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STOCK-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
STOCK-BASED COMPENSATION | NOTE 9 – 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 Corporation (see Note 23). 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 are 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 vest after two years. No payments were required from employees for the restricted stock awards. At year-end 2013, there were approximately 384,000 shares authorized for future incentive awards. There was no unrecognized compensation cost related to unvested stock options granted under our various stock-based compensation plans, and $0.4 million of total unrecognized compensation cost related to unvested restricted stock granted under our Stock Incentive Plan of 2006 as of December 31, 2013, which is expected to be fully recognized during 2014. A summary of restricted stock activity is as follows:
|  | 2013 |  |  | 2012 |  |  | 2011 |
|  |  |  |  | Weighted |  |  |  |  |  | Weighted |  |  |  |  |  | Weighted |
|  |  |  |  | Average |  |  |  |  |  | Average |  |  |  |  |  | Average |
|  | Shares |  |  | Fair Value |  |  | Shares |  |  | Fair Value |  |  | Shares |  |  | Fair Value |
Nonvested at beginning of year |  |  | 66,100 |  |  | $ | 14.30 |  |  |  | 38,650 |  |  | $ | 6.20 |  |  |  | 73,955 |  |  | $ | 11.02 |
Granted |  |  | 0 |  |  |  | NA |  |  |  | 66,100 |  |  |  | 14.30 |  |  |  | 0 |  |  |  | NA |
Vested |  |  | 0 |  |  |  | NA |  |  |  | (38,266 | ) |  |  | 6.20 |  |  |  | (28,533 | ) |  |  | 17.57 |
Forfeited |  |  | (2,300 | ) |  |  | 14.30 |  |  |  | (384 | ) |  |  | 6.20 |  |  |  | (6,772 | ) |  |  | 10.99 |
Nonvested at end of year |  |  | 63,800 |  |  | $ | 14.30 |  |  |  | 66,100 |  |  | $ | 14.30 |  |  |  | 38,650 |  |  | $ | 6.20 |
A summary of stock option activity is as follows:
|  | 2013 |  |  | 2012 |  |  | 2011 |
|  |  |  |  | Weighted |  |  |  |  |  | Weighted |  |  |  |  |  | Weighted |
|  |  |  |  | Average |  |  |  |  |  | Average |  |  |  |  |  | Average |
|  |  |  |  | Exercise |  |  |  |  |  | Exercise |  |  |  |  |  | Exercise |
|  | Shares |  |  | Price |  |  | Shares |  |  | Price |  |  | Shares |  |  | Price |
Outstanding at beginning of year |  |  | 152,896 |  |  | $ | 26.15 |  |  |  | 214,903 |  |  | $ | 22.40 |  |  |  | 262,042 |  |  | $ | 21.18 |
Granted |  |  | 0 |  |  |  | NA |  |  |  | 0 |  |  |  | NA |  |  |  | 0 |  |  |  | NA |
Exercised |  |  | (51,055 | ) |  |  | 13.72 |  |  |  | (50,930 | ) |  |  | 10.83 |  |  |  | (8,800 | ) |  |  | 6.21 |
Forfeited or expired |  |  | (40,965 | ) |  |  | 31.30 |  |  |  | (11,077 | ) |  |  | 23.77 |  |  |  | (38,339 | ) |  |  | 17.80 |
Outstanding at end of year |  |  | 60,876 |  |  | $ | 33.11 |  |  |  | 152,896 |  |  | $ | 26.15 |  |  |  | 214,903 |  |  | $ | 22.40 |
Options exercisable at year-end |  |  | 60,876 |  |  | $ | 33.11 |  |  |  | 152,896 |  |  | $ | 26.15 |  |  |  | 212,643 |  |  | $ | 22.57 |
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. No stock option grants were made during 2011, 2012 or 2013. Options outstanding at year-end 2013 were as follows:
|  | Outstanding |  |  | Exercisable |
|  |  |  |  | Weighted Average |  |  | Weighted |  |  |  |  |  | Weighted |
Range of |  |  |  |  | Remaining |  |  | Average |  |  |  |  |  | Average |
Exercise |  |  |  |  | Contractual |  |  | Exercise |  |  |  |  |  | Exercise |
Prices |  | Number |  |  | Life |  |  | Price |  |  | Number |  |  | Price |
$6.21 - $ 8.00 |  |  | 2,700 |  |  |  | 1.9 Years |  |  | $ | 6.21 |  |  |  | 2,700 |  |  | $ | 6.21 |
$16.01 - $ 20.00 |  |  | 2,845 |  |  |  | 0.9 Years |  |  |  | 17.74 |  |  |  | 2,845 |  |  |  | 17.74 |
$32.01 - $ 36.00 |  |  | 51,863 |  |  |  | 1.4 Years |  |  |  | 34.87 |  |  |  | 51,863 |  |  |  | 34.87 |
$40.01 - $ 44.00 |  |  | 3,468 |  |  |  | 0.8 Years |  |  |  | 40.28 |  |  |  | 3,468 |  |  |  | 40.28 |
Outstanding at year end |  |  | 60,876 |  |  |  | 1.4 Years |  |  | $ | 33.11 |  |  |  | 60,876 |  |  | $ | 33.11 |
Information related to options outstanding at year-end 2013, 2012 and 2011 is as follows:
|  | 2013 |  |  | 2012 |  |  | 2011 |
Minimum exercise price |  | $ | 6.21 |  |  | $ | 6.21 |  |  | $ | 6.21 |
Maximum exercise price |  |  | 40.28 |  |  |  | 40.28 |  |  |  | 40.28 |
Average remaining option term |  |  | 1.4 Years |  |  |  | 1.9 Years |  |  |  | 2.8 Years |
Information related to stock option grants and exercises during 2013, 2012 and 2011 follows:
|  | 2013 |  |  | 2012 |  |  | 2011 |
Aggregate intrinsic value of stock options exercised |  | $ | 408,000 |  |  | $ | 307,000 |  |  | $ | 26,000 |
Cash received from stock option exercises |  |  | 289,000 |  |  |  | 227,000 |  |  |  | 55,000 |
Tax benefit realized from stock option exercises |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Weighted average per share fair value of stock options granted |  |  | NA |  |  |  | NA |  |  |  | NA |
The aggregate intrinsic value of all stock options outstanding and exercisable at December 31, 2013 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.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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