Mercantile Bank Corporation is a registered bank holding company under the
Bank Holding Company Act of 1956, as amended. As a bank holding company, we
are subject to regulation by the Board of Governors of the Federal Reserve System.
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.
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 48 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, Belding,
Cadillac, Canadian Lakes, Clare, Comstock Park, DeWitt, Fairview, Grand Rapids,
Hale, Hastings, 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, Vestaburg, West Branch, and Wyoming.
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.
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.
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.
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