Macatawa Bank Corporation (MCBC) is a Michigan-based bank holding company that wholly owns Macatawa Bank, a community bank serving Kent County, Ottawa County, and northern Allegan County in Michigan. With $2.61 billion in total assets as of March 31, 2024, Macatawa Bank has established itself as a reliable financial institution, weathering economic storms and adapting to industry changes with a steadfast commitment to its local communities.
Financials
In the first quarter of 2024, Macatawa Bank reported net income of $9.8 million, compared to $12.0 million in the same period of 2023. The decrease in earnings was primarily due to lower net interest income and higher noninterest expense, partially offset by higher noninterest income. The bank's net interest margin decreased to 3.26% in the first quarter of 2024 from 3.44% in the same period of 2023, as the cost of funds increased more rapidly than the yield on interest-earning assets.
The provision for credit losses was $0 for the first three months of 2024, consistent with the same period in 2023. Macatawa Bank's net loan charge-offs were $2,000 in the first quarter of 2024, compared to net loan recoveries of $33,000 in the same period of 2023. The bank's allowance for credit losses represented 1.30% of total portfolio loans at March 31, 2024, unchanged from December 31, 2023.
Macatawa Bank's total portfolio loans increased by $3.8 million, or 0.3%, to $1.34 billion at March 31, 2024, compared to $1.34 billion at December 31, 2023. The bank's commercial loan portfolio decreased by $2.9 million, or 0.3%, during the first three months of 2024, while the consumer loan portfolio increased by $621,000, or 0.3%, and the residential mortgage portfolio increased by $6.1 million, or 3.2%.
The bank's deposit base decreased by $131.3 million, or 5.4%, to $2.28 billion at March 31, 2024, from $2.42 billion at December 31, 2023. This decrease was primarily due to a seasonal runoff of business deposit balances. Macatawa Bank's core deposits, which the bank defines as deposits sourced within its local markets, represented 100% of total deposits at March 31, 2024.
Capital Position
Macatawa Bank's capital position remained strong, with a common equity Tier 1 capital ratio of 17.7% and a total risk-based capital ratio of 18.7% at March 31, 2024. The bank was categorized as "well capitalized" under regulatory standards at the end of the first quarter of 2024.
Liquidity
In terms of liquidity, Macatawa Bank had $331.4 million in federal funds sold and other short-term investments, as well as $491.2 million in securities available for sale, at March 31, 2024. The bank also had total additional borrowing capacity of $354.0 million, including $287.3 million in unused availability with the Federal Home Loan Bank, $65.0 million in available fed funds facilities with correspondent banks, and $1.7 million in availability at the Federal Reserve Bank's Discount Window.
Asset Quality
Macatawa Bank's nonperforming assets remained low, totaling $1,000, or 0.00% of total assets, at March 31, 2024, consistent with the level at December 31, 2023. The bank's net charge-offs were $2,000 in the first quarter of 2024, compared to net loan recoveries of $33,000 in the same period of 2023.
Recent Developments
In April 2024, Macatawa Bank announced that it had entered into a definitive merger agreement with Wintrust Financial Corporation (WTFC). Under the terms of the agreement, Wintrust will acquire Macatawa Bank in an all-stock transaction, with Macatawa Bank shareholders receiving Wintrust common stock. The transaction is expected to close in the second half of 2024, subject to shareholder and regulatory approvals.
Conclusion
Macatawa Bank's management team has navigated the bank through various economic cycles, maintaining a focus on prudent risk management and community-oriented banking. The bank's strong capital position, ample liquidity, and low levels of nonperforming assets position it well to weather any potential challenges that may arise in the future. As Macatawa Bank prepares to join forces with Wintrust, the combined entity is poised to leverage the strengths of both organizations to better serve the communities in which they operate.