Macatawa Bank Revises 2006 Q4 Results
HOLLAND, Mich., March 15, 2007 (PRIME NEWSWIRE) -- Macatawa Bank Corp. (Nasdaq:MCBC) today issued revised results for the fourth-quarter and twelve-month periods ending Dec. 31, 2006.
These financial results, which were originally reported on January 15, 2007, have been revised based on information that only became available since that date. The revision reflects an additional loan loss provision of $4.7 million related to outstanding commercial loans to one borrower of $5.2 million that have become impaired. The Bank has reason to believe that the borrower will be unable to meet the repayment terms of the loans. The loans have been secured by collateral, but the collateral may not be of a sufficient value to cover the outstanding principal on these loans.
The impairment was discovered over the past week through internal investigations relating to the collateral and the borrower relationship. Macatawa Bank's internal investigation suggests that the borrower may have made misrepresentations to the Bank regarding the loan collateral and its financial condition.
"The realization that this appears to be an intentional effort to defraud the Bank is very distressing to all of us," said Benj. A. Smith III, chairman and CEO. "As part of our internal investigation, we have begun a review of our loan policies and procedures. As a management team, we pledge that these procedures will be tightened to prevent a recurrence."
The additional loan loss provision will be recognized in the fourth quarter of 2006. The after-tax impact on net income is expected to be approximately $3.1 million, or $0.18 per share. As a result of this additional provision, net income for the fourth-quarter and full-year 2006 is $2.8 million and $19.8 million, respectively, instead of the $5.9 million and $22.9 million previously disclosed. Net income per diluted share for the fourth-quarter and full-year 2006 is $0.17 and $1.20, respectively, instead of the $0.36 and $1.38 per diluted share previously disclosed.
"In light of our ongoing investigation, which is still in the preliminary stage, we determined the need to revise our 2006 loan loss provision," said Phil Koning, president. "We will aggressively seek to recover funds associated with this borrower.
"It is important to note that Macatawa Bank remains financially strong and well-capitalized. We have a solid foundation and, with the support of our shareholders and employees, will continue to grow."
Revised financial results are attached to this press release. These results supersede the results previously disclosed in the January 15, 2007 press release.
About Macatawa Bank
Headquartered in Holland, Mich., Macatawa Bank Corp. is the parent company for Macatawa Bank, Macatawa Bank Mortgage Co. 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 24 full-service branches located throughout communities in Kent, Ottawa and northern Allegan counties. Services include commercial, consumer and real estate financing; business and personal deposit services; ATMs 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. For more information, visit www.macatawabank.com .
"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 future level of other revenue sources. 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
REVISED CONSOLIDATED FINANCIAL SUMMARY
These results supersede the results previously disclosed
in the January 15, 2007 press release.
(Unaudited)
(Dollars in thousands except per share information)
Three Months Ended Twelve Months Ended
December 31 December 31
----------------- -------------------
EARNINGS SUMMARY 2006 2005 2006 2005
------- ------- -------- --------
Total interest income $35,589 $29,087 $133,506 $105,395
Total interest expense 18,544 12,686 66,089 42,558
------- ------- -------- --------
Net interest income 17,045 16,401 67,417 62,837
Provision for loan loss 5,725 795 7,715 3,675
------- ------- -------- --------
Net interest income
after provision for
loan loss 11,320 15,606 59,702 59,162
NON-INTEREST INCOME
Deposit service charges 1,231 1,185 4,874 4,323
Gain on sale of loans 433 544 1,721 2,336
Trust fees 1,096 744 3,589 2,921
Other 1,091 841 3,993 3,424
------- ------- -------- --------
Total non-interest income 3,851 3,314 14,177 13,004
NON-INTEREST EXPENSE
Salaries and benefits 6,268 5,798 24,791 22,388
Occupancy 928 852 3,558 3,239
Furniture and equipment 859 793 3,221 2,975
Other 3,182 3,370 13,343 12,821
------- ------- -------- --------
Total non-interest expense 11,237 10,813 44,913 41,423
------- ------- -------- --------
Income before income tax 3,934 8,107 28,966 30,743
Federal income tax expense 1,089 2,565 9,135 9,854
------- ------- -------- --------
Net income $ 2,845 $ 5,542 $ 19,831 $ 20,889
======= ======= ======== ========
Basic earnings per share $ 0.18 $ 0.34 $ 1.22 $ 1.30
Diluted earnings per share $ 0.17 $ 0.34 $ 1.20 $ 1.27
Return on average assets 0.56% 1.20% 1.01% 1.17%
Return on average equity 7.17% 15.69% 13.09% 15.30%
Net interest margin 3.55% 3.82% 3.67% 3.81%
Efficiency ratio 53.78% 54.85% 55.04% 54.62%
BALANCE SHEET DATA December 31
Assets 2006 2005
---------- ----------
Cash and due from banks $ 39,882 $ 49,101
Securities available for sale 198,546 156,696
Securities held to maturity 2,711 3,907
Federal Home Loan Bank Stock 12,275 13,910
Loans held for sale 1,547 2,331
Total loans 1,711,450 1,547,879
Less allowance for loan loss 23,259 20,992
---------- ----------
Net loans 1,688,191 1,526,887
---------- ----------
Premises and equipment, net 60,731 53,028
Acquisition intangibles 25,478 25,856
Bank-owned life insurance 21,843 20,814
Other assets 23,612 17,460
---------- ----------
Total Assets $2,074,816 $1,869,990
========== ==========
Liabilities and Shareholders' Equity
Noninterest-bearing deposits $ 180,032 $ 188,762
Interest-bearing deposits 1,487,525 1,319,010
---------- ----------
Total deposits 1,667,557 1,507,772
Federal funds purchased 11,990 25,809
Other borrowed funds 192,018 145,161
Long-term debt 41,238 41,238
Other liabilities 5,164 8,266
---------- ----------
Total Liabilities 1,917,967 1,728,246
Shareholders' equity 156,849 141,744
---------- ----------
Total Liabilities and
Shareholders' Equity $2,074,816 $1,869,990
========== ==========
MACATAWA BANK CORPORATION
REVISED SELECTED CONSOLIDATED FINANCIAL DATA
These results supersede the results previously disclosed
in the January 15, 2007 press release.
(Unaudited)
(Dollars in thousands except per share information)
Quarterly
----------------------------------------------------------
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
2006 2006 2006 2006 2005
---------- ---------- ---------- ---------- ----------
EARNINGS
SUMMARY
Net interest
income $ 17,045 $ 17,083 $ 16,975 $ 16,314 $ 16,401
Provision
for loan
loss 5,725 490 800 700 795
Total non-
interest
income 3,851 3,503 3,629 3,194 3,314
Total non-
interest
expense 11,237 11,257 11,333 11,085 10,813
Income
taxes 1,089 2,830 2,715 2,501 2,565
Net income $ 2,845 $ 6,009 $ 5,756 $ 5,222 $ 5,542
Basic earn-
ings per
share $ 0.18 $ 0.37 $ 0.36 $ 0.32 $ 0.34
Diluted earn-
ings per
share $ 0.17 $ 0.36 $ 0.35 $ 0.32 $ 0.34
MARKET DATA
Book value
per share $ 9.65 $ 9.56 $ 9.13 $ 8.97 $ 8.80
Market value
per share $ 21.26 $ 22.89 $ 23.39 $ 24.07 $ 23.10
Average
basic
common
shares 16,227,588 16,214,390 16,200,172 16,164,946 16,100,083
Average
diluted
common
shares 16,553,239 16,557,849 16,542,131 16,568,345 16,520,970
Period end
common
shares 16,233,179 16,221,682 16,205,196 16,188,015 16,109,087
PERFORMANCE
RATIOS
Return on
average
assets 0.56% 1.20% 1.18% 1.11% 1.20%
Return on
average
equity 7.17% 15.69% 15.53% 14.34% 15.69%
Net interest
margin (FTE) 3.55% 3.62% 3.74% 3.78% 3.82%
Efficiency
ratio 53.78% 54.68% 55.00% 56.82% 54.85%
ASSET QUALITY
Net charge-
offs $ 4,894 $ 208 $ 46 $ 300 $ 329
Nonper-
forming
loans $ 22,290 $ 5,768 $ 5,781 $ 5,545 $ 4,204
Other real
estate and
repossessed
assets $ 3,293 $ 2,758 $ 1,725 $ 1,401 $ 692
Nonper-
forming
loans to
total loans 1.30% 0.34% 0.35% 0.35% 0.27%
Nonper-
forming
assets to
total assets 1.23% 0.42% 0.38% 0.36% 0.26%
Net charge-
offs to
average
loans
(annualized) 1.16% 0.05% 0.01% 0.08% 0.09%
Allowance for
loan loss
to total
loans 1.36% 1.33% 1.34% 1.35% 1.36%
CAPITAL &
LIQUIDITY
Average
equity to
average
assets 7.77% 7.62% 7.61% 7.76% 7.66%
Tier 1
capital to
risk-weighted
assets 9.49% 9.59% 9.49% 9.69% 9.69%
Total
capital to
risk-weighted
assets 10.85% 10.95% 10.85% 11.06% 11.07%
Loans to
deposits +
Other
borrowed
funds 92.03% 91.69% 93.88% 94.52% 93.64%
END OF PERIOD
BALANCES
Total
portfolio
loans $1,711,450 $1,682,359 $1,653,035 $1,590,138 $1,547,879
Earning
assets 1,921,735 1,897,447 1,841,812 1,776,486 1,725,832
Total
assets 2,074,816 2,041,031 1,981,318 1,903,965 1,869,990
Deposits 1,667,557 1,632,816 1,573,101 1,542,567 1,507,772
Total share-
holders'
equity 156,849 155,125 147,899 145,153 141,744
AVERAGE
BALANCES
Total
portfolio
loans $1,686,139 $1,664,378 $1,626,102 $1,563,277 $1,528,007
Earning
assets 1,903,566 1,873,191 1,815,807 1,743,952 1,710,742
Total
assets 2,042,005 2,010,840 1,949,399 1,876,713 1,843,737
Deposits 1,616,606 1,605,567 1,556,712 1,517,460 1,445,437
Total share-
holders'
equity 158,716 153,147 148,252 145,639 141,311
Year to Date
--------------------------
2006 2005
---------- ----------
EARNINGS SUMMARY
Net interest income $ 67,417 $ 62,837
Provision for loan loss 7,715 3,675
Total non-interest income 14,177 13,004
Total non-interest expense 44,913 41,423
Income taxes 9,135 9,854
Net income $ 19,831 $ 20,889
Basic earnings per share $ 1.22 $ 1.30
Diluted earnings per share $ 1.20 $ 1.27
MARKET DATA
Book value per share $ 9.65 $ 8.80
Market value per share $ 22.89 $ 23.10
Average basic common shares 16,201,514 16,060,600
Average diluted common shares 16,551,879 16,485,069
Period end common shares 16,233,179 16,109,087
PERFORMANCE RATIOS
Return on average assets 1.01% 1.17%
Return on average equity 13.09% 15.30%
Net interest margin (FTE) 3.67% 3.81%
Efficiency ratio 55.04% 54.62%
ASSET QUALITY
Net charge-offs $ 5,448 $ 1,934
Nonperforming loans $ 22,290 $ 4,204
Other real estate and repossessed assets $ 3,293 $ 692
Nonperforming loans to total loans 1.30% 0.27%
Nonperforming assets to total assets 1.23% 0.26%
Net charge-offs to average
loans (annualized) 0.33% 0.13%
Allowance for loan loss to total loans 1.36% 1.36%
CAPITAL & LIQUIDITY
Average equity to average assets 7.69% 7.66%
Tier 1 capital to risk-weighted assets 9.49% 9.69%
Total capital to risk-weighted assets 10.85% 11.07%
Loans to deposits + Other borrowed funds 92.03% 93.64%
END OF PERIOD BALANCES
Total portfolio loans $1,711,450 $1,547,879
Earning assets 1,921,735 1,725,832
Total assets 2,074,816 1,869,990
Deposits 1,667,557 1,507,772
Total shareholders' equity 156,849 141,744
AVERAGE BALANCES
Total portfolio loans $1,635,391 $1,471,404
Earning assets 1,834,673 1,654,145
Total assets 1,970,305 1,783,032
Deposits 1,574,444 1,390,418
Total shareholders' equity 151,479 136,512
CONTACT: Macatawa Bank
Phil Koning, President
616.820.1429
Jon Swets, Chief Financial Officer
616.494.7645
Released March 15, 2007