restructured after acquisition are not considered or reported as troubled debt restructurings if the loans evidenced credit deterioration as of the Merger Date and are accounted for in pools.

The fair value estimates for acquired loans are based on expected prepayments and the amount and timing of discounted expected principal, interest and other cash flows. Credit discounts representing the principal losses expected over the life of the loan are also a component of the initial fair value. In determining the Merger Date fair value of acquired impaired loans, and in subsequent accounting, we have generally aggregated acquired commercial and consumer loans into pools of loans with common risk characteristics.

The difference between the fair value of an acquired non-impaired loan and contractual amounts due at the Merger Date is accreted into income over the estimated life of the loan. Contractually required payments represent the total undiscounted amount of all uncollected principal and interest payments. Acquired non-impaired loans are placed on nonaccrual status and reported as nonperforming or past due using the same criteria applied to the originated loan portfolio.

The excess of an acquired impaired loan’s contractually required payments over the amount of its undiscounted cash flows expected to be collected is referred to as the non-accretable difference. The non-accretable difference, which is neither accreted into income nor recorded on the Consolidated Balance Sheets, reflects estimated future credit losses and uncollectable contractual interest expected to be incurred over the life of the acquired impaired loan. The excess cash flows expected to be collected over the carrying amount of the acquired loan is referred to as the accretable yield. This amount is accreted into interest income over the remaining life of the acquired loans or pools using the level yield method. The accretable yield is affected by changes in interest rate indices for variable rate loans, changes in prepayment speed assumptions and changes in expected principal and interest payments over the estimated lives of the acquired impaired loans.

We evaluate quarterly the remaining contractually required payments receivable and estimate cash flows expected to be collected over the lives of the impaired loans. Contractually required payments receivable may increase or decrease for a variety of reasons, for example, when the contractual terms of the loan agreement are modified, when interest rates on variable rate loans change, or when principal and/or interest payments are received. Cash flows expected to be collected on acquired impaired loans are estimated by incorporating several key assumptions similar to the initial estimate of fair value. These key assumptions include probability of default, loss given default, and the amount of actual prepayments after the Merger Date. Prepayments affect the estimated lives of loans and could change the amount of interest income, and possibly principal, expected to be collected. In re-forecasting future estimated cash flows, credit loss expectations are adjusted as necessary. The adjustments are based, in part, on actual loss severities recognized for each loan type, as well as changes in the probability of default. For periods in which estimated cash flows are not re-forecasted, the prior reporting period’s estimated cash flows are adjusted to reflect the actual cash received and credit events that transpired during the current reporting period.

Increases in expected cash flows of acquired impaired loans subsequent to the Merger Date are recognized prospectively through adjustments of the yield on the loans or pools over their remaining lives, while decreases in expected cash flows are recognized as impairment through a provision for loan losses and an increase in the allowance.

Year-end loans disaggregated by class of loan within the loan portfolio segments were as follows:

											Percent
	December 31, 2014					December 31, 2013					Increase
	Balance		%			Balance		%			(Decrease)
Originated Loans
Commercial:
Commercial and industrial	$	384,570,000		30.8	%	$	286,373,000		27.2	%		34.3	%
Vacant land, land development, and residential construction		29,826,000		2.4			36,741,000		3.5			(18.8	)
Real estate – owner occupied		291,758,000		23.4			261,877,000		24.9			11.4
Real estate – non-owner occupied		410,977,000		33.0			364,066,000		34.6			12.9
Real estate – multi-family and residential rental		36,058,000		2.9			37,639,000		3.5			(4.2	)
Total commercial		1,153,189,000		92.5			986,696,000		93.7			16.9
Retail:
Home equity and other		50,059,000		4.0			35,080,000		3.3			42.7
1-4 family mortgages		42,868,000		3.5			31,467,000		3.0			36.2
Total retail		92,927,000		7.5			66,547,000		6.3			39.6
Total originated loans	$	1,246,116,000		100.0	%	$	1,053,243,000		100.0	%		18.3	%

										Percent
	December 31, 2014					December 31, 2013				Increase
	Balance		%			Balance		%		(Decrease)
Acquired Loans
Commercial:
Commercial and industrial	$	166,037,000		19.7	%	$	0		NA		NM
Vacant land, land development, and residential construction		22,148,000		2.6			0		NA		NM
Real estate – owner occupied		138,630,000		16.4			0		NA		NM
Real estate – non-owner occupied		148,597,000		17.6			0		NA		NM
Real estate – multi-family and residential rental		86,702,000		10.3			0		NA		NM
Total commercial		562,114,000		66.6			0		NA		NM
Retail:
Home equity and other		109,219,000		13.0			0		NA		NM
1-4 family mortgages		171,828,000		20.4			0		NA		NM
Total retail		281,047,000		33.4			0		NA		NM
Total acquired loans	$	843,161,000		100.0	%	$	0		NA		NM

											Percent
	December 31, 2014					December 31, 2013					Increase
	Balance		%			Balance		%			(Decrease)
Total Loans
Commercial:
Commercial and industrial	$	550,607,000		26.4	%	$	286,373,000		27.2	%		92.3	%
Vacant land, land development, and residential construction		51,974,000		2.5			36,741,000		3.5			41.5
Real estate – owner occupied		430,388,000		20.5			261,877,000		24.9			64.3
Real estate – non-owner occupied		559,574,000		26.8			364,066,000		34.6			53.7
Real estate – multi-family and residential rental		122,760,000		5.9			37,639,000		3.5			226.2
Total commercial		1,715,303,000		82.1			986,696,000		93.7			73.8
Retail:
Home equity and other		159,278,000		7.6			35,080,000		3.3			354.0
1-4 family mortgages		214,696,000		10.3			31,467,000		3.0			582.3
Total retail		373,974,000		17.9			66,547,000		6.3			462.0
Total loans	$	2,089,277,000		100.0	%	$	1,053,243,000		100.0	%		98.4	%

The total contractually required payments and carrying value of acquired impaired loans was $31.4 million and $18.6 million, respectively, as of December 31, 2014. Changes in the accretable yield for acquired impaired loans for the seven-month period ended December 31, 2014 were as follows:

	2014
Balance at May 31, 2014	$	0
Additions		2,514,000
Accretion		(786,000	)
Net reclassification from nonaccretable to accretable		3,537,000
Disposals		(40,000	)
Other activity		(227,000	)
Balance at December 31, 2014	$	4,998,000

Concentrations within the loan portfolio were as follows at year-end:

	2014					2013
			Percentage of					Percentage of
	Balance		Loan Portfolio			Balance		Loan Portfolio
Commercial real estate loans to lessors of non-residential buildings	$	480,170,000		23.0	%	$	299,446,000		28.4	%

Year-end nonperforming originated loans were as follows:

	2014		2013
Loans past due 90 days or more still accruing interest	$	0	$	0
Nonaccrual loans		26,048,000		6,718,000
Total nonperforming loans	$	26,048,000	$	6,718,000

Year-end nonperforming acquired loans were as follows:

	2014		2013
Loans past due 90 days or more still accruing interest	$	26,000	$	NA
Nonaccrual loans		3,358,000		NA
Total nonperforming loans	$	3,384,000	$	NA

The recorded principal balance of nonperforming loans was as follows:

	December 31,		December 31,
	2014		2013
Commercial:
Commercial and industrial	$	6,478,000	$	1,501,000
Vacant land, land development, and residential construction		209,000		785,000
Real estate – owner occupied		18,062,000		389,000
Real estate – non-owner occupied		378,000		168,000
Real estate – multi-family and residential rental		106,000		208,000
Total commercial		25,233,000		3,051,000
Retail:
Home equity and other		800,000		788,000
1-4 family mortgages		3,399,000		2,879,000
Total retail		4,199,000		3,667,000
Total nonperforming loans	$	29,432,000	$	6,718,000

Acquired impaired loans are not reported as nonperforming loans based on acquired impaired loan accounting. Acquired non-impaired loans are placed on nonaccrual status and reported as nonperforming or past due using the same criteria applied to the originated loan portfolio.

An age analysis of past due loans is as follows as of December 31, 2014:

					Greater								Recorded
	30 – 59		60 – 89		Than 89								Balance > 89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing
Originated Loans
Commercial:
Commercial and industrial	$	0	$	0	$	0	$	0	$	384,570,000	$	384,570,000	$	0
Vacant land, land development, and residential construction		0		0		0		0		29,826,000		29,826,000		0
Real estate – owner occupied		0		0		120,000		120,000		291,638,000		291,758,000		0
Real estate – non-owner occupied		0		0		116,000		116,000		410,861,000		410,977,000		0
Real estate – multi-family and residential rental		0		0		0		0		36,058,000		36,058,000		0
Total commercial		0		0		236,000		236,000		1,152,953,000		1,153,189,000		0
Retail:
Home equity and other		38,000		3,000		0		41,000		50,018,000		50,059,000		0
1- 4 family mortgages		0		0		366,000		366,000		42,502,000		42,868,000		0
Total retail		38,000		3,000		366,000		407,000		92,520,000		92,927,000		0
Total past due loans	$	38,000	$	3,000	$	602,000	$	643,000	$	1,245,473,000	$	1,246,116,000	$	0

					Greater								Recorded
	30 – 59		60 – 89		Than 89								Balance > 89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing
Acquired Loans
Commercial:
Commercial and industrial	$	29,000	$	32,000	$	76,000	$	137,000	$	165,900,000	$	166,037,000	$	0
Vacant land, land development, and residential construction		0		38,000		0		38,000		22,110,000		22,148,000		0
Real estate – owner occupied		51,000		425,000		1,625,000		2,101,000		136,529,000		138,630,000		0
Real estate – non-owner occupied		68,000		598,000		395,000		1,061,000		147,536,000		148,597,000		0
Real estate – multi-family and residential rental		37,000		0		105,000		142,000		86,560,000		86,702,000		0
Total commercial		185,000		1,093,000		2,201,000		3,479,000		558,635,000		562,114,000		0
Retail:
Home equity and other		445,000		419,000		155,000		1,019,000		108,200,000		109,219,000		26,000
1- 4 family mortgages		1,087,000		408,000		750,000		2,245,000		169,583,000		171,828,000		0
Total retail		1,532,000		827,000		905,000		3,264,000		277,783,000		281,047,000		26,000
Total past due loans	$	1,717,000	$	1,920,000	$	3,106,000	$	6,743,000	$	836,418,000	$	843,161,000	$	26,000

An age analysis of past due loans is as follows as of December 31, 2013:

					Greater								Recorded
	30 – 59		60 – 89		Than 89								Balance > 89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing
Originated Loans
Commercial:
Commercial and industrial	$	0	$	0	$	309,000	$	309,000	$	286,064,000	$	286,373,000	$	0
Vacant land, land development, and residential construction		0		0		0		0		36,741,000		36,741,000		0
Real estate – owner occupied		65,000		0		50,000		115,000		261,762,000		261,877,000		0
Real estate – non-owner occupied		0		0		0		0		364,066,000		364,066,000		0
Real estate – multi-family and residential rental		0		0		64,000		64,000		37,575,000		37,639,000		0
Total commercial		65,000		0		423,000		488,000		986,208,000		986,696,000		0
Retail:
Home equity and other		14,000		0		0		14,000		35,066,000		35,080,000		0
1- 4 family mortgages		21,000		44,000		375,000		440,000		31,027,000		31,467,000		0
Total retail		35,000		44,000		375,000		454,000		66,093,000		66,547,000		0
Total past due loans	$	100,000	$	44,000	$	798,000	$	942,000	$	1,052,301,000	$	1,053,243,000	$	0

Impaired originated loans with no related allowance recorded were as follows as of December 31, 2014:

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	1,170,000	$	1,164,000			$	652,000
Vacant land, land development and residential construction		540,000		209,000				227,000
Real estate – owner occupied		3,609,000		1,901,000				4,365,000
Real estate – non-owner occupied		1,210,000		1,210,000				971,000
Real estate – multi-family and residential rental		375,000		317,000				64,000
Total commercial		6,904,000		4,801,000				6,279,000
Retail:
Home equity and other		207,000		191,000				517,000
1-4 family mortgages		1,144,000		560,000				585,000
Total retail		1,351,000		751,000				1,102,000
Total with no related allowance recorded	$	8,255,000	$	5,552,000		0	$	7,381,000

Impaired originated loans with an allowance recorded and total impaired loans were as follows as of December 31, 2014:

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With an allowance recorded:
Commercial:
Commercial and industrial	$	5,299,000	$	5,226,000	$	1,578,000	$	2,759,000
Vacant land, land development and residential construction		2,000,000		2,000,000		151,000		3,229,000
Real estate – owner occupied		15,745,000		15,674,000		2,200,000		4,630,000
Real estate – non-owner occupied		16,033,000		15,949,000		4,779,000		18,245,000
Real estate – multi-family and residential rental		1,371,000		1,371,000		666,000		1,700,000
Total commercial		40,448,000		40,220,000		9,374,000		30,563,000
Retail:
Home equity and other		115,000		84,000		84,000		128,000
1-4 family mortgages		2,194,000		2,000,000		694,000		2,115,000
Total retail		2,309,000		2,084,000		778,000		2,243,000
Total with an allowance recorded	$	42,757,000	$	42,304,000	$	10,152,000	$	32,806,000
Total impaired loans:
Commercial	$	47,352,000	$	45,021,000	$	9,374,000	$	36,842,000
Retail		3,660,000		2,835,000		778,000		3,345,000
Total impaired loans	$	51,012,000	$	47,856,000	$	10,152,000	$	40,187,000

Impaired acquired loans with no related allowance recorded were as follows as of December 31, 2014:

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	1,586,000	$	1,579,000			$	563,000
Vacant land, land development and residential construction		0		0				0
Real estate – owner occupied		113,000		113,000				52,000
Real estate – non-owner occupied		326,000		326,000				260,000
Real estate – multi-family and residential rental		487,000		487,000				166,000
Total commercial		2,512,000		2,505,000				1,041,000
Retail:
Home equity and other		641,000		639,000				262,000
1-4 family mortgages		866,000		866,000				458,000
Total retail		1,507,000		1,505,000				720,000
Total with no related allowance recorded	$	4,019,000	$	4,010,000		0	$	1,761,000

Impaired acquired loans with an allowance recorded and total impaired loans were as follows as of December 31, 2014:

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With an allowance recorded:
Commercial:
Commercial and industrial	$	0	$	0	$	0	$	0
Vacant land, land development and residential construction		0		0		0		0
Real estate – owner occupied		1,516,000		1,502,000		605,000		501,000
Real estate – non-owner occupied		0		0		0		0
Real estate – multi-family and residential rental		0		0		0		0
Total commercial		1,516,000		1,502,000		605,000		501,000
Retail:
Home equity and other		0		0		0		0
1-4 family mortgages		0		0		0		0
Total retail		0		0		0		0
Total with an allowance recorded	$	1,516,000	$	1,502,000	$	605,000	$	501,000
Total impaired loans:
Commercial	$	4,028,000	$	4,007,000	$	605,000	$	1,542,000
Retail		1,507,000		1,505,000		0		720,000
Total impaired loans	$	5,535,000	$	5,512,000	$	605,000	$	2,262,000

Impaired originated loans with no related allowance recorded were as follows as of December 31, 2013:

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	2,229,000	$	511,000			$	1,205,000
Vacant land, land development and residential construction		475,000		362,000				991,000
Real estate – owner occupied		1,270,000		785,000				1,084,000
Real estate – non-owner occupied		895,000		733,000				4,049,000
Real estate – multi-family and residential rental		41,000		1,000				390,000
Total commercial		4,910,000		2,392,000				7,719,000
Retail:
Home equity and other		507,000		461,000				471,000
1-4 family mortgages		1,272,000		647,000				727,000
Total retail		1,779,000		1,108,000				1,198,000
Total with no related allowance recorded	$	6,689,000	$	3,500,000		0	$	8,917,000

Impaired originated loans with an allowance recorded and total impaired loans were as follows as of December 31, 2013:

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With an allowance recorded:
Commercial:
Commercial and industrial	$	1,517,000	$	1,440,000	$	792,000	$	1,880,000
Vacant land, land development and residential construction		4,436,000		4,139,000		844,000		3,354,000
Real estate – owner occupied		1,513,000		1,513,000		528,000		2,550,000
Real estate – non-owner occupied		21,088,000		21,072,000		7,969,000		28,388,000
Real estate – multi-family and residential rental		3,219,000		2,684,000		1,127,000		2,915,000
Total commercial		31,773,000		30,848,000		11,260,000		39,087,000
Retail:
Home equity and other		320,000		289,000		96,000		329,000
1-4 family mortgages		2,274,000		2,231,000		1,030,000		1,628,000
Total retail		2,594,000		2,520,000		1,126,000		1,957,000
Total with an allowance recorded	$	34,367,000	$	33,368,000	$	12,386,000	$	41,044,000
Total impaired loans:
Commercial	$	36,683,000	$	33,240,000	$	11,260,000	$	46,806,000
Retail		4,373,000		3,628,000		1,126,000		3,155,000
Total impaired loans	$	41,056,000	$	36,868,000	$	12,386,000	$	49,961,000

Impaired loans for which no allocation of the allowance for loan losses has been made generally reflect situations whereby the loans have been charged-down to estimated collateral value. Interest income recognized on accruing troubled debt restructurings totaled $1.8 million, $2.5 million and $2.0 million during 2014, 2013 and 2012, respectively. Interest income recognized on nonaccrual loans totaled $1.9 million during 2013, reflecting the collection of interest at the time of principal pay-off. No such significant collections of interest income were recorded during 2014 or 2012. Lost interest income on nonaccrual loans totaled $0.1 million, $0.4 million and $0.8 million during 2014, 2013 and 2012, respectively.

Credit Quality Indicators. We utilize a comprehensive grading system for our commercial loans. All commercial loans are graded on a ten grade rating system. The rating system utilizes standardized grade paradigms that analyze several critical factors such as cash flow, operating performance, financial condition, collateral, industry condition and management. All commercial loans are graded at inception and reviewed and, if appropriate, re-graded at various intervals thereafter. The risk assessment for retail loans is primarily based on the type of collateral and payment activity.

Loans by credit quality indicators were as follows as of December 31, 2014:

Originated Loans

Commercial credit exposure – credit risk profiled by internal credit risk grades:

	Commercial and Industrial		Commercial Vacant Land, Land  Development, and Residential Construction		Commercial Real Estate - Owner Occupied		Commercial Real Estate - Non-Owner Occupied		Commercial Real Estate - Multi-Family and Residential Rental
Internal credit risk grade groupings:
Grades 1 – 4	$	266,631,000	$	11,242,000	$	190,656,000	$	285,035,000	$	12,394,000
Grades 5 – 7		109,639,000		16,375,000		83,123,000		113,982,000		22,282,000
Grades 8 – 9		8,300,000		2,209,000		17,979,000		11,960,000		1,382,000
Total commercial	$	384,570,000	$	29,826,000	$	291,758,000	$	410,977,000	$	36,058,000

Retail credit exposure – credit risk profiled by collateral type:

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Total retail	$	50,059,000	$	42,868,000

Acquired Loans

Commercial credit exposure – credit risk profiled by internal credit risk grades:

			Commercial						Commercial
			Vacant Land,		Commercial		Commercial		Real Estate -
	Commercial		Land Development,		Real Estate -		Real Estate -		Multi-Family
	and		and Residential		Owner		Non-Owner		and Residential
	Industrial		Construction		Occupied		Occupied		Rental
Internal credit risk grade groupings:
Grades 1 – 4	$	72,411,000	$	5,875,000	$	39,496,000	$	65,886,000	$	35,858,000
Grades 5 – 7		90,320,000		14,472,000		92,212,000		78,103,000		49,781,000
Grades 8 – 9		3,306,000		1,801,000		6,922,000		4,608,000		1,063,000
Total commercial	$	166,037,000	$	22,148,000	$	138,630,000	$	148,597,000	$	86,702,000

Retail credit exposure – credit risk profiled by collateral type:

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Total retail	$	109,219,000	$	171,828,000

Loans by credit quality indicators were as follows as of December 31, 2013:

Originated Loans

Commercial credit exposure – credit risk profiled by internal credit risk grades:

			Commercial Vacant Land, Land		Commercial		Commercial		Commercial Real Estate -
	Commercial		Development,		Real Estate -		Real Estate -		Multi-Family
	and		and Residential		Owner		Non-Owner		and Residential
	Industrial		Construction		Occupied		Occupied		Rental
Internal credit risk grade groupings:
Grades 1 – 4	$	208,151,000	$	6,973,000	$	156,230,000	$	219,325,000	$	15,465,000
Grades 5 – 7		76,237,000		25,535,000		103,066,000		122,717,000		19,469,000
Grades 8 – 9		1,985,000		4,233,000		2,581,000		22,024,000		2,705,000
Total commercial	$	286,373,000	$	36,741,000	$	261,877,000	$	364,066,000	$	37,639,000

Retail credit exposure – credit risk profiled by collateral type:

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Total retail	$	35,080,000	$	31,467,000

All commercial loans are graded using the following number system:

Grade 1.     Excellent credit rating that contain very little, if any, risk of loss.

Grade 2.     Strong sources of repayment and have low repayment risk.

Grade 3.     Good sources of repayment and have limited repayment risk.

Grade 4.     Adequate sources of repayment and acceptable repayment risk; however, characteristics are present that render the credit more vulnerable to a negative event.

Grade 5.     Marginally acceptable sources of repayment and exhibit defined weaknesses and negative characteristics.

Grade 6.     Well defined weaknesses which may include negative current cash flow, high leverage, or operating losses. Generally, if the credit does not stabilize or if further deterioration is observed in the near term, the loan will likely be downgraded and placed on the Watch List (i.e., list of lending relationships that receive increased scrutiny and review by the Board of Directors and senior management).

Grade 7.     Defined weaknesses or negative trends that merit close monitoring through Watch List status.

Grade 8.     Inadequately protected by current sound net worth, paying capacity of the obligor, or pledged collateral, resulting in a distinct possibility of loss requiring close monitoring through Watch List status.

Grade 9.     Vital weaknesses exist where collection of principal is highly questionable.

Grade 10.   Considered uncollectable and of such little value that their continuance as an asset is not warranted.

The primary risk elements with respect to commercial loans are the financial condition of the borrower, the sufficiency of collateral, and timeliness of scheduled payments. We have a policy of requesting and reviewing periodic financial statements from commercial loan customers and employ a disciplined and formalized review of the existence of collateral and its value. The primary risk element with respect to each residential real estate loan and consumer loan is the timeliness of scheduled payments. We have a reporting system that monitors past due loans and have adopted policies to pursue creditor’s rights in order to preserve our collateral position.

The allowance for originated loan losses and recorded investments in originated loans for the year-ended December 31, 2014 are as follows:

	Commercial			Retail
	Loans			Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	20,455,000		$	2,358,000		$	8,000	$	22,821,000
Provision for loan losses		(3,140,000	)		(721,000	)		68,000		(3,793,000	)
Charge-offs		(876,000	)		(554,000	)		0		(1,430,000	)
Recoveries		1,297,000			404,000			0		1,701,000
Ending balance	$	17,736,000		$	1,487,000		$	76,000	$	19,299,000
Ending balance: individually evaluated for impairment	$	9,374,000		$	777,000		$	0	$	10,151,000
Ending balance: collectively evaluated for impairment	$	8,362,000		$	710,000		$	76,000	$	9,148,000
Total loans:
Ending balance	$	1,153,189,000		$	92,927,000				$	1,246,116,000
Ending balance: individually evaluated for impairment	$	45,021,000		$	2,835,000				$	47,856,000
Ending balance: collectively evaluated for impairment	$	1,108,168,000		$	90,092,000				$	1,198,260,000

The allowance for acquired loan losses for the year-ended December 31, 2014 is as follows:

	Commercial			Retail
	Loans			Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	0		$	0		$	0	$	0
Provision for loan losses		734,000			59,000			0		793,000
Charge-offs		(55,000	)		(16,000	)		0		(71,000	)
Recoveries		2,000			18,000			0		20,000
Ending balance	$	681,000		$	61,000		$	0	$	742,000

In accordance with the applicable accounting guidance for business combinations, there was no carry-over of Firstbank’s previously established allowance for loan losses.

The allowance for loan losses and recorded investments in loans for the year-ended December 31, 2013 are as follows:

	Commercial			Retail
	Loans			Loans			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	26,043,000		$	2,645,000		$	(11,000	)	$	28,677,000
Provision for loan losses		(6,730,000	)		(489,000	)		19,000			(7,200,000	)
Charge-offs		(5,120,000	)		(170,000	)		0			(5,290,000	)
Recoveries		6,262,000			372,000			0			6,634,000
Ending balance	$	20,455,000		$	2,358,000		$	8,000		$	22,821,000
Ending balance: individually evaluated for impairment	$	11,260,000		$	1,126,000		$	0		$	12,386,000
Ending balance: collectively evaluated for impairment	$	9,195,000		$	1,232,000		$	8,000		$	10,435,000
Total loans:
Ending balance	$	986,696,000		$	66,547,000					$	1,053,243,000
Ending balance: individually evaluated for impairment	$	33,240,000		$	3,628,000					$	36,868,000
Ending balance: collectively evaluated for impairment	$	953,456,000		$	62,919,000					$	1,016,375,000

The allowance for loan losses and recorded investments in loans for the year-ended December 31, 2012 are as follows:

	Commercial			Retail
	Loans			Loans			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	33,431,000		$	3,019,000		$	82,000		$	36,532,000
Provision for loan losses		(2,800,000	)		(207,000	)		(93,000	)		(3,100,000	)
Charge-offs		(12,075,000	)		(569,000	)		0			(12,644,000	)
Recoveries		7,487,000			402,000			0			7,889,000
Ending balance	$	26,043,000		$	2,645,000		$	(11,000	)	$	28,677,000
Ending balance: individually evaluated for impairment	$	16,860,000		$	329,000		$	0		$	17,189,000
Ending balance: collectively evaluated for impairment	$	9,183,000		$	2,316,000		$	(11,000	)	$	11,488,000
Total loans:
Ending balance	$	968,506,000		$	72,683,000					$	1,041,189,000
Ending balance: individually evaluated for impairment	$	55,138,000		$	2,141,000					$	57,279,000
Ending balance: collectively evaluated for impairment	$	913,368,000		$	70,542,000					$	983,910,000

Loans modified as troubled debt restructurings during 2014 were as follows:

			Pre-		Post-
			Modification		Modification
			Recorded		Recorded
	Number of		Principal		Principal
	Contracts		Balance		Balance
Originated Loans
Commercial:
Commercial and industrial		2	$	5,994,000	$	6,094,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		2		16,787,000		16,787,000
Real estate – non-owner occupied		1		146,000		146,000
Real estate – multi-family and residential rental		0		0		0
Total commercial		5		22,927,000		23,027,000
Retail:
Home equity and other		0		0		0
1-4 family mortgages		0		0		0
Total retail		0		0		0
Total		5	$	22,927,000	$	23,027,000
Acquired Loans
Commercial:
Commercial and industrial		7	$	1,604,000	$	1,604,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		2		1,619,000		1,619,000
Real estate – non-owner occupied		1		65,000		65,000
Real estate – multi-family and residential rental		4		394,000		394,000
Total commercial		14		3,682,000		3,682,000
Retail:
Home equity and other		1		26,000		26,000
1-4 family mortgages		1		179,000		179,000
Total retail		2		205,000		205,000
Total		16	$	3,887,000	$	3,887,000

Originated loans modified as troubled debt restructurings during 2013 were as follows:

			Pre-		Post-
			Modification		Modification
			Recorded		Recorded
	Number of		Principal		Principal
	Contracts		Balance		Balance
Commercial:
Commercial and industrial		3	$	741,000	$	741,000
Vacant land, land development and residential construction		2		3,610,000		3,610,000
Real estate – owner occupied		2		715,000		715,000
Real estate – non-owner occupied		1		45,000		45,000
Real estate – multi-family and residential rental		1		241,000		241,000
Total commercial		9		5,352,000		5,352,000
Retail:
Home equity and other		0		0		0
1-4 family mortgages		1		1,879,000		1,879,000
Total retail		1		1,879,000		1,879,000
Total		10	$	7,231,000	$	7,231,000

The following originated loans, modified as troubled debt restructurings within the previous twelve months, became over 30 days past due during the twelve months ended December 31, 2014 (amounts as of period end):

			Recorded
	Number of		Principal
	Contracts		Balance
Commercial:
Commercial and industrial		0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		0		0
Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0
Total		0	$	0

The following acquired loans, modified as troubled debt restructurings within the previous seven months, became over 30 days past due during the seven months ended December 31, 2014 (amounts as of period end):

			Recorded
	Number of		Principal
	Contracts		Balance
Commercial:
Commercial and industrial		0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		0		0
Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0
Total		0	$	0

The following originated loans, modified as troubled debt restructurings within the previous twelve months, became over 30 days past due during the twelve months ended December 31, 2013 (amounts as of period end):

	Number of		Principal
	Contracts		Balance
Commercial:
Commercial and industrial		0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		1		65,000
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		1		65,000
Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0
Total		1	$	65,000

Activity for originated loans categorized as troubled debt restructurings during 2014 is as follows:

				Commercial
				Vacant Land, Land			Commercial			Commercial			Commercial Real Estate -
	Commercial			Development,			Real Estate -			Real Estate -			Multi-Family
	and			and Residential			Owner			Non-Owner			and Residential
	Industrial			Construction			Occupied			Occupied			Rental
Commercial Loan Portfolio:
Beginning Balance	$	1,656,000		$	4,501,000		$	1,816,000		$	22,311,000		$	2,620,000
Charge-Offs		(67,000	)		0			(11,000	)		0			(420,000	)
Payments		(871,000	)		(4,719,000	)		(2,343,000	)		(5,190,000	)		(1,695,000	)
Transfers to ORE		(21,000	)		0			(48,000	)		0			0
Net Additions/Deletions		6,329,000			2,898,000			17,746,000			318,000			0
Ending Balance	$	7,026,000		$	2,680,000		$	17,160,000		$	17,439,000		$	505,000

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	1,987,000
Charge-Offs		0		0
Payments		0		(224,000	)
Transfers to ORE		0		0
Net Additions/Deletions		0		204,000
Ending Balance	$	0	$	1,967,000

Activity for acquired loans categorized as troubled debt restructurings during the last seven months of 2014 is as follows:

				Commercial
				Vacant Land, Land		Commercial		Commercial		Commercial Real Estate -
	Commercial			Development,		Real Estate -		Real Estate -		Multi-Family
	and			and Residential		Owner		Non-Owner		and Residential
	Industrial			Construction		Occupied		Occupied		Rental
Commercial Loan Portfolio:
Beginning Balance	$	0		$	0	$	0	$	0	$	0
Charge-Offs		0			0		0		0		0
Payments		(2,000	)		0		0		0		(18,000	)
Transfers to ORE		0			0		0		0		0
Net Additions/Deletions		1,441,000			0		1,569,000		64,000		399,000
Ending Balance	$	1,439,000		$	0	$	1,569,000	$	64,000	$	381,000

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	0
Charge-Offs		0		0
Payments		0		0
Transfers to ORE		0		0
Net Additions/Deletions		26,000		178,000
Ending Balance	$	26,000	$	178,000

Activity for loans categorized as troubled debt restructurings during 2013 is as follows:

				Commercial
				Vacant Land, Land			Commercial			Commercial			Commercial Real Estate -
	Commercial			Development,			Real Estate -			Real Estate -			Multi-Family
	and			and Residential			Owner			Non-Owner			and Residential
	Industrial			Construction			Occupied			Occupied			Rental
Commercial Loan Portfolio:
Beginning Balance	$	2,720,000		$	3,071,000		$	4,116,000		$	37,671,000		$	3,027,000
Charge-Offs		(35,000	)		(725,000	)		(70,000	)		(2,537,000	)		(15,000	)
Payments		(2,781,000	)		(1,596,000	)		(2,151,000	)		(13,795,000	)		(735,000	)
Transfers to ORE		(74,000	)		0			(363,000	)		(1,153,000	)		0
Net Additions/Deletions		1,826,000			3,751,000			284,000			2,126,000			343,000
Ending Balance	$	1,656,000		$	4,501,000		$	1,816,000		$	22,312,000		$	2,620,000

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	155,000
Charge-Offs		0		0
Payments		0		(46,000	)
Transfers to ORE		0		0
Net Additions/Deletions		0		1,878,000
Ending Balance	$	0	$	1,987,000

Activity for loans categorized as troubled debt restructurings during 2012 is as follows:

				Commercial
				Vacant Land, Land			Commercial			Commercial			Commercial Real Estate -
	Commercial			Development,			Real Estate -			Real Estate -			Multi-Family
	and			and Residential			Owner			Non-Owner			and Residential
	Industrial			Construction			Occupied			Occupied			Rental
Commercial Loan Portfolio:
Beginning Balance	$	4,553,000		$	5,100,000		$	6,183,000		$	12,036,000		$	12,626,000
Charge-Offs		(540,000	)		(63,000	)		(426,000	)		(720,000	)		(2,180,000	)
Payments		(2,584,000	)		(2,013,000	)		(3,443,000	)		(2,482,000	)		(7,422,000	)
Transfers to ORE		(96,000	)		0			(65,000	)		(1,045,000	)		(186,000	)
Net Additions/Deletions		1,387,000			47,000			1,867,000			29,882,000			189,000
Ending Balance	$	2,720,000		$	3,071,000		$	4,116,000		$	37,671,000		$	3,027,000

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	164,000
Charge-Offs		0		0
Payments		0		(9,000	)
Transfers to ORE		0		0
Net Additions/Deletions		0		0
Ending Balance	$	0	$	155,000

The allowance related to loans categorized as troubled debt restructurings was as follows:

	December 31,		December 31,
	2014		2013
Commercial:
Commercial and industrial	$	16,000	$	187,000
Vacant land, land development, and residential construction		151,000		798,000
Real estate – owner occupied		182,000		528,000
Real estate – non-owner occupied		4,778,000		7,828,000
Real estate – multi-family and residential rental		666,000		1,010,000
Total commercial		5,793,000		10,351,000
Retail:
Home equity and other		0		0
1-4 family mortgages		0		48,000
Total retail		0		48,000
Total related allowance	$	5,793,000	$	10,399,000

In general, our policy dictates that a renewal or modification of an 8- or 9-rated commercial loan meets the criteria of a troubled debt restructuring, although we review and consider all renewed and modified loans as part of our troubled debt restructuring assessment procedures. Loan relationships rated 8 contain significant financial weaknesses, resulting in a distinct possibility of loss, while relationships rated 9 reflect vital financial weaknesses, resulting in a highly questionable ability on our part to collect principal; we believe borrowers warranting such ratings would have difficulty obtaining financing from other market participants. Thus, due to the lack of comparable market rates for loans with similar risk characteristics, we believe 8- or 9-rated loans renewed or modified were done so at below market rates. Loans that are identified as troubled debt restructurings are considered impaired and are individually evaluated for impairment when assessing these credits in our allowance for loan losses calculation.

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Note 3 - Securities

12 Months Ended

Dec. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 3 – SECURITIES

The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
2014
U.S. Government agency debt obligations	$	194,894,000	$	1,612,000	$	(3,038,000	)	$	193,468,000
Mortgage-backed securities		92,656,000		1,123,000		(218,000	)		93,561,000
Municipal general obligation bonds		132,347,000		1,042,000		(307,000	)		133,082,000
Municipal revenue bonds		10,769,000		117,000		(13,000	)		10,873,000
Other investments		1,925,000		3,000		0			1,928,000
	$	432,591,000	$	3,897,000	$	(3,576,000	)	$	432,912,000
2013
U.S. Government agency debt obligations	$	108,279,000	$	263,000	$	(10,065,000	)	$	98,477,000
Mortgage-backed securities		12,456,000		1,102,000		0			13,558,000
Municipal general obligation bonds		16,488,000		388,000		(4,000	)		16,872,000
Municipal revenue bonds		878,000		38,000		0			916,000
Mutual funds		1,386,000		0		(31,000	)		1,355,000
	$	139,487,000	$	1,791,000	$	(10,100,000	)	$	131,178,000

Securities with unrealized losses at year-end 2014 and 2013, aggregated by investment category and length of time that individual securities have been in a continuous loss position, are as follows:

	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
2014
U.S. Government agency debt obligations	$	81,891,000	$	202,000	$	74,120,000	$	2,836,000	$	156,011,000	$	3,038,000
Mortgage-backed securities		49,940,000		218,000		0		0		49,940,000		218,000
Municipal general obligation bonds		54,104,000		307,000		0		0		54,104,000		307,000
Municipal revenue bonds		4,644,000		13,000		0		0		4,644,000		13,000
Other investments		0		0		0		0		0		0
	$	190,579,000	$	740,000	$	74,120,000	$	2,836,000	$	264,699,000	$	3,576,000
2013
U.S. Government agency debt obligations	$	57,117,000	$	5,798,000	$	29,679,000	$	4,267,000	$	86,796,000	$	10,065,000
Mortgage-backed securities		0		0		0		0		0		0
Municipal general obligation bonds		295,000		4,000		0		0		295,000		4,000
Municipal revenue bonds		0		0		0		0		0		0
Mutual funds		1,355,000		31,000		0		0		1,355,000		31,000
	$	58,767,000	$	5,833,000	$	29,679,000	$	4,267,000	$	88,446,000	$	10,100,000

We evaluate securities for other-than-temporary impairment at least on a quarterly basis. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability we have to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. For those debt securities whose fair value is less than their amortized cost basis, we also consider our intent to sell the security, whether it is more likely than not that we will be required to sell the security before recovery and if we do not expect to recover the entire amortized cost basis of the security. In analyzing an issuer’s financial condition, we may consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial condition.

At December 31, 2014, 341 debt securities with fair values totaling $264.7 million have unrealized losses aggregating $3.6 million. After we considered whether the securities were issued by the federal government or its agencies and whether downgrades by bond rating agencies had occurred, we determined that unrealized losses were due to changing interest rate environments. As we do not intend to sell our debt securities before recovery of their cost basis and we believe it is more likely than not that we will not be required to sell our debt securities before recovery of the cost basis, no unrealized losses are deemed to be other-than-temporary.

The amortized cost and fair values of debt securities at December 31, 2014, by maturity, are shown in the following table. The contractual maturity is utilized for U.S. Government agency debt obligations and municipal bonds. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately. Weighted average yields are also reflected, with yields for municipal securities shown at their tax equivalent yield.

	Weighted
	Average			Amortized		Fair
	Yield			Cost		Value
Due in one year or less		0.72	%	$	27,651,000	$	27,662,000
Due from one to five years		1.35			148,233,000		147,974,000
Due from five to ten years		2.99			70,282,000		70,191,000
Due after ten years		3.62			91,844,000		91,596,000
Mortgage-backed securities		1.79			92,656,000		93,561,000
Other investments		2.57			1,925,000		1,928,000
		2.17	%	$	432,591,000	$	432,912,000

During 2013, Michigan Strategic Fund bonds totaling $10.3 million were sold at par. No securities were sold during 2014 and 2012.

Securities issued by the State of Michigan and all its political subdivisions had a combined amortized cost of $113.1 million and $17.4 million at December 31, 2014 and December 31, 2013, respectively, with estimated market values of $113.9 million and $17.8 million, respectively. Securities issued by all other states and their political subdivisions had a combined amortized cost of $30.0 million and estimated market value of $30.0 million at December 31, 2014; as of December 31, 2013, our entire municipal bond portfolio consisted of securities issued by the State of Michigan and its political subdivisions. Total securities of any other specific issuer, other than the U.S. Government and its agencies and the State of Michigan and all its political subdivisions, did not exceed 10% of shareholders’ equity.

The carrying value of U.S. Government agency debt obligations and mortgage-backed securities that are pledged to secure repurchase agreements was $180.5 million and $94.4 million at December 31, 2014 and 2013, respectively. In addition, substantially all of our municipal bonds have been pledged to the Discount Window of the Federal Reserve Bank of Chicago. Investments in FHLB stock are restricted and may only be resold to, or redeemed by, the issuer.

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Note 15 - Benefit Plans

12 Months Ended

Dec. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

NOTE 15 – BENEFIT PLANS

We have a 401(k) benefit plan that covers substantially all of our employees. The percent of our matching contributions to the 401(k) benefit plan is determined annually by the Board of Directors. The matching contribution was 3% as of January 1, 2012, and then increased to 4% as of October 1, 2012. Effective January 1, 2014, the matching contribution was increased to 4.25%. Matching contributions, if made, are immediately vested. Our 2014, 2013 and 2012 matching 401(k) contributions charged to expense were $0.9 million, $0.5 million and $0.4 million, respectively.

We have a deferred compensation plan in which all persons serving on the Board of Directors may defer all or portions of their annual retainer and meeting fees, with distributions to be paid upon termination of service as a director or specific dates selected by the director. We also have a non-qualified deferred compensation program in which selected officers may defer all or portions of salary and bonus payments. The deferred amounts, totaling $3.7 million and $1.6 million as of December 31, 2014 and 2013, respectively, are categorized as other liabilities in the Consolidated Balance Sheets, and are paid interest at a rate equal to the Wall Street Journal Prime Rate. Interest expense is insignificant for all periods presented.

The Mercantile Bank Corporation Employee Stock Purchase Plan of 2002 was replaced by the Mercantile Bank Corporation Employee Stock Purchase Plan of 2014 (herein after referred to as the “Stock Purchase Plans”) in June of 2014. The Stock Purchase Plans are non-compensatory plans intended to encourage full- and part-time employees of Mercantile and its subsidiaries to promote our best interests and to align employees’ interests with the interests of our shareholders by permitting employees to purchase shares of our common stock through regular payroll deductions. Shares are purchased on the last business day of each calendar quarter at a price equal to the consolidated closing bid price of our common stock reported on The Nasdaq Stock Market. A total of 250,000 shares of common stock may be issued under the existing plan; however, the number of shares may be adjusted to reflect any stock dividends and other changes in our capitalization. The number of shares issued under the Stock Purchase Plans totaled 1,150 and 1,098 in 2014 and 2013, respectively. As of December 31, 2014, there were 28,850 shares available under our current plan.

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Note 11 - Federal Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 11 - FEDERAL INCOME TAXES

The consolidated income tax expense is as follows:

	2014		2013		2012
Current expense	$	3,359,000	$	0	$	0
Deferred expense		4,506,000		8,092,000		5,636,000
Tax expense	$	7,865,000	$	8,092,000	$	5,636,000

A reconciliation of the differences between the federal income tax expense recorded and the amount computed by applying the federal statutory rate to income before income taxes is as follows:

	2014			2013			2012
Tax at statutory rate (35%)	$	8,819,000		$	8,794,000		$	6,360,000
Increase (decrease) from
Tax-exempt interest		(621,000	)		(347,000	)		(486,000	)
Bank owned life insurance		(415,000	)		(465,000	)		(535,000	)
Other		82,000			110,000			297,000
Tax expense	$	7,865,000		$	8,092,000		$	5,636,000

Significant components of deferred tax assets and liabilities as of December 31, 2014 and 2013 are as follows:

	2014			2013
Deferred income tax assets
Allowance for loan losses	$	7,014,000		$	7,987,000
Tax credit carryforwards		3,395,000			1,397,000
Nonaccrual loan interest income		471,000			605,000
Deferred compensation		1,304,000			567,000
Deferred loan fees		445,000			273,000
Fair value write-downs on foreclosed properties		212,000			241,000
Fair value of interest rate swap		89,000			92,000
Losses on capital investments		450,000			0
Stock compensation		521,000			207,000
Net operating loss carryforward		0			4,050,000
Unrealized loss on securities		0			2,908,000
Other		725,000			136,000
		14,626,000			18,463,000
Deferred income tax liabilities
Depreciation		1,217,000			419,000
Prepaid expenses		425,000			192,000
Core deposit intangible		5,386,000			0
Mortgage loan servicing rights		2,349,000			0
Unrealized gain on securities		112,000			0
Other		476,000			98,000
		9,965,000			709,000
Net deferred tax asset before valuation allowance		4,661,000			17,754,000
Valuation allowance		(450,000	)		0
Total net deferred tax asset	$	4,211,000		$	17,754,000

A valuation allowance related to deferred tax assets is required when it is considered more likely than not that all or part of the benefits related to such assets will not be realized. We do not believe the deferred tax asset related to losses on certain capital investments acquired in our merger with Firstbank is more likely than not to be realized. Therefore, we established a valuation allowance of $0.5 million in connection with the acquisition accounting at the time of the merger.

At December 31, 2014, we had carryforwards of the following tax attributes: general business tax credits of $0.6 million that expire in the years 2028 through 2034; and $2.8 million of federal alternative minimum tax credits with an indefinite life.

We had no unrecognized tax benefits at any time during 2014 or 2013 and do not anticipate any significant increase in unrecognized tax benefits during 2015. Should the accrual of any interest or penalties relative to unrecognized tax benefits be necessary, it is our policy to record such accruals in our income tax accounts; no such accruals existed at any time during 2014 or 2013. Our U.S. federal income tax returns are no longer subject to examination for all years before 2011.

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Note 6 - Mortgage Loan Servicing (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Mortgage Loan Servicing [Abstract]
Continuing Involvement with Transferred Financial Assets, Custodial Escrow Balance (in Dollars)	$ 2.8
Servicing Asset at Fair Value, Amount (in Dollars)	$ 7.3
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Discount Rate	7.05%
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Prepayment Speed	12.60%
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Expected Credit Losses	1.01%
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Weighted Average Life	3 years 255 days

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Note 7 - Core Deposit Intangible Assets, Net

12 Months Ended

Dec. 31, 2014

Disclosure Text Block [Abstract]

Intangible Assets Disclosure [Text Block]

NOTE 7 – CORE DEPOSIT INTANGIBLE ASSETS, NET

The gross carrying amount of core deposit intangible assets totaled $17.5 million as of December 31, 2014 (none at December 31, 2013). The accumulated amortization on core deposit intangible assets was $1.9 million, providing for a net carry balance of $15.6 million as of December 31, 2014.

The estimated amortization expense on core deposit intangible assets in future periods is:

2015	$	2,992,000
2016		2,675,000
2017		2,357,000
2018		2,039,000
2019		1,721,000
Thereafter		3,839,000

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Note 2 - Business Combination (Details) - Net Assets Acquired (USD $)	Dec. 31, 2014	Dec. 31, 2013	Jun. 01, 2014
Liabilities
Goodwill	$ 49,473,000	$ 0
Core Deposits [Member] | Firstbank Corporation [Member]
Assets
Intangibles			17,478,000
Servicing Contracts [Member] | Firstbank Corporation [Member]
Assets
Intangibles			7,389,000
Firstbank Corporation [Member]
Assets
Cash and cash equivalents			91,806,000
Securities			358,599,000
Total loans			943,662,000
Premises and equipment			24,049,000
Other assets			9,897,000
Total Assets			1,452,880,000
Liabilities
Deposits			1,229,609,000
Borrowings			87,615,000
Other liabilities			10,155,000
Total Liabilities			1,327,379,000
Net Identifiable Assets Acquired			125,501,000
Goodwill			$ 49,473,000

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Note 13 - Related Parties (Details) - Loans Outstanding to Directors and Executive Officers (Directors and Executive Officers [Member], USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Directors and Executive Officers [Member]
Related Party Transaction [Line Items]
Beginning balance	$ 6,884,000	$ 1,418,000
New loans	781,000	6,309,000
Repayments	(381,000)	(252,000)
Adjustments	1,718,000	(591,000)
Ending balance	$ 9,002,000	$ 6,884,000

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Note 5 - Premises and Equipment, Net

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

NOTE 5 - PREMISES AND EQUIPMENT, NET

Year-end premises and equipment were as follows:

	2014		2013
Land and improvements	$	16,579,000	$	8,556,000
Buildings		38,761,000		24,733,000
Furniture and equipment		16,622,000		12,718,000
		71,962,000		46,007,000
Less: accumulated depreciation		23,150,000		21,109,000
Total premises and equipment	$	48,812,000	$	24,898,000

Future lease payments total $1.8 million, comprised of $0.4 million in one year, $0.8 million in one to three years, $0.5 million in three to five years and $0.1 million in over five years. Depreciation expense totaled $2.3 million in 2014, $1.3 million in 2013, and $1.5 million in 2012.

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Note 6 - Mortgage Loan Servicing

12 Months Ended

Dec. 31, 2014

Mortgage Loan Servicing [Abstract]

Mortgage Loan Servicing [Text Block]

NOTE 6 – MORTGAGE LOAN SERVICING

Mortgage loans serviced for others are not reported as assets in the Consolidated Balance Sheets. The mortgage loan servicing portfolio was acquired in the merger with Firstbank. The year-end aggregate unpaid principal balances of mortgage loans serviced for others were as follows:

	2014
Mortgage loan portfolios serviced for:
Federal Home Loan Mortgage Corporation	$	589,118,000
Federal Home Loan Bank		1,702,000
Total mortgage loans serviced for others	$	590,820,000

Custodial escrow balances maintained in connection with serviced loans were $2.8 million as of December 31, 2014.

Activity for capitalized mortgage loan servicing rights, included in other assets in the Consolidated Balance Sheets, during 2014 was as follows:

	2014
Balance at January 1, 2014	$	0
Firstbank merger		7,389,000
Additions		575,000
Amortized to expense		(1,252,000	)
Balance at December 31, 2014	$	6,712,000

We determined that no valuation allowance was necessary as of December 31, 2014. The estimated fair value of mortgage servicing rights was $7.3 million as of December 31, 2014. The fair value of mortgage servicing rights is estimated using a valuation model that calculates the present value of estimated future net servicing cash flows, taking into consideration expected mortgage loan prepayment rates, discount rates, servicing costs and other economic factors, which are determined based on current market conditions. Fair value was determined using a discount rate of 7.05%, a weighted average constant prepayment rate of 12.6%, depending on the stratification of the specific right, and a weighted average delinquency rate of 1.01%.

The weighted average amortization period is 3.7 years as of December 31, 2014. Estimated amortization is as follows:

2015	$	1,560,000
2016		1,256,000
2017		1,023,000
2018		857,000
2019		722,000
Thereafter		1,294,000

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Note 8 - Deposits

12 Months Ended

Dec. 31, 2014

Disclosure Text Block [Abstract]

Deposit Liabilities Disclosures [Text Block]

NOTE 8 – DEPOSITS

Deposits at year-end are summarized as follows:

											Percent
	December 31, 2014					December 31, 2013					Increase
	Balance		%			Balance		%			(Decrease)
Noninterest-bearing demand	$	558,738,000		24.5	%	$	224,580,000		20.1	%		148.8	%
Interest-bearing checking		413,382,000		18.2			197,388,000		17.6			109.4
Money market		235,587,000		10.3			133,369,000		11.9			76.6
Savings		330,459,000		14.5			52,606,000		4.7			528.2
Time, under $100,000		181,026,000		8.0			43,251,000		3.9			318.5
Time, $100,000 and over		382,120,000		16.8			254,600,000		22.8			50.1
		2,101,312,000		92.3			905,794,000		81.0			132.0
Out-of-area time, under $100,000		2,422,000		0.1			4,078,000		0.4			(40.6	)
Out-of-area time, $100,000 and over		173,181,000		7.6			209,039,000		18.6			(17.2	)
		175,603,000		7.7			213,117,000		19.0			(17.6	)
Total deposits	$	2,276,915,000		100.0	%	$	1,118,911,000		100.0	%		103.5

Out-of-area certificates of deposit consist of certificates obtained from depositors outside of our primary market areas almost exclusively through deposit brokers.

The following table depicts the maturity distribution for certificates of deposit at year-end:

	2014		2013
In one year or less	$	368,163,000	$	213,454,000
In one to two years		153,346,000		80,138,000
In two to three years		118,919,000		73,271,000
In three to four years		60,953,000		95,979,000
In four to five years		37,368,000		48,126,000
Total certificates of deposit	$	738,749,000	$	510,968,000

The following table depicts the maturity distribution for certificates of deposit with balances of $100,000 or more at year-end:

	2014		2013
Up to three months	$	75,356,000	$	57,469,000
Three months to six months		65,838,000		41,237,000
Six months to twelve months		125,492,000		93,920,000
Over twelve months		288,615,000		271,013,000
Total certificates of deposit	$	555,301,000	$	463,639,000

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Note 3 - Securities (Details) (USD $)	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2014
Note 3 - Securities (Details) [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 88,446,000		264,699,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	10,100,000		3,576,000
Available-for-sale Debt Securities, Amortized Cost Basis			432,591,000
Available-for-sale Securities	131,178,000	[1]	432,912,000	[1]
Debt Securities [Member]
Note 3 - Securities (Details) [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions			341
Michigan Strategic Fund Bonds [Member]
Note 3 - Securities (Details) [Line Items]
Available-for-sale Securities, Sold at Par	10,300,000
State of Michigan and all its Political Subdivisions [Member]
Note 3 - Securities (Details) [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis	17,400,000		113,100,000
Available-for-sale Securities	17,800,000		113,900,000
All Other States and Their Political Subdivisions [Member]
Note 3 - Securities (Details) [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis			30,000,000
Available-for-sale Securities			30,000,000
Securities Other Than US Government Agencies and the State of Michigan and Political Subdivisions [Member] | Stockholders' Equity, Total [Member] | Securities Issued Concentration Risk [Member]
Note 3 - Securities (Details) [Line Items]
Concentration Risk, Percentage			10.00%
US Government Agency Debt Obligations and Mortgage-Backed Securities [Member]
Note 3 - Securities (Details) [Line Items]
Available-for-sale Securities, Restricted	$ 94,400,000		180,500,000

[1] See Note 18 for a description of the fair value hierarchy as well as a disclosure of levels for classes of financial assets and liabilities.

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Note 19 - Earnings Per Share (Details)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Earnings Per Share [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	168,000	55,000	132,000

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Note 6 - Mortgage Loan Servicing (Details) - Mortgage Loans Serviced for Others (USD $)	Dec. 31, 2014
Mortgage loan portfolios serviced for:
Mortgage loans serviced for others	$ 590,820,000
Federal Home Loan Mortgage Corporation [Member]
Mortgage loan portfolios serviced for:
Mortgage loans serviced for others	589,118,000
Federal Home Loan Bank [Member]
Mortgage loan portfolios serviced for:
Mortgage loans serviced for others	$ 1,702,000

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Note 3 - Securities (Details) - Securities in a Continuous Loss Position (USD $)	Dec. 31, 2014	Dec. 31, 2013
Note 3 - Securities (Details) - Securities in a Continuous Loss Position [Line Items]
Securities available for sale, continuous unrealized loss position, less than 12 months	$ 190,579,000	$ 58,767,000
Securities available for sale, continuous unrealized loss position, less than 12 months, unrealized loss	740,000	5,833,000
Securities available for sale, continuous unrealized loss position, 12 months or more	74,120,000	29,679,000
Securities available for sale, continuous unrealized loss position, 12 months or more, unrealized loss	2,836,000	4,267,000
Securities available for sale, continuous unrealized loss position	264,699,000	88,446,000
Securities available for sale, continuous unrealized loss position, unrealized loss	3,576,000	10,100,000
US Government Agencies Debt Securities [Member]
Note 3 - Securities (Details) - Securities in a Continuous Loss Position [Line Items]
Securities available for sale, continuous unrealized loss position, less than 12 months	81,891,000	57,117,000
Securities available for sale, continuous unrealized loss position, less than 12 months, unrealized loss	202,000	5,798,000
Securities available for sale, continuous unrealized loss position, 12 months or more	74,120,000	29,679,000
Securities available for sale, continuous unrealized loss position, 12 months or more, unrealized loss	2,836,000	4,267,000
Securities available for sale, continuous unrealized loss position	156,011,000	86,796,000
Securities available for sale, continuous unrealized loss position, unrealized loss	3,038,000	10,065,000
Collateralized Mortgage Backed Securities [Member]
Note 3 - Securities (Details) - Securities in a Continuous Loss Position [Line Items]
Securities available for sale, continuous unrealized loss position, less than 12 months	49,940,000	0
Securities available for sale, continuous unrealized loss position, less than 12 months, unrealized loss	218,000	0
Securities available for sale, continuous unrealized loss position, 12 months or more	0	0
Securities available for sale, continuous unrealized loss position, 12 months or more, unrealized loss	0	0
Securities available for sale, continuous unrealized loss position	49,940,000	0
Securities available for sale, continuous unrealized loss position, unrealized loss	218,000	0
Municipal General Obligation Bonds [Member]
Note 3 - Securities (Details) - Securities in a Continuous Loss Position [Line Items]
Securities available for sale, continuous unrealized loss position, less than 12 months	54,104,000	295,000
Securities available for sale, continuous unrealized loss position, less than 12 months, unrealized loss	307,000	4,000
Securities available for sale, continuous unrealized loss position, 12 months or more	0	0
Securities available for sale, continuous unrealized loss position, 12 months or more, unrealized loss	0	0
Securities available for sale, continuous unrealized loss position	54,104,000	295,000
Securities available for sale, continuous unrealized loss position, unrealized loss	307,000	4,000
Municipal Revenue Bonds [Member]
Note 3 - Securities (Details) - Securities in a Continuous Loss Position [Line Items]
Securities available for sale, continuous unrealized loss position, less than 12 months	4,644,000	0
Securities available for sale, continuous unrealized loss position, less than 12 months, unrealized loss	13,000	0
Securities available for sale, continuous unrealized loss position, 12 months or more	0	0
Securities available for sale, continuous unrealized loss position, 12 months or more, unrealized loss	0	0
Securities available for sale, continuous unrealized loss position	4,644,000	0
Securities available for sale, continuous unrealized loss position, unrealized loss	13,000	0
Other Debt Obligations [Member]
Note 3 - Securities (Details) - Securities in a Continuous Loss Position [Line Items]
Securities available for sale, continuous unrealized loss position, less than 12 months	0
Securities available for sale, continuous unrealized loss position, less than 12 months, unrealized loss	0
Securities available for sale, continuous unrealized loss position, 12 months or more	0
Securities available for sale, continuous unrealized loss position, 12 months or more, unrealized loss	0
Securities available for sale, continuous unrealized loss position	0
Securities available for sale, continuous unrealized loss position, unrealized loss	0
Mutual Funds [Member]
Note 3 - Securities (Details) - Securities in a Continuous Loss Position [Line Items]
Securities available for sale, continuous unrealized loss position, less than 12 months		1,355,000
Securities available for sale, continuous unrealized loss position, less than 12 months, unrealized loss		31,000
Securities available for sale, continuous unrealized loss position, 12 months or more		0
Securities available for sale, continuous unrealized loss position, 12 months or more, unrealized loss		0
Securities available for sale, continuous unrealized loss position		1,355,000
Securities available for sale, continuous unrealized loss position, unrealized loss		$ 31,000

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Note 12 - Stock-based Compensation (Details) - Summary of Restricted Stock Activity (Restricted Stock [Member], USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Restricted Stock [Member]
Note 12 - Stock-based Compensation (Details) - Summary of Restricted Stock Activity [Line Items]
Nonvested at beginning of year	63,800	66,100	38,650
Nonvested at beginning of year (in Dollars per share)	$ 14.30	$ 14.30	$ 6.20
Granted	101,490	0	66,100
Granted (in Dollars per share)	$ 20.13		$ 14.30
Vested	(63,300)	0	(38,266)
Vested (in Dollars per share)	$ 14.30		$ 6.20
Forfeited	(500)	(2,300)	(384)
Forfeited (in Dollars per share)	$ 14.30	$ 14.30	$ 6.20
Nonvested at end of year	101,490	63,800	66,100
Nonvested at end of year (in Dollars per share)	$ 20.13	$ 14.30	$ 14.30

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Note 2 - Business Combination (Details) - Acquired Impaired and Non-impaired Loans (Firstbank Corporation [Member], USD $)	Jun. 01, 2014
Firstbank Corporation [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Contractually required payments	$ 44,936,000
Nonaccretable difference	17,057,000
Expected cash flows	27,879,000
Accretable yield	2,514,000
Carrying balance	$ 25,365,000

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Note 8 - Deposits (Details) - Certificates of Deposit with Balances of $100,000 or More (USD $)	Dec. 31, 2014	Dec. 31, 2013
Certificates of Deposit with Balances of $100,000 or More [Abstract]
Up to three months	$ 75,356,000	$ 57,469,000
Three months to six months	65,838,000	41,237,000
Six months to twelve months	125,492,000	93,920,000
Over twelve months	288,615,000	271,013,000
Total certificates of deposit	$ 555,301,000	$ 463,639,000

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Note 25 - Mercantile Bank Corporation (Parent Company Only) Condensed Financial Statements (Details) - Condensed Balance Sheets (USD $)	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Feb. 29, 2012	Dec. 31, 2011
ASSETS
Other assets	$ 33,024,000	$ 30,165,000
Total assets	2,893,379,000	1,426,966,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities	2,565,241,000	1,273,641,000
Subordinated debentures	54,472,000	32,990,000		32,000,000
Shareholders’ equity	328,138,000	153,325,000	146,590,000		164,999,000
Total liabilities and shareholders’ equity	2,893,379,000	1,426,966,000
Parent Company [Member]
ASSETS
Cash and cash equivalents	1,441,000	2,506,000	473,000		542,000
Investment in bank subsidiary	361,355,000	179,706,000
Other assets	20,948,000	4,740,000
Total assets	383,744,000	186,952,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities	1,134,000	637,000
Subordinated debentures	54,472,000	32,990,000
Shareholders’ equity	328,138,000	153,325,000
Total liabilities and shareholders’ equity	$ 383,744,000	$ 186,952,000

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Accounting Policies, by Policy (Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation: The consolidated financial statements include the accounts of Mercantile Bank Corporation (“Mercantile”) and its subsidiary, Mercantile Bank of Michigan (“Bank”), and of Mercantile Bank Real Estate Co., L.L.C. (“Mercantile Real Estate”) and Mercantile Insurance Center, Inc. (“Mercantile Insurance”), subsidiaries of our Bank, after elimination of significant intercompany transactions and accounts.

We have five separate business trusts: Mercantile Bank Capital Trust I, Firstbank Capital Trust I, Firstbank Capital Trust II, Firstbank Capital Trust III and Firstbank Capital Trust IV (“our trusts”). Our trusts were formed to issue trust preferred securities. We issued subordinated debentures to our trusts in return for the proceeds raised from the issuance of the trust preferred securities. Our trusts are not consolidated, but instead we report the subordinated debentures issued to the trusts as liabilities.

Nature of Operation [Policy Text Block]

Nature of Operations: Mercantile was incorporated on July 15, 1997 to establish and own the Bank based in Grand Rapids, Michigan. The Bank began operations on December 15, 1997. We completed the merger of Firstbank Corporation (“Firstbank”), a Michigan corporation with approximately $1.5 billion in total assets and 46 branch locations, into Mercantile as of June 1, 2014.

The Bank is a community-based financial institution. The Bank’s primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are commercial loans, residential mortgage loans, and instalment loans. Substantially all loans are secured by specific items of collateral including business assets, real estate or consumer assets. Commercial loans are expected to be repaid from cash flow from operations of businesses. Real estate loans are secured by commercial or residential real estate. The Bank’s loan accounts and retail deposits are primarily with customers located in the communities in which we have bank office locations. As an alternative source of funds, the Bank has also issued certificates of deposit to depositors outside of its primary market areas. Substantially all revenues are derived from banking products and services and investment securities. While we monitor the revenue streams of the various products and services offered, we manage our business on the basis of one operating segment, banking.

Mercantile Insurance was formed during 2002 through the acquisition of an existing shelf insurance agency. Insurance products are offered through an Agency and Institutions Agreement among Mercantile Insurance, the Bank and Hub International. The insurance products are marketed through a central facility operated by the Michigan Bankers Insurance Association, members of which include the insurance subsidiaries of various Michigan-based financial institutions and Hub International. Mercantile Insurance receives commissions based upon written premiums produced under the Agency and Institutions Agreement.

Mercantile Real Estate was organized on July 21, 2003, principally to develop, construct, and own a facility in downtown Grand Rapids that serves as our Bank’s main office and Mercantile’s headquarters. This facility was placed into service during the second quarter of 2005.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. The allowance for loan losses and the fair values of financial instruments are particularly subject to change.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash Flow Reporting: Cash and cash equivalents include cash on hand, demand deposits with other financial institutions, short-term investments (including securities with daily put provisions) and federal funds sold. Cash flows are reported net for customer loan and deposit transactions, interest-bearing time deposits with other financial institutions and short-term borrowings with maturities of 90 days or less.

Marketable Securities, Policy [Policy Text Block]

Securities: Debt securities classified as held to maturity are carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available for sale when they might be sold prior to maturity. Equity securities with readily determinable fair values are classified as available for sale. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax. Federal Home Loan Bank stock is carried at cost.

Interest income includes amortization of purchase premiums and accretion of discounts. Premiums and discounts on securities are amortized or accreted on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

Declines in the fair value of debt securities below their amortized cost that are other than temporary (“OTTI”) are reflected in earnings or other comprehensive income, as appropriate. For those debt securities whose fair value is less than their amortized cost, we consider our intent to sell the security, whether it is more likely than not that we will be required to sell the security before recovery and whether we expect to recover the entire amortized cost of the security based on our assessment of the issuer’s financial condition. In analyzing an issuer’s financial condition, we consider whether the securities are issued by the federal government or its agencies, and whether downgrades by bond rating agencies have occurred. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement, and 2) OTTI related to other factors, such as liquidity conditions in the market or changes in market interest rates, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost.

Finance, Loan and Lease Receivables, Held-for-investment, Policy [Policy Text Block]

Loans: Loans that we have the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs and an allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments. Net unamortized deferred loan fees amounted to $1.1 million and $0.5 million at December 31, 2014 and 2013, respectively.

Interest income on commercial loans and mortgage loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer and credit card loans are typically charged off no later than when they are 120 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal and interest is considered doubtful.

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Finance, Loan and Lease Receivables, Held-for-sale, Policy [Policy Text Block]

Loans Held for Sale: Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings. Prior to the merger with Firstbank, such mortgage loans were sold servicing released. Subsequent to the merger, mortgage loans held for sale are generally sold with servicing rights retained. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related mortgage loan sold, which is reduced by the cost allocated to the servicing right. We generally lock in the sale price to the purchaser of the mortgage loan at the same time we make an interest rate commitment to the borrower.

Year-end mortgage loans held for sale were as follows:

	2014		2013
Mortgage loans held for sale	$	1,574,000	$	1,115,000
Less: Allowance to adjust to lower of cost or market		0		0
Mortgage loans held for sale, net	$	1,574,000	$	1,115,000

Mortgage Loan Derivatives [Policy Text Block]

Mortgage Loan Derivatives: From time to time, we enter into mortgage loan derivatives such as forward contracts and interest rate lock commitments in the ordinary course of business. The derivatives are not designated as hedges and are carried at fair value. The net gain or loss on mortgage loan derivatives is included in mortgage banking activities in the income statement. The balance of mortgage loan derivatives was immaterial at December 31, 2014 and 2013.

Loans and Leases Receivable, Mortgage Banking Activities, Policy [Policy Text Block]

Mortgage Banking Activities: Mortgage loan servicing rights are recognized as assets based on the allocated value of retained servicing rights on mortgage loans sold. Mortgage loan servicing rights are carried at the lower of amortized cost or fair value and are expensed in proportion to, and over the period of, estimated net servicing revenues. Impairment is evaluated based on the fair value of the rights using groupings of the underlying mortgage loans as to interest rates. Any impairment of a grouping is reported as a valuation allowance.

Servicing fee income is recorded for fees earned for serving mortgage loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. Amortization of mortgage loan servicing rights is netted against mortgage loan servicing income and recorded in mortgage banking activities in the income statement.

Loans and Leases Receivable, Troubled Debt Restructuring Policy [Policy Text Block]

Troubled Debt Restructurings: A loan is accounted for as a troubled debt restructuring if we, for economic or legal reasons, grant a concession to a borrower considered to be experiencing financial difficulties that we would not otherwise consider. A troubled debt restructuring may involve the receipt of assets from the debtor in partial or full satisfaction of the loan, or a modification of terms such as a reduction of the stated interest rate or balance of the loan, a reduction of accrued interest, an extension of the maturity date or renewal of the loan at a stated interest rate lower than the current market rate for a new loan with similar risk, or some combination of these concessions. Troubled debt restructurings can be in either accrual or nonaccrual status. Nonaccrual troubled debt restructurings are included in nonperforming loans. Accruing troubled debt restructurings are generally excluded from nonperforming loans as it is considered probable that all contractual principal and interest due under the restructured terms will be collected.

Loans modified as troubled debt restructurings are, by definition, considered to be impaired loans. Impairment for these loans is measured on a loan-by-loan basis similar to other impaired loans as described below under “Allowance for Loan Losses.” Certain loans modified as troubled debt restructurings may have been previously measured for impairment under a general allowance methodology (i.e., pooling), thus at the time the loan is modified as a troubled debt restructuring the allowance will be impacted by the difference between the results of these two measurement methodologies. Loans modified as troubled debt restructurings that subsequently default are factored into the determination of the allowance for loan losses in the same manner as other defaulted loans.

Loans and Leases Receivable, Allowance for Loan Losses Policy [Policy Text Block]

Allowance for Loan Losses: The allowance for loan losses (“allowance”) is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when we believe the uncollectability of a loan is confirmed. Subsequent recoveries, if any, are credited to the allowance. We estimate the allowance balance required using past loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. We estimate credit losses based on individual loans determined to be impaired and on all other loans grouped on similar risk characteristics. Our historical loss component is the most significant of the allowance components and is based on historical loss experience by credit risk grade for commercial loans and payment status for mortgage and consumer loans. Loans are pooled based on similar risk characteristics supported by observable data. The historical loss experience component of the allowance represents the results of migration analysis of historical net charge-offs for portfolios of loans, including groups of commercial loans within each credit risk grade. For measuring loss exposure in a pool of loans, the historical net charge-off or migration experience is utilized to estimate expected future losses to be realized from the pool of loans. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in our judgment, should be charged-off.

A loan is considered impaired when, based on current information and events, it is probable we will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Factors considered in determining impairment include payment status and collateral value. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. We determine the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of delay, the reasons for delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment.

Transfers and Servicing of Financial Assets, Policy [Policy Text Block]

Transfers of Financial Assets: Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when: (1) the assets have been isolated from the Bank and put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. Our transfers of financial assets are generally limited to commercial loan participations sold and residential mortgage loans sold in the secondary market.

Property, Plant and Equipment, Policy [Policy Text Block]

Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 5 to 33 years. Furniture, fixtures and equipment are depreciated using the straight-line method with useful lives ranging from 3 to 7 years. Maintenance, repairs and minor alterations are charged to current operations as expenditures occur and major improvements are capitalized.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Long-lived Assets: Premises and equipment and other long-lived assets are reviewed for impairment when events indicate their carrying amount may not be recoverable based on future undiscounted cash flows. If impaired, the assets are recorded at the lower of carrying value or fair value.

Finance, Loan and Lease Receivables, Held for Investments, Foreclosed Assets Policy [Policy Text Block]

Foreclosed Assets: Assets acquired through or in lieu of foreclosure are initially recorded at their estimated fair value net of estimated selling costs, establishing a new cost basis. If fair value subsequently declines, a valuation allowance is recorded through noninterest expense, as are collection and operating costs after acquisition. Foreclosed assets totaled $2.0 million and $2.9 million as of December 31, 2014 and 2013, respectively.

Bank Owned Life Insurance [Policy Text Block]

Bank Owned Life Insurance: The Bank has purchased life insurance policies on certain key officers. Bank owned life insurance is recorded at its cash surrender value, or the amount that can be realized.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Goodwill and Core Deposit Intangible: Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment and any such impairment is recognized in the period identified. A more frequent assessment is performed should events or changes in circumstances indicate the carrying value of the goodwill may not be recoverable. We may elect to perform a qualitative assessment for the annual impairment test. If the qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we elect not to perform a qualitative assessment, then we would be required to perform a quantitative test for goodwill impairment. The quantitative test is a two-step process consisting of comparing the carrying value of the reporting unit to an estimate of its fair value. If the estimated fair value of the reporting unit is less than the carrying value, goodwill is impaired and is written down to its estimated fair value. In 2014, we elected to perform a qualitative assessment for our annual impairment test and concluded our fair value was greater than its carrying amount; therefore, no further testing was required.

The core deposit intangible that arose from the merger with Firstbank was initially measured at fair value and is being amortized into noninterest expense over a ten-year period using the sum-of-the-years-digits methodology.

Repurchase and Resale Agreements Policy [Policy Text Block]

Repurchase Agreements: The Bank sells certain securities under agreements to repurchase. The agreements are treated as collateralized financing transactions, with the obligations to repurchase the securities sold reflected as liabilities and the securities underlying the agreements remaining in assets in the Consolidated Balance Sheets.

Off-Balance-Sheet Credit Exposure, Policy [Policy Text Block]

Financial Instruments and Loan Commitments: Financial instruments include off-balance-sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded. Instruments, such as standby letters of credit, that are considered financial guarantees are recorded at fair value.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation: Compensation cost for equity-based awards is measured on the grant date based on the fair value of the award at that date, and is recognized over the requisite service period, net of estimated forfeitures. Fair value of stock option awards is estimated using a closed option valuation (Black-Scholes) model. Fair value of restricted stock awards is based upon the quoted market price of the common stock on the date of grant.

Advertising Costs, Policy [Policy Text Block]

Advertising Costs: Advertising costs are expensed as incurred.

Income Tax, Policy [Policy Text Block]

Income Taxes: Income tax expense is the total of the current year income tax due or refundable, the change in deferred income tax assets and liabilities, and any adjustments related to unrecognized tax benefits. Deferred income tax assets and liabilities are recognized for the tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates applicable to future years. A valuation allowance, if needed, reduces deferred income tax assets to the amount expected to be realized.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Values of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates. The fair value estimates of existing on- and off-balance sheet financial instruments do not include the value of anticipated future business or the values of assets and liabilities not considered financial instruments.

Earnings Per Share, Policy [Policy Text Block]

Earnings Per Share: Basic earnings per share is based on the weighted average number of common shares and participating securities outstanding during the period. Diluted earnings per share include the dilutive effect of additional potential common shares issuable under our stock-based compensation plans using the treasury stock method. In addition, diluted earnings per share for 2012 include the dilutive effect of our common stock warrant granted to the U.S. Department of Treasury that we repurchased on July 3, 2012, also using the treasury stock method. Our unvested stock awards, which contain non-forfeitable rights to dividends whether paid or unpaid (i.e., participating securities), are included in the number of shares outstanding for both basic and diluted earnings per share calculations. In the event of a net loss, our unvested stock awards are excluded from the calculations of both basic and diluted earnings per share.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale and interest rate swaps which are also recognized as a separate component of equity.

Derivatives, Policy [Policy Text Block]

Derivatives: Derivative financial instruments are recognized as assets or liabilities at fair value. The accounting for changes in the fair value of derivatives depends on the use of the derivatives and whether the derivatives qualify for hedge accounting. Used as part of our asset and liability management to help manage interest rate risk, our derivatives have historically generally consisted of interest rate swap agreements that qualified for hedge accounting. We do not use derivatives for trading purposes.

Changes in the fair value of derivatives that are designated, for accounting purposes, as a hedge of the variability of cash flows to be received on various assets and liabilities and are effective are reported in other comprehensive income. They are later reclassified into earnings in the same periods during which the hedged transaction affects earnings and are included in the line item in which the hedged cash flows are recorded. If hedge accounting does not apply, changes in the fair value of derivatives are recognized immediately in current earnings as interest income or expense.

If designated as a hedge, we formally document the relationship between the derivative instrument and the hedged item, as well as the risk-management objective and the strategy for undertaking the hedge transaction. This documentation includes linking cash flow hedges to specific assets on the balance sheet. If designated as a hedge, we also formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivative instrument that is used is highly effective in offsetting changes in cash flows of the hedged items. Ineffective hedge gains and losses are recognized immediately in current earnings as noninterest income or expense. We discontinue hedge accounting when we determine the derivative is no longer effective in offsetting changes in the cash flows of the hedged item, the derivative is settled or terminates, or treatment of the derivatives as a hedge is no longer appropriate or intended.

Commitments and Contingencies, Policy [Policy Text Block]

Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. We do not believe there are any such matters outstanding that would have a material effect on the financial statements.

Reclassification, Policy [Policy Text Block]

Reclassifications: Certain items in the prior years’ financial statements have been reclassified to conform to the current year presentation.

New Accounting Pronouncements, Policy [Policy Text Block]

Accounting Standards Updates: In January of 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. This ASU clarifies that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The ASU also requires additional related interim and annual disclosures. The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2014, and is not expected to have a material effect on our financial position or results of operations when adopted.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU establishes a comprehensive revenue recognition standard for virtually all industries under U.S. GAAP, including those that previously followed industry-specific guidance such as the real estate, construction and software industries. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires five basic steps: i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2016, with three transition methods available – full retrospective, retrospective and cumulative effect approach. Although we are in process of evaluating the impact, the adoption of this ASU is not expected to have a material effect on our financial position or results of operations.

In June 2014, the FASB issued ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. This ASU requires two accounting changes. First, repurchase-to-maturity transactions will be accounted for as secured borrowing transactions on the balance sheet, rather than sales. Second, for repurchase financing arrangements, the ASU requires separate accounting for a transfer of a financial asset executed contemporaneously with (or in contemplation of) a repurchase agreement with the same counterparty, which also will generally result in secured borrowing accounting for the repurchase agreement. The ASU also introduces new disclosures to increase transparency about the types of collateral pledged for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions that are accounted for as secured borrowings. The ASU also requires a transferor to disclose information about transactions accounted for as a sale in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets through an agreement with the transferee. The accounting changes and disclosure for certain transactions accounted for as a sale are effective for the first annual and interim periods beginning after December 15, 2014. The disclosure for transactions accounted for as secured borrowings is required for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Adoption of this ASU is not expected to have a material effect on our financial position or results of operations.

In August 2014, the FASB issued ASU 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure. This ASU requires that certain government-guaranteed mortgage loans, including those guaranteed by the Federal Housing Administration, be derecognized and that a separate other receivable be recognized upon foreclosure if certain conditions are met. Upon foreclosure on the loans that meet these criteria, a separate receivable should be recorded based on the amount of the loan balance expected to be recovered from the guarantor. The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2014, and is not expected to have a material effect on our financial position or results of operations when adopted.

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Note 19 - Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	2014		2013		2012
Basic
Net income attributable to common shares	$	17,331,000	$	17,033,000	$	11,505,000
Weighted average common shares outstanding		13,510,991		8,710,677		8,625,198
Basic earnings per common share	$	1.28	$	1.96	$	1.33
Diluted
Net income attributable to common shares	$	17,331,000	$	17,033,000	$	11,505,000
Weighted average common shares outstanding for basic earnings per common share		13,510,991		8,710,677		8,625,198
Add: Dilutive effects of share-based awards		30,913		14,031		224,429
Average shares and dilutive potential common shares		13,541,904		8,724,708		8,849,627
Diluted earnings per common share	$	1.28	$	1.95	$	1.30

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Note 13 - Related Parties

12 Months Ended

Dec. 31, 2014

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 13 – RELATED PARTIES

Certain directors and executive officers of the Bank, including their immediate families and companies in which they are principal owners, were loan customers of the Bank. At year-end 2014 and 2013, the Bank had $15.8 million and $7.8 million in loan commitments to directors and executive officers, of which $9.0 million and $6.9 million were outstanding at year-end 2014 and 2013, respectively, as reflected in the following table. The line item entitled “Adjustments” primarily relates to the Firstbank merger in 2014 and Board member retirements during 2013.

	2014			2013
Beginning balance	$	6,884,000		$	1,418,000
New loans		781,000			6,309,000
Repayments		(381,000	)		(252,000	)
Adjustments		1,718,000			(591,000	)
Ending balance	$	9,002,000		$	6,884,000

Related party deposits and repurchase agreements totaled $16.6 million and $3.9 million at year-end 2014 and 2013, respectively.

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Note 16 - Hedging Activities (Details) (USD $)	1 Months Ended
	Feb. 29, 2012	Dec. 31, 2014	Dec. 31, 2013
Note 16 - Hedging Activities (Details) [Line Items]
Junior Subordinated Debenture Owed to Unconsolidated Subsidiary Trust	$ 32,000,000	$ 54,472,000	$ 32,990,000
Fair Value of Interest Rate Swap Agreement Liability		300,000	300,000
Junior Subordinated Debt [Member] | London Interbank Offered Rate (LIBOR) [Member]
Note 16 - Hedging Activities (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	2.18%
Derivative, Notional Amount	$ 32,000,000

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Note 18 - Fair Values Measurements

12 Months Ended

Dec. 31, 2014

Disclosure Text Block [Abstract]

Fair Value, Measurement Inputs, Disclosure [Text Block]

NOTE 18 – FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability, or in the absence of a principal market, the most advantageous market for the asset or liability. The price of the principal (or most advantageous) market used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

We are required to use valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect our own estimates about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. In that regard, we utilize a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that we have the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be derived from or corroborated by observable market data by correlation or other means.

Level 3: Significant unobservable inputs that reflect our own estimates about the assumptions that market participants would use in pricing an asset or liability.

The following is a description of our valuation methodologies used to measure and disclose the fair values of our financial assets and liabilities on a recurring or nonrecurring basis:

Securities available for sale. Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based on quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models. Level 2 securities include U.S. Government agency debt obligations, mortgage-backed securities issued or guaranteed by U.S. Government agencies, municipal general obligation and revenue bonds, and mutual funds. Level 3 securities include bonds issued by certain relatively small municipalities located within our markets that have very limited marketability due to their size and lack of ratings from a recognized rating service. We carry these bonds at historical cost, which we believe approximates fair value, unless our periodic financial analysis or other information becomes known which necessitates a valuation allowance. There was no such valuation allowance as of December 31, 2014 or 2013. We have no Level 1 securities available for sale.

Mortgage loans held for sale. Mortgage loans held for sale are carried at the lower of aggregate cost or fair value and are measured on a nonrecurring basis. Fair value is based on independent quoted market prices, where applicable, or the prices for other mortgage whole loans with similar characteristics. As of December 31, 2014 and 2013, we determined that the fair value of our mortgage loans held for sale approximated the recorded cost of $1.6 million and $1.1 million, respectively.

Loans. We do not record loans at fair value on a recurring basis. However, from time to time, we record nonrecurring fair value adjustments to collateral dependent loans to reflect partial write-downs or specific reserves that are based on the observable market price or current estimated value of the collateral. These loans are reported in the nonrecurring table below at initial recognition of impairment and on an ongoing basis until recovery or charge-off.

Foreclosed assets. At time of foreclosure or repossession, foreclosed and repossessed assets are adjusted to fair value less costs to sell upon transfer of the loans to foreclosed and repossessed assets, establishing a new cost basis. We subsequently adjust estimated fair value on foreclosed assets on a nonrecurring basis to reflect write-downs based on revised fair value estimates.

Derivatives. The interest rate swap agreement is measured at fair value on a recurring basis. We measure fair value utilizing models that use primarily market observable inputs, such as forecasted yield curves, and accordingly, the interest rate swap agreement is classified as Level 2.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The balances of assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 are as follows:

				Quoted Prices
				in Active		Significant
				Markets for		Other			Significant
				Identical		Observable			Unobservable
				Assets		Inputs			Inputs
	Total			(Level 1)		(Level 2)			(Level 3)
Available for sale securities
U.S. Government agency debt obligations	$	193,468,000		$	0	$	193,468,000		$	0
Mortgage-backed securities		93,561,000			0		93,561,000			0
Municipal general obligation bonds		133,082,000			0		122,801,000			10,281,000
Municipal revenue bonds		10,873,000			0		10,873,000			0
Other investments		1,928,000			0		1,928,000			0
Derivatives
Interest rate swap agreement		(253,000	)		0		(253,000	)		0
Total	$	432,659,000		$	0	$	422,378,000		$	10,281,000

There were no transfers in or out of Level 1, Level 2 or Level 3 during 2014. The Level 3 investments in the table above originated from the merger with Firstbank.

The balances of assets and liabilities measured at fair value on a recurring basis as of December 31, 2013 are as follows:

				Quoted Prices
				in Active		Significant
				Markets for		Other			Significant
				Identical		Observable			Unobservable
				Assets		Inputs			Inputs
	Total			(Level 1)		(Level 2)			(Level 3)
Available for sale securities U.S. Government agency debt obligations	$	98,477,000		$	0	$	98,477,000		$	0
Mortgage-backed securities		13,558,000			0		13,558,000			0
Municipal general obligation bonds		16,872,000			0		16,872,000			0
Municipal revenue bonds		916,000			0		916,000			0
Mutual funds		1,355,000			0		1,355,000			0
Derivatives
Interest rate swap agreement		(264,000	)		0		(264,000	)		0
Total	$	130,914,000		$	0	$	130,914,000		$	0

There were no transfers in or out of Level 1, Level 2 or Level 3 during 2013.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The balances of assets and liabilities measured at fair value on a nonrecurring basis as of December 31, 2014 are as follows:

			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans (1)	$	17,097,000	$	0	$	0	$	17,097,000
Foreclosed assets (1)		1,995,000		0		0		1,995,000
Total	$	19,092,000	$	0	$	0	$	19,092,000

The balances of assets and liabilities measured at fair value on a nonrecurring basis as of December 31, 2013 are as follows:

			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans (1)	$	23,405,000	$	0	$	0	$	23,405,000
Foreclosed assets (1)		2,851,000		0		0		2,851,000
Total	$	26,256,000	$	0	$	0	$	26,256,000

⁽¹⁾ Represents carrying value and related write-downs for which adjustments are based on the estimated value of the property or other assets.

Fair value estimates of collateral on impaired loans, as well as on foreclosed assets, are reviewed periodically. Our credit policies establish criteria for obtaining appraisals and determining internal value estimates. We may also adjust outside appraisals and internal evaluations based on identifiable trends within our markets, such as sales of similar properties or assets, listing prices and offers received. In addition, we may discount certain appraised and internal value estimates to address current distressed market conditions.

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Note 10 - Federal Home Loan Bank Advances (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Disclosure Text Block [Abstract]
Long-term Federal Home Loan Bank Advances (in Dollars)	$ 54,022,000	$ 45,000,000
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Interest Rate, Range from	0.62%	1.22%
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Interest Rate, Range to	1.51%	1.51%
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Weighted Average Interest Rate	1.26%	1.34%
Line of Credit Facility, Maximum Borrowing Capacity (in Dollars)	409,500,000
Line of Credit Facility, Remaining Borrowing Capacity (in Dollars)	$ 355,500,000

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Note 17 - Fair Values of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping [Table Text Block]

	Level in		2014				2013
	Fair Value		Carrying		Fair		Carrying		Fair
	Hierarchy		Amount		Value		Amount		Value
Financial assets
Cash	Level 1		$	13,261	$	13,261	$	1,464	$	1,464
Cash equivalents	Level 2			159,477		159,477		145,501		145,501
Securities available for sale		(1)		432,912		432,912		131,178		131,178
Federal Home Loan Bank stock		(2)		13,699		13,699		11,961		11,961
Loans, net	Level 3			2,069,236		2,064,140		1,030,422		1,027,300
Bank owned life insurance	Level 2			57,861		57,861		51,377		51,377
Accrued interest receivable	Level 2			8,033		8,033		3,649		3,649
Financial liabilities
Deposits	Level 2			2,276,915		2,254,749		1,118,911		1,120,576
Securities sold under agreements to repurchase	Level 2			167,569		167,569		69,305		69,305
Federal Home Loan Bank advances	Level 2			54,022		54,720		45,000		45,139
Subordinated debentures	Level 2			54,472		54,508		32,990		32,974
Accrued interest payable	Level 2			1,942		1,942		2,041		2,041
Interest rate swap		(1)		253		253		264		264

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Note 12 - Stock-based Compensation (Details) - Summary of Options Outstanding (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower range limit	$ 6.21	$ 6.21	$ 6.21
Exercise price range, upper range limit	$ 35.88	$ 40.28	$ 40.28
Number of Options Outstanding (in Shares)	35,335
Weighted Average Remaining Contractual Life	2 years	1 year 146 days	1 year 328 days
Weighted Average Exercise Price	$ 31.09
Number of Options Exercisable (in Shares)	28,847
Options Exercisable, Weighted Average Exercise Price	$ 33.11
Exercise Price Range 1 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower range limit	$ 6.21
Exercise price range, upper range limit	$ 8.00
Number of Options Outstanding (in Shares)	2,700
Weighted Average Remaining Contractual Life	328 days
Weighted Average Exercise Price	$ 6.21
Number of Options Exercisable (in Shares)	2,700
Options Exercisable, Weighted Average Exercise Price	$ 6.21
Exercise Price Range 2 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower range limit	$ 20.01
Exercise price range, upper range limit	$ 24.00
Number of Options Outstanding (in Shares)	6,488
Weighted Average Remaining Contractual Life	6 years 328 days
Weighted Average Exercise Price	$ 22.15
Number of Options Exercisable (in Shares)	0
Exercise Price Range 3 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower range limit	$ 32.01
Exercise price range, upper range limit	$ 36.00
Number of Options Outstanding (in Shares)	26,147
Weighted Average Remaining Contractual Life	328 days
Weighted Average Exercise Price	$ 35.88
Number of Options Exercisable (in Shares)	26,147
Options Exercisable, Weighted Average Exercise Price	$ 35.88
Exercise Price Range 4 [Member] | Firstbank Plans [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower range limit	$ 4.00
Exercise price range, upper range limit	$ 8.00
Number of Options Outstanding (in Shares)	63,590
Weighted Average Remaining Contractual Life	4 years 328 days
Weighted Average Exercise Price	$ 6.53
Number of Options Exercisable (in Shares)	56,385
Options Exercisable, Weighted Average Exercise Price	$ 6.70
Exercise Price Range 5 [Member] | Firstbank Plans [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower range limit	$ 8.01
Exercise price range, upper range limit	$ 12.00
Number of Options Outstanding (in Shares)	68,430
Weighted Average Remaining Contractual Life	3 years 255 days
Weighted Average Exercise Price	$ 13.20
Number of Options Exercisable (in Shares)	68,430
Options Exercisable, Weighted Average Exercise Price	$ 13.20
Exercise Price Range 6 [Member] | Firstbank Plans [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower range limit	$ 20.01
Exercise price range, upper range limit	$ 25.00
Number of Options Outstanding (in Shares)	85,962
Weighted Average Remaining Contractual Life	1 year 146 days
Weighted Average Exercise Price	$ 22.43
Number of Options Exercisable (in Shares)	85,962
Options Exercisable, Weighted Average Exercise Price	$ 22.43
Firstbank Plans [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower range limit	$ 5.19
Exercise price range, upper range limit	$ 24.46
Number of Options Outstanding (in Shares)	217,982
Weighted Average Remaining Contractual Life	3 years 36 days
Weighted Average Exercise Price	$ 14.89
Number of Options Exercisable (in Shares)	210,777
Options Exercisable, Weighted Average Exercise Price	$ 15.22

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Note 7 - Core Deposit Intangible Assets, Net (Tables)

12 Months Ended

Dec. 31, 2014

Disclosure Text Block [Abstract]

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

2015	$	2,992,000
2016		2,675,000
2017		2,357,000
2018		2,039,000
2019		1,721,000
Thereafter		3,839,000

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Note 12 - Stock-based Compensation (Details) - Summary of Stock Option Grants and Exercises (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Note 12 - Stock-based Compensation (Details) - Summary of Stock Option Grants and Exercises [Line Items]
Cash received from stock option exercises	$ 282,000	$ 289,000	$ 227,000
Mercantile Plans [Member]
Note 12 - Stock-based Compensation (Details) - Summary of Stock Option Grants and Exercises [Line Items]
Aggregate intrinsic value of stock options exercised	11,000	408,000	307,000
Cash received from stock option exercises	50,000	289,000	227,000
Tax benefit realized from stock option exercises	0	0	0
Weighted average per share fair value of stock options granted (in Dollars per share)	$ 2.72
Firstbank Plans [Member]
Note 12 - Stock-based Compensation (Details) - Summary of Stock Option Grants and Exercises [Line Items]
Aggregate intrinsic value of stock options exercised	333,000
Cash received from stock option exercises	232,000
Tax benefit realized from stock option exercises	$ 116,000

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Consolidated Statements of Comprehensive Income (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Net income	$ 17,331,000	$ 17,033,000	$ 12,535,000
Other comprehensive income (loss):
Unrealized holding gains (losses) on securities available for sale	8,596,000	(11,960,000)	(2,184,000)
Fair value of interest rate swap	11,000	849,000	(1,113,000)
	8,607,000	(11,111,000)	(3,297,000)
Tax effect of unrealized holding gains (losses) on securities available for sale	(3,014,000)	4,186,000	1,229,000
Tax effect of fair value of interest rate swap	(4,000)	(298,000)	390,000
	(3,018,000)	3,888,000	1,619,000
Other comprehensive income (loss), net of tax effect	5,589,000	(7,223,000)	(1,678,000)
Comprehensive income	$ 22,920,000	$ 9,810,000	$ 10,857,000

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Note 7 - Core Deposit Intangible Assets, Net (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Note 7 - Core Deposit Intangible Assets, Net (Details) [Line Items]
Finite-Lived Core Deposits, Gross	$ 17,500,000
Finite-Lived Intangible Assets, Net	15,624,000	0
Core Deposits [Member]
Note 7 - Core Deposit Intangible Assets, Net (Details) [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization	1,900,000
Finite-Lived Intangible Assets, Net	$ 15,600,000

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Note 2 - Business Combination

12 Months Ended

Dec. 31, 2014

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

NOTE 2 - BUSINESS COMBINATION

We completed the merger of Firstbank Corporation (“Firstbank”), a Michigan corporation with approximately $1.5 billion in total assets and 46 branch locations, into Mercantile Bank Corporation as of June 1, 2014 (“Merger Date”). Each share of Firstbank’s common stock was converted into the right to receive one share of Mercantile common stock, resulting in Mercantile issuing 8,087,272 shares of its common stock. The merger provided an expanded geographic footprint for the Company and increased the size of the balance sheet. In conjunction with the completion of the merger, Mercantile assumed the obligations of Firstbank Capital Trust I, Firstbank Capital Trust II, Firstbank Capital Trust III and Firstbank Capital Trust IV.

The Firstbank transaction was accounted for using the acquisition method of accounting and accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the Merger Date. Preliminary goodwill of $49.5 million was calculated as the purchase premium after adjusting for the fair value of net assets acquired and represents the value expected from the synergies created from combining the two banking organizations as well as the economies of scale expected from combining the operations of the two companies. None of the goodwill is deductible for income tax purposes as the merger is accounted for as a tax-free exchange.

The following table provides the purchase price calculation as of the Merger Date and the identifiable assets purchased and the liabilities assumed at their estimated fair values. These fair value measurements are provisional based on third-party valuations that are currently under review and are subject to refinement for up to one year after the Merger Date based on additional information that may be obtained by us that existed as of the Merger Date.

Purchase Price:
Mercantile common shares issued for Firstbank common shares		8,087,272
Price per share, based on Mercantile closing price on May 30, 2014	$	21.43
Value of common stock issued		173,310,000
Value of replacement stock options granted		1,664,000
Total purchase price	$	174,974,000

Preliminary Statement of Net Assets Acquired at Fair Value:
Assets
Cash and cash equivalents	$	91,806,000
Securities		358,599,000
Total loans		943,662,000
Premises and equipment		24,049,000
Core deposit intangible		17,478,000
Mortgage servicing rights		7,389,000
Other assets		9,897,000
Total Assets	$	1,452,880,000
Liabilities
Deposits	$	1,229,609,000
Borrowings		87,615,000
Other liabilities		10,155,000
Total Liabilities	$	1,327,379,000
Net Identifiable Assets Acquired			$	125,501,000
Goodwill			$	49,473,000

Effective December 31, 2014, we identified certain Firstbank deferred tax assets and liabilities that should have been addressed on the Merger Date. The net impact of recording the necessary entries was a $1.4 million reduction to Goodwill and a $1.4 million increase to our net deferred tax asset account (included in other assets above) from what we reported in our June 30, 2014 and September 30, 2014 Form 10-Qs.

Firstbank’s results of operations prior to the Merger Date are not included in our Consolidated Statements of Income or Consolidated Statements of Comprehensive Income. We recorded merger-related expenses of $5.4 million and $1.2 million during 2014 and 2013, respectively. Such expenses were generally for professional services, costs related to termination of existing contractual arrangements for various services, retention and severance compensation costs, marketing and promotional expenses, travel costs, and printing and supplies costs. We do not expect to record any additional significant expenses related to the Firstbank merger in future periods. We are not presenting the amounts of revenue and earnings of Firstbank since the Merger Date as it is impracticable due to the integration of Firstbank upon the consummation of the merger.

The following table provides the unaudited pro forma information for the results of operations for the twelve month periods ended December 31, 2014 and 2013, as if the acquisition had occurred on January 1, 2013. These adjustments reflect the impact of certain purchase accounting fair value measurements primarily related to Firstbank’s loan and deposit portfolios. In addition, the aggregate $12.2 million in merger-related expenses recorded by us and Firstbank during 2014 and 2013 are reflected to have been recorded during 2013. We expect to achieve further operating cost savings and other business synergies as a result of the merger which are not reflected in the pro forma amounts. These unaudited pro forma results are presented for illustrative purposes only and are not intended to represent or be indicative of the actual results of operations of the combined banking organization that would have been achieved had the merger occurred at the beginning of each period presented, nor are they intended to represent or be indicative of future results of operations.

	2014		2013
Net interest income	$	98,607,000	$	93,862,000
Noninterest expense		81,295,000		93,263,000
Net income		22,659,000		16,068,000
Net income per diluted share		1.33		0.96

In most instances, determining the fair value of the acquired assets and assumed liabilities required us to estimate cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of those determinations relates to the valuation of acquired loans. For such loans, the excess of cash flows expected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and other factors, such as prepayments. In accordance with the applicable accounting guidance for business combinations, there was no carry-over of Firstbank’s previously established allowance for loan losses.

The acquired loans were divided into loans with evidence of credit quality deterioration, which are accounted for under ASC 310-30 (“acquired impaired”), and loans that do not meet this criteria, which are accounted for under ASC 310-20 (“acquired non-impaired”). In addition, the loans are further categorized into different loan pools based primarily on the type and purpose of the loan.

The provisional fair value of loans at the Merger Date is presented in the following table: 

	Acquired		Acquired		Acquired
	Impaired		Non-Impaired		Total Loans
Commercial Loans:
Commercial & industrial	$	878,000	$	163,316,000	$	164,194,000
Commercial real estate		12,973,000		378,016,000		390,989,000
Construction & development		1,289,000		33,726,000		35,015,000
Total Commercial Loans	$	15,140,000	$	575,058,000	$	590,198,000
Consumer Loans:
Residential mortgages	$	9,694,000	$	216,653,000	$	226,347,000
Instalment		167,000		61,657,000		61,824,000
Home equity lines		288,000		52,054,000		52,342,000
Construction		76,000		12,875,000		12,951,000
Total Consumer Loans	$	10,225,000	$	343,239,000	$	353,464,000
Total Loans	$	25,365,000	$	918,297,000	$	943,662,000

The following table presents data on acquired impaired loans at the Merger Date:

	Acquired Impaired
Contractually required payments	$	44,936,000
Nonaccretable difference		17,057,000
Expected cash flows		27,879,000
Accretable yield		2,514,000
Carrying balance	$	25,365,000

The nonaccretable difference includes $10.4 million in principal cash flows not expected to be collected, $2.8 million of pre-acquisition charge-offs and $3.9 million of future interest not expected to be collected. The unpaid principal balance of acquired performing loans was $926.4 million at the Merger Date, and the unaccreted discount on such loans was $8.1 million.

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Note 2 - Business Combination (Details) (USD $)	12 Months Ended			0 Months Ended		6 Months Ended	24 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2014	Jun. 01, 2014	Jun. 30, 2014	Dec. 31, 2014
Note 2 - Business Combination (Details) [Line Items]
Goodwill	$ 49,473,000	$ 0		$ 49,473,000			$ 49,473,000
Business Combination, Acquisition Related Costs	5,447,000	1,246,000	0
Firstbank Corporation [Member]
Note 2 - Business Combination (Details) [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets					1,452,880,000
Business Combination, Branches Acquired					46
Business Acquisition, Conversion of Stock Per Share (in Shares)					1
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares)					8,087,272	8,087,272
Goodwill					49,473,000
Goodwill, Purchase Accounting Adjustments				(1,400,000)
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment Net Deferred Tax Asset				1,400,000
Business Combination, Acquisition Related Costs	5,400,000	1,200,000
Business Combination, Aggregate Merger Related Expenses Recorded by Acquirer and Acquiree							12,200,000
Business Combination, Acquired Receivables and Certain Loans, Estimated Uncollectible Cash Flows					10,400,000
Business Combination, Acquired Receivables and Certain Loans, Pre-acquisition Charge-offs					2,800,000
Business Combination, Acquired Receivables and Certain Loans, Estimated Uncollectible Interest					3,900,000
Business Combination, Acquired Receivables, Gross Contractual Amount					926,400,000
Business Combination, Acquired Receivables, Unaccredted Discount					$ 8,100,000

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Note 5 - Premises and Equipment, Net (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Abstract]
Operating Leases, Future Minimum Payments Due	$ 1.8
Operating Leases, Future Minimum Payments Due, Next Twelve Months	0.4
Operating Leases, Future Minimum Payments, Due in One to Three Years	0.8
Operating Leases, Future Minimum Payments, Due in Three to Five Years	0.5
Operating Leases, Future Minimum Payments, Due Thereafter	0.1
Depreciation	$ 2.3	$ 1.3	$ 1.5

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Note 12 - Stock-based Compensation (Details) - Summary of Information Related to Options Outstanding (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Note 12 - Stock-based Compensation (Details) - Summary of Information Related to Options Outstanding [Line Items]
Minimum exercise price	$ 6.21	$ 6.21	$ 6.21
Maximum exercise price	$ 35.88	$ 40.28	$ 40.28
Average remaining option term (Years)	2 years	1 year 146 days	1 year 328 days
Firstbank Plans [Member]
Note 12 - Stock-based Compensation (Details) - Summary of Information Related to Options Outstanding [Line Items]
Minimum exercise price	$ 5.19
Maximum exercise price	$ 24.46
Average remaining option term (Years)	3 years 36 days

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Note 4 - Loans and Allowance for Loan Losses (Details) - Components of Loan Portfolio (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	$ 2,089,277,000	$ 1,053,243,000	$ 1,041,189,000
Loans, percentage of portfolio	100.00%	100.00%
Loans, percentage of change in loans	98.40%
Originated Loan [Member] | Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	384,570,000	286,373,000
Loans, percentage of portfolio	30.80%	27.20%
Loans, percentage of change in loans	34.30%
Originated Loan [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	29,826,000	36,741,000
Loans, percentage of portfolio	2.40%	3.50%
Loans, percentage of change in loans	(18.80%)
Originated Loan [Member] | Commercial Real Estate Owner Occupied Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	291,758,000	261,877,000
Loans, percentage of portfolio	23.40%	24.90%
Loans, percentage of change in loans	11.40%
Originated Loan [Member] | Commercial Real Estate Non Owner Occupied Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	410,977,000	364,066,000
Loans, percentage of portfolio	33.00%	34.60%
Loans, percentage of change in loans	12.90%
Originated Loan [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	36,058,000	37,639,000
Loans, percentage of portfolio	2.90%	3.50%
Loans, percentage of change in loans	(4.20%)
Originated Loan [Member] | Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	1,153,189,000	986,696,000
Loans, percentage of portfolio	92.50%	93.70%
Loans, percentage of change in loans	16.90%
Originated Loan [Member] | Retail Home Equity and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	50,059,000	35,080,000
Loans, percentage of portfolio	4.00%	3.30%
Loans, percentage of change in loans	42.70%
Originated Loan [Member] | Retail 1-4 Family Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	42,868,000	31,467,000
Loans, percentage of portfolio	3.50%	3.00%
Loans, percentage of change in loans	36.20%
Originated Loan [Member] | Retail Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	92,927,000	66,547,000
Loans, percentage of portfolio	7.50%	6.30%
Loans, percentage of change in loans	39.60%
Originated Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	1,246,116,000	1,053,243,000
Loans, percentage of portfolio	100.00%	100.00%
Loans, percentage of change in loans	18.30%
Acquired Loan [Member] | Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	166,037,000	0
Loans, percentage of portfolio	19.70%
Loans, percentage of change in loans
Acquired Loan [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	22,148,000	0
Loans, percentage of portfolio	2.60%
Loans, percentage of change in loans
Acquired Loan [Member] | Commercial Real Estate Owner Occupied Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	138,630,000	0
Loans, percentage of portfolio	16.40%
Loans, percentage of change in loans
Acquired Loan [Member] | Commercial Real Estate Non Owner Occupied Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	148,597,000	0
Loans, percentage of portfolio	17.60%
Loans, percentage of change in loans
Acquired Loan [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	86,702,000	0
Loans, percentage of portfolio	10.30%
Loans, percentage of change in loans
Acquired Loan [Member] | Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	562,114,000	0
Loans, percentage of portfolio	66.60%
Loans, percentage of change in loans
Acquired Loan [Member] | Retail Home Equity and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	109,219,000	0
Loans, percentage of portfolio	13.00%
Loans, percentage of change in loans
Acquired Loan [Member] | Retail 1-4 Family Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	171,828,000	0
Loans, percentage of portfolio	20.40%
Loans, percentage of change in loans
Acquired Loan [Member] | Retail Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	281,047,000	0
Loans, percentage of portfolio	33.40%
Loans, percentage of change in loans
Acquired Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	843,161,000	0
Loans, percentage of portfolio	100.00%
Loans, percentage of change in loans
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	550,607,000	286,373,000
Loans, percentage of portfolio	26.40%	27.20%
Loans, percentage of change in loans	92.30%
Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	51,974,000	36,741,000
Loans, percentage of portfolio	2.50%	3.50%
Loans, percentage of change in loans	41.50%
Commercial Real Estate Owner Occupied Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	430,388,000	261,877,000
Loans, percentage of portfolio	20.50%	24.90%
Loans, percentage of change in loans	64.30%
Commercial Real Estate Non Owner Occupied Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	559,574,000	364,066,000
Loans, percentage of portfolio	26.80%	34.60%
Loans, percentage of change in loans	53.70%
Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	122,760,000	37,639,000
Loans, percentage of portfolio	5.90%	3.50%
Loans, percentage of change in loans	226.20%
Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	1,715,303,000	986,696,000	968,506,000
Loans, percentage of portfolio	82.10%	93.70%
Loans, percentage of change in loans	73.80%
Retail Home Equity and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	159,278,000	35,080,000
Loans, percentage of portfolio	7.60%	3.30%
Loans, percentage of change in loans	354.00%
Retail 1-4 Family Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	214,696,000	31,467,000
Loans, percentage of portfolio	10.30%	3.00%
Loans, percentage of change in loans	582.30%
Retail Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans (in Dollars)	$ 373,974,000	$ 66,547,000	$ 72,683,000
Loans, percentage of portfolio	17.90%	6.30%
Loans, percentage of change in loans	462.00%

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Note 19 - Earnings Per Share

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

NOTE 19 – EARNINGS PER SHARE

The factors used in the earnings per share computation follow:

	2014		2013		2012
Basic
Net income attributable to common shares	$	17,331,000	$	17,033,000	$	11,505,000
Weighted average common shares outstanding		13,510,991		8,710,677		8,625,198
Basic earnings per common share	$	1.28	$	1.96	$	1.33
Diluted
Net income attributable to common shares	$	17,331,000	$	17,033,000	$	11,505,000
Weighted average common shares outstanding for basic earnings per common share		13,510,991		8,710,677		8,625,198
Add: Dilutive effects of share-based awards		30,913		14,031		224,429
Average shares and dilutive potential common shares		13,541,904		8,724,708		8,849,627
Diluted earnings per common share	$	1.28	$	1.95	$	1.30

Stock options for approximately 168,000, 55,000 and 132,000 shares of common stock were antidilutive and were not included in determining dilutive earnings per share in 2014, 2013, and 2012, respectively.

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Note 18 - Fair Values Measurements (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Disclosure Text Block [Abstract]
Disposal Group, Including Discontinued Operation, Mortgage Loans	$ 1,574,000	$ 1,115,000

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Note 25 - Mercantile Bank Corporation (Parent Company Only) Condensed Financial Statements (Details) - Condensed Statements of Income (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income
Interest and dividends from subsidiaries	$ 28,147,000	$ 28,900,000	$ 18,483,000	$ 13,588,000	$ 15,373,000	$ 14,667,000	$ 13,992,000	$ 14,210,000	$ 89,118,000	$ 58,242,000	$ 59,917,000
Expenses
Interest expense									11,340,000	10,786,000	13,216,000
Income before income tax benefit and equity in undistributed net income (loss) of subsidiary									25,196,000	25,125,000	18,171,000
Federal income tax benefit									7,865,000	8,092,000	5,636,000
Net income									17,331,000	17,033,000	12,535,000
Preferred stock dividends and accretion									0	0	1,030,000
Net income attributable to common shares	6,293,000	5,948,000	1,510,000	3,580,000	5,163,000	3,453,000	4,016,000	4,401,000	17,331,000	17,033,000	11,505,000
Comprehensive income									22,920,000	9,810,000	10,857,000
Parent Company [Member]
Income
Interest and dividends from subsidiaries									12,139,000	5,516,000	32,532,000
Total income									12,139,000	5,516,000	32,532,000
Expenses
Interest expense									2,145,000	1,213,000	884,000
Other operating expenses									3,552,000	2,773,000	1,048,000
Total expenses									5,697,000	3,986,000	1,932,000
Income before income tax benefit and equity in undistributed net income (loss) of subsidiary									6,442,000	1,530,000	30,600,000
Federal income tax benefit									(1,758,000)	(1,042,000)	(665,000)
Equity in undistributed net income (loss) of subsidiary									9,131,000	14,461,000	(18,730,000)
Net income									17,331,000	17,033,000	12,535,000
Preferred stock dividends and accretion									0	0	1,030,000
Net income attributable to common shares									17,331,000	17,033,000	11,505,000
Comprehensive income									$ 22,920,000	$ 9,810,000	$ 10,857,000

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Note 22 - U.S. Treasury Capital Purchase Program Participation (Details) (USD $)	0 Months Ended	3 Months Ended		12 Months Ended
	May 15, 2009	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Note 22 - U.S. Treasury Capital Purchase Program Participation (Details) [Line Items]
Proceeds from Issuance or Sale of Equity	$ 21,000,000
Number of Cumulative Perpetual Preferred Shares Received by Treasury under Capital Purchase Program (in Shares)	21,000
Preferred Stock, Redemption Price Per Share (in Dollars per share)	$ 1,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)	616,438
Preferred Stock, Par or Stated Value Per Share (in Dollars per share)	$ 0			$ 0	$ 0
Cumulative Dividends Preferred Stock Dividend Rate Percentage for First Five Years	5.00%
Cumulative Dividends Preferred Stock Dividend Rate Percentage for After Five Years	9.00%
Warrant Expiration Period	10 years
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)	$ 5.11
Reduction from Retained Earnings Resulting from Accelerated Discount on Preferred Stock			600,000
Amortization Period for Accelerated Discount on Preferred Stock			5 years
Payments for Repurchase of Warrants		7,500,000		0	0	7,465,000
Reduction in Shareholders' Equity Resulting from Repurchase of Warrant		7,500,000
Preferred Stock 1 [Member]
Note 22 - U.S. Treasury Capital Purchase Program Participation (Details) [Line Items]
Treasury Stock, Value, Acquired, Par Value Method			$ 21,000,000

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Note 4 - Loans and Allowance for Loan Losses (Details) - Impaired Loans (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance		$ 12,386,000
Commercial:
Impaired loans, related allowance		12,386,000
Total impaired loans:
Impaired loans, unpaid contractual principal balance		41,056,000
Impaired loans, recorded principal balance		36,868,000
Impaired loans, related allowance		12,386,000
Impaired loans, average recorded principal balance		49,961,000
Originated Loan [Member] | With No Related Allowance [Member] | Commercial and Industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	1,170,000	2,229,000
Impaired loans with no related allowance recorded, recorded principal balance	1,164,000	511,000
Impaired loans with no related allowance recorded, average recorded principal balance	652,000	1,205,000
Originated Loan [Member] | With No Related Allowance [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	540,000	475,000
Impaired loans with no related allowance recorded, recorded principal balance	209,000	362,000
Impaired loans with no related allowance recorded, average recorded principal balance	227,000	991,000
Originated Loan [Member] | With No Related Allowance [Member] | Commercial Real Estate Owner Occupied Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	3,609,000	1,270,000
Impaired loans with no related allowance recorded, recorded principal balance	1,901,000	785,000
Impaired loans with no related allowance recorded, average recorded principal balance	4,365,000	1,084,000
Originated Loan [Member] | With No Related Allowance [Member] | Commercial Real Estate Non Owner Occupied Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	1,210,000	895,000
Impaired loans with no related allowance recorded, recorded principal balance	1,210,000	733,000
Impaired loans with no related allowance recorded, average recorded principal balance	971,000	4,049,000
Originated Loan [Member] | With No Related Allowance [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	375,000	41,000
Impaired loans with no related allowance recorded, recorded principal balance	317,000	1,000
Impaired loans with no related allowance recorded, average recorded principal balance	64,000	390,000
Originated Loan [Member] | With No Related Allowance [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	6,904,000	4,910,000
Impaired loans with no related allowance recorded, recorded principal balance	4,801,000	2,392,000
Impaired loans with no related allowance recorded, average recorded principal balance	6,279,000	7,719,000
Originated Loan [Member] | With No Related Allowance [Member] | Retail Home Equity and Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	207,000	507,000
Impaired loans with no related allowance recorded, recorded principal balance	191,000	461,000
Impaired loans with no related allowance recorded, average recorded principal balance	517,000	471,000
Originated Loan [Member] | With No Related Allowance [Member] | Retail 1-4 Family Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	1,144,000	1,272,000
Impaired loans with no related allowance recorded, recorded principal balance	560,000	647,000
Impaired loans with no related allowance recorded, average recorded principal balance	585,000	727,000
Originated Loan [Member] | With No Related Allowance [Member] | Retail Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	1,351,000	1,779,000
Impaired loans with no related allowance recorded, recorded principal balance	751,000	1,108,000
Impaired loans with no related allowance recorded, average recorded principal balance	1,102,000	1,198,000
Originated Loan [Member] | With No Related Allowance [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	8,255,000	6,689,000
Impaired loans with no related allowance recorded, recorded principal balance	5,552,000	3,500,000
Impaired loans with no related allowance recorded, related allowance	0	0
Impaired loans with no related allowance recorded, average recorded principal balance	7,381,000	8,917,000
Commercial:
Impaired loans, related allowance	0	0
Total impaired loans:
Impaired loans, related allowance	0	0
Originated Loan [Member] | With An Allowance Recorded [Member] | Commercial and Industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	1,578,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	5,299,000
Impaired loans with an allowance recorded, recorded principal balance	5,226,000
Impaired loans, related allowance	1,578,000
Impaired loans with an allowance recorded, average recorded principal balance	2,759,000
Total impaired loans:
Impaired loans, related allowance	1,578,000
Originated Loan [Member] | With An Allowance Recorded [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	151,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	2,000,000
Impaired loans with an allowance recorded, recorded principal balance	2,000,000
Impaired loans, related allowance	151,000
Impaired loans with an allowance recorded, average recorded principal balance	3,229,000
Total impaired loans:
Impaired loans, related allowance	151,000
Originated Loan [Member] | With An Allowance Recorded [Member] | Commercial Real Estate Owner Occupied Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	2,200,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	15,745,000
Impaired loans with an allowance recorded, recorded principal balance	15,674,000
Impaired loans, related allowance	2,200,000
Impaired loans with an allowance recorded, average recorded principal balance	4,630,000
Total impaired loans:
Impaired loans, related allowance	2,200,000
Originated Loan [Member] | With An Allowance Recorded [Member] | Commercial Real Estate Non Owner Occupied Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	4,779,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	16,033,000
Impaired loans with an allowance recorded, recorded principal balance	15,949,000
Impaired loans, related allowance	4,779,000
Impaired loans with an allowance recorded, average recorded principal balance	18,245,000
Total impaired loans:
Impaired loans, related allowance	4,779,000
Originated Loan [Member] | With An Allowance Recorded [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	666,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	1,371,000
Impaired loans with an allowance recorded, recorded principal balance	1,371,000
Impaired loans, related allowance	666,000
Impaired loans with an allowance recorded, average recorded principal balance	1,700,000
Total impaired loans:
Impaired loans, related allowance	666,000
Originated Loan [Member] | With An Allowance Recorded [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	9,374,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	40,448,000
Impaired loans with an allowance recorded, recorded principal balance	40,220,000
Impaired loans, related allowance	9,374,000
Impaired loans with an allowance recorded, average recorded principal balance	30,563,000
Total impaired loans:
Impaired loans, related allowance	9,374,000
Originated Loan [Member] | With An Allowance Recorded [Member] | Retail Home Equity and Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	84,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	115,000
Impaired loans with an allowance recorded, recorded principal balance	84,000
Impaired loans, related allowance	84,000
Impaired loans with an allowance recorded, average recorded principal balance	128,000
Total impaired loans:
Impaired loans, related allowance	84,000
Originated Loan [Member] | With An Allowance Recorded [Member] | Retail 1-4 Family Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	694,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	2,194,000
Impaired loans with an allowance recorded, recorded principal balance	2,000,000
Impaired loans, related allowance	694,000
Impaired loans with an allowance recorded, average recorded principal balance	2,115,000
Total impaired loans:
Impaired loans, related allowance	694,000
Originated Loan [Member] | With An Allowance Recorded [Member] | Retail Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	778,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	2,309,000
Impaired loans with an allowance recorded, recorded principal balance	2,084,000
Impaired loans, related allowance	778,000
Impaired loans with an allowance recorded, average recorded principal balance	2,243,000
Total impaired loans:
Impaired loans, related allowance	778,000
Originated Loan [Member] | With An Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	10,152,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	42,757,000
Impaired loans with an allowance recorded, recorded principal balance	42,304,000
Impaired loans, related allowance	10,152,000
Impaired loans with an allowance recorded, average recorded principal balance	32,806,000
Total impaired loans:
Impaired loans, related allowance	10,152,000
Originated Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	9,374,000
Commercial:
Impaired loans, related allowance	9,374,000
Total impaired loans:
Impaired loans, unpaid contractual principal balance	47,352,000
Impaired loans, recorded principal balance	45,021,000
Impaired loans, related allowance	9,374,000
Impaired loans, average recorded principal balance	36,842,000
Originated Loan [Member] | Retail Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	778,000
Commercial:
Impaired loans, related allowance	778,000
Total impaired loans:
Impaired loans, unpaid contractual principal balance	3,660,000
Impaired loans, recorded principal balance	2,835,000
Impaired loans, related allowance	778,000
Impaired loans, average recorded principal balance	3,345,000
Originated Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	10,152,000
Commercial:
Impaired loans, related allowance	10,152,000
Total impaired loans:
Impaired loans, unpaid contractual principal balance	51,012,000
Impaired loans, recorded principal balance	47,856,000
Impaired loans, related allowance	10,152,000
Impaired loans, average recorded principal balance	40,187,000
Acquired Loan [Member] | With No Related Allowance [Member] | Commercial and Industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	1,586,000
Impaired loans with no related allowance recorded, recorded principal balance	1,579,000
Impaired loans with no related allowance recorded, average recorded principal balance	563,000
Acquired Loan [Member] | With No Related Allowance [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	0
Impaired loans with no related allowance recorded, recorded principal balance	0
Impaired loans with no related allowance recorded, average recorded principal balance	0
Acquired Loan [Member] | With No Related Allowance [Member] | Commercial Real Estate Owner Occupied Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	113,000
Impaired loans with no related allowance recorded, recorded principal balance	113,000
Impaired loans with no related allowance recorded, average recorded principal balance	52,000
Acquired Loan [Member] | With No Related Allowance [Member] | Commercial Real Estate Non Owner Occupied Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	326,000
Impaired loans with no related allowance recorded, recorded principal balance	326,000
Impaired loans with no related allowance recorded, average recorded principal balance	260,000
Acquired Loan [Member] | With No Related Allowance [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	487,000
Impaired loans with no related allowance recorded, recorded principal balance	487,000
Impaired loans with no related allowance recorded, average recorded principal balance	166,000
Acquired Loan [Member] | With No Related Allowance [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	2,512,000
Impaired loans with no related allowance recorded, recorded principal balance	2,505,000
Impaired loans with no related allowance recorded, average recorded principal balance	1,041,000
Acquired Loan [Member] | With No Related Allowance [Member] | Retail Home Equity and Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	641,000
Impaired loans with no related allowance recorded, recorded principal balance	639,000
Impaired loans with no related allowance recorded, average recorded principal balance	262,000
Acquired Loan [Member] | With No Related Allowance [Member] | Retail 1-4 Family Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	866,000
Impaired loans with no related allowance recorded, recorded principal balance	866,000
Impaired loans with no related allowance recorded, average recorded principal balance	458,000
Acquired Loan [Member] | With No Related Allowance [Member] | Retail Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	1,507,000
Impaired loans with no related allowance recorded, recorded principal balance	1,505,000
Impaired loans with no related allowance recorded, average recorded principal balance	720,000
Acquired Loan [Member] | With No Related Allowance [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, unpaid contractual principal balance	4,019,000
Impaired loans with no related allowance recorded, recorded principal balance	4,010,000
Impaired loans with no related allowance recorded, related allowance	0
Impaired loans with no related allowance recorded, average recorded principal balance	1,761,000
Commercial:
Impaired loans, related allowance	0
Total impaired loans:
Impaired loans, related allowance	0
Acquired Loan [Member] | With An Allowance Recorded [Member] | Commercial and Industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	0
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	0
Impaired loans with an allowance recorded, recorded principal balance	0
Impaired loans, related allowance	0
Impaired loans with an allowance recorded, average recorded principal balance	0
Total impaired loans:
Impaired loans, related allowance	0
Acquired Loan [Member] | With An Allowance Recorded [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	0
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	0
Impaired loans with an allowance recorded, recorded principal balance	0
Impaired loans, related allowance	0
Impaired loans with an allowance recorded, average recorded principal balance	0
Total impaired loans:
Impaired loans, related allowance	0
Acquired Loan [Member] | With An Allowance Recorded [Member] | Commercial Real Estate Owner Occupied Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	605,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	1,516,000
Impaired loans with an allowance recorded, recorded principal balance	1,502,000
Impaired loans, related allowance	605,000
Impaired loans with an allowance recorded, average recorded principal balance	501,000
Total impaired loans:
Impaired loans, related allowance	605,000
Acquired Loan [Member] | With An Allowance Recorded [Member] | Commercial Real Estate Non Owner Occupied Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	0
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	0
Impaired loans with an allowance recorded, recorded principal balance	0
Impaired loans, related allowance	0
Impaired loans with an allowance recorded, average recorded principal balance	0
Total impaired loans:
Impaired loans, related allowance	0
Acquired Loan [Member] | With An Allowance Recorded [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	0
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	0
Impaired loans with an allowance recorded, recorded principal balance	0
Impaired loans, related allowance	0
Impaired loans with an allowance recorded, average recorded principal balance	0
Total impaired loans:
Impaired loans, related allowance	0
Acquired Loan [Member] | With An Allowance Recorded [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	605,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	1,516,000
Impaired loans with an allowance recorded, recorded principal balance	1,502,000
Impaired loans, related allowance	605,000
Impaired loans with an allowance recorded, average recorded principal balance	501,000
Total impaired loans:
Impaired loans, related allowance	605,000
Acquired Loan [Member] | With An Allowance Recorded [Member] | Retail Home Equity and Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	0
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	0
Impaired loans with an allowance recorded, recorded principal balance	0
Impaired loans, related allowance	0
Impaired loans with an allowance recorded, average recorded principal balance	0
Total impaired loans:
Impaired loans, related allowance	0
Acquired Loan [Member] | With An Allowance Recorded [Member] | Retail 1-4 Family Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	0
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	0
Impaired loans with an allowance recorded, recorded principal balance	0
Impaired loans, related allowance	0
Impaired loans with an allowance recorded, average recorded principal balance	0
Total impaired loans:
Impaired loans, related allowance	0
Acquired Loan [Member] | With An Allowance Recorded [Member] | Retail Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	0
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	0
Impaired loans with an allowance recorded, recorded principal balance	0
Impaired loans, related allowance	0
Impaired loans with an allowance recorded, average recorded principal balance	0
Total impaired loans:
Impaired loans, related allowance	0
Acquired Loan [Member] | With An Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	605,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance	1,516,000
Impaired loans with an allowance recorded, recorded principal balance	1,502,000
Impaired loans, related allowance	605,000
Impaired loans with an allowance recorded, average recorded principal balance	501,000
Total impaired loans:
Impaired loans, related allowance	605,000
Acquired Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	605,000
Commercial:
Impaired loans, related allowance	605,000
Total impaired loans:
Impaired loans, unpaid contractual principal balance	4,028,000
Impaired loans, recorded principal balance	4,007,000
Impaired loans, related allowance	605,000
Impaired loans, average recorded principal balance	1,542,000
Acquired Loan [Member] | Retail Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	0
Commercial:
Impaired loans, related allowance	0
Total impaired loans:
Impaired loans, unpaid contractual principal balance	1,507,000
Impaired loans, recorded principal balance	1,505,000
Impaired loans, related allowance	0
Impaired loans, average recorded principal balance	720,000
Acquired Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance	605,000
Commercial:
Impaired loans, related allowance	605,000
Total impaired loans:
Impaired loans, unpaid contractual principal balance	5,535,000
Impaired loans, recorded principal balance	5,512,000
Impaired loans, related allowance	605,000
Impaired loans, average recorded principal balance	2,262,000
With An Allowance Recorded [Member] | Commercial and Industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance		792,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance		1,517,000
Impaired loans with an allowance recorded, recorded principal balance		1,440,000
Impaired loans, related allowance		792,000
Impaired loans with an allowance recorded, average recorded principal balance		1,880,000
Total impaired loans:
Impaired loans, related allowance		792,000
With An Allowance Recorded [Member] | Commercial Vacant Land and Land Development and Residential Construction Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance		844,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance		4,436,000
Impaired loans with an allowance recorded, recorded principal balance		4,139,000
Impaired loans, related allowance		844,000
Impaired loans with an allowance recorded, average recorded principal balance		3,354,000
Total impaired loans:
Impaired loans, related allowance		844,000
With An Allowance Recorded [Member] | Commercial Real Estate Owner Occupied Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance		528,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance		1,513,000
Impaired loans with an allowance recorded, recorded principal balance		1,513,000
Impaired loans, related allowance		528,000
Impaired loans with an allowance recorded, average recorded principal balance		2,550,000
Total impaired loans:
Impaired loans, related allowance		528,000
With An Allowance Recorded [Member] | Commercial Real Estate Non Owner Occupied Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance		7,969,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance		21,088,000
Impaired loans with an allowance recorded, recorded principal balance		21,072,000
Impaired loans, related allowance		7,969,000
Impaired loans with an allowance recorded, average recorded principal balance		28,388,000
Total impaired loans:
Impaired loans, related allowance		7,969,000
With An Allowance Recorded [Member] | Commercial Real Estate Multi Family and Residential Rental Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance		1,127,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance		3,219,000
Impaired loans with an allowance recorded, recorded principal balance		2,684,000
Impaired loans, related allowance		1,127,000
Impaired loans with an allowance recorded, average recorded principal balance		2,915,000
Total impaired loans:
Impaired loans, related allowance		1,127,000
With An Allowance Recorded [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance		11,260,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance		31,773,000
Impaired loans with an allowance recorded, recorded principal balance		30,848,000
Impaired loans, related allowance		11,260,000
Impaired loans with an allowance recorded, average recorded principal balance		39,087,000
Total impaired loans:
Impaired loans, related allowance		11,260,000
With An Allowance Recorded [Member] | Retail Home Equity and Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance		96,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance		320,000
Impaired loans with an allowance recorded, recorded principal balance		289,000
Impaired loans, related allowance		96,000
Impaired loans with an allowance recorded, average recorded principal balance		329,000
Total impaired loans:
Impaired loans, related allowance		96,000
With An Allowance Recorded [Member] | Retail 1-4 Family Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance		1,030,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance		2,274,000
Impaired loans with an allowance recorded, recorded principal balance		2,231,000
Impaired loans, related allowance		1,030,000
Impaired loans with an allowance recorded, average recorded principal balance		1,628,000
Total impaired loans:
Impaired loans, related allowance		1,030,000
With An Allowance Recorded [Member] | Retail Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance		1,126,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance		2,594,000
Impaired loans with an allowance recorded, recorded principal balance		2,520,000
Impaired loans, related allowance		1,126,000
Impaired loans with an allowance recorded, average recorded principal balance		1,957,000
Total impaired loans:
Impaired loans, related allowance		1,126,000
With An Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance		12,386,000
Commercial:
Impaired loans with an allowance recorded, unpaid contractual principal balance		34,367,000
Impaired loans with an allowance recorded, recorded principal balance		33,368,000
Impaired loans, related allowance		12,386,000
Impaired loans with an allowance recorded, average recorded principal balance		41,044,000
Total impaired loans:
Impaired loans, related allowance		12,386,000
Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance		11,260,000
Commercial:
Impaired loans, related allowance		11,260,000
Total impaired loans:
Impaired loans, unpaid contractual principal balance		36,683,000
Impaired loans, recorded principal balance		33,240,000
Impaired loans, related allowance		11,260,000
Impaired loans, average recorded principal balance		46,806,000
Retail Loan [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with no related allowance recorded, related allowance		1,126,000
Commercial:
Impaired loans, related allowance		1,126,000
Total impaired loans:
Impaired loans, unpaid contractual principal balance		4,373,000
Impaired loans, recorded principal balance		3,628,000
Impaired loans, related allowance		1,126,000
Impaired loans, average recorded principal balance		$ 3,155,000

XML

Note 4 - Loans and Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2014

Note 4 - Loans and Allowance for Loan Losses (Tables) [Line Items]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

											Percent
	December 31, 2014					December 31, 2013					Increase
	Balance		%			Balance		%			(Decrease)
Originated Loans
Commercial:
Commercial and industrial	$	384,570,000		30.8	%	$	286,373,000		27.2	%		34.3	%
Vacant land, land development, and residential construction		29,826,000		2.4			36,741,000		3.5			(18.8	)
Real estate – owner occupied		291,758,000		23.4			261,877,000		24.9			11.4
Real estate – non-owner occupied		410,977,000		33.0			364,066,000		34.6			12.9
Real estate – multi-family and residential rental		36,058,000		2.9			37,639,000		3.5			(4.2	)
Total commercial		1,153,189,000		92.5			986,696,000		93.7			16.9
Retail:
Home equity and other		50,059,000		4.0			35,080,000		3.3			42.7
1-4 family mortgages		42,868,000		3.5			31,467,000		3.0			36.2
Total retail		92,927,000		7.5			66,547,000		6.3			39.6
Total originated loans	$	1,246,116,000		100.0	%	$	1,053,243,000		100.0	%		18.3	%

										Percent
	December 31, 2014					December 31, 2013				Increase
	Balance		%			Balance		%		(Decrease)
Acquired Loans
Commercial:
Commercial and industrial	$	166,037,000		19.7	%	$	0		NA		NM
Vacant land, land development, and residential construction		22,148,000		2.6			0		NA		NM
Real estate – owner occupied		138,630,000		16.4			0		NA		NM
Real estate – non-owner occupied		148,597,000		17.6			0		NA		NM
Real estate – multi-family and residential rental		86,702,000		10.3			0		NA		NM
Total commercial		562,114,000		66.6			0		NA		NM
Retail:
Home equity and other		109,219,000		13.0			0		NA		NM
1-4 family mortgages		171,828,000		20.4			0		NA		NM
Total retail		281,047,000		33.4			0		NA		NM
Total acquired loans	$	843,161,000		100.0	%	$	0		NA		NM

											Percent
	December 31, 2014					December 31, 2013					Increase
	Balance		%			Balance		%			(Decrease)
Total Loans
Commercial:
Commercial and industrial	$	550,607,000		26.4	%	$	286,373,000		27.2	%		92.3	%
Vacant land, land development, and residential construction		51,974,000		2.5			36,741,000		3.5			41.5
Real estate – owner occupied		430,388,000		20.5			261,877,000		24.9			64.3
Real estate – non-owner occupied		559,574,000		26.8			364,066,000		34.6			53.7
Real estate – multi-family and residential rental		122,760,000		5.9			37,639,000		3.5			226.2
Total commercial		1,715,303,000		82.1			986,696,000		93.7			73.8
Retail:
Home equity and other		159,278,000		7.6			35,080,000		3.3			354.0
1-4 family mortgages		214,696,000		10.3			31,467,000		3.0			582.3
Total retail		373,974,000		17.9			66,547,000		6.3			462.0
Total loans	$	2,089,277,000		100.0	%	$	1,053,243,000		100.0	%		98.4	%

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Accretable Yield Movement [Table Text Block]

	2014
Balance at May 31, 2014	$	0
Additions		2,514,000
Accretion		(786,000	)
Net reclassification from nonaccretable to accretable		3,537,000
Disposals		(40,000	)
Other activity		(227,000	)
Balance at December 31, 2014	$	4,998,000

Concentrations Within Loan Portfolio [Table Text Block]

	2014					2013
			Percentage of					Percentage of
	Balance		Loan Portfolio			Balance		Loan Portfolio
Commercial real estate loans to lessors of non-residential buildings	$	480,170,000		23.0	%	$	299,446,000		28.4	%

Schedule of Financing Receivables, Non Accrual Status [Table Text Block]

	2014		2013
Loans past due 90 days or more still accruing interest	$	0	$	0
Nonaccrual loans		26,048,000		6,718,000
Total nonperforming loans	$	26,048,000	$	6,718,000

	2014		2013
Loans past due 90 days or more still accruing interest	$	26,000	$	NA
Nonaccrual loans		3,358,000		NA
Total nonperforming loans	$	3,384,000	$	NA

	December 31,		December 31,
	2014		2013
Commercial:
Commercial and industrial	$	6,478,000	$	1,501,000
Vacant land, land development, and residential construction		209,000		785,000
Real estate – owner occupied		18,062,000		389,000
Real estate – non-owner occupied		378,000		168,000
Real estate – multi-family and residential rental		106,000		208,000
Total commercial		25,233,000		3,051,000
Retail:
Home equity and other		800,000		788,000
1-4 family mortgages		3,399,000		2,879,000
Total retail		4,199,000		3,667,000
Total nonperforming loans	$	29,432,000	$	6,718,000

Past Due Financing Receivables [Table Text Block]

					Greater								Recorded
	30 – 59		60 – 89		Than 89								Balance > 89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing
Originated Loans
Commercial:
Commercial and industrial	$	0	$	0	$	0	$	0	$	384,570,000	$	384,570,000	$	0
Vacant land, land development, and residential construction		0		0		0		0		29,826,000		29,826,000		0
Real estate – owner occupied		0		0		120,000		120,000		291,638,000		291,758,000		0
Real estate – non-owner occupied		0		0		116,000		116,000		410,861,000		410,977,000		0
Real estate – multi-family and residential rental		0		0		0		0		36,058,000		36,058,000		0
Total commercial		0		0		236,000		236,000		1,152,953,000		1,153,189,000		0
Retail:
Home equity and other		38,000		3,000		0		41,000		50,018,000		50,059,000		0
1- 4 family mortgages		0		0		366,000		366,000		42,502,000		42,868,000		0
Total retail		38,000		3,000		366,000		407,000		92,520,000		92,927,000		0
Total past due loans	$	38,000	$	3,000	$	602,000	$	643,000	$	1,245,473,000	$	1,246,116,000	$	0

					Greater								Recorded
	30 – 59		60 – 89		Than 89								Balance > 89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing
Acquired Loans
Commercial:
Commercial and industrial	$	29,000	$	32,000	$	76,000	$	137,000	$	165,900,000	$	166,037,000	$	0
Vacant land, land development, and residential construction		0		38,000		0		38,000		22,110,000		22,148,000		0
Real estate – owner occupied		51,000		425,000		1,625,000		2,101,000		136,529,000		138,630,000		0
Real estate – non-owner occupied		68,000		598,000		395,000		1,061,000		147,536,000		148,597,000		0
Real estate – multi-family and residential rental		37,000		0		105,000		142,000		86,560,000		86,702,000		0
Total commercial		185,000		1,093,000		2,201,000		3,479,000		558,635,000		562,114,000		0
Retail:
Home equity and other		445,000		419,000		155,000		1,019,000		108,200,000		109,219,000		26,000
1- 4 family mortgages		1,087,000		408,000		750,000		2,245,000		169,583,000		171,828,000		0
Total retail		1,532,000		827,000		905,000		3,264,000		277,783,000		281,047,000		26,000
Total past due loans	$	1,717,000	$	1,920,000	$	3,106,000	$	6,743,000	$	836,418,000	$	843,161,000	$	26,000

					Greater								Recorded
	30 – 59		60 – 89		Than 89								Balance > 89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing
Originated Loans
Commercial:
Commercial and industrial	$	0	$	0	$	309,000	$	309,000	$	286,064,000	$	286,373,000	$	0
Vacant land, land development, and residential construction		0		0		0		0		36,741,000		36,741,000		0
Real estate – owner occupied		65,000		0		50,000		115,000		261,762,000		261,877,000		0
Real estate – non-owner occupied		0		0		0		0		364,066,000		364,066,000		0
Real estate – multi-family and residential rental		0		0		64,000		64,000		37,575,000		37,639,000		0
Total commercial		65,000		0		423,000		488,000		986,208,000		986,696,000		0
Retail:
Home equity and other		14,000		0		0		14,000		35,066,000		35,080,000		0
1- 4 family mortgages		21,000		44,000		375,000		440,000		31,027,000		31,467,000		0
Total retail		35,000		44,000		375,000		454,000		66,093,000		66,547,000		0
Total past due loans	$	100,000	$	44,000	$	798,000	$	942,000	$	1,052,301,000	$	1,053,243,000	$	0

Impaired Financing Receivables [Table Text Block]

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	1,170,000	$	1,164,000			$	652,000
Vacant land, land development and residential construction		540,000		209,000				227,000
Real estate – owner occupied		3,609,000		1,901,000				4,365,000
Real estate – non-owner occupied		1,210,000		1,210,000				971,000
Real estate – multi-family and residential rental		375,000		317,000				64,000
Total commercial		6,904,000		4,801,000				6,279,000
Retail:
Home equity and other		207,000		191,000				517,000
1-4 family mortgages		1,144,000		560,000				585,000
Total retail		1,351,000		751,000				1,102,000
Total with no related allowance recorded	$	8,255,000	$	5,552,000		0	$	7,381,000

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With an allowance recorded:
Commercial:
Commercial and industrial	$	5,299,000	$	5,226,000	$	1,578,000	$	2,759,000
Vacant land, land development and residential construction		2,000,000		2,000,000		151,000		3,229,000
Real estate – owner occupied		15,745,000		15,674,000		2,200,000		4,630,000
Real estate – non-owner occupied		16,033,000		15,949,000		4,779,000		18,245,000
Real estate – multi-family and residential rental		1,371,000		1,371,000		666,000		1,700,000
Total commercial		40,448,000		40,220,000		9,374,000		30,563,000
Retail:
Home equity and other		115,000		84,000		84,000		128,000
1-4 family mortgages		2,194,000		2,000,000		694,000		2,115,000
Total retail		2,309,000		2,084,000		778,000		2,243,000
Total with an allowance recorded	$	42,757,000	$	42,304,000	$	10,152,000	$	32,806,000
Total impaired loans:
Commercial	$	47,352,000	$	45,021,000	$	9,374,000	$	36,842,000
Retail		3,660,000		2,835,000		778,000		3,345,000
Total impaired loans	$	51,012,000	$	47,856,000	$	10,152,000	$	40,187,000

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	1,586,000	$	1,579,000			$	563,000
Vacant land, land development and residential construction		0		0				0
Real estate – owner occupied		113,000		113,000				52,000
Real estate – non-owner occupied		326,000		326,000				260,000
Real estate – multi-family and residential rental		487,000		487,000				166,000
Total commercial		2,512,000		2,505,000				1,041,000
Retail:
Home equity and other		641,000		639,000				262,000
1-4 family mortgages		866,000		866,000				458,000
Total retail		1,507,000		1,505,000				720,000
Total with no related allowance recorded	$	4,019,000	$	4,010,000		0	$	1,761,000

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With an allowance recorded:
Commercial:
Commercial and industrial	$	0	$	0	$	0	$	0
Vacant land, land development and residential construction		0		0		0		0
Real estate – owner occupied		1,516,000		1,502,000		605,000		501,000
Real estate – non-owner occupied		0		0		0		0
Real estate – multi-family and residential rental		0		0		0		0
Total commercial		1,516,000		1,502,000		605,000		501,000
Retail:
Home equity and other		0		0		0		0
1-4 family mortgages		0		0		0		0
Total retail		0		0		0		0
Total with an allowance recorded	$	1,516,000	$	1,502,000	$	605,000	$	501,000
Total impaired loans:
Commercial	$	4,028,000	$	4,007,000	$	605,000	$	1,542,000
Retail		1,507,000		1,505,000		0		720,000
Total impaired loans	$	5,535,000	$	5,512,000	$	605,000	$	2,262,000

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	2,229,000	$	511,000			$	1,205,000
Vacant land, land development and residential construction		475,000		362,000				991,000
Real estate – owner occupied		1,270,000		785,000				1,084,000
Real estate – non-owner occupied		895,000		733,000				4,049,000
Real estate – multi-family and residential rental		41,000		1,000				390,000
Total commercial		4,910,000		2,392,000				7,719,000
Retail:
Home equity and other		507,000		461,000				471,000
1-4 family mortgages		1,272,000		647,000				727,000
Total retail		1,779,000		1,108,000				1,198,000
Total with no related allowance recorded	$	6,689,000	$	3,500,000		0	$	8,917,000

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With an allowance recorded:
Commercial:
Commercial and industrial	$	1,517,000	$	1,440,000	$	792,000	$	1,880,000
Vacant land, land development and residential construction		4,436,000		4,139,000		844,000		3,354,000
Real estate – owner occupied		1,513,000		1,513,000		528,000		2,550,000
Real estate – non-owner occupied		21,088,000		21,072,000		7,969,000		28,388,000
Real estate – multi-family and residential rental		3,219,000		2,684,000		1,127,000		2,915,000
Total commercial		31,773,000		30,848,000		11,260,000		39,087,000
Retail:
Home equity and other		320,000		289,000		96,000		329,000
1-4 family mortgages		2,274,000		2,231,000		1,030,000		1,628,000
Total retail		2,594,000		2,520,000		1,126,000		1,957,000
Total with an allowance recorded	$	34,367,000	$	33,368,000	$	12,386,000	$	41,044,000
Total impaired loans:
Commercial	$	36,683,000	$	33,240,000	$	11,260,000	$	46,806,000
Retail		4,373,000		3,628,000		1,126,000		3,155,000
Total impaired loans	$	41,056,000	$	36,868,000	$	12,386,000	$	49,961,000

Financing Receivable Credit Quality Indicators [Table Text Block]

	Commercial and Industrial		Commercial Vacant Land, Land  Development, and Residential Construction		Commercial Real Estate - Owner Occupied		Commercial Real Estate - Non-Owner Occupied		Commercial Real Estate - Multi-Family and Residential Rental
Internal credit risk grade groupings:
Grades 1 – 4	$	266,631,000	$	11,242,000	$	190,656,000	$	285,035,000	$	12,394,000
Grades 5 – 7		109,639,000		16,375,000		83,123,000		113,982,000		22,282,000
Grades 8 – 9		8,300,000		2,209,000		17,979,000		11,960,000		1,382,000
Total commercial	$	384,570,000	$	29,826,000	$	291,758,000	$	410,977,000	$	36,058,000

			Commercial						Commercial
			Vacant Land,		Commercial		Commercial		Real Estate -
	Commercial		Land Development,		Real Estate -		Real Estate -		Multi-Family
	and		and Residential		Owner		Non-Owner		and Residential
	Industrial		Construction		Occupied		Occupied		Rental
Internal credit risk grade groupings:
Grades 1 – 4	$	72,411,000	$	5,875,000	$	39,496,000	$	65,886,000	$	35,858,000
Grades 5 – 7		90,320,000		14,472,000		92,212,000		78,103,000		49,781,000
Grades 8 – 9		3,306,000		1,801,000		6,922,000		4,608,000		1,063,000
Total commercial	$	166,037,000	$	22,148,000	$	138,630,000	$	148,597,000	$	86,702,000

			Commercial Vacant Land, Land		Commercial		Commercial		Commercial Real Estate -
	Commercial		Development,		Real Estate -		Real Estate -		Multi-Family
	and		and Residential		Owner		Non-Owner		and Residential
	Industrial		Construction		Occupied		Occupied		Rental
Internal credit risk grade groupings:
Grades 1 – 4	$	208,151,000	$	6,973,000	$	156,230,000	$	219,325,000	$	15,465,000
Grades 5 – 7		76,237,000		25,535,000		103,066,000		122,717,000		19,469,000
Grades 8 – 9		1,985,000		4,233,000		2,581,000		22,024,000		2,705,000
Total commercial	$	286,373,000	$	36,741,000	$	261,877,000	$	364,066,000	$	37,639,000

Allowance for Credit Losses on Financing Receivables [Table Text Block]

	Commercial			Retail
	Loans			Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	20,455,000		$	2,358,000		$	8,000	$	22,821,000
Provision for loan losses		(3,140,000	)		(721,000	)		68,000		(3,793,000	)
Charge-offs		(876,000	)		(554,000	)		0		(1,430,000	)
Recoveries		1,297,000			404,000			0		1,701,000
Ending balance	$	17,736,000		$	1,487,000		$	76,000	$	19,299,000
Ending balance: individually evaluated for impairment	$	9,374,000		$	777,000		$	0	$	10,151,000
Ending balance: collectively evaluated for impairment	$	8,362,000		$	710,000		$	76,000	$	9,148,000
Total loans:
Ending balance	$	1,153,189,000		$	92,927,000				$	1,246,116,000
Ending balance: individually evaluated for impairment	$	45,021,000		$	2,835,000				$	47,856,000
Ending balance: collectively evaluated for impairment	$	1,108,168,000		$	90,092,000				$	1,198,260,000

	Commercial			Retail
	Loans			Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	0		$	0		$	0	$	0
Provision for loan losses		734,000			59,000			0		793,000
Charge-offs		(55,000	)		(16,000	)		0		(71,000	)
Recoveries		2,000			18,000			0		20,000
Ending balance	$	681,000		$	61,000		$	0	$	742,000

	Commercial			Retail
	Loans			Loans			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	26,043,000		$	2,645,000		$	(11,000	)	$	28,677,000
Provision for loan losses		(6,730,000	)		(489,000	)		19,000			(7,200,000	)
Charge-offs		(5,120,000	)		(170,000	)		0			(5,290,000	)
Recoveries		6,262,000			372,000			0			6,634,000
Ending balance	$	20,455,000		$	2,358,000		$	8,000		$	22,821,000
Ending balance: individually evaluated for impairment	$	11,260,000		$	1,126,000		$	0		$	12,386,000
Ending balance: collectively evaluated for impairment	$	9,195,000		$	1,232,000		$	8,000		$	10,435,000
Total loans:
Ending balance	$	986,696,000		$	66,547,000					$	1,053,243,000
Ending balance: individually evaluated for impairment	$	33,240,000		$	3,628,000					$	36,868,000
Ending balance: collectively evaluated for impairment	$	953,456,000		$	62,919,000					$	1,016,375,000

	Commercial			Retail
	Loans			Loans			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	33,431,000		$	3,019,000		$	82,000		$	36,532,000
Provision for loan losses		(2,800,000	)		(207,000	)		(93,000	)		(3,100,000	)
Charge-offs		(12,075,000	)		(569,000	)		0			(12,644,000	)
Recoveries		7,487,000			402,000			0			7,889,000
Ending balance	$	26,043,000		$	2,645,000		$	(11,000	)	$	28,677,000
Ending balance: individually evaluated for impairment	$	16,860,000		$	329,000		$	0		$	17,189,000
Ending balance: collectively evaluated for impairment	$	9,183,000		$	2,316,000		$	(11,000	)	$	11,488,000
Total loans:
Ending balance	$	968,506,000		$	72,683,000					$	1,041,189,000
Ending balance: individually evaluated for impairment	$	55,138,000		$	2,141,000					$	57,279,000
Ending balance: collectively evaluated for impairment	$	913,368,000		$	70,542,000					$	983,910,000

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

			Pre-		Post-
			Modification		Modification
			Recorded		Recorded
	Number of		Principal		Principal
	Contracts		Balance		Balance
Originated Loans
Commercial:
Commercial and industrial		2	$	5,994,000	$	6,094,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		2		16,787,000		16,787,000
Real estate – non-owner occupied		1		146,000		146,000
Real estate – multi-family and residential rental		0		0		0
Total commercial		5		22,927,000		23,027,000
Retail:
Home equity and other		0		0		0
1-4 family mortgages		0		0		0
Total retail		0		0		0
Total		5	$	22,927,000	$	23,027,000
Acquired Loans
Commercial:
Commercial and industrial		7	$	1,604,000	$	1,604,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		2		1,619,000		1,619,000
Real estate – non-owner occupied		1		65,000		65,000
Real estate – multi-family and residential rental		4		394,000		394,000
Total commercial		14		3,682,000		3,682,000
Retail:
Home equity and other		1		26,000		26,000
1-4 family mortgages		1		179,000		179,000
Total retail		2		205,000		205,000
Total		16	$	3,887,000	$	3,887,000

			Pre-		Post-
			Modification		Modification
			Recorded		Recorded
	Number of		Principal		Principal
	Contracts		Balance		Balance
Commercial:
Commercial and industrial		3	$	741,000	$	741,000
Vacant land, land development and residential construction		2		3,610,000		3,610,000
Real estate – owner occupied		2		715,000		715,000
Real estate – non-owner occupied		1		45,000		45,000
Real estate – multi-family and residential rental		1		241,000		241,000
Total commercial		9		5,352,000		5,352,000
Retail:
Home equity and other		0		0		0
1-4 family mortgages		1		1,879,000		1,879,000
Total retail		1		1,879,000		1,879,000
Total		10	$	7,231,000	$	7,231,000

Troubled Debt Restructurings on Financing Receivables WithIn Previous Twelve Months that Became Over Thirty Days Past Due [Table Text Block]

			Recorded
	Number of		Principal
	Contracts		Balance
Commercial:
Commercial and industrial		0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		0		0
Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0
Total		0	$	0

			Recorded
	Number of		Principal
	Contracts		Balance
Commercial:
Commercial and industrial		0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		0		0
Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0
Total		0	$	0

	Number of		Principal
	Contracts		Balance
Commercial:
Commercial and industrial		0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		1		65,000
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		1		65,000
Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0
Total		1	$	65,000

Trouble Debt Restructuring Activity [Table Text Block]

				Commercial
				Vacant Land, Land			Commercial			Commercial			Commercial Real Estate -
	Commercial			Development,			Real Estate -			Real Estate -			Multi-Family
	and			and Residential			Owner			Non-Owner			and Residential
	Industrial			Construction			Occupied			Occupied			Rental
Commercial Loan Portfolio:
Beginning Balance	$	1,656,000		$	4,501,000		$	1,816,000		$	22,311,000		$	2,620,000
Charge-Offs		(67,000	)		0			(11,000	)		0			(420,000	)
Payments		(871,000	)		(4,719,000	)		(2,343,000	)		(5,190,000	)		(1,695,000	)
Transfers to ORE		(21,000	)		0			(48,000	)		0			0
Net Additions/Deletions		6,329,000			2,898,000			17,746,000			318,000			0
Ending Balance	$	7,026,000		$	2,680,000		$	17,160,000		$	17,439,000		$	505,000

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	1,987,000
Charge-Offs		0		0
Payments		0		(224,000	)
Transfers to ORE		0		0
Net Additions/Deletions		0		204,000
Ending Balance	$	0	$	1,967,000

				Commercial
				Vacant Land, Land		Commercial		Commercial		Commercial Real Estate -
	Commercial			Development,		Real Estate -		Real Estate -		Multi-Family
	and			and Residential		Owner		Non-Owner		and Residential
	Industrial			Construction		Occupied		Occupied		Rental
Commercial Loan Portfolio:
Beginning Balance	$	0		$	0	$	0	$	0	$	0
Charge-Offs		0			0		0		0		0
Payments		(2,000	)		0		0		0		(18,000	)
Transfers to ORE		0			0		0		0		0
Net Additions/Deletions		1,441,000			0		1,569,000		64,000		399,000
Ending Balance	$	1,439,000		$	0	$	1,569,000	$	64,000	$	381,000

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	0
Charge-Offs		0		0
Payments		0		0
Transfers to ORE		0		0
Net Additions/Deletions		26,000		178,000
Ending Balance	$	26,000	$	178,000

				Commercial
				Vacant Land, Land			Commercial			Commercial			Commercial Real Estate -
	Commercial			Development,			Real Estate -			Real Estate -			Multi-Family
	and			and Residential			Owner			Non-Owner			and Residential
	Industrial			Construction			Occupied			Occupied			Rental
Commercial Loan Portfolio:
Beginning Balance	$	2,720,000		$	3,071,000		$	4,116,000		$	37,671,000		$	3,027,000
Charge-Offs		(35,000	)		(725,000	)		(70,000	)		(2,537,000	)		(15,000	)
Payments		(2,781,000	)		(1,596,000	)		(2,151,000	)		(13,795,000	)		(735,000	)
Transfers to ORE		(74,000	)		0			(363,000	)		(1,153,000	)		0
Net Additions/Deletions		1,826,000			3,751,000			284,000			2,126,000			343,000
Ending Balance	$	1,656,000		$	4,501,000		$	1,816,000		$	22,312,000		$	2,620,000

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	155,000
Charge-Offs		0		0
Payments		0		(46,000	)
Transfers to ORE		0		0
Net Additions/Deletions		0		1,878,000
Ending Balance	$	0	$	1,987,000

				Commercial
				Vacant Land, Land			Commercial			Commercial			Commercial Real Estate -
	Commercial			Development,			Real Estate -			Real Estate -			Multi-Family
	and			and Residential			Owner			Non-Owner			and Residential
	Industrial			Construction			Occupied			Occupied			Rental
Commercial Loan Portfolio:
Beginning Balance	$	4,553,000		$	5,100,000		$	6,183,000		$	12,036,000		$	12,626,000
Charge-Offs		(540,000	)		(63,000	)		(426,000	)		(720,000	)		(2,180,000	)
Payments		(2,584,000	)		(2,013,000	)		(3,443,000	)		(2,482,000	)		(7,422,000	)
Transfers to ORE		(96,000	)		0			(65,000	)		(1,045,000	)		(186,000	)
Net Additions/Deletions		1,387,000			47,000			1,867,000			29,882,000			189,000
Ending Balance	$	2,720,000		$	3,071,000		$	4,116,000		$	37,671,000		$	3,027,000

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	164,000
Charge-Offs		0		0
Payments		0		(9,000	)
Transfers to ORE		0		0
Net Additions/Deletions		0		0
Ending Balance	$	0	$	155,000

Allowance Related to Loans Categorized as Troubled Debt Restructurings [Table Text Block]

	December 31,		December 31,
	2014		2013
Commercial:
Commercial and industrial	$	16,000	$	187,000
Vacant land, land development, and residential construction		151,000		798,000
Real estate – owner occupied		182,000		528,000
Real estate – non-owner occupied		4,778,000		7,828,000
Real estate – multi-family and residential rental		666,000		1,010,000
Total commercial		5,793,000		10,351,000
Retail:
Home equity and other		0		0
1-4 family mortgages		0		48,000
Total retail		0		48,000
Total related allowance	$	5,793,000	$	10,399,000

Retail Loan [Member]

Note 4 - Loans and Allowance for Loan Losses (Tables) [Line Items]

Financing Receivable Credit Quality Indicators [Table Text Block]

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Total retail	$	50,059,000	$	42,868,000

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Total retail	$	109,219,000	$	171,828,000

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Total retail	$	35,080,000	$	31,467,000

XML

Note 12 - Stock-based Compensation

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 12 – STOCK-BASED COMPENSATION

Stock-based compensation plans are used to provide directors and employees with an increased incentive to contribute to our long-term performance and growth, to align the interests of directors and employees with the interests of our shareholders through the opportunity for increased stock ownership and to attract and retain directors and employees. From 2000 through 2005, stock option grants were provided to directors and certain employees through several stock option plans, including the 2000 Employee Stock Option Plan, 2004 Employee Stock Option Plan and Independent Director Stock Option Plan. During 2006, 2007 and 2008, stock option and restricted stock grants were provided to certain employees through the Stock Incentive Plan of 2006. No stock option or restricted stock grants were made during 2009, 2010 or 2011. During 2012, restricted stock grants were provided to directors and certain employees through the Stock Incentive Plan of 2006. No stock option or restricted stock grants were made during 2013 due to the pending merger with Firstbank. During 2014, stock option and restricted stock grants were provided to certain employees through the Stock Incentive Plan of 2006. In addition, stock grants were provided to directors as retainer payments during 2014 through the Stock Incentive Plan of 2006.

Under our 2000 Employee Stock Option Plan and 2004 Employee Stock Option Plan, stock options granted to employees were granted at the market price on the date of grant, generally fully vested after one year and expired ten years from the date of grant. Stock options granted to non-executive officers during 2005 vested about three weeks after being granted. Under our Independent Director Stock Option Plan, stock options granted to non-employee directors were at 125% of the market price on the date of grant, fully vested after five years and expire ten years from the date of grant.

The Stock Incentive Plan of 2006 replaced all of our outstanding stock option plans for stock options not previously granted. Under the Stock Incentive Plan of 2006, incentive awards may include, but are not limited to, stock options, restricted stock, stock appreciation rights and stock awards. Incentive awards that are stock options or stock appreciation rights are granted with an exercise price not less than the closing price of our common stock on the date of grant, or for stock options granted in 2006 or 2007, the day before the date of grant, if the closing price was higher on the day before the date of grant. Price, vesting and expiration date parameters are determined by Mercantile’s Compensation Committee on a grant-by-grant basis. Generally, the stock options granted to employees during 2006, 2007 and 2008 fully vested after two years and expire after seven years. The restricted stock awards granted to certain employees during 2006, 2007 and 2008 fully vested after four years, while the restricted stock awards granted to directors and certain employees during 2012 fully vested after two years. No payments were required from employees for the restricted stock awards. The restricted stock awards granted to certain employees during 2014 fully vest after three years. The stock options granted to certain employees during 2014, which were at 110% of the market price on the date of grant, fully vest after two years and expire after seven years. At year-end 2014, there were approximately 277,000 shares authorized for future incentive awards.

In conjunction with the Firstbank merger, all of our outstanding restricted stock awards, which were scheduled to vest in full in November, 2014, became fully vested on June 1, 2014, resulting in the recognition of compensation expense of $0.2 million in the second quarter of 2014 to reflect the accelerated vesting of the restricted stock awards. The unrecognized compensation cost related to unvested stock options was less than $0.1 million as of December 31, 2014, which will be recognized as expense over the next two years. The unrecognized compensation cost related to restricted stock grants was $2.0 million as of December 31, 2014, which will be recognized as expense over the next three years.

Also in conjunction with the Firstbank merger, we issued Mercantile stock options in replacement of all outstanding Firstbank stock option grants that had been previously issued to Firstbank employees under the Firstbank Corporation Stock Option and Restricted Stock Plan of 1997 and the Firstbank Corporation 2006 Stock Compensation Plan. In general, stock option grants for 50 shares or less fully vested after one year from date of grant, while stock option grants for more than 50 shares vested over a five-year period at 20% of the grant per annum starting one year from date of grant. The stock option grants expire ten years from date of grant. There were approximately 282,200 Mercantile stock options issued as a result of the merger, with about 258,400 of the stock option grants fully vested and exercisable on the date of merger. Unrecognized compensation cost related to the unvested stock options was less than $0.1 million as of December 31, 2014, which will be fully expensed during 2015.

A summary of restricted stock activity from grants issued under the Mercantile Stock Incentive Plan of 2006 during the past three years is as follows:

	2014					2013					2012
				Weighted					Weighted					Weighted
				Average					Average					Average
	Shares			Fair Value		Shares			Fair Value		Shares			Fair Value
Nonvested at beginning of year		63,800		$	14.30		66,100		$	14.30		38,650		$	6.20
Granted		101,490			20.13		0		NA			66,100			14.30
Vested		(63,300	)		14.30		0		NA			(38,266	)		6.20
Forfeited		(500	)		14.30		(2,300	)		14.30		(384	)		6.20
Nonvested at end of year		101,490		$	20.13		63,800		$	14.30		66,100		$	14.30

A summary of stock option activity from grants issued under various Mercantile plans during the past three years is as follows:

	2014					2013					2012
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
Outstanding at beginning of year		60,876		$	33.11		152,896		$	26.15		214,903		$	22.40
Granted		6,488			22.15		0		NA			0		NA
Exercised		(2,845	)		17.74		(51,055	)		13.72		(50,930	)		10.83
Forfeited or expired		(29,184	)		34.60		(40,965	)		31.30		(11,077	)		23.77
Outstanding at end of year		35,335		$	31.09		60,876		$	33.11		152,896		$	26.15
Options exercisable at year-end		28,847		$	33.11		60,876		$	33.11		152,896		$	26.15

The fair value of each stock option award is estimated on the date of grant using a closed option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatilities on our common stock. Historical data is used to estimate stock option expense and post-vesting termination behavior. The expected term of stock options granted is based on historical data and represents the period of time that stock options granted are expected to be outstanding, which takes into account that the stock options are not transferable. The risk-free interest rate for the expected term of the stock option is based on the U.S. Treasury yield curve in effect at the time of the stock option grant.

The fair value of stock options granted during 2014 was determined using the following weighted-average assumptions as of the grant date. No stock options were granted during 2013 or 2012.

	2014
Risk-free interest rate		1.56	%
Expected option life (Years)		5
Expected stock price volatility		26	%
Dividend yield		2.5	%

Options issued under various Mercantile plans outstanding at year-end 2014 were as follows:

			Outstanding					Exercisable
					Weighted Average	Weighted				Weighted
Range of					Remaining	Average				Average
Exercise					Contractual	Exercise				Exercise
Prices			Number		Life (Years)	Price		Number		Price
$6.21	-	$ 8.00		2,700	0.9	$	6.21		2,700	$	6.21
$20.01	-	$24.00		6,488	6.9		22.15		0	NA
$32.01	-	$36.00		26,147	0.9		35.88		26,147		35.88
Outstanding at year end				35,335	2.0	$	31.09		28,847	$	33.11

Information related to options issued under various Mercantile plans outstanding at year-end 2014, 2013 and 2012 is as follows:

	2014		2013		2012
Minimum exercise price	$	6.21	$	6.21	$	6.21
Maximum exercise price		35.88		40.28		40.28
Average remaining option term (Years)	2.0		1.4		1.9

Information related to stock option grants and exercises issued under various Mercantile plans during 2014, 2013 and 2012 is as follows:

	2014		2013		2012
Aggregate intrinsic value of stock options exercised	$	11,000	$	408,000	$	307,000
Cash received from stock option exercises		50,000		289,000		227,000
Tax benefit realized from stock option exercises		0		0		0
Weighted average per share fair value of stock options granted	$	2.72		NA		NA

The aggregate intrinsic value of all stock options issued under various Mercantile plans outstanding and exercisable at December 31, 2014 was less than $0.1 million. Shares issued as a result of the exercise of stock option grants have been authorized and previously unissued shares.

A summary of stock option activity from grants issued under various Firstbank plans that became part of Mercantile’s plans upon consummation of the merger on June 1, 2014 is as follows:

	2014
				Weighted
				Average
				Exercise
	Shares			Price
Outstanding at beginning of year		0			0
Granted		0			0
Replaced as part of merger		282,178			15.48
Exercised		(27,740	)		8.34
Forfeited or expired		(36,456	)		24.46
Outstanding at end of year		217,982		$	14.89
Options exercisable at year-end		210,777		$	15.22

Options issued under various Firstbank plans outstanding at year-end 2014 were as follows:

			Outstanding					Exercisable
					Weighted Average	Weighted				Weighted
Range of					Remaining	Average				Average
Exercise					Contractual	Exercise				Exercise
Prices			Number		Life (Years)	Price		Number		Price
$4.00	-	$8.00		63,590	4.9	$	6.53		56,385	$	6.70
$8.01	-	$12.00		68,430	3.7		13.20		68,430		13.20
$20.01	-	$25.00		85,962	1.4		22.43		85,962		22.43
Outstanding at year end				217,982	3.1	$	14.89		210,777	$	15.22

Information related to options issued under various Firstbank plans outstanding at year-end 2014 is as follows:

	2014
Minimum exercise price	$	5.19
Maximum exercise price		24.46
Average remaining option term (Years)	3.1

Information related to stock option grants and exercises issued under various Firstbank plans during 2014 is as follows:

	2014
Aggregate intrinsic value of stock options exercised	$	333,000
Cash received from stock option exercises		232,000
Tax benefit realized from stock option exercises		116,000
Weighted average per share fair value of stock options granted	NA

The aggregate intrinsic value of all stock options issued under various Firstbank plans outstanding and exercisable at December 31, 2014 was $1.3 million. Shares issued as a result of the exercise of stock option grants have been authorized and previously unissued shares.

On June 26, 2014, we granted a total of 7,375 shares of common stock to our Corporate, Bank and Regional Advisory Boards of Directors for retainer payments for the period of June 1, 2014 through December 31, 2014. The associated $0.2 million cost was expensed on a straightline basis over the last six months of 2014.

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Note 12 - Stock-based Compensation (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended						3 Months Ended	0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Jun. 30, 2014	Jun. 01, 2014	Jun. 26, 2014
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Grants in Period (in Shares)		0		0	0	0
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares)	277,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in Shares)	6,488	0	0
Employee Stock Option [Member] | Firstbank Corporation [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options (in Dollars)	0.1
Employee Stock Option [Member] | Non-Executive Officers [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	21 days
Employee Stock Option [Member] | Director [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent	125.00%
Employee Stock Option [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in Shares)		0	0
Options Granted During 2006, 2007 and 2008 [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	2 years
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	7 years
Restricted Stock Granted During 2006, 2007 and 2008 [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	4 years
Restricted Stock Granted in 2012 [Member] | Directors and Certain Employees [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	2 years
Restricted Stock Granted in 2014 [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Stock Options Granted in 2014 [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	2 years
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	7 years
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent	110.00%
Restricted Stock [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award Accelerated Compensation Cost (in Dollars)							0.2
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	3 years
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options (in Dollars)	2.0
Stock Option Grants for 50 Shares or Less [Member] | Firstbank Corporation [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Stock Option Grants for Over 50 Shares [Member] | Firstbank Corporation [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	20.00%
Firstbank Corporation [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in Shares)								282,200
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number (in Shares)								258,400
Maximum [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options (in Dollars)	0.1
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value (in Dollars)	0.1
Director [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Stock Issued During Period, Shares, Issued for Services (in Shares)									7,375
Allocated Share-based Compensation Expense (in Dollars)									0.2
Stock Issued for Services, Share-based Compensation Expense Period									6 months
Firstbank Plans [Member]
Note 12 - Stock-based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in Shares)	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value (in Dollars)	1.3