Exhibit 10.4
MERCANTILE BANCORP, INC.
Quincy, Illinois
COMPANY AND BANK
EXECUTIVE and SENIOR OFFICER
INCENTIVE COMPENSATION PLAN
EXECUTIVE and SENIOR OFFICER INCENTIVE COMPENSATION PLAN
BASIC PLAN

  1.   PURPOSE         The purpose of the Executive and Senior Management
Incentive Compensation Plan (the Plan) is to maximize the achievement of
Mercantile Bancorp, Inc. (the Company) and its affiliate bank’s objectives by
providing incentives and awards to those senior-level executives and officers
who attain and sustain consistently high levels of performance which exceed
normal expectations and which contribute to the success and profitability of the
bank or the Company. The Plan is designed to support the key goals and
objectives of each bank and the Company.     2.   GENERAL DESCRIPTION        
Incentive awards can be based on individual and/or organization-wide
contributions to performance as measured by critical operating ratios, including
selected financial ratios, percentage improvements and overall profitability. At
the same time, the Plan establishes annual targets which will help the bank and
Company achieve its strategic goals, as well as provide a performance review and
measurement system.         The incentive formulas are constructed to provide
awards consistent with the increase in profits to the banks and Company. The
incentive formulas are designed to provide a level of performance award that is
competitive with comparable levels of performance in other institutions, to
assist the banks and Company in retaining and motivating key executives, and to
provide incentive toward the bank’s and Company continued growth and
profitability.

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      An earned incentive bonus is to be supplemental compensation in the form
of cash paid on an annual basis. The Plan is established in addition to regular
salary and other benefits programs. The Plan presumes an equitable base
compensation system and a competitive benefits program.     3.   ADMINISTRATION

The Board of Directors of the Company has the responsibility to interpret,
administer, and amend the Plan.

      Matters before the Board shall be decided based upon the vote of a
majority of the entire Board. Company officers who are members of the Board
shall not be entitled to vote on matters relating to the eligibility for and/or
determination of their own incentive compensation award.         Prior to the
beginning of each fiscal year, the Compensation Committee shall review and
revise, if deemed advisable, the guidelines for implementing the Plan for the
coming fiscal year.         Computation of incentive awards will be performed by
executive and or senior management at the Company level and reviewed by the
Compensation Committee.         The Board may deem to exclude extraordinary
occurrences, which could impact the incentive awards, either positively or
negatively, but are, by their nature, outside the significant influence of Plan
participants.         The actions of the Board as to the interpretation,
construction, and administration of the Plan shall be final and binding for all
parties, including the Company and its employees.     4.   PARTICIPANTS        
Eligibility for participation in the Plan shall be limited to those individuals
approved by the CEO of the Company who, in unison with the judgment of the
Compensation Committee and the Board of Directors agree, are responsible for
directing functions in each bank or the Company that have a significant bearing
on the growth and profitability of the Company.         Participants in this
Plan are not eligible for and will not participate in the Company “Performance
Compensation Plan”.         Prior to the beginning of each Plan year,
participants may be added or deleted at the discretion of the CEO.

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  5.   DEFINITIONS

For the purpose of determining the amount of the incentive compensation awards
under the guidelines, the following definitions shall apply:

  •   Key Performance Factors – Those key operating ratios, plus other pertinent
measures of the Company or individual bank performance, on which the
participants will be evaluated. Factors are to be disclosed explicit to Company
or bank. The exact factors and number of factors may vary per individual.
Factors include but are not limited to:

  –   Return on Assets – After-tax net income adjusted for extraordinary items
divided by average assets.     –   Return on Equity – After-tax net income
adjusted for extraordinary items divided by average equity.     –   Book Value
Per Share – The improvement of BVPS on an average weighted share basis. ($ or %)
    –   Market Price Multiple of Book Value per Share — The improvement of
MPMBVPS on a per share basis.     –   Earnings Per Share – The improvement of
EPS on an average weighted share basis. ($ or %)     –   Net Income After Tax —
The after-tax income increases or decreases in the amount as compared with the
previous year. ($ or %)     –   Net Interest Margin Ratio – Interest income
minus interest expense divided by average earning assets.     –   Asset Growth –
The average increases or decreases in the amount of assets as compared with the
previous year. ($ or %)     –   Loan Growth – The average percentage increases
or decreases in the amount of identified loans as compared with the previous
year. ($ or %)     –   Deposit Growth – The average increases or decreases in
the amount of identified deposits as compared with the previous year. ($ or %)  
  –   Non-interest Income – The average percentage increases or decreases in the
amount of identified non-interest income as compared with the previous year. ($
or %)     –   Non-interest Income Ratio – The dollar amount of non-interest
income adjusted for extraordinary items divided by average assets.

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  –   Overhead Expense Ratio – The dollar amount of total overhead expenses
divided by average assets.     –   Earning Assets Ratio – The average dollar
amount of total earning assets divided by the average dollar amount of total
assets.     –   Loan to Deposit Ratio – The average dollar amount of total loans
(less non-accrual) divided by the average dollar amount of total deposits.     –
  Net Charge-Off Ratio – Net charged-off divided by average total loans
outstanding.     –   Specific Objectives – Measurable specific goals and
objectives, which may be established for certain participants.

Participants are encouraged to suggest Key Performance Factors, and what is
listed will not limit what is considered or agreed to.

  •   Threshold Performance Trigger –The minimum overall performance level for a
single key performance ratio identified for each individual’s core
responsibility link to individual bank profitability or overall Company
performance, which can vary per individual, bank and position.     •   Key
Performance Factors – The minimum or maximum performance level for each other
factor (other than Trigger) identified for each individual’s core responsibility
area to an individual bank or overall Company performance, which can vary per
individual, bank and position, below or above which no award will be given.    
•   Incentive Factor Weighting – A percentage for each of the Threshold Trigger
and Key Performance Factors for each participating position, which is used to
modify the basic incentive percentage to reflect the relative importance of the
factor to that position, and to the expectations directed to the participant.
The total of the weightings must equal 100%. The weightings per factor can vary
per individual, bank and position.     •   Percentage of the Base Award – A
percentage of the base salary received in the bonus formula if the Threshold
Trigger is met, which can vary per individual, bank and position.     •  
Discretionary/Individual Performance Adjustment – A multiplier, which allows the
Compensation Committee some subjective discretion in the determination of, the
final incentive award for each participant.

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  •   Extraordinary Occurrences – Those events which, in the opinion of the
Board of Directors, are outside the significant influence of Plan participants
and would, by their inclusion, cause a significant unintended effect, positive
or negative, on the Company’s operating and financial performance results.

  6.   INCENTIVE COMPUTATION – GENERAL PROCEDURES

The general formula for converting overall Company results into individual
incentive awards is as follows:

  •   Incentive dollars for a participant for the Plan year are calculated by:

  –   The base annual salary of the participant,     –   Times the “Percentage
of the Base Award,”     –   Times the “Individual Performance Adjustment.”
(Discretionary)     –   Equals the Total Possible Incentive Award,     –  
Neutral effect or Minus (-) the sum of the measures on each Key Performance
Factor and its weighting applicable to the participant’s Plan for that year,    
–   Equals the Total Actual Payout

      No incentive awards will be granted for a fiscal year, regardless of
performance on individual Key Performance Factors, if the individual’s Threshold
Performance Trigger is not met for that fiscal year.         At the discretion
of the Compensation Committee of the Company, the calculation of the incentive
compensation award may also include a discretionary incentive award adjustment
(noted above as the “Individual Performance Adjustment”).     7.   PAYMENT OF
INDIVIDUAL INCENTIVE COMPENSATION AWARDS         When the Company’s year-end
financial results are known, participants will receive the incentive payment
determined by evaluating their performance for the year using the formula
established for their Plan. An award payout, if earned, would be made following
the Plan year-end when final audited numbers are finalized and available.
Applicable withholding of taxes will be deducted from each payment.

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  8.   PARTIAL PAYMENTS: TERMINATION OF EMPLOYMENT/NEW HIRES

In the event of termination of employment through retirement or death, the
employee shall be considered to have earned one-twelfth of the annual incentive
compensation award of a particular year for each full month of employment in the
fiscal year of his/her retirement or death.

      If a participant dies, any unpaid incentive awards shall be paid to the
estate, or designated beneficiary, in one lump sum.         Participants may not
be added to the Plan after September 1 of the Plan year. If an individual
becomes a new participant prior to September 1 during the Plan year, the
incentive compensation award will be earned on the basis of one-twelfth of the
annual incentive compensation for each full month of participation.         In
all other cases of termination, the employee forfeits any unpaid awards.     9.
  INCENTIVE COMPENSATION GUIDELINES         As of the beginning of each fiscal
year, the Board shall review and revise, if deemed advisable, the guidelines of
the Plan for the year then beginning. The guidelines shall include the
following:

  a.   Identification of employees selected under Paragraph 4 for participation
in the Plan.     b.   Percentage of base award, key performance factors and
weightings for determining the amount of the incentive compensation awards for
the fiscal year then beginning.     c.   Measure barometers are to be
standardized and rely mainly on UBPR reports, Banker’s Dashboard, and audit work
of the Company’s external audit firm.     d.   Other administrative and
procedural rules that the Board considers appropriate.

      After approval by the Board of Directors, Company management shall, as
soon as practical, inform each of the participants under the Plan of the
guidelines for the fiscal year then beginning.     10.   PERFORMANCE PROGRESS
REPORTING         The Company’s President, or his designee, will be responsible
for a quarterly reporting to the Board of Directors of Plan performance during
the course of the year. This data is to be made available to the Board within
30 days of its date of availability.

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  11.   AMENDMENT OR TERMINATION OF PLAN         The Board of Directors may
modify, amend, or terminate this Plan at any time effective at the end of a
fiscal year. The modification, amendment, or termination of the Plan shall in no
way affect a participant’s right to unpaid incentive compensation awards for the
year prior to termination or modification.

This Plan was adopted April 17, 2007 and is effective January 1, 2007.

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Example payout calculation:
Assumptions
Individual bank structure
$75,000 base salary
Percentage of Base Award Level – 15%

                  Factors   Targets   Weightings
Trigger
               
Return on Equity
    13.0 %     20 %

Key Performance Factors

                 
Net Interest Margin Ratio
    3.25 %     25 %
Loan Growth Percentage
    10.0 %     25 %
Net Charge-Off Ratio
    2.0 %     20 %
Non-Interest Income Ratio
    .90 %     10 %
Specific Objective
  None        

Actual target performance:

                 
1. Return on Equity
    13.2 %   (trigger met)
2. Net Interest Margin Ratio
    3.21 %   (KPF not met)*
3. Loan Growth Percentage
    11.3 %   (KPF met)
4. Net Charge-Off Ratio
    1.9 %   (KPF met)
5. Non-Interest Income Ratio
    .88 %   (KPF not met)*

Bonus calculation:

                 
Base Salary
  $ 75,000          
15% of Base Award
    11,250          
Individual Adjustment
    0     (Discretionary)
 
             
Total Award Possible
  $ 11,250          
Minus # 2 KPF
    - 2,813     (11,250 x 25% weighting)
Minus # 5 KPF
    - 1,125     (11,250 x 10% weighting)
 
             
Total actual payout
  $ 7,312          

In this example, if the Trigger factor of ROE would have been below the target
established, there would - 0 - payout to the individual.

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