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Macatawa Bank Corporation Reports Second Quarter 2022 Results

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Macatawa Bank Corporation
Macatawa Bank Corporation

HOLLAND, Mich., July 28, 2022 (GLOBE NEWSWIRE) -- Macatawa Bank Corporation (NASDAQ: MCBC), the holding company for Macatawa Bank (collectively, the “Company”), today announced its results for the second quarter 2022.

  • Net income of $6.6 million in second quarter 2022 versus $6.0 million in first quarter 2022 and $7.8 million in second quarter 2021

  • Net interest income of $14.8 million in second quarter 2022 versus $12.7 million in first quarter 2022 and $14.5 million in second quarter 2021

  • Strong credit metrics and net loan recoveries resulted in no provision for loan losses for the quarter

  • Continued loan portfolio growth – third quarter in a row

  • Grew investment securities portfolio by $187.7 million in second quarter 2022 to supplement loan growth and continue strategic deployment of excess liquidity

  • Reduction of $55.0 million in FHLB borrowings, resulting in over $650,000 in annual interest expense savings

The Company reported net income of $6.6 million, or $0.19 per diluted share, in second quarter 2022 compared to $7.8 million, or $0.23 per diluted share, in second quarter 2021.   For the first six months of 2022, the Company reported net income of $12.6 million, or $0.37 per diluted share, compared to $15.6 million, or $0.46 per diluted share, for the same period in 2021.

"We are pleased to report solid results for the second quarter of the year,” said Ronald L. Haan, President and CEO of the Company. “We are encouraged to see our strategy of maintaining an asset-sensitive balance sheet paying off as we have entered a rising rate environment. Net interest income for the second quarter 2022 was $2.2 million higher than the first quarter 2022 and $386,000 higher than in the second quarter 2021 reflecting benefits from federal funds rate increases and growth in our investment securities portfolio. Net interest income in the 2021 periods included high levels of fee income from PPP loans, which were mostly forgiven by the end of 2021. We are again encouraged by our commercial loan origination activity and pipeline of new loan opportunities while maintaining strong credit quality. Regarding fee income, while mortgage gains are down, we are experiencing increases in other areas including wealth management fees, debit card interchange income and treasury management fees. Total non-interest expenses were up only slightly in the second quarter 2022 compared to the same period in the prior year, despite significant inflationary pressure.” 

Mr. Haan concluded: "Consistent loan demand and rising interest rates will continue to have a positive impact on our high levels of liquidity and provide a catalyst for strong revenue growth during the remainder of 2022. We have a strong balance sheet that is very well-positioned to deliver further improvement in operating performance throughout the remainder of the year. High inflation, higher interest rates and continuing disruptions to the supply chain may result in additional pressure on the economy. The months ahead will undoubtedly present new challenges, and we remain committed to keeping a diligent eye on an ever-changing operating environment.”

Operating Results
Net interest income for the second quarter 2022 totaled $14.8 million, an increase of $2.2 million from first quarter 2022 and an increase of $386,000 from the second quarter 2021. Net interest margin for second quarter 2022 was 2.19 percent, up 34 basis points from the first quarter 2022 and the same as second quarter 2021. Net interest income for the second quarter 2022 reflected $199,000 in interest and fees from loans originated under the PPP, compared to $1.1 million in first quarter 2022 and $3.0 million in second quarter 2021. There were just $94,000 in net deferred PPP fees remaining as of June 30, 2022. Net interest income benefited in the second quarter 2022 versus the first quarter 2022 and second quarter 2021 by the significant increase in the federal funds rate in March 2022, May 2022 and June 2022, totaling 150 basis points and the related increases in rate indices impacting the Company’s variable rate loan portfolios. Net interest income also benefited from growth in the investment securities portfolio to further deploy excess liquid funds held by the Company. Interest on investments increased by $1.2 million over the first quarter 2022 and by $1.8 million over the second quarter 2021.

During second quarter 2022, the Federal Home Loan Bank (“FHLB”) exercised put options on $35.0 million of advances and the Company voluntarily prepaid $20.0 million in FHLB advances. Prepayment fees on these advances totaled $87,000 and were included in interest expense in the second quarter 2022. The elimination of these advances will save the Company over $650,000 in annual interest expense.

On July 7, 2021, the Company redeemed its remaining $20.0 million of trust preferred securities. The Company estimates that this saves approximately $600,000 of interest expense annually, with regulatory capital remaining significantly above levels required to be categorized as well capitalized.

Non-interest income increased $166,000 in second quarter 2022 compared to first quarter 2022 and decreased $1.0 million from second quarter 2021. Income from debit and credit cards was up by $163,000 in the second quarter 2022 compared to first quarter 2022 and was up $78,000 compared to second quarter 2021. Gains on sales of mortgage loans in second quarter 2022 were down $109,000 compared to first quarter 2022 and were down $1.1 million from second quarter 2021. The Company originated $8.4 million in mortgage loans for sale in second quarter 2022 compared to $10.1 million in first quarter 2022 and $39.2 million in second quarter 2021. Deposit service charge income, including treasury management fees, was up $7,000 in second quarter 2022 compared to first quarter 2022 and was up $153,000 from second quarter 2021. Other noninterest income was up $105,000 compared to first quarter 2022 and was down $158,000 from second quarter 2021.

Non-interest expense was $11.9 million for second quarter 2022, compared to $11.7 million for first quarter 2022 and $11.7 million for second quarter 2021. The largest component of non-interest expense was salaries and benefits expenses. Salaries and benefits expenses were up $114,000 compared to first quarter 2022 and were down $100,000 compared to second quarter 2021. The increase compared to first quarter 2022 was due primarily to a higher level of salary and other compensation resulting from merit adjustments to base pay effective April 1, 2022, while the decrease from second quarter 2021 was due largely to a lower level of commissions from mortgage production as volume decreased. The table below identifies the primary components of the changes in salaries and benefits between periods.



Dollars in 000s

 

Q2 2022
to
Q1 2022

 

Q2 2022
to
Q2 2021

 

 

 

 

 

 

Salaries and other compensation

 

$

146

 

 

$

63

 

Salary deferral from commercial loans

 

 

(4

)

 

 

50

 

Bonus accrual

 

 

(1

)

 

 

3

 

Mortgage production – variable comp

 

 

(3

)

 

 

(239

)

401k matching contributions

 

 

(24

)

 

 

85

 

Medical insurance costs

 

 

---

 

 

 

(62

)

Total change in salaries and benefits

 

$

114

 

 

$

(100

)

Occupancy expenses were down $102,000 in second quarter 2022 compared to first quarter 2022 and were up $76,000 compared to the second quarter 2021. Occupancy expenses in first quarter 2022 were elevated due to higher snow removal expenses. The increase compared to second quarter 2021 was due to higher building maintenance costs incurred in the second quarter 2022. FDIC assessment expense was $197,000 in second quarter 2022 compared to $180,000 in first quarter 2022 and $159,000 in second quarter 2021. FDIC assessment expense is impacted by changes in deposit balances between periods. Legal and professional fees were up $77,000 in second quarter 2022 compared to first quarter 2022 and were down $3,000 compared to second quarter 2021. The increase in second quarter 2022 includes higher regulatory examination fees and legal expense, which was down in first quarter 2022. Data processing expenses were up $41,000 in second quarter 2022 compared to first quarter 2022 and were up $69,000 compared to second quarter 2021. Other categories of non-interest expense were relatively flat compared to first quarter 2022 and second quarter 2021 due to a continued focus on expense management.

Federal income tax expense was $1.5 million for second quarter 2022, $1.4 million for first quarter 2022, and $1.8 million for second quarter 2021. The effective tax rate was 18.5 percent for second quarter 2022, compared to 18.8 percent for first quarter 2022 and 19.1 percent for second quarter 2021.

Asset Quality
No provision for loan losses was recorded in second quarter 2022 while a provision benefit of $1.5 million was recorded in first quarter 2022 and a provision benefit of $750,000 was recorded in second quarter 2021. Net loan recoveries for second quarter 2022 were $15,000, compared to first quarter 2022 net loan recoveries of $227,000 and second quarter 2021 net loan recoveries of $104,000. At June 30, 2022, the Company had experienced net loan recoveries in twenty-eight of the past thirty quarters.   Total loans past due on payments by 30 days or more amounted to $197,000 at June 30, 2022, versus $171,000 at March 31, 2022 and $126,000 at June 30, 2021. Delinquencies at June 30, 2022 were comprised of just five individual loans. Delinquency as a percentage of total loans was just 0.02 percent at June 30, 2022, well below the Company’s peer level.

The allowance for loan losses of $14.6 million was 1.32 percent of total loans at June 30, 2022, compared to $14.6 million or 1.33 percent of total loans at March 31, 2022, and $16.8 million or 1.36 percent at June 30, 2021. The ratio at June 30, 2022, March 31, 2022 and June 30, 2021 includes PPP loans, which are fully guaranteed by the SBA and receive no allowance allocation. The ratio excluding PPP loans was 1.32 percent at June 30, 2022, 1.34 percent at March 31, 2022 and 1.57 percent at June 30, 2021. The coverage ratio of allowance for loan losses to nonperforming loans continued to be strong and significantly exceeded 1-to-1 coverage at 163-to-1 as of June 30, 2022.

At June 30, 2022, the Company's nonperforming loans were $90,000, representing 0.01 percent of total loans. This compares to $90,000 (0.01 percent of total loans) at March 31, 2022 and $433,000 (0.03 percent of total loans) at June 30, 2021. Other real estate owned and repossessed assets were $2.3 million at June 30, 2022, compared to $2.3 million at March 31, 2022 and $2.3 million at June 30, 2021. Total non-performing assets, including other real estate owned and nonperforming loans, were $2.4 million, or 0.09 percent of total assets, at June 30, 2022. Total nonperforming assets, including other real estate owned and nonperforming loans, decreased by $343,000 from June 30, 2021 to June 30, 2022.

A break-down of non-performing loans is shown in the table below.

Dollars in 000s

 

June 30,
2022

 

Mar 31,
2022

 

Dec 31,
2021

 

Sept 30,
2021

 

June 30,
2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate

 

$

5

 

$

5

 

$

5

 

$

332

 

$

341

 

Commercial and Industrial

 

 

1

 

 

1

 

 

1

 

 

---

 

 

---

 

Total Commercial Loans

 

 

6

 

 

6

 

 

6

 

 

332

 

 

341

 

Residential Mortgage Loans

 

 

84

 

 

84

 

 

86

 

 

88

 

 

92

 

Consumer Loans

 

 

---

 

 

---

 

 

---

 

 

---

 

 

---

 

Total Non-Performing Loans

 

$

90

 

$

90

 

$

92

 

$

420

 

$

433

 

A break-down of non-performing assets is shown in the table below.

Dollars in 000s

 

June 30,
2022

 

Mar 31,
2022

 

Dec 31,
2021

 

Sept 30,
2021

 

June 30,
2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Performing Loans

 

$

90

 

$

90

 

$

92

 

$

420

 

$

433

 

Other Repossessed Assets

 

 

---

 

 

---

 

 

---

 

 

---

 

 

---

 

Other Real Estate Owned

 

 

2,343

 

 

2,343

 

 

2,343

 

 

2,343

 

 

2,343

 

Total Non-Performing Assets

 

$

2,433

 

$

2,433

 

$

2,435

 

$

2,763

 

$

2,776

 

Balance Sheet, Liquidity and Capital

Total assets were $2.78 billion at June 30, 2022, a decrease of $148.7 million from $2.93 billion at March 31, 2022 and a decrease of $159.9 million from $2.94 billion at June 30, 2021. Assets were elevated at each period-end due to customers holding a higher level of deposits during the COVID-19 pandemic, including balances from PPP loan proceeds.

The Company continued to increase its investment portfolio to deploy some of its excess liquidity. The Company’s investment portfolio primarily consists of U.S. treasury and agency securities, agency mortgage backed securities and various municipal securities. Total securities were $788.3 million at June 30, 2022, an increase of $187.7 million from $600.7 million at March 31, 2022 and an increase of $426.5 million from $361.8 million at June 30, 2021.

Total loans were $1.11 billion at June 30, 2022, an increase of $10.0 million from $1.10 billion at March 31, 2022 and a decrease of $126.4 million from $1.24 billion at June 30, 2021.

Commercial loans decreased by $129.7 million from June 30, 2021 to June 30, 2022, partially offset by an increase of $1.6 million in the residential mortgage portfolio, and an increase of $1.7 million in the consumer loan portfolio. Within commercial loans, commercial real estate loans decreased by $10.8 million and commercial and industrial loans decreased by $118.9 million. However, the largest decrease in commercial loans was in PPP loans which decreased by $166.9 million due to forgiveness by the SBA. Excluding PPP loans, total commercial loans increased by $37.1 million. The loan growth experienced in this time period was the direct result of both new loan prospecting efforts and existing customers beginning to borrow more for expansion of their businesses as pandemic risks to economic conditions decrease.   

The composition of the commercial loan portfolio is shown in the table below:

Dollars in 000s

 

June 30,
2022

 

Mar 31,
2022

 

Dec 31,
2021

 

Sept 30,
2021

 

June 30,
2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction and Development

 

$

107,325

 

$

104,945

 

$

103,755

 

$

104,636

 

$

102,608

 

Other Commercial Real Estate

 

 

411,778

 

 

417,368

 

 

412,346

 

 

422,574

 

 

427,291

 

Commercial Loans Secured by Real Estate

 

 

519,103

 

 

522,313

 

 

516,101

 

 

527,210

 

 

529,899

 

Commercial and Industrial

 

 

407,788

 

 

402,854

 

 

378,318

 

 

356,812

 

 

359,846

 

Paycheck Protection Program

 

 

2,791

 

 

7,393

 

 

41,939

 

 

77,571

 

 

169,679

 

Total Commercial Loans

 

$

929,682

 

$

932,560

 

$

936,358

 

$

961,593

 

$

1,059,424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank owned life insurance was $53.0 million at June 30, 2022, up $243,000 from $52.7 million at March 31, 2022 and up $456,000 from $52.5 million at June 30, 2021 due to earnings on the underlying investments.

Total deposits were $2.49 billion at June 30, 2022, down $87.7 million, or 3.4 percent, from $2.58 billion at March 31, 2022 and down $105.5 million, or 4.1 percent, from $2.60 billion at June 30, 2021. Demand deposits were down $53.7 million at the end of the second quarter 2022 compared to the end of the first quarter 2022 and were down $154.6 million compared to the end of the second quarter 2021. Money market deposits and savings deposits were down $31.2 million from the end of the first quarter 2022 and were up $63.0 million from the end of the second quarter 2021. Certificates of deposit were down $7.8 million at June 30, 2022 compared to March 31, 2022 and were down $13.9 million compared to June 30, 2021 as customers reacted to changes in market interest rates. As deposit rates dropped during the pandemic, the Company experienced some shifting between deposit types and, while balances have decreased over the last year, overall, deposit customers are continuing to hold higher levels of liquid deposit balances due to uncertainty related to economic conditions. The Company continues to be successful at attracting and retaining core deposit customers. Customer deposit accounts remain insured to the highest levels available under FDIC deposit insurance.

Other borrowed funds of $30.0 million at June 30, 2022 were down $55.0 million compared to $85.0 million at March 31, 2022 and were down $30.0 million compared to $60.0 million at June 30, 2021. The decrease in the second quarter 2022 was largely due to the FHLB exercising its put options on a $25.0 million advance carrying a rate of 0.05% and a $10.0 million advance carrying a rate of 0.45%. Both advances were repaid by the Company during the second quarter 2022. In addition, during the second quarter 2022, the Company prepaid $20.0 million in FHLB advances, with interest rates ranging from 2.91% to 3.05%. Prepayment fees totaled $87,000 and were included in interest expense in the second quarter 2022. Paying these advances off early will save the Company over $650,000 in annual interest expense, net of the prepayment fees incurred.

Long-term debt decreased by $20.6 million from June 30, 2021 to June 30, 2022 due to the redemption of the Company’s remaining $20.6 million trust preferred securities on July 7, 2021. The Company had no long-term debt remaining at June 30, 2022.

The Company's total risk-based regulatory capital ratio at June 30, 2022 was consistent with the ratio at December 31, 2021. Macatawa Bank’s risk-based regulatory capital ratios continue to be at levels considerably above those required to be categorized as “well capitalized” under applicable regulatory capital guidelines. As such, the Bank was categorized as "well capitalized" at June 30, 2022.

About Macatawa Bank
Headquartered in Holland, Michigan, Macatawa Bank offers a full range of banking, retail and commercial lending, wealth management and ecommerce services to individuals, businesses and governmental entities from a network of 26 full-service branches located throughout communities in Kent, Ottawa and northern Allegan counties. The bank is recognized for its local management team and decision making, along with providing customers excellent service, a rewarding experience and superior financial products. Macatawa Bank has been recognized for ten years as “West Michigan’s 101 Best and Brightest Companies to Work For”. For more information, visit www.macatawabank.com.

CAUTIONARY STATEMENT: This press release contains forward-looking statements that are based on management's current beliefs, expectations, assumptions, estimates, plans and intentions. Forward-looking statements are identifiable by words or phrases such as “anticipates,” "believe," "expect," "may," "should," "will," ”intend,” "continue," "improving," "additional," "focus," "forward," "future," "efforts," "strategy," "momentum," "positioned," and other similar words or phrases. Such statements are based upon current beliefs and expectations and involve substantial risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements include, among others, statements related to risks and uncertainties related to, and the impact of, the COVID-19 pandemic on the business, financial condition and results of operations of our company and our customers, trends in our key operating metrics and financial performance, future levels of earnings and profitability, future levels of earning assets, future asset quality, future growth, future interest rates and future net interest margin. All statements with references to future time periods are forward-looking. Management's determination of the provision and allowance for loan losses, the appropriate carrying value of intangible assets (including deferred tax assets) and other real estate owned and the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment) involves judgments that are inherently forward-looking. Our ability to sell other real estate owned at its carrying value or at all, reduce non-performing asset expenses, utilize our deferred tax asset, successfully implement new programs and initiatives, increase efficiencies, maintain our current level of deposits and other sources of funding, maintain liquidity, respond to declines in collateral values and credit quality, improve profitability, and produce consistent core earnings is not entirely within our control and is not assured. The future effect of changes in the real estate, financial and credit markets and the national and regional economy on the banking industry, generally, and Macatawa Bank Corporation, specifically, are also inherently uncertain. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk 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 in or implied by such forward-looking statements. Macatawa Bank Corporation does not undertake to update forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

Risk factors include, but are not limited to, the risk factors described in "Item 1A - Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2021. These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

MACATAWA BANK CORPORATION

 

CONSOLIDATED FINANCIAL SUMMARY

 

(Unaudited)

 

(Dollars in thousands except per share information)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly

 

Six Months Ended

 

 

 

 

 

 

 

2nd Qtr

 

1st Qtr

 

2nd Qtr

 

June 30

 

EARNINGS SUMMARY

 

 

 

 

 

 

2022

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

Total interest income

 

 

 

 

 

$

15,435

 

 

$

13,143

 

 

$

15,184

 

 

$

28,578

 

 

$

30,458

 

 

Total interest expense

 

 

 

 

 

 

592

 

 

 

478

 

 

 

727

 

 

 

1,070

 

 

 

1,511

 

 

Net interest income

 

 

 

 

 

 

14,843

 

 

 

12,665

 

 

 

14,457

 

 

 

27,508

 

 

 

28,947

 

 

Provision for loan losses

 

 

 

 

 

 

-

 

 

 

(1,500

)

 

 

(750

)

 

 

(1,500

)

 

 

(750

)

 

Net interest income after provision for loan losses

 

 

 

 

 

 

14,843

 

 

 

14,165

 

 

 

15,207

 

 

 

29,008

 

 

 

29,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit service charges

 

 

 

 

 

 

1,218

 

 

 

1,211

 

 

 

1,065

 

 

 

2,430

 

 

 

2,057

 

 

Net gains on mortgage loans

 

 

 

 

 

 

199

 

 

 

308

 

 

 

1,311

 

 

 

508

 

 

 

3,326

 

 

Trust fees

 

 

 

 

 

 

1,096

 

 

 

1,088

 

 

 

1,133

 

 

 

2,184

 

 

 

2,138

 

 

Other

 

 

 

 

 

 

2,618

 

 

 

2,358

 

 

 

2,660

 

 

 

4,974

 

 

 

5,186

 

 

Total non-interest income

 

 

 

 

 

 

5,131

 

 

 

4,965

 

 

 

6,169

 

 

 

10,096

 

 

 

12,707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

 

 

 

 

6,402

 

 

 

6,289

 

 

 

6,502

 

 

 

12,691

 

 

 

12,914

 

 

Occupancy

 

 

 

 

 

 

1,071

 

 

 

1,172

 

 

 

994

 

 

 

2,243

 

 

 

2,031

 

 

Furniture and equipment

 

 

 

 

 

 

988

 

 

 

1,016

 

 

 

978

 

 

 

2,004

 

 

 

1,915

 

 

FDIC assessment

 

 

 

 

 

 

197

 

 

 

180

 

 

 

159

 

 

 

377

 

 

 

329

 

 

Other

 

 

 

 

 

 

3,255

 

 

 

3,082

 

 

 

3,085

 

 

 

6,337

 

 

 

6,014

 

 

Total non-interest expense

 

 

 

 

 

 

11,913

 

 

 

11,739

 

 

 

11,718

 

 

 

23,652

 

 

 

23,203

 

 

Income before income tax

 

 

 

 

 

 

8,061

 

 

 

7,391

 

 

 

9,658

 

 

 

15,452

 

 

 

19,201

 

 

Income tax expense

 

 

 

 

 

 

1,493

 

 

 

1,391

 

 

 

1,840

 

 

 

2,884

 

 

 

3,605

 

 

Net income

 

 

 

 

 

$

6,568

 

 

$

6,000

 

 

$

7,818

 

 

$

12,568

 

 

$

15,596

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

 

 

 

 

$

0.19

 

 

$

0.18

 

 

$

0.23

 

 

$

0.37

 

 

$

0.46

 

 

Diluted earnings per common share

 

 

 

 

 

$

0.19

 

 

$

0.18

 

 

$

0.23

 

 

$

0.37

 

 

$

0.46

 

 

Return on average assets

 

 

 

 

 

 

0.92

%

 

 

0.82

%

 

 

1.11

%

 

 

0.87

%

 

 

1.14

%

 

Return on average equity

 

 

 

 

 

 

10.80

%

 

 

9.54

%

 

 

12.79

%

 

 

10.16

%

 

 

12.85

%

 

Net interest margin (fully taxable equivalent)

 

 

 

 

 

 

2.19

%

 

 

1.85

%

 

 

2.19

%

 

 

2.02

%

 

 

2.25

%

 

Efficiency ratio

 

 

 

 

 

 

59.64

%

 

 

66.59

%

 

 

56.81

%

 

 

62.90

%

 

 

55.70

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET DATA

 

 

 

 

 

 

 

 

 

June 30

 

March 31

 

June 30

 

Assets

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

2022

 

 

 

2021

 

 

Cash and due from banks

 

 

 

 

 

 

 

 

 

$

38,376

 

 

$

31,957

 

 

$

31,051

 

 

Federal funds sold and other short-term investments

 

 

 

 

 

 

 

 

 

 

721,826

 

 

 

1,078,983

 

 

 

1,189,266

 

 

Debt securities available for sale

 

 

 

 

 

 

 

 

 

 

435,628

 

 

 

346,114

 

 

 

239,955

 

 

Debt securities held to maturity

 

 

 

 

 

 

 

 

 

 

352,721

 

 

 

254,565

 

 

 

121,867

 

 

Federal Home Loan Bank Stock

 

 

 

 

 

 

 

 

 

 

10,211

 

 

 

10,211

 

 

 

11,558

 

 

Loans held for sale

 

 

 

 

 

 

 

 

 

 

1,163

 

 

 

855

 

 

 

4,752

 

 

Total loans

 

 

 

 

 

 

 

 

 

 

1,111,915

 

 

 

1,101,902

 

 

 

1,238,327

 

 

Less allowance for loan loss

 

 

 

 

 

 

 

 

 

 

14,631

 

 

 

14,616

 

 

 

16,806

 

 

Net loans

 

 

 

 

 

 

 

 

 

 

1,097,284

 

 

 

1,087,286

 

 

 

1,221,521

 

 

Premises and equipment, net

 

 

 

 

 

 

 

 

 

 

41,088

 

 

 

41,413

 

 

 

42,906

 

 

Bank-owned life insurance

 

 

 

 

 

 

 

 

 

 

52,963

 

 

 

52,720

 

 

 

52,507

 

 

Other real estate owned

 

 

 

 

 

 

 

 

 

 

2,343

 

 

 

2,343

 

 

 

2,343

 

 

Other assets

 

 

 

 

 

 

 

 

 

 

27,605

 

 

 

23,436

 

 

 

23,360

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

 

 

 

 

 

 

 

 

$

2,781,208

 

 

$

2,929,883

 

 

$

2,941,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

 

 

 

 

 

 

 

$

903,334

 

 

$

918,907

 

 

$

956,961

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

1,591,249

 

 

 

1,663,390

 

 

 

1,643,115

 

 

Total deposits

 

 

 

 

 

 

 

 

 

 

2,494,583

 

 

 

2,582,297

 

 

 

2,600,076

 

 

Other borrowed funds

 

 

 

 

 

 

 

 

 

 

30,000

 

 

 

85,000

 

 

 

60,000

 

 

Long-term debt

 

 

 

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

20,619

 

 

Other liabilities

 

 

 

 

 

 

 

 

 

 

13,516

 

 

 

16,984

 

 

 

12,174

 

 

Total Liabilities

 

 

 

 

 

 

 

 

 

 

2,538,099

 

 

 

2,684,281

 

 

 

2,692,869

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

 

 

 

 

243,109

 

 

 

245,602

 

 

 

248,217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

$

2,781,208

 

 

$

2,929,883

 

 

$

2,941,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MACATAWA BANK CORPORATION

 

SELECTED CONSOLIDATED FINANCIAL DATA

 

(Unaudited)

 

(Dollars in thousands except per share information)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly

 

Year to Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2nd Qtr

 

1st Qtr

 

4th Qtr

 

3rd Qtr

 

2nd Qtr

 

 

 

 

 

 

 

 

2022

 

 

 

2022

 

 

 

2021

 

 

 

2021

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

EARNINGS SUMMARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

14,843

 

 

$

12,665

 

 

$

12,826

 

 

$

14,296

 

 

$

14,457

 

 

$

27,508

 

 

$

28,947

 

 

Provision for loan losses

 

 

-

 

 

 

(1,500

)

 

 

(750

)

 

 

(550

)

 

 

(750

)

 

 

(1,500

)

 

 

(750

)

 

Total non-interest income

 

 

5,131

 

 

 

4,965

 

 

 

5,346

 

 

 

5,642

 

 

 

6,169

 

 

 

10,096

 

 

 

12,707

 

 

Total non-interest expense

 

 

11,913

 

 

 

11,739

 

 

 

11,337

 

 

 

11,550

 

 

 

11,718

 

 

 

23,652

 

 

 

23,203

 

 

Federal income tax expense

 

 

1,493

 

 

 

1,391

 

 

 

1,369

 

 

 

1,736

 

 

 

1,840

 

 

 

2,884

 

 

 

3,605

 

 

Net income

 

$

6,568

 

 

$

6,000

 

 

$

6,216

 

 

$

7,202

 

 

$

7,818

 

 

$

12,568

 

 

$

15,596

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

0.19

 

 

$

0.18

 

 

$

0.18

 

 

$

0.21

 

 

$

0.23

 

 

$

0.37

 

 

$

0.46

 

 

Diluted earnings per common share

 

$

0.19

 

 

$

0.18

 

 

$

0.18

 

 

$

0.21

 

 

$

0.23

 

 

$

0.37

 

 

$

0.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MARKET DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

$

7.10

 

 

$

7.17

 

 

$

7.41

 

 

$

7.38

 

 

$

7.26

 

 

$

7.10

 

 

$

7.26

 

 

Tangible book value per common share

 

$

7.10

 

 

$

7.17

 

 

$

7.41

 

 

$

7.38

 

 

$

7.26

 

 

$

7.10

 

 

$

7.26

 

 

Market value per common share

 

$

8.84

 

 

$

9.01

 

 

$

8.82

 

 

$

8.03

 

 

$

8.75

 

 

$

8.84

 

 

$

8.75

 

 

Average basic common shares

 

 

34,253,846

 

 

 

34,254,772

 

 

 

34,229,664

 

 

 

34,190,264

 

 

 

34,193,016

 

 

 

34,254,306

 

 

 

34,194,264

 

 

Average diluted common shares

 

 

34,253,846

 

 

 

34,254,772

 

 

 

34,229,664

 

 

 

34,190,264

 

 

 

34,193,016

 

 

 

34,254,306

 

 

 

34,194,264

 

 

Period end common shares

 

 

34,253,147

 

 

 

34,253,962

 

 

 

34,259,945

 

 

 

34,189,799

 

 

 

34,192,317

 

 

 

34,253,147

 

 

 

34,192,317

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERFORMANCE RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.92

%

 

 

0.82

%

 

 

0.85

%

 

 

0.98

%

 

 

1.11

%

 

 

0.87

%

 

 

1.14

%

 

Return on average equity

 

 

10.80

%

 

 

9.54

%

 

 

9.84

%

 

 

11.52

%

 

 

12.79

%

 

 

10.16

%

 

 

12.85

%

 

Net interest margin (fully taxable equivalent)

 

 

2.19

%

 

 

1.85

%

 

 

1.85

%

 

 

2.04

%

 

 

2.19

%

 

 

2.02

%

 

 

2.25

%

 

Efficiency ratio

 

 

59.64

%

 

 

66.59

%

 

 

62.39

%

 

 

57.93

%

 

 

56.81

%

 

 

62.90

%

 

 

55.70

%

 

Full-time equivalent employees (period end)

 

 

315

 

 

 

311

 

 

 

311

 

 

 

318

 

 

 

321

 

 

 

315

 

 

 

321

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSET QUALITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross charge-offs

 

$

60

 

 

$

35

 

 

$

22

 

 

$

22

 

 

$

30

 

 

$

95

 

 

$

80

 

 

Net charge-offs/(recoveries)

 

$

(15

)

 

$

(227

)

 

$

(107

)

 

$

(276

)

 

$

(104

)

 

$

(242

)

 

$

(148

)

 

Net charge-offs to average loans (annualized)

 

 

-0.01

%

 

 

-0.08

%

 

 

-0.04

%

 

 

-0.09

%

 

 

-0.03

%

 

 

-0.04

%

 

 

-0.02

%

 

Nonperforming loans

 

$

90

 

 

$

90

 

 

$

92

 

 

$

420

 

 

$

433

 

 

$

90

 

 

$

433

 

 

Other real estate and repossessed assets

 

$

2,343

 

 

$

2,343

 

 

$

2,343

 

 

$

2,343

 

 

$

2,343

 

 

$

2,343

 

 

$

2,343

 

 

Nonperforming loans to total loans

 

 

0.01

%

 

 

0.01

%

 

 

0.01

%

 

 

0.04

%

 

 

0.03

%

 

 

0.01

%

 

 

0.03

%

 

Nonperforming assets to total assets

 

 

0.09

%

 

 

0.08

%

 

 

0.08

%

 

 

0.10

%

 

 

0.09

%

 

 

0.09

%

 

 

0.09

%

 

Allowance for loan losses

 

$

14,631

 

 

$

14,616

 

 

$

15,889

 

 

$

16,532

 

 

$

16,806

 

 

$

14,631

 

 

$

16,806

 

 

Allowance for loan losses to total loans

 

 

1.32

%

 

 

1.33

%

 

 

1.43

%

 

 

1.45

%

 

 

1.36

%

 

 

1.32

%

 

 

1.36

%

 

Allowance for loan losses to total loans (excluding PPP loans)

 

1.32

%

 

 

1.34

%

 

 

1.49

%

 

 

1.56

%

 

 

1.57

%

 

 

1.32

%

 

 

1.57

%

 

Allowance for loan losses to nonperforming loans

 

 

16256.67

%

 

 

16240.00

%

 

 

17270.65

%

 

 

3936.19

%

 

 

3881.29

%

 

 

16256.67

%

 

 

3881.29

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average equity to average assets

 

 

8.55

%

 

 

8.62

%

 

 

8.66

%

 

 

8.48

%

 

 

8.70

%

 

 

8.59

%

 

 

8.87

%

 

Common equity tier 1 to risk weighted assets (Consolidated)

 

 

16.54

%

 

 

16.92

%

 

 

17.24

%

 

 

17.43

%

 

 

17.10

%

 

 

16.54

%

 

 

17.10

%

 

Tier 1 capital to average assets (Consolidated)

 

 

9.13

%

 

 

8.82

%

 

 

8.72

%

 

 

8.51

%

 

 

9.48

%

 

 

9.13

%

 

 

9.48

%

 

Total capital to risk-weighted assets (Consolidated)

 

 

17.47

%

 

 

17.88

%

 

 

18.32

%

 

 

18.58

%

 

 

19.66

%

 

 

17.47

%

 

 

19.66

%

 

Common equity tier 1 to risk weighted assets (Bank)

 

 

16.04

%

 

 

16.39

%

 

 

16.70

%

 

 

16.88

%

 

 

16.57

%

 

 

16.04

%

 

 

16.57

%

 

Tier 1 capital to average assets (Bank)

 

 

8.85

%

 

 

8.55

%

 

 

8.44

%

 

 

8.24

%

 

 

8.49

%

 

 

8.85

%

 

 

8.49

%

 

Total capital to risk-weighted assets (Bank)

 

 

16.97

%

 

 

17.35

%

 

 

17.77

%

 

 

18.02

%

 

 

17.73

%

 

 

16.97

%

 

 

17.73

%

 

Common equity to assets

 

 

8.74

%

 

 

8.38

%

 

 

8.67

%

 

 

8.69

%

 

 

8.44

%

 

 

8.74

%

 

 

8.44

%

 

Tangible common equity to assets

 

 

8.74

%

 

 

8.38

%

 

 

8.67

%

 

 

8.69

%

 

 

8.44

%

 

 

8.74

%

 

 

8.44

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

END OF PERIOD BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total portfolio loans

 

$

1,111,915

 

 

$

1,101,902

 

 

$

1,108,993

 

 

$

1,136,613

 

 

$

1,238,327

 

 

$

1,111,915

 

 

$

1,238,327

 

 

Earning assets

 

 

2,655,706

 

 

 

2,802,498

 

 

 

2,803,853

 

 

 

2,768,507

 

 

 

2,803,634

 

 

 

2,655,706

 

 

 

2,803,634

 

 

Total assets

 

 

2,781,208

 

 

 

2,929,883

 

 

 

2,928,751

 

 

 

2,901,500

 

 

 

2,941,086

 

 

 

2,781,208

 

 

 

2,941,086

 

 

Deposits

 

 

2,494,583

 

 

 

2,582,297

 

 

 

2,577,958

 

 

 

2,553,175

 

 

 

2,600,076

 

 

 

2,494,583

 

 

 

2,600,076

 

 

Total shareholders' equity

 

 

243,109

 

 

 

245,602

 

 

 

254,005

 

 

 

252,213

 

 

 

248,217

 

 

 

243,109

 

 

 

248,217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total portfolio loans

 

$

1,103,955

 

 

$

1,092,673

 

 

$

1,109,863

 

 

$

1,182,633

 

 

$

1,324,915

 

 

$

1,098,346

 

 

$

1,362,946

 

 

Earning assets

 

 

2,724,714

 

 

 

2,788,254

 

 

 

2,780,236

 

 

 

2,804,157

 

 

 

2,669,862

 

 

 

2,756,363

 

 

 

2,603,948

 

 

Total assets

 

 

2,847,381

 

 

 

2,917,462

 

 

 

2,917,569

 

 

 

2,948,664

 

 

 

2,809,487

 

 

 

2,882,228

 

 

 

2,738,539

 

 

Deposits

 

 

2,537,111

 

 

 

2,569,315

 

 

 

2,564,961

 

 

 

2,605,043

 

 

 

2,468,398

 

 

 

2,553,124

 

 

 

2,395,112

 

 

Total shareholders' equity

 

 

243,352

 

 

 

251,600

 

 

 

252,606

 

 

 

249,994

 

 

 

244,516

 

 

 

247,453

 

 

 

242,779

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONTACT: Contact: Jon W. Swets Chief Financial Officer 616-494-7645 jswets@macatawabank.com