Exhibit 99
MACATAWA BANK
CORPORATION
10753 Macatawa Drive
Holland, MI 49424
NEWS RELEASE
NASDAQ NATIONAL MARKET: MCBC
FOR RELEASE: Immediate
DATE: July 17, 2006
Contact: Jon Swets, CFO
616.494.7645
HOLLAND, MICHIGAN - MACATAWA BANK CORPORATION REPORTS RECORD SECOND QUARTER
EARNINGS
Macatawa Bank Corporation today announced net income for the second quarter of
2006. Net income for the quarter was a record $5.76 million, or a 9% increase
over second quarter 2005 net income of $5.26 million. Diluted earnings per share
totaled $0.35 for the quarter compared to $0.32 for the second quarter of 2005.
The results for the second quarter represent a 1.18% ROA and a 15.53% ROE. Net
income for the first six months of 2006 increased 12% and totaled $10.98
million, or $0.66 per diluted share, as compared to net income of $9.80 million,
or $0.60 per diluted share, for the six months ended June 30, 2005.
"Outstanding growth rates and credit quality led the way to yet another solid
quarter of earnings," said Ben Smith, Chairman and CEO. Total loans increased
$63 million during the second quarter, 16% on an annualized basis. Core deposits
were up $35 million, 11% on an annualized basis and up from the 9% growth rate
of the first quarter. "Our continued robust growth rates are a direct result of
Macatawa's commitment to providing outstanding customer service," added Mr.
Smith.
In addition to growth for the quarter, asset quality remained strong. "Net loan
charge-offs for the quarter were very low, reflecting the success of our
disciplined approach to lending" stated Mr. Smith. Annualized net charge-offs
were only 0.01% of average loans for the quarter, down from 0.18% for the second
quarter of 2005.
Second quarter net interest income totaled $17.0 million, an increase of $1.5
million or 10%, as compared to the second quarter of 2005. The improvement in
net interest income was driven primarily by an increase in average earning
assets. Average earning assets grew by 11% or $185.3 million from $1.63 billion
for the second quarter of 2005 to $1.82 billion for the second quarter of 2006.
The net interest margin was 3.74% for the quarter, down four basis points from
3.78% for the first quarter of 2006 and eight basis points from 3.82% for the
second quarter of 2005. The net interest margin has moved within a narrow range
consistent with the Company's balanced sensitivity to interest rate changes.
Non-interest income was $3.6 million for the second quarter of 2006, an increase
of $436,000 or 14% from the first quarter of 2006, and $260,000 over the second
quarter of 2005. Non-interest income for the prior year quarter included a
$200,000 gain on the sale of other real estate (ORE). When excluding the impact
of this gain, non-interest income was up over 14% when compared to the prior
year. Increases in revenue from trust, deposit and other financial services more
than offset a slight decline in gains on the sale of mortgage loans.
Non-interest expense increased to $11.3 million for the quarter as compared to
$10.0 million for the second quarter of 2005. Salaries and benefits increased by
$865,000 representing the majority of the increase. The increase in salaries and
benefits included $188,000 in stock option compensation expense related to the
adoption of FAS 123, Revised beginning January 1, 2006. The remainder of the
increase was related to staff hires for new branch locations and additional
staffing in each line of business and in support departments consistent with
growth of the Bank. All remaining categories, including occupancy, furniture and
equipment and other expense, also increased moderately during the quarter
consistent with growth of the Bank.
The provision for loan losses was $800,000 for the quarter, down from $1.1
million for the second quarter of 2005. The significant decline in net
charge-offs more than offset the impact of greater loan growth for the quarter,
resulting in the decline in the provision for loan losses. Non-performing assets
to total assets remained relatively stable and were 0.38% at June 30, 2006
compared to 0.36% at March 31, 2006 and 0.31% at June 30, 2005. The allowance
for loan losses represents 1.34% of total loans at June 30, 2006.
Total assets increased $200.7 million from June 30, 2005 to $1.98 billion at
June 30, 2006. Over the same twelve month period, total loans increased $183.5
million to $1.65 billion and total deposits increased $235.5 million to $1.57
billion at June 30, 2006. The Company remained well-capitalized at June 30,
2006, with a total risk-based capital ratio of 10.85%. During the quarter the
Company purchased property on the Southeast side of Grand Rapids where it
expects to open a branch by year end. In May, the Company opened a second branch
in Jenison. "In addition to our new locations, we continue to improve and add to
our existing deposit programs to expand existing relationships and open doors to
new ones. We are excited about these accomplishments and look forward to the
benefits they will provide," concluded Mr. Smith.
CONFERENCE CALL
Macatawa Bank Corporation will hold its quarterly earnings conference call on
Tuesday, July 18, 2006, 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 24 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 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."
Page 2
MACATAWA BANK CORPORATION
CONSOLIDATED FINANCIAL SUMMARY
(Unaudited)
(Dollars in thousands except per share information)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------- --------------------
EARNINGS SUMMARY 2006 2005 2006 2005
------- ------- ------- -------
Total interest income $32,896 $25,357 $63,137 $48,556
Total interest expense 15,921 9,870 29,848 18,225
------- ------- ------- -------
Net interest income 16,975 15,487 33,289 30,331
Provision for loan loss 800 1,125 1,500 2,025
------- ------- ------- -------
Net interest income after provision for loan loss 16,175 14,362 31,789 28,306
NON-INTEREST INCOME
Deposit service charges 1,300 1,155 2,386 1,879
Gain on sale of loans 511 536 923 1,094
Trust fees 796 716 1,622 1,432
Other 1,022 962 1,892 1,637
------- ------- ------- -------
Total non-interest income 3,629 3,369 6,823 6,042
NON-INTEREST EXPENSE
Salaries and benefits 6,293 5,430 12,330 10,834
Occupancy 835 749 1,720 1,590
Furniture and equipment 774 720 1,572 1,423
Other 3,431 3,063 6,796 6,076
------- ------- ------- -------
Total non-interest expense 11,333 9,962 22,418 19,923
------- ------- ------- -------
Income before income tax 8,471 7,769 16,194 14,425
Federal income tax expense 2,715 2,507 5,217 4,628
------- ------- ------- -------
Net income $ 5,756 $ 5,262 $10,977 $ 9,797
======= ======= ======= =======
Basic earnings per share $ 0.36 $ 0.33 $ 0.68 $ 0.61
Diluted earnings per share $ 0.35 $ 0.32 $ 0.66 $ 0.60
Return on average assets 1.18% 1.20% 1.15% 1.13%
Return on average equity 15.53% 15.71% 14.94% 14.73%
Net interest margin 3.74% 3.82% 3.76% 3.83%
Efficiency ratio 55.00% 52.83% 55.89% 54.77%
BALANCE SHEET DATA JUNE 30 JUNE 30 DECEMBER 31
ASSETS 2006 2005 2005
---------- ---------- ----------
Cash and due from banks $ 43,346 $ 37,657 $ 49,101
Securities available for sale 165,964 161,243 156,696
Securities held to maturity 2,715 2,481 3,907
Federal Home Loan Bank Stock 13,910 13,910 13,910
Loans held for sale 2,346 3,243 2,331
Total loans 1,653,035 1,469,493 1,547,879
Less allowance for loan loss 22,145 20,010 20,992
---------- ---------- ----------
Net loans 1,630,890 1,449,483 1,526,887
---------- ---------- ----------
Premises and equipment, net 56,569 47,602 53,028
Acquisition intangibles 25,663 26,055 25,856
Bank-owned life insurance 21,279 20,490 20,814
Other assets 18,636 18,451 17,460
---------- ---------- ----------
TOTAL ASSETS $1,981,318 $1,780,615 $1,869,990
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $ 174,516 $ 169,189 $ 188,762
Interest-bearing deposits 1,398,585 1,168,452 1,319,010
---------- ---------- ----------
Total deposits 1,573,101 1,337,641 1,507,772
Federal funds purchased 25,701 42,565 25,809
FHLB advances 187,722 215,564 145,161
Other borrowings 41,238 41,238 41,238
Other liabilities 5,657 7,639 8,266
---------- ---------- ----------
TOTAL LIABILITIES 1,833,419 1,644,647 1,728,246
Shareholders' equity 147,899 135,968 141,744
---------- ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,981,318 $1,780,615 $1,869,990
========== ========== ==========
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
2006 2006 2005 2005 2005 2006 2005
----------- ----------- ----------- ----------- ----------- ----------- -----------
EARNINGS SUMMARY
Net interest income $ 16,975 $ 16,314 $ 16,401 $ 16,105 $ 15,487 $ 33,289 $ 30,331
Provision for loan loss 800 700 795 855 1,125 1,500 2,025
Total non-interest income 3,629 3,194 3,314 3,649 3,369 6,823 6,042
Total non-interest expense 11,333 11,085 10,813 10,688 9,962 22,418 19,923
Income taxes 2,715 2,501 2,565 2,661 2,507 5,217 4,628
Net income $ 5,756 $ 5,222 $ 5,542 $ 5,550 $ 5,262 $ 10,977 $ 9,797
Basic earnings per share $ 0.36 $ 0.32 $ 0.34 $ 0.35 $ 0.33 $ 0.68 $ 0.61
Diluted earnings per share $ 0.35 $ 0.32 $ 0.34 $ 0.34 $ 0.32 $ 0.66 $ 0.60
MARKET DATA
Book value per share $ 9.13 $ 8.97 $ 8.80 $ 8.66 $ 8.47 $ 9.13 $ 8.47
Market value per share $ 23.39 $ 24.07 $ 23.10 $ 21.72 $ 22.03 $ 23.39 $ 22.03
Average basic common shares 16,200,172 16,164,946 16,100,083 16,076,699 16,051,168 16,181,716 16,032,349
Average diluted common shares 16,542,131 16,568,345 16,520,970 16,507,189 16,455,403 16,562,618 16,429,827
Period end common shares 16,205,196 16,188,015 16,109,087 16,091,173 16,056,503 16,205,196 16,056,503
PERFORMANCE RATIOS
Return on average assets 1.18% 1.11% 1.20% 1.21% 1.20% 1.15% 1.13%
Return on average equity 15.53% 14.34% 15.69% 16.02% 15.71% 14.94% 14.73%
Net interest margin (FTE) 3.74% 3.78% 3.82% 3.76% 3.82% 3.76% 3.83%
Efficiency ratio 55.00% 56.82% 54.85% 54.11% 52.83% 55.89% 54.77%
ASSET QUALITY
Net charge-offs $ 46 $ 300 $ 329 $ 339 $ 649 $ 346 $ 1,266
Nonperforming loans $ 5,781 $ 5,545 $ 4,204 $ 3,565 $ 3,385 $ 5,781 $ 3,385
Other real estate and
repossessed assets $ 1,725 $ 1,401 $ 692 $ 1,632 $ 2,155 $ 1,725 $ 2,155
Nonperforming loans to
total loans 0.35% 0.35% 0.27% 0.24% 0.23% 0.35% 0.23%
Nonperforming assets to
total assets 0.38% 0.36% 0.26% 0.28% 0.31% 0.38% 0.31%
Net charge-offs to average
loans (annualized) 0.01% 0.08% 0.09% 0.09% 0.18% 0.04% 0.18%
Allowance for loan loss to
total loans 1.34% 1.35% 1.36% 1.36% 1.36% 1.34% 1.36%
CAPITAL & LIQUIDITY
Average equity to average
assets 7.61% 7.76% 7.66% 7.56% 7.63% 7.68% 7.71%
Tier 1 capital to
risk-weighted assets 9.49% 9.69% 9.54% 9.65% 9.28% 9.49% 9.28%
Total capital to
risk-weighted assets 10.85% 11.06% 11.07% 11.02% 11.05% 10.85% 11.05%
Loans to deposits + FHLB
borrowings 93.88% 94.52% 93.64% 94.19% 94.61% 93.88% 94.61%
END OF PERIOD BALANCES
Total portfolio loans $ 1,653,035 $ 1,590,138 $ 1,547,879 $ 1,511,458 $ 1,469,493 $ 1,653,035 $ 1,469,493
Earning assets 1,841,812 1,776,486 1,725,832 1,691,699 1,648,106 1,841,812 1,648,106
Total assets 1,981,318 1,903,965 1,869,990 1,824,483 1,780,615 1,981,318 1,780,615
Deposits 1,573,101 1,542,567 1,507,772 1,457,484 1,337,641 1,573,101 1,337,641
Total shareholders' equity 147,899 145,153 141,744 139,331 135,968 147,899 135,968
AVERAGE BALANCES
Total portfolio loans $ 1,626,102 $ 1,563,277 $ 1,528,007 $ 1,496,063 $ 1,453,769 $ 1,594,863 $ 1,430,098
Earning assets 1,815,807 1,743,952 1,710,742 1,704,660 1,630,478 1,780,078 1,599,701
Total assets 1,949,399 1,876,713 1,843,737 1,833,571 1,755,857 1,913,257 1,726,487
Deposits 1,556,712 1,517,460 1,445,437 1,433,795 1,330,684 1,537,194 1,340,405
Total shareholders' equity 148,252 145,639 141,311 138,556 134,019 146,953 133,035