Macatawa Bank Corporation Reports Fourth Consecutive Quarter of Profitability With First Quarter Results

HOLLAND, Mich., April 28, 2011 (GLOBE NEWSWIRE) -- Macatawa Bank Corporation (Nasdaq:MCBC) today announced its results for the first quarter of 2011, marking the Company's fourth consecutive quarter of profitability and continued improvement in all key capital and operational ratios.

 
  Net income of $1.3 million, compared to a net loss of $21.1 million in the same quarter of last year, net income of $835,000 in the fourth quarter 2010 and net income of $703,000 in the third quarter 2010
 
  Continued improvement in asset quality metrics, with nonperforming loans down 34 percent and total past due loans down 26 percent compared to the fourth quarter of 2010
 
  Net charge offs of $3.6 million, down 73 percent from $13.6 million in the first quarter of 2010
 
  Improvement in capital ratios, all of which are now above minimums ordinarily required for "well capitalized" banks
 
  Deposit accounts remain insured by the FDIC up to the maximum amount permitted by law

Macatawa reported net income available to common shares of $1.3 million, or $0.07 per diluted share, in the first quarter 2011 compared to net loss of $21.1 million, or $1.19 per diluted share, for the first quarter 2010. This improvement continues a trend experienced over the last three quarters of 2010 with the Company reporting net income of $835,000 in the fourth quarter 2010, $703,000 in the third quarter 2010 and $1.7 million in the second quarter 2010.

"Since I accepted the role of Chairman of Macatawa Bank Corporation in late 2009," said Richard L. Postma, "we have been cautious not to place undue emphasis on what may be considered a positive or negative quarter or on apparent trends. Our focus is broader and long-term. Our goal is to return Macatawa Bank to consistent profitability and to be an exceptional community bank in West Michigan. Nonetheless, we are pleased with our first quarter profit, which continued the momentum the Company achieved in the last three quarters of 2010. The first quarter of 2011 represented our fourth consecutive quarter of profitability, with continued improvements in every key capital and performance metric. Net charge-offs for the first quarter of 2011 were at our lowest level since the third quarter of 2008. Nonperforming loans were at our lowest level since the third quarter of 2007."

Mr. Postma continued, "These significant achievements are a result of our efforts beginning in late 2009 to identify and address asset quality and procedural weaknesses. We believe the improvements in our credit quality metrics reflect improved stability in our loan portfolio, real estate values and the Michigan economy in general. It is our belief that the work we have done since late 2009, coupled with our improving credit quality metrics, position us to continue down a path toward sustained profitability."

Mr. Postma continued, "Regulatory capital ratios at March 31, 2011 were at the highest level since the first quarter of 2009 and have now returned to levels ordinarily required for banks to be categorized as 'well capitalized' under regulatory standards. As a result, the amount of capital we need to contribute to the Bank to comply with our Consent Order has decreased from $43.2 million at March 31, 2010 to $14.0 million at March 31, 2011. Our goal remains to reach compliance with the Consent Order, and we continue to work closely with regulators in our efforts to do so."

Mr. Postma concluded, "We remain focused on further improvements and our long-term goals. We must continue to improve the Bank's capital ratios, and we must significantly reduce our level of other-real-estate-owned and non-performing loans. Through the commitment of our Board of Directors, management and employees, we intend to continue our efforts to build accountability, confidence and performance in Macatawa Bank and serve West Michigan as an exceptional community bank." 

Over the past year and a half, under the direction of the Board of Directors, the Company has navigated a difficult banking environment and critical transition period. Under this leadership, the Bank improved business and banking principles, added experienced personnel, added new directors with financial and accounting expertise, enhanced corporate governance, and bolstered the Bank's risk management functions by adding key individuals in its Special Assets and Loan Review groups. During the first quarter of 2011, the Company appointed a seasoned banker as head of commercial banking and added specialists to its Special Assets group to focus on the disposition of other real estate owned properties. 

Operating Results

Net interest income for the first quarter 2011 totaled $11.6 million, a decrease of $686,000 from the fourth quarter 2010 and a decrease of $1.4 million from the first quarter 2010. Net interest margin was 3.22 percent, down 16 basis points from 3.38 percent on a consecutive quarter basis, and was at the same level as the first quarter 2010. Late in the fourth quarter of last year and throughout the first quarter of this year the Bank experienced a sharp seasonal increase in deposit balances. While creating a strong liquidity position for the Bank, the excess seasonal deposits have the short-term impact of decreasing net interest margin. 

Average interest earning assets for the first quarter 2011 decreased $14.4 million from the fourth quarter 2010 and were down $211.5 million from the first quarter 2010, negatively impacting net interest income. The decreases in assets reflected the Bank's continued focus on capital ratio maintenance, liquidity improvement, and reduction in credit exposure within certain segments of its loan portfolio.

Non-interest income of $3.7 million for the first quarter 2011 was down $829,000 from the fourth quarter 2010, and up $211,000 from the first quarter 2010. The decrease from the fourth quarter 2010 was primarily due to a $574,000 gain in the fourth quarter 2010 on the sale of a property that had been held for branch expansion. The increase over the prior year period was primarily due to a higher level of gains on sales of mortgage loans in the first quarter 2011.

Non-interest expense was $15.4 million for the first quarter 2011, compared to $15.6 million for the fourth quarter 2010 and $17.9 million for the first quarter 2010. The largest increase in non-interest expense related to costs associated with the administration and disposition of problem loans and non-performing assets, which were up $238,000 in the first quarter 2011 compared to the fourth quarter 2010 and down $1.1 million compared to the first quarter 2010. FDIC insurance assessments remained elevated at $1.0 million as a result of higher assessment rates implemented by the FDIC, and were substantially unchanged compared to the last quarter of 2010 and down slightly from $1.2 million in the first quarter 2010.

When excluding nonperforming asset costs and FDIC assessments, non-interest expense was $10.0 million for the most recent quarter, down $300,000 from $10.3 million in the fourth quarter 2010 and down $1.1 million from $11.1 million for the first quarter 2010.   These costs continue to trend downward as a result of the Company's ongoing focus on expense management and its efforts to scale its operations to respond to the impact of the prolonged economic weakness.

Asset Quality

As a result of the continued decline in net charge-offs, consistent improvements in nonperforming loans and delinquencies over the past four quarters, and continued shrinkage of the loan portfolio, the provision for loan losses for the first quarter 2011 was a negative $1.45 million. The provision for loan losses was $400,000 for the fourth quarter 2010, $550,000 in the third quarter 2010, $1.8 million in the second quarter 2010 and $19.7 million in the first quarter 2010. Net charge-offs for the first quarter 2011 were at the lowest quarterly level since 2008 at $3.6 million, compared to $5.2 million for the fourth quarter 2010, $4.6 million for the third quarter 2010, $6.3 million for the second quarter 2010 and $13.6 million for the first quarter 2010.

The allowance for loan losses of $42.3 million was 3.67 percent of total loans at March 31, 2011, compared to 3.90 percent of total loans at December 31, 2010 and 4.23 percent at March 31, 2010. While this overall loan coverage ratio declined, the more important ratio of loan loss reserve coverage to nonperforming loans increased significantly to 75.48 percent at March 31, 2011, compared to 62.93 percent of December 31, 2010 and 59.27 percent at March 31, 2010. This ratio is at its highest level since June 2007.

At March 31, 2011, the Company's non-performing loans were $56.1 million, representing 4.86% of total loans, the lowest level since the third quarter of 2007. This compares to $75.4 million (6.19 percent of total loans) at December 31, 2010, $84.4 million (6.61 percent of total loans) at September 30, 2010 and $102.5 million (6.88% of total loans) at March 31, 2010. Other-real-estate-owned is higher at $65.0 million at March 31, 2011 compared to $58.0 million at December 31, 2010 and $45.8 million at March 31, 2010. These balances have increased as our problem loans have migrated through the normal collection process. However, the total of nonperforming loans and other-real-estate-owned has decreased by $27.3 million from March 31, 2010 to March 31, 2011.

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

 Dollars in 000s       March 31, 
    2011       December 31, 
    2010       September 30, 
    2010       June 30, 
    2010       March 31,
    2010
                                                                                                                                                                        
                Commercial Real Estate                   $ 43,039                     $ 60,186                      $ 72,310                 $ 81,319                 $ 81,669
             Commercial and Industrial                     11,180                       12,170                         8,326                   10,418                   17,782
                Total Commercial Loans                     54,219                       72,356                        80,636                   91,737                   99,451
            Residential Mortgage Loans                        389                        1,830                         2,702                    1,976                    1,849
                        Consumer Loans                      1,489                        1,175                         1,110                    1,345                    1,248
            Total Non-Performing Loans                   $ 56,097                     $ 75,361                      $ 84,448                 $ 95,058                $ 102,548
                                                                                                                                                                        
       Residential Developer Loans (a)                   $ 20,715                     $ 22,137                      $ 32,822                 $ 37,939                 $ 36,594
                                                                                                                                                                        
(a) Represents the amount of loans to residential developers secured by single family residential property which is included in non-performing commercial loans secured by real estate

Total non-performing assets were $121.1 million, or 7.78 percent of total assets, at March 31, 2011. A break-down of non-performing assets is shown in the table below.

 Dollars in 000s     March 31, 
    2011     December 31, 
    2010     September 30, 
    2010     June 30, 
    2010     March 31, 
    2010
                                                                                                                                                        
            Non-Performing Loans                $ 56,097                   $ 75,361                    $ 84,448               $ 95,058               $ 102,548
        Other Repossessed Assets                      22                         50                         130                     81                      84
         Other Real Estate Owned                  64,992                     57,984                      53,982                 48,672                  45,790
     Total Non-Performing Assets               $ 121,111                  $ 133,395                   $ 138,560              $ 143,811               $ 148,422

Balance Sheet, Liquidity and Capital

Total assets were $1.56 billion at March 31, 2011, a decrease of $21 million from $1.58 billion at December 31, 2010. Total loans were $1.15 billion at March 31, 2011, down $63 million from $1.22 billion at December 31, 2010.

Commercial loans decreased by $47.5 million, representing the majority of the decrease in total loans since December 31, 2010. The commercial real estate portfolio was reduced by $43.4 million as the Company continued its efforts to reduce exposure in these segments. Commercial and industrial loans declined by only $4.0 million. Of the decline in commercial real estate loans, $35.3 million was in loans to residential developers, the portfolio that has caused the majority of stress within the Company's loan portfolio.

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

Dollars in 000s     March 31, 
    2011     December 31, 
    2010     September 30, 
    2010     June 30, 
    2010     March 31, 
    2010
                                                                                                                                                             
        Construction and development                $ 121,147                  $ 133,228                   $ 139,579              $ 150,443               $ 156,867
        Other commercial real estate                  504,600                    535,960                     548,071                582,882                 611,904
         Commercial Loans Secured by                                                                                                                          
                         Real Estate                  625,747                    669,188                     687,650                733,325                 768,771
           Commercial and Industrial                  260,669                    264,680                     285,924                314,087                 344,294
              Total Commercial Loans                $ 886,416                  $ 933,868                   $ 973,574            $ 1,047,412             $ 1,113,065
                                                                                                                                                             
     Residential Developer Loans (a)                 $ 60,414                   $ 95,736                   $ 106,372              $ 120,344               $ 130,727
                                                                                                                                                             
(a) Represents the amount of loans to residential developers secured by single family residential property which is included in commercial loans secured by real estate

The reduction in loans since year-end 2010 allowed the Company to continue its reduction of wholesale funding. In the first quarter 2011, wholesale funding, including out-of-market deposits acquired through brokers and other borrowed funds, decreased by $16.7 million. Total deposits were $1.26 billion at March 31, 2011, down $12.0 million from $1.28 billion at December 31, 2010, as the Bank continued to encourage run-off of brokered deposits and higher priced local certificates of deposit. Customer deposit accounts remain fully insured to the highest levels available under the FDIC insurance programs.

The Bank's capital ratios continued to improve in the first quarter 2011. At March 31, 2011, all of the regulatory capital ratios for Macatawa Bank were maintained at levels in excess of those ordinarily required to be categorized as "well capitalized" under applicable regulatory capital guidelines, but the Bank did not have capital at levels required by its Consent Order. At March 31, 2011, the Bank's total risk-based capital ratio of 10.42 percent was above the 10.0 percent minimum ordinarily required to be categorized as "well capitalized" and below the 11.0 percent minimum required by the Consent Order. This ratio has steadily improved since March 31, 2010 when it was 8.14 percent. Because the Bank is subject to the Consent Order, it cannot be categorized as "well capitalized" regardless of actual capital levels. Significant improvement has been made with respect to the Bank's regulatory capital ratios over the past year which reduces the amount of capital the Company needs to raise in order to comply with the Consent Order. 

Headquartered in Holland, Michigan, Macatawa Bank Corporation is the parent company for Macatawa Bank. Through its banking subsidiary, the Company offers a full range of banking, investment and trust services to individuals, businesses, and governmental entities from a network of 26 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 Company emphasizes its local management team and decision making, along with providing customers excellent service and superior financial products.

"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 "will," "believe," "continue," "trend," "position," "toward" "goal," "further," "intend," "efforts," "apparent" 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 trends in our credit quality metrics, our ability to build accountability, confidence and performance in Macatawa Bank, our ability to comply with our Consent Order and return to "well capitalized" status, our ability to continue down a path toward sustained profitability, and our ability to reduce our level of other-real-estate owned and non-performing loans. 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 goodwill, mortgage servicing rights and 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, fully comply with our Consent Order, raise additional capital, improve regulatory capital ratios, successfully implement new programs and initiatives, increase efficiencies, address regulatory issues, maintain our current level of deposits and other sources of funding, maintain liquidity, respond to declines in collateral values and credit quality, and improve profitability 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. Failure to comply with the agreements in our Consent Order could result in further regulatory action which could have a material adverse effect on Macatawa Bank Corporation and its shareholders. 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, extend, 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, 2010. 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)                  
                                                                                                   Quarter Ended 
    March 31                     
                                        EARNINGS SUMMARY                                            2011                   2010                     
                                   Total interest income                                      $ 15,853             $ 20,937                     
                                  Total interest expense                                          4,255                 7,909                     
                                     Net interest income                                         11,598                13,028                     
                                 Provision for loan loss                                        (1,450)                19,710                     
       Net interest income after provision for loan loss                                         13,048               (6,682)                     
                                                                                                                                                 
                                     NON-INTEREST INCOME                                                                                          
                                 Deposit service charges                                            949                 1,065                     
                             Net gains on mortgage loans                                            435                   181                     
                                              Trust fees                                            651                   890                     
                                                 Other                                           1,644                 1,332                     
                               Total non-interest income                                          3,679                 3,468                     
                                                                                                                                                 
                                    NON-INTEREST EXPENSE                                                                                          
                                   Salaries and benefits                                          5,347                 5,450                     
                                               Occupancy                                          1,011                 1,052                     
                                 Furniture and equipment                                            817                   981                     
                                         FDIC assessment                                            978                 1,257                     
        Administration and disposition of problem assets                                          4,434                 5,535                     
                                                   Other                                          2,849                 3,651                     
                              Total non-interest expense                                         15,436                17,926                     
                         Income (loss) before income tax                                          1,291              (21,140)                     
                            Income tax expense (benefit)                                           --                   --                      
                                                                                                                                                 
                                       Net income (loss)                                       $ 1,291           $ (21,140)                     
                  Dividends declared on preferred shares                                           --                   --                      
            Net income (loss) available to common shares                                       $ 1,291           $ (21,140)                     
                                                                                                                                                 
                         Basic earnings per common share                                        $ 0.07             $ (1.19)                     
                       Diluted earnings per common share                                        $ 0.07             $ (1.19)                     
                              Return on average assets                                            0.33%                 -4.74%                     
                                Return on average equity                                           7.49%               -101.04%                     
                                     Net interest margin                                           3.22%                  3.22%                     
                                        Efficiency ratio                                         101.04%                108.67%                     
                                                                                                                                                 
                                    BALANCE SHEET DATA                                                                                           
                                                  Assets     March 31 
    2011     December 31 
    2010     March 31 
    2010                     
                                 Cash and due from banks             $ 24,265                $ 21,274             $ 22,948                     
     Federal funds sold and other short-term investments               238,362                  214,853                26,657                     
                           Securities available for sale                12,660                    9,120               115,107                     
                             Securities held to maturity                  --                        83                   333                     
                            Federal Home Loan Bank Stock                11,932                   11,932                12,275                     
                                     Loans held for sale                   942                    2,537                 1,501                     
                                             Total loans             1,153,992                1,217,196             1,438,107                     
                            Less allowance for loan loss                42,343                   47,426                60,782                     
                                               Net loans             1,111,649                1,169,770             1,377,325                     
                             Premises and equipment, net                56,410                   56,988                60,444                     
                               Bank-owned life insurance                25,229                   25,014                24,595                     
                                 Other real estate owned                64,992                   57,984                45,790                     
                                            Other assets                10,794                    8,706                31,454                     
                                                                                                                                                 
                                            Total Assets          $ 1,557,235              $ 1,578,261          $ 1,718,429                     
                                                                                                                                                 
                    Liabilities and Shareholders' Equity                                                                                          
                            Noninterest-bearing deposits            $ 282,050               $ 255,897            $ 228,842                     
                               Interest-bearing deposits               982,615                1,020,723             1,141,925                     
                                          Total deposits             1,264,665                1,276,620             1,370,767                     
                                    Other borrowed funds               174,270                  185,336               232,003                     
                                      Surbordinated debt                 1,650                    1,650                 1,650                     
                                          Long-term debt                41,238                   41,238                41,238                     
                                       Other liabilities                 6,259                    5,575                 5,854                     
                                       Total Liabilities             1,488,082                1,510,419             1,651,512                     
                                                                                                                                                 
                                    Shareholders' equity                69,153                   67,842                66,917                     
                                                                                                                                                 
              Total Liabilities and Shareholders' Equity          $ 1,557,235              $ 1,578,261          $ 1,718,429
                               
                                                                                                                                               MACATAWA BANK CORPORATION                              
                                                                                                                                    SELECTED CONSOLIDATED FINANCIAL DATA                              
                                                                                                                                                             (Unaudited)                              
                                                                                                                                                                                                     
      (Dollars in thousands except per share information)                                                                                                     Quarterly                                   
                                                                                                                                                                                                     
                                                              1st Qtr 
    2011     4th Qtr 
    2010     3rd Qtr 
    2010     2nd Qtr 
    2010     1st Qtr 
    2010                                   
                                          EARNINGS SUMMARY                                                                                                                                            
                                       Net interest income            $ 11,598            $ 12,284            $ 12,437            $ 12,818            $ 13,028                                   
                                   Provision for loan loss              (1,450)                  400                  550                1,800               19,710                                   
                                 Total non-interest income                3,679                4,508                3,726                6,322                3,468                                   
                                Total non-interest expense               15,436               15,557               14,910               14,289               17,926                                   
                      Federal income tax expense (benefit)                 --                  --                  --                 1,303                 --                                    
                                         Net income (loss)              $ 1,291               $ 835                $ 703              $ 1,748           $ (21,140)                                   
                    Dividends declared on preferred shares                   --                 --                    --                   --                   --                                   
              Net income (loss) available to common shares             $ 1,291               $ 835               $ 703             $ 1,748          $ (21,140)                                   
                                                                                                                                                                                                     
                           Basic earnings per common share              $ 0.07              $ 0.05              $ 0.04              $ 0.10            $ (1.19)                                   
                         Diluted earnings per common share              $ 0.07              $ 0.05              $ 0.04              $ 0.10            $ (1.19)                                   
                                                                                                                                                                                                     
                                               MARKET DATA                                                                                                                                            
                               Book value per common share              $ 2.04              $ 1.96              $ 1.91              $ 1.87              $ 1.91                                   
                      Tangible book value per common share              $ 2.02              $ 1.94              $ 1.89              $ 1.85              $ 1.88                                   
                             Market value per common share              $ 2.48              $ 4.12              $ 1.48              $ 1.20              $ 1.75                                   
                               Average basic common shares           17,679,621           17,679,884           17,677,284           17,692,231           17,696,922                                   
                             Average diluted common shares           17,679,621           17,679,884           17,677,284           17,692,231           17,696,922                                   
                                  Period end common shares           17,679,621           17,679,621           17,680,211           17,682,458           17,696,423                                   
                                                                                                                                                                                                     
                                        PERFORMANCE RATIOS                                                                                                                                            
                                  Return on average assets                 0.33%                 0.20%                 0.17%                 0.41%                -4.74%                                   
                                  Return on average equity                 7.49%                 4.93%                 4.21%                10.32%              -101.04%                                   
            Net interest margin (fully taxable equivalent)                 3.22%                 3.38%                 3.22%                 3.29%                 3.22%                                   
                                          Efficiency ratio               101.04%                92.65%                92.25%                74.66%               108.67%                                   
               Full-time equivalent employees (period end)                   385                   382                   387                   391                   375                                   
                                                                                                                                                                                                     
                                             ASSET QUALITY                                                                                                                                            
                                         Gross charge-offs             $ 4,132             $ 5,637             $ 5,114             $ 6,851            $ 14,235                                   
                                           Net charge-offs             $ 3,633             $ 5,167             $ 4,644             $ 6,296            $ 13,550                                   
             Net charge-offs to average loans (annualized)                 1.23%                 1.66%                 1.41%                 1.79%                 3.68%                                   
                                       Nonperforming loans            $ 56,097            $ 75,361            $ 84,448            $ 95,058           $ 102,548                                   
                  Other real estate and repossessed assets            $ 65,014            $ 58,034            $ 54,112            $ 48,753            $ 45,874                                   
                        Nonperforming loans to total loans                 4.86%                 6.19%                 6.61%                 6.96%                 7.13%                                   
                      Nonperforming assets to total assets                 7.78%                 8.45%                 8.49%                 8.72%                 8.64%                                   
                                   Allowance for loan loss            $ 42,343            $ 47,426            $ 52,192            $ 56,286            $ 60,782                                   
                    Allowance for loan loss to total loans                 3.67%                 3.90%                 4.08%                 4.12%                 4.23%                                   
            Allowance for loan loss to nonperforming loans                75.48%                62.93%                61.80%                59.21%                59.27%                                   
                                                                                                                                                                                                     
                                       CAPITAL & LIQUIDITY                                                                                                                                            
                          Average equity to average assets                 4.40%                 4.14%                 4.09%                 4.02%                 4.69%                                   
           Tier 1 capital to average assets (Consolidated)                 5.84%                 5.82%                 5.42%                 5.25%                 4.80%                                   
      Total capital to risk-weighted assets (Consolidated)                10.34%                 9.65%                 9.30%                 8.81%                 8.27%                                   
                   Tier 1 capital to average assets (Bank)                 7.11%                 7.10%                 6.55%                 6.31%                 5.83%                                   
              Total capital to risk-weighted assets (Bank)                10.42%                 9.68%                 9.23%                 8.70%                 8.14%                                   
                                                                                                                                                                                                     
                                    END OF PERIOD BALANCES                                                                                                                                            
                                     Total portfolio loans         $ 1,153,992          $ 1,217,196         $ 1,278,298          $ 1,364,881         $ 1,438,107                                   
                                   Interest earning assets            1,417,783            1,453,041            1,480,046            1,517,318            1,589,670                                   
                                              Total assets            1,557,235            1,578,261            1,611,395            1,649,747            1,718,429                                   
                                                  Deposits            1,264,665            1,276,620            1,279,710            1,312,701            1,370,767                                   
                                Total shareholders' equity               69,153               67,842               66,992               66,241               66,917                                   
                                                                                                                                                                                                     
                                          AVERAGE BALANCES                                                                                                                                            
                                     Total portfolio loans         $ 1,183,517          $ 1,244,148         $ 1,319,029          $ 1,408,672         $ 1,473,337                                   
                                   Interest earning assets            1,437,638            1,423,287            1,515,501            1,555,372            1,649,121                                   
                                              Total assets            1,565,782            1,634,249            1,634,249            1,686,311            1,785,286                                   
                                                  Deposits            1,263,115            1,224,156            1,297,498            1,341,243            1,394,701                                   
                                Total shareholders' equity               68,924               67,735               66,860               67,733               83,692
CONTACT: Jon Swets, SVP and CEO
         616.494.7645
Source: Macatawa Bank Corporation