CURRENT REPORT
Pursuant to Section 13
or 15(d) of
The Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported): January 17, 2005
MACATAWA BANK
CORPORATION
(Exact name of
Registrant as specified in its charter)
| Michigan (State or Other Jurisdiction of Incorporation) |
000-25927 (Commission File No.) |
38-3391345 (IRS Employer Identification No.) |
| 10753 Macatawa Drive, Holland, MI (Address of Principal Executive Offices) |
49424 (Zip Code) |
616 820-1444
(Registrant’s
Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former
Address, if changed Since Last Report)
[__] Written communications
pursuant to Rule 425 under the Section Act (17 CFR 230.425).
[__] Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).
[__] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b)).
[__] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)).
| Item 2.02 | Results of Operations and Financial Condition. |
On January 17, 2005, Macatawa Bank Corporation issued a press release announcing results for the fourth quarter and year ended December 31, 2004. A copy of the press release is attached as Exhibit 99.
The information in this Form 8-K and the attached Exhibit shall not be deemed filed for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
| (c) | Exhibits |
| 99 | Press release dated January 17, 2005. |
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: January 17, 2005 | MACATAWA BANK CORPORATION By: /s/ Jon W. Swets —————————————— Jon W. Swets Chief Financial Officer |
| Exhibit No. | Description |
| 99 | Press release dated January 17, 2005. |
| MACATAWA BANK
CORPORATION 10753 Macatawa Drive Holland, MI 49424 |
NEWS RELEASE
| NASDAQ NATIONAL MARKET: FOR RELEASE: DATE: Contact: |
MCBC Immediate January 17, 2005 Jon Swets, CFO 616.494.7645 |
Macatawa Bank Corporation today announced net income for the fourth quarter of 2004. Net income was a record $4.45 million, or a 50% increase over fourth quarter 2003 net income of $2.98 million. Diluted earnings per share totaled $0.49 for the fourth quarter of 2004, or a 48% increase over the $0.33 for the same period in 2003. Net income totaled $12.78 million for the year ended December 31, 2004, or $1.42 per diluted share, as compared to 2003 net income of $11.78 million, or $1.32 per diluted share. The annual results for 2004 reflect the impact of the $2.3 million ($1.5 million after-tax, or $0.17 per share) charge against earnings related to a commercial borrower that became impaired under unusual circumstances, as previously announced in the third quarter earnings release.
"Evidenced by our exceptional fourth quarter results, the value of our business model has begun to directly impact our bottom line," commented Ben Smith, Chairman and CEO. "Our focus on full-service community banking continues to be well received in the markets we serve. During the quarter, each of our major lines of business contributed to improvement in our bottom line," added Mr. Smith.
Core deposits for the year 2004 were up 20%, ending the year at $1.20 billion. "Macatawa is now the number one bank in deposits in Ottawa County. Our continued success at attracting deposits is directly attributed to our passion for community banking and the employees who share that vision. Our people make the difference and the customers recognize that fact," stated Mr. Smith. The Corporation continues to create a more significant presence in the Grand Rapids market. On the north side of Grand Rapids, in Rockford, construction recently began on the newest location which is expected to open in mid 2005. There will then be 10 branches in the Grand Rapids area. "Our expansion in this important area will slow, but not stop, as we focus on improving profitability and on growing the branches we now have," Mr. Smith added.
The loan portfolio ended the year at $1.40 billion, up over 21% for all of 2004. Commercial and commercial real estate loans increased $166 million or 20%, residential mortgage loans increased $46 million or 27%, and consumer loans increased $27 million or 20%. "The 20% or greater growth in each of our loan lines of business confirms our ability to add new customers and deepen the relationships we have already established," stated Mr. Smith.
The increase in quarterly earnings was largely a result of a significant increase in net interest income. Net interest income for the fourth quarter totaled $14.44 million, an increase of $3.18 million, or 28% as compared to the 2003 quarter. The increase was driven primarily by significant growth in average earning assets of $295.12 million, or 24%, to $1.53 billion for the fourth quarter of 2004. A 12 basis point increase in the net interest margin to 3.76% for the quarter also contributed to the increase in net interest income. The recent increases in short-term rates since June of 2004 largely contributed to the improvement in margin. On a consecutive quarter basis, the net interest margin increased 10 basis points from 3.66% for the third quarter of 2004, which represents the third consecutive quarter of improvement in net interest margin. "As interest rates continue to rise from their recent 46 year lows, we believe our portfolios are well positioned to provide strong and consistent earnings growth," stated Mr. Smith.
Non-interest income totaled $2.73 million for the fourth quarter of 2004, a $581,000 increase compared to fourth quarter 2003 non-interest income of $2.15 million. Increases in deposit service charges, gains on the sale of mortgage loans, trust fees and other income all contributed to the overall increase in non-interest income. Deposit service charges increased $139,000 and the gain on sales of mortgage loans increased $122,000 during the quarter. "We are extremely pleased with the success of our retail loan programs considering the significant decline in refinancing opportunities. Our gain on mortgage loan sales for the quarter was up over both the last quarter and the same quarter in 2003," commented Mr. Smith. Other income increased $303,000 largely related to the income earned on bank-owned life insurance, purchased in the fourth quarter of 2004.
The provision for loan losses increased to $1.33 million for the quarter from $1.20 million for the fourth quarter of 2003. Non-performing loans to total loans ended the year at 0.29% compared to 0.35% at the end of 2003. The majority of the balance of non-performing loans at December 31, 2004 relates to the one commercial borrower that became impaired at the end of the third quarter. The allowance for loan losses represents 1.38% of total loans at December 31, 2004. Mr. Smith commented, "We believe our renewed diligence will help us maintain our asset quality numbers at the high standards we expect."
Non-interest expense increased to $9.28 million for the quarter as compared to $7.85 million for the fourth quarter of 2003. Salaries and benefits increased by $666,000 primarily reflecting an increase in staffing for the five new full-service branches that were opened since the fourth quarter of last year, and for the lending, trust and investment service departments that has occurred in the past twelve months to enhance our service in these areas. Other expenses increased by $761,000 and relates to various items; including new costs associated with complying with Section 404 of the Sarbanes-Oxley Act, holding costs associated with repossessed and foreclosed properties, and an increase in marketing costs associated with our expansion efforts in the markets we serve. Despite the increase in non-interest expense levels, the efficiency ratio improved to 54.03% for the quarter compared to 58.53% for the same quarter in 2003 and 56.25% for the third quarter of 2004. "Our revenue growth is now consistently exceeding our non-interest expense increases as we continue to grow into our capacity and benefit from the investments we have made in our people and in our infrastructure," Mr. Smith commented.
Total assets ended the year at $1.67 billion, an increase of $271.50 million or 19% since December 31, 2003. The Company's total risk-based capital ratio was 11.02% at December 31, 2004, remaining well-capitalized under regulatory capital standards.
"Building on the positive momentum we have generated in 2004, we expect our growth and improved performance to continue into 2005," concluded Mr. Smith
Conference Call
Macatawa
Bank Corporation will hold its quarterly earnings conference call on Tuesday, January
18, 2005, at 10:00 A.M. Persons who wish to access the call may do so via the Internet
by visiting www.macatawabank.com and clicking on the webcast link in the Investor
Information section. It may also be accessed by logging on to www.streetevents.com .
A replay of the call will be available for 30 days following the call.
Headquartered in Holland, Michigan, Macatawa Bank Corporation is the parent company for Macatawa Bank and Macatawa Investment Services. Through its subsidiaries, the Corporation offers a full range of banking, investment and trust services to individuals, businesses, and governmental entities from a network of 22 full service branches located in communities in Kent County, Ottawa County, and northern Allegan County. Services include commercial, consumer and real estate financing; business and personal deposit services, ATM's and Internet banking services, trust and employee benefit plan services, and various investment services. The Corporation emphasizes its local management team and decision making, along with providing customers excellent service and superior financial products.
"CAUTIONARY STATEMENT: This press release contains certain forward-looking statements that involve risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive, governmental and technological factors affecting our operations, markets, products, services, and pricing. These statements include, among others, statements related to future growth and funding sources, future profitability levels, the effects on earnings of changes in interest rates and the ability to maintain high asset quality. Annualized growth rates are not intended to imply future growth at those rates. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Further information concerning our business, including additional factors that could materially affect our financial results, is included in our filings with the Securities and Exchange Commission."
MACATAWA BANK CORPORATION
CONSOLIDATED FINANCIAL SUMMARY
(Unaudited)
(Dollars in thousands except per share information)
| Quarter Ended December 31 | Year Ended December 31 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EARNINGS SUMMARY | 2004 | 2003 | 2004 | 2003 | ||||||||||
| Total interest income | $ | 22,043 | $ | 16,768 | $ | 78,329 | $ | 64,435 | ||||||
| Total interest expense | 7,604 | 5,505 | 26,309 | 22,341 | ||||||||||
| Net interest income | 14,439 | 11,263 | 52,020 | 42,094 | ||||||||||
| Provision for loan loss | 1,325 | 1,200 | 7,890 | 4,105 | ||||||||||
| Net interest income after provision for loan loss | 13,114 | 10,063 | 44,130 | 37,989 | ||||||||||
| NON-INTEREST INCOME | ||||||||||||||
| Deposit service charges | 787 | 648 | 2,962 | 2,564 | ||||||||||
| Gain on sale of loans | 590 | 468 | 2,207 | 3,746 | ||||||||||
| Trust fees | 691 | 674 | 2,945 | 2,480 | ||||||||||
| Other | 664 | 361 | 1,928 | 853 | ||||||||||
| Total non-interest income | 2,732 | 2,151 | 10,042 | 9,643 | ||||||||||
| NON-INTEREST EXPENSE | ||||||||||||||
| Salaries and benefits | 4,920 | 4,254 | 19,206 | 16,371 | ||||||||||
| Occupancy | 640 | 640 | 2,653 | 2,342 | ||||||||||
| Furniture and equipment | 672 | 673 | 2,768 | 2,588 | ||||||||||
| Other | 3,045 | 2,284 | 10,773 | 8,763 | ||||||||||
| Total non-interest expense | 9,277 | 7,851 | 35,400 | 30,064 | ||||||||||
| Income before income tax | 6,569 | 4,363 | 18,772 | 17,568 | ||||||||||
| Federal income tax expense | 2,121 | 1,388 | 5,996 | 5,788 | ||||||||||
| Net income | $ | 4,448 | $ | 2,975 | $ | 12,776 | $ | 11,780 | ||||||
| Basic earnings per share | $ | 0.50 | $ | 0.34 | $ | 1.45 | $ | 1.34 | ||||||
| Diluted earnings per share | $ | 0.49 | $ | 0.33 | $ | 1.42 | $ | 1.32 | ||||||
| Return on average assets | 1.08 | % | 0.90 | % | 0.83 | % | 0.94 | % | ||||||
| Return on average equity | 13.76 | % | 9.78 | % | 10.15 | % | 9.91 | % | ||||||
| Net interest margin | 3.76 | % | 3.64 | % | 3.64 | % | 3.63 | % | ||||||
| Efficiency ratio | 54.03 | % | 58.53 | % | 57.04 | % | 58.11 | % | ||||||
| BALANCE SHEET DATA Assets |
December 31 2004 | December 31 2003 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash and due from banks | $ | 31,711 | $ | 41,633 | ||||||||||
| Federal funds sold & short term investments | - | 18,414 | ||||||||||||
| Securities available for sale | 137,249 | 107,049 | ||||||||||||
| Securities held to maturity | 2,552 | 2,624 | ||||||||||||
| Federal Home Loan Bank Stock | 12,239 | 8,793 | ||||||||||||
| Loans held for sale | 3,150 | 4,054 | ||||||||||||
| Total loans | 1,396,387 | 1,157,107 | ||||||||||||
| Less allowance for loan loss | 19,251 | 16,093 | ||||||||||||
| Net Loans | 1,377,136 | 1,141,014 | ||||||||||||
| Premises and equipment, net | 45,784 | 38,713 | ||||||||||||
| Acquisition intangibles | 26,262 | 26,702 | ||||||||||||
| Bank-owned life insurance | 20,157 | - | ||||||||||||
| Other assets | 16,366 | 12,115 | ||||||||||||
| Total Assets | $ | 1,672,606 | $ | 1,401,111 | ||||||||||
| Liabilities and Shareholders Equity | ||||||||||||||
| Non-interest bearing deposits | $ | 149,104 | $ | 139,557 | ||||||||||
| Interest bearing deposits | 1,202,412 | 969,842 | ||||||||||||
| Total deposits | 1,351,516 | 1,109,399 | ||||||||||||
| Federal funds purchased | 22,131 | - | ||||||||||||
| FHLB advances | 123,985 | 145,680 | ||||||||||||
| Other borrowings | 41,238 | 19,655 | ||||||||||||
| Other liabilities | 4,662 | 4,477 | ||||||||||||
| Total Liabilities | 1,543,532 | 1,279,211 | ||||||||||||
| Shareholders' equity | 129,074 | 121,900 | ||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 1,672,606 | $ | 1,401,111 | ||||||||||
MACATAWA BANK CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands except per share
information)
| Quarterly | Year to Date | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 4th Qtr 2004 | 3rd Qtr 2004 | 2nd Qtr 2004 | 1st Qtr 2004 | 4th Qtr 2003 | 2004 | 2003 | |||||||||||||||||
| EARNINGS SUMMARY | |||||||||||||||||||||||
| Net interest income | $ | 14,439 | $ | 13,619 | $ | 12,570 | $ | 11,392 | $ | 11,263 | $ | 52,020 | $ | 42,094 | |||||||||
| Provision for loan loss | 1,325 | 3,900 | 1,440 | 1,225 | 1,200 | 7,890 | 4,105 | ||||||||||||||||
| Total non-interest income | 2,732 | 2,261 | 2,751 | 2,298 | 2,151 | 10,042 | 9,643 | ||||||||||||||||
| Total non-interest expense | 9,277 | 8,933 | 8,933 | 8,257 | 7,851 | 35,400 | 30,064 | ||||||||||||||||
| Income taxes | 2,121 | 931 | 1,602 | 1,342 | 1,388 | 5,996 | 5,788 | ||||||||||||||||
| Net income | $ | 4,448 | $ | 2,116 | $ | 3,346 | $ | 2,866 | $ | 2,975 | $ | 12,776 | $ | 11,780 | |||||||||
| Basic earnings per share | $ | 0.50 | $ | 0.24 | $ | 0.38 | $ | 0.33 | $ | 0.34 | $ | 1.45 | $ | 1.34 | |||||||||
| Diluted earnings per share | $ | 0.49 | $ | 0.24 | $ | 0.37 | $ | 0.32 | $ | 0.33 | $ | 1.42 | $ | 1.32 | |||||||||
| MARKET DATA | |||||||||||||||||||||||
| Book value per share | $ | 14.62 | $ | 14.39 | $ | 13.92 | $ | 14.18 | $ | 13.87 | $ | 14.62 | $ | 13.87 | |||||||||
| Market value per share | $ | 32.29 | $ | 28.05 | $ | 27.49 | $ | 26.54 | $ | 27.04 | $ | 32.29 | $ | 27.04 | |||||||||
| Average basic common shares | 8,819,272 | 8,809,971 | 8,804,830 | 8,791,864 | 8,787,079 | 8,805,852 | 8,771,893 | ||||||||||||||||
| Average diluted common shares | 8,997,538 | 8,966,312 | 8,957,976 | 8,952,939 | 8,946,517 | 8,973,053 | 8,912,741 | ||||||||||||||||
| Period end common shares | 8,826,902 | 8,812,591 | 8,808,983 | 8,803,956 | 8,788,577 | 8,826,902 | 8,788,577 | ||||||||||||||||
| PERFORMANCE RATIOS | |||||||||||||||||||||||
| Return on average assets | 1.08 | % | 0.53 | % | 0.89 | % | 0.81 | % | 0.90 | % | 0.83 | % | 0.94 | % | |||||||||
| Return on average equity | 13.76 | % | 6.73 | % | 10.74 | % | 9.30 | % | 9.78 | % | 10.15 | % | 9.91 | % | |||||||||
| Net interest margin (FTE) | 3.76 | % | 3.66 | % | 3.62 | % | 3.49 | % | 3.64 | % | 3.64 | % | 3.63 | % | |||||||||
| Efficiency ratio | 54.03 | % | 56.25 | % | 58.31 | % | 60.31 | % | 58.53 | % | 57.04 | % | 58.11 | % | |||||||||
| ASSET QUALITY | |||||||||||||||||||||||
| Net charge-offs | $ | 674 | $ | 3,207 | $ | 491 | $ | 360 | $ | 249 | $ | 4,732 | $ | 1,484 | |||||||||
| Nonperforming loans | $ | 4,021 | $ | 7,601 | $ | 2,742 | $ | 3,047 | $ | 4,025 | $ | 4,021 | $ | 4,025 | |||||||||
| Nonperforming loans to total loans | 0.29 | % | 0.56 | % | 0.21 | % | 0.25 | % | 0.35 | % | 0.29 | % | 0.35 | % | |||||||||
| Net charge-offs to average loans (annualized) | 0.19 | % | 0.96 | % | 0.16 | % | 0.12 | % | 0.09 | % | 0.37 | % | 0.14 | % | |||||||||
| Allowance for loan loss to total loans | 1.38 | % | 1.37 | % | 1.39 | % | 1.39 | % | 1.39 | % | 1.38 | % | 1.39 | % | |||||||||
| CAPITAL & LIQUIDITY | |||||||||||||||||||||||
| Average equity to average assets | 7.8 | % | 7.9 | % | 8.3 | % | 8.7 | % | 9.2 | % | 8.2 | % | 9.5 | % | |||||||||
| Tier 1 capital to risk-weighted assets | 9.2 | % | 9.3 | % | 9.9 | % | 10.3 | % | 9.7 | % | 9.2 | % | 9.7 | % | |||||||||
| Total capital to risk-weighted assets | 11.0 | % | 11.1 | % | 11.8 | % | 12.2 | % | 10.9 | % | 11.0 | % | 10.9 | % | |||||||||
| Loans to deposits + FHLB borrowings | 94.8 | % | 94.2 | % | 96.9 | % | 97.5 | % | 92.2 | % | 94.8 | % | 92.2 | % | |||||||||
| END OF PERIOD BALANCES | |||||||||||||||||||||||
| Total portfolio loans | $ | 1,396,387 | $ | 1,361,017 | $ | 1,288,461 | $ | 1,224,243 | $ | 1,157,107 | $ | 1,396,387 | $ | 1,157,107 | |||||||||
| Earning assets | 1,551,577 | 1,512,039 | 1,428,499 | 1,360,689 | 1,298,041 | 1,551,577 | 1,298,041 | ||||||||||||||||
| Total assets | 1,672,606 | 1,616,994 | 1,525,977 | 1,456,428 | 1,401,111 | 1,672,606 | 1,401,111 | ||||||||||||||||
| Deposits | 1,351,516 | 1,322,563 | 1,151,347 | 1,109,276 | 1,109,399 | 1,351,516 | 1,109,399 | ||||||||||||||||
| Total shareholders' equity | 129,074 | 126,816 | 122,590 | 124,863 | 121,900 | 129,074 | 121,900 | ||||||||||||||||
| AVERAGE BALANCES | |||||||||||||||||||||||
| Total portfolio loans | $ | 1,377,886 | $ | 1,329,763 | $ | 1,262,153 | $ | 1,190,153 | $ | 1,120,397 | $ | 1,290,338 | $ | 1,046,731 | |||||||||
| Earning assets | 1,531,685 | 1,483,788 | 1,399,415 | 1,314,208 | 1,236,569 | 1,435,173 | 1,150,774 | ||||||||||||||||
| Total assets | 1,651,939 | 1,585,427 | 1,500,155 | 1,410,471 | 1,329,319 | 1,537,604 | 1,250,563 | ||||||||||||||||
| Deposits | 1,316,548 | 1,256,730 | 1,122,548 | 1,104,750 | 995,997 | 1,200,617 | 973,770 | ||||||||||||||||
| Total shareholders' equity | 129,301 | 125,851 | 124,652 | 123,239 | 121,689 | 125,930 | 118,835 | ||||||||||||||||