Exhibit 99.1
 
 
 
For immediate release
 
NASDAQ Stock Market:
MCBC

Macatawa Bank Corporation Reports
First Quarter 2015 Results

Holland, Michigan, (April 23, 2015) – Macatawa Bank Corporation (NASDAQ: MCBC) today announced its results for the first quarter of 2015, reflecting continued improvement in financial performance.

  Net income of $2.8 million in the first quarter 2015, up from $2.6 million in the first quarter 2014
  Strong growth in total loans – up $16.8 million for the first quarter 2015 and up $105.2 million, or 10.2%, from one year ago
  Increased net interest income aided by growth in loans
  Healthy mortgage banking volume – gains on sales up $465,000 in first quarter 2015 compared to first quarter 2014
  Favorable loan collection results – net recoveries of $718,000 in first quarter 2015 and net recoveries in 4 of the previous 5 quarters
  Past due loans only 0.22% of total loans at end of first quarter 2015, an all-time low for the Company

Macatawa reported net income of $2.8 million, or $0.08 per diluted share, in the first quarter 2015 compared to net income of $2.6 million, or $0.08 per diluted share, for the first quarter 2014.

"We made excellent progress in the first quarter of 2015 with improved operating performance compared to the first quarter of 2014”, said Ronald L. Haan, President and CEO of the Company.  “Loan growth totaling $16.8M during the first quarter had a positive impact on our net interest margins and consequently improved net interest income.  Asset quality also improved during the quarter and the Company achieved a record low for quarter-end loan delinquencies.  While loan collection activity remained very strong with net recoveries totaling $718,000, expenses associated with the administration and disposition of problem assets are still above acceptable levels totaling $827,000 during the first quarter.”

Mr. Haan continued:  "Revenue gains in non-interest income categories also improved during the first quarter of 2015.  Mortgage banking, card services and trust and investment services revenues all increased compared to the first quarter of 2014.  Mortgage banking revenues in the first quarter of 2015 exceeded the first quarter of 2014 by $465,000, and revenues from our  trust services business improved by $103,000, or a 16% increase from the first quarter of 2014.  Marketing and cross-selling efforts designed to increase debit and ATM card penetration into our customer base were also successful resulting in improved revenue from card services.”

Mr. Haan concluded: "We are pleased with our momentum and improved operating results as we begin 2015.  Our loan yields are stable, and continued growth in commercial and consumer loans during 2015 will have a positive impact on our earnings in coming quarters."
 
-- more –
 

Macatawa Bank Corporation 1Q Results / page 2 of 4

Operating Results
Net interest income for the first quarter 2015 totaled $10.7 million, an increase of $195,000 from the fourth quarter 2014 and an increase of $177,000 from the first quarter 2014.  Net interest margin was 3.07 percent, up 2 basis points from the fourth quarter 2014, and down 8 basis points from the first quarter 2014.  Margin in the first quarter of 2014 benefitted from a large interest recovery on a previously charged off loan, adding approximately 10 basis points to net interest margin for that period.  Margin in the first quarter 2015 did not include any such non-recurring items.

Average interest earning assets for the first quarter 2015 increased $42.5 million from the fourth quarter 2014 and were up $65.7 million from the first quarter 2014.

Non-interest income decreased $38,000 in the first quarter 2015 compared to the fourth quarter 2014 and increased $785,000 from the first quarter 2014.  The increase from the first quarter 2014 is primarily due to increases in gains on sales of mortgage loans as the market for this activity rebounded in late 2014 with a drop in long term interest rates.  This continued into the first quarter of 2015.  The Bank originated $23.4 million in loans for sale in the first quarter 2015 compared to $23.5 million in loans for sale in the fourth quarter 2014 and $14.1 million in loans for sale in the first quarter 2014.  Trust and investment services fees were also up in the first quarter of 2015 due to growth in the Bank’s customer base and improved investment market conditions.

Non-interest expense was $11.9 million for the first quarter 2015, compared to $12.1 million for the fourth quarter 2014 and $11.2 million for the first quarter 2014.  The largest fluctuations in non-interest expense related to costs associated with the administration and disposition of problem loans and non-performing assets, which decreased $26,000 compared to the fourth quarter 2014 and increased $356,000 compared to the first quarter 2014.  The increase from the first quarter of 2014 related to a non-recurring gain on the sale of an individual property in the first quarter of 2014 that offset expense in that period.  Salaries and benefits were up $222,000 compared to the fourth quarter 2014 and were up $359,000 compared to the first quarter 2014 due a higher level of variable and incentive based compensation.

Federal income tax expense was $1.2 million for the first quarter 2015 compared to $1.0 million for the fourth quarter 2014 and $1.2 million for the first quarter 2014.  The effective tax rate decreased from 30.85% for the first quarter 2014 to 30.48% for the first quarter 2015 as a result of an increase in tax-free municipal investments.

Asset Quality
As a result of the consistent improvements in nonperforming loans and past due loans over the past several quarters, the reduction in historical loan loss ratios, and large loan recoveries experienced in the first quarter 2015, a negative provision for loan losses of $1.0 million was recorded in the first quarter 2015.  Net loan recoveries for the first quarter 2015 were $718,000, compared to fourth quarter 2014 net loan charge-offs of $67,000 and first quarter 2014 net loan recoveries of $585,000.  The Bank has experienced net loan recoveries in four of the past five quarters. Total loans past due on payments by 30 days or more amounted to $2.5 million at March 31, 2015, down 10.7 percent from $2.8 million at December 31, 2014 and down 62.1 percent from $6.6 million at March 31, 2014.  Delinquency as a percentage of total loans was 0.22 percent at March 31, 2015, a new quarterly low for the Bank.

The allowance for loan losses of $18.7 million was 1.65 percent of total loans at March 31, 2015, compared to 1.70 percent of total loans at December 31, 2014, and 1.98 percent at March 31, 2014.    The coverage ratio of allowance for loan losses to nonperforming loans continued to be strong and significantly exceeded 1-to-1 coverage at 190.40 percent as of March 31, 2015, compared to 225.04 percent at December 31, 2014, and 131.10 percent at March 31, 2014.

At March 31, 2015, the Company's nonperforming loans were $9.8 million, representing 0.86 percent of total loans.  This compares to $8.4 million (0.75 percent of total loans) at December 31, 2014 and $15.5 million (1.51 percent of total loans) at March 31, 2014.  Other real estate owned and repossessed assets were $27.1 million at March 31, 2015, compared to $28.3 million at December 31, 2014, and down significantly from $34.1 million at March 31, 2014. Total nonperforming assets, including other real estate owned and nonperforming loans, have decreased by $12.7 million, or 25.7 percent, from March 31, 2014 to March 31, 2015.
 
-- more –
 

Macatawa Bank Corporation 1Q Results / page 3 of 4
 
A break-down of non-performing loans is shown in the table below.
 
 
Dollars in 000s
 
March 31,
2015
   
December 31,
2014
   
September 30,
2014
   
June 30,
2014
   
March 31,
2014
 
                     
Commercial Real Estate
 
$
2,610
   
$
2,023
   
$
3,499
   
$
3,955
   
$
6,299
 
Commercial and Industrial
   
6,732
     
5,605
     
4,372
     
3,485
     
8,077
 
Total Commercial Loans
   
9,342
     
7,628
     
7,871
     
7,440
     
14,376
 
Residential Mortgage Loans
   
64
     
305
     
144
     
142
     
762
 
Consumer Loans
   
405
     
493
     
410
     
483
     
410
 
Total Non-Performing Loans
 
$
9,811
   
$
8,426
   
$
8,425
   
$
8,065
   
$
15,548
 
                                         
Residential Developer Loans (a)
 
$
213
   
$
245
   
$
2,245
   
$
2,249
   
$
2,205
 

 
(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 $36.9 million, or 2.29 percent of total assets, at March 31, 2015.  A break-down of non-performing assets is shown in the table below.

 
Dollars in 000s
 
March 31,
2015
   
December 31,
2014
   
September 30,
2014
   
June 30,
2014
   
March 31,
2014
 
                     
Non-Performing Loans
 
$
9,811
   
$
8,426
   
$
8,425
   
$
8,065
   
$
15,548
 
Other Repossessed Assets
   
38
     
38
     
38
     
48
     
42
 
Other Real Estate Owned
   
27,038
     
28,242
     
28,763
     
31,523
     
34,035
 
Total Non-Performing Assets
 
$
36,887
   
$
36,706
   
$
37,226
   
$
39,636
   
$
49,625
 

Balance Sheet, Liquidity and Capital
Total assets were $1.61 billion at March 31, 2015, an increase of $26.4 million from $1.58 billion at December 31, 2014 and an increase of $119.3 million from $1.49 billion at March 31, 2014.  Total loans were $1.14 billion at March 31, 2015, an increase of $16.8 million from $1.12 billion at December 31, 2014 and an increase of $105.2 million from $1.03 billion at March 31, 2014.

Commercial loans increased by $11.4 million from December 31, 2014 to March 31, 2015, along with an increase of $5.4 million in our residential mortgage and consumer loan portfolios.  Commercial real estate loans decreased by $2.5 million, as the Company continued its efforts to reduce exposure in this segment, and commercial and industrial loans increased by $13.9 million during the same period.

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

 
Dollars in 000s
 
March 31,
2015
   
December 31,
2014
   
September 30,
2014
   
June 30,
2014
   
March 31,
2014
 
                     
Construction and Development
 
$
77,494
   
$
81,296
   
$
82,485
   
$
84,448
   
$
84,875
 
Other Commercial Real Estate
   
410,578
     
409,235
     
385,432
     
380,146
     
378,322
 
Commercial Loans Secured by Real Estate
   
488,072
     
490,531
     
467,917
     
464,594
     
463,197
 
Commercial and Industrial
   
341,530
     
327,674
     
285,833
     
284,152
     
271,924
 
Total Commercial Loans
 
$
829,602
   
$
818,205
   
$
753,750
   
$
748,746
   
$
735,121
 
                                         
Residential Developer Loans (a)
 
$
29,415
   
$
29,804
   
$
32,441
   
$
33,622
   
$
33,970
 

 
(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.
 
-- more –
 

Macatawa Bank Corporation 1Q Results / page 4 of 4

Total deposits were $1.32 billion at March 31, 2015, up $14.2 million from $1.31 billion at December 31, 2014 and were up $103.7 million from $1.22 billion at March 31, 2014.  The increase from March 31, 2014 was primarily related to increases in checking, savings and money market accounts, which grew by $128.3 million, or 11.9 percent, compared to the first quarter 2014.  The Bank continues to be successful at attracting and retaining core deposit customers.  Customer deposit accounts remain insured to the highest levels available under FDIC deposit insurance.

The Bank's risk-based regulatory capital ratios decreased slightly in the first quarter 2015 due to asset growth and the impact of applying the new Basel III capital requirements, but continue to be at levels among the highest in Bank history, comfortably above levels required to be categorized as “well capitalized” under applicable regulatory capital guidelines.  As such, the Bank was categorized as "well capitalized" at March 31, 2015.

About Macatawa Bank
Headquartered in Holland, Mich., Macatawa Bank offers a full range of banking, retail and commercial lending, wealth management and ecommerce services to individuals, businesses and governmental entities from a network of 26 full-service branches located throughout communities in Kent, Ottawa and northern Allegan counties.  The bank is recognized for its local management team and decision making, along with providing customers excellent service, a rewarding experience and superior financial products.  Macatawa Bank has been awarded for its exceptional commitment to service by readers of the Holland Sentinel as the “Best Bank on the Lakeshore” since 2002, and “Best Bank in Grand Rapids” by readers of Grand Rapids Magazine since 2009. The bank has also been recognized for the past four consecutive years as “West Michigan’s 101 Best and Brightest Companies to Work For”. For more information, visit www.macatawabank.com.
 
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 "believe," "may," "will," "continue," "improving," "additional," "focus," "future," “efforts,” “momentum,” "well positioned," 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 key operating metrics and financial performance, future levels of earnings and profitability, future levels of earning assets, future asset quality, future growth, future yield compression and future net interest margin.  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 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, utilize our deferred tax asset, successfully implement new programs and initiatives, increase efficiencies, maintain our current level of deposits and other sources of funding, maintain liquidity, respond to declines in collateral values and credit quality, improve profitability, and produce consistent core earnings 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.  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, 2014.  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
 
2015
   
2014
 
Total interest income
 
$
12,011
   
$
11,970
 
Total interest expense
   
1,359
     
1,495
 
Net interest income
   
10,652
     
10,475
 
Provision for loan losses
   
(1,000
)
   
(1,000
)
Net interest income after provision for loan losses
   
11,652
     
11,475
 
                 
NON-INTEREST INCOME
               
Deposit service charges
   
1,001
     
991
 
Net gains on mortgage loans
   
723
     
258
 
Trust fees
   
734
     
631
 
Other
   
1,837
     
1,630
 
Total non-interest income
   
4,295
     
3,510
 
                 
NON-INTEREST EXPENSE
               
Salaries and benefits
   
6,182
     
5,823
 
Occupancy
   
972
     
1,008
 
Furniture and equipment
   
783
     
840
 
FDIC assessment
   
281
     
328
 
Administration and disposition of problem assets
   
827
     
471
 
Other
   
2,817
     
2,699
 
Total non-interest expense
   
11,862
     
11,169
 
Income before income tax
   
4,085
     
3,816
 
Income tax expense
   
1,245
     
1,177
 
Net income
 
$
2,840
   
$
2,639
 
Net income attributable to common shareholders
 
$
2,840
   
$
2,639
 
                 
Basic earnings per common share
 
$
0.08
   
$
0.08
 
Diluted earnings per common share
 
$
0.08
   
$
0.08
 
Return on average assets
   
0.73
%
   
0.71
%
Return on average equity
   
7.89
%
   
7.85
%
Net interest margin
   
3.07
%
   
3.15
%
Efficiency ratio
   
79.36
%
   
79.86
%
 
BALANCE SHEET DATA
 
March 31
   
December 31
   
March 31
 
Assets
 
2015
     2014      2014  
Cash and due from banks
 
$
27,001
   
$
31,503
   
$
34,615
 
Federal funds sold and other short-term investments
   
107,078
     
97,952
     
92,668
 
Interest-bearing time deposits in other financial institutions
   
20,000
     
20,000
     
32,500
 
Securities available for sale
   
155,640
     
161,874
     
153,327
 
Securities held to maturity
   
43,042
     
31,585
     
19,175
 
Federal Home Loan Bank Stock
   
11,238
     
11,238
     
11,236
 
Loans held for sale
   
2,368
     
2,347
     
194
 
Total loans
   
1,135,311
     
1,118,483
     
1,030,111
 
Less allowance for loan loss
   
18,680
     
18,962
     
20,383
 
Net loans
   
1,116,631
     
1,099,521
     
1,009,728
 
Premises and equipment, net
   
52,506
     
52,894
     
53,619
 
Bank-owned life insurance
   
28,357
     
28,195
     
27,671
 
Other real estate owned
   
27,038
     
28,242
     
34,035
 
Other assets
   
19,310
     
18,495
     
22,131
 
                         
Total Assets
 
$
1,610,209
   
$
1,583,846
   
$
1,490,899
 
                         
Liabilities and Shareholders' Equity
                       
Noninterest-bearing deposits
 
$
373,215
   
$
404,143
   
$
342,357
 
Interest-bearing deposits
   
947,301
     
902,182
     
874,421
 
Total deposits
   
1,320,516
     
1,306,325
     
1,216,778
 
Other borrowed funds
   
96,836
     
88,107
     
88,774
 
Long-term debt
   
41,238
     
41,238
     
41,238
 
Other liabilities
   
6,038
     
5,657
     
8,921
 
Total Liabilities
   
1,464,628
     
1,441,327
     
1,355,711
 
                         
Shareholders' equity
   
145,581
     
142,519
     
135,188
 
                         
Total Liabilities and Shareholders' Equity
 
$
1,610,209
   
$
1,583,846
   
$
1,490,899
 
 

MACATAWA BANK CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Unaudited)

(Dollars in thousands except per share information)

   
Quarterly
 
                     
   
1st Qtr
   
4th Qtr
   
3rd Qtr
   
2nd Qtr
   
1st Qtr
 
   
2015
   
2014
   
2014
   
2014
   
2014
 
EARNINGS SUMMARY
                   
Net interest income
 
$
10,652
   
$
10,457
   
$
10,304
   
$
10,156
   
$
10,475
 
Provision for loan losses
   
(1,000
)
   
(600
)
   
(750
)
   
(1,000
)
   
(1,000
)
Total non-interest income
   
4,295
     
4,333
     
4,303
     
4,068
     
3,510
 
Total non-interest expense
   
11,862
     
12,113
     
11,389
     
11,238
     
11,169
 
Federal income tax expense (benefit)
   
1,245
     
960
     
1,206
     
1,231
     
1,177
 
Net income
 
$
2,840
   
$
2,317
   
$
2,762
   
$
2,755
   
$
2,639
 
                                         
Basic earnings per common share
 
$
0.08
   
$
0.07
   
$
0.08
   
$
0.08
   
$
0.08
 
Diluted earnings per common share
 
$
0.08
   
$
0.07
   
$
0.08
   
$
0.08
   
$
0.08
 
                                         
MARKET DATA
                                       
Book value per common share
 
$
4.30
   
$
4.21
   
$
4.15
   
$
4.09
   
$
4.00
 
Tangible book value per common share
 
$
4.30
   
$
4.21
   
$
4.15
   
$
4.09
   
$
4.00
 
Market value per common share
 
$
5.35
   
$
5.44
   
$
4.80
   
$
5.07
   
$
5.04
 
Average basic common shares
   
33,866,789
     
33,837,334
     
33,795,384
     
33,788,431
     
33,790,542
 
Average diluted common shares
   
33,866,789
     
33,837,334
     
33,795,384
     
33,788,431
     
33,790,542
 
Period end common shares
   
33,866,789
     
33,866,789
     
33,803,823
     
33,788,431
     
33,788,431
 
                                         
PERFORMANCE RATIOS
                                       
Return on average assets
   
0.73
%
   
0.61
%
   
0.74
%
   
0.75
%
   
0.71
%
Return on average equity
   
7.89
%
   
6.54
%
   
7.94
%
   
8.03
%
   
7.85
%
Net interest margin (fully taxable equivalent)
   
3.07
%
   
3.05
%
   
3.04
%
   
3.06
%
   
3.15
%
Efficiency ratio
   
79.36
%
   
81.90
%
   
77.97
%
   
79.01
%
   
79.86
%
Full-time equivalent employees (period end)
   
351
     
355
     
352
     
348
     
354
 
                                         
ASSET QUALITY
                                       
Gross charge-offs
 
$
78
   
$
382
   
$
120
   
$
92
   
$
82
 
Net charge-offs
 
$
(718
)
 
$
67
   
$
(330
)
 
$
(666
)
 
$
(585
)
Net charge-offs to average loans (annualized)
   
-0.26
%
   
0.02
%
   
-0.13
%
   
-0.26
%
   
-0.23
%
Nonperforming loans
 
$
9,811
   
$
8,426
   
$
8,425
   
$
8,065
   
$
15,548
 
Other real estate and repossessed assets
 
$
27,076
   
$
28,280
   
$
28,801
   
$
31,571
   
$
34,077
 
Nonperforming loans to total loans
   
0.86
%
   
0.75
%
   
0.80
%
   
0.77
%
   
1.51
%
Nonperforming assets to total assets
   
2.29
%
   
2.32
%
   
2.50
%
   
2.66
%
   
3.33
%
Allowance for loan losses
 
$
18,680
   
$
18,962
   
$
19,629
   
$
20,049
   
$
20,383
 
Allowance for loan losses to total loans
   
1.65
%
   
1.70
%
   
1.86
%
   
1.92
%
   
1.98
%
Allowance for loan losses to nonperforming loans
   
190.40
%
   
225.04
%
   
232.99
%
   
248.59
%
   
131.10
%
                                         
CAPITAL
                                       
Average equity to average assets
   
9.29
%
   
9.40
%
   
9.29
%
   
9.29
%
   
9.01
%
Common equity tier 1 to risk weighted assets (Consolidated)
   
10.74
%
   
N/
A
   
N/
A
   
N/
A
   
N/
A
Tier 1 capital to average assets (Consolidated)
   
11.90
%
   
11.61
%
   
11.55
%
   
11.43
%
   
11.06
%
Total capital to risk-weighted assets (Consolidated)
   
14.97
%
   
15.55
%
   
16.27
%
   
16.33
%
   
16.11
%
Common equity tier 1 to risk weighted assets (Bank)
   
13.31
%
   
N/
A
   
N/
A
   
N/
A
   
N/
A
Tier 1 capital to average assets (Bank)
   
11.57
%
   
11.41
%
   
11.36
%
   
11.26
%
   
10.99
%
Total capital to risk-weighted assets (Bank)
   
14.57
%
   
15.27
%
   
15.98
%
   
16.06
%
   
16.00
%
Tangible common equity to assets
   
9.05
%
   
9.05
%
   
9.49
%
   
9.34
%
   
9.15
%
                                         
END OF PERIOD BALANCES
                                       
Total portfolio loans
 
$
1,135,311
   
$
1,118,483
   
$
1,054,788
   
$
1,043,529
   
$
1,030,111
 
Earning assets
   
1,471,945
     
1,442,651
     
1,355,635
     
1,340,438
     
1,337,512
 
Total assets
   
1,610,209
     
1,583,845
     
1,489,664
     
1,491,142
     
1,490,899
 
Deposits
   
1,320,516
     
1,306,325
     
1,216,089
     
1,215,724
     
1,216,778
 
Total shareholders' equity
   
145,581
     
142,519
     
140,469
     
138,092
     
135,188
 
                                         
AVERAGE BALANCES
                                       
Total portfolio loans
 
$
1,120,395
   
$
1,072,585
   
$
1,043,774
   
$
1,040,413
   
$
1,037,678
 
Earning assets
   
1,415,643
     
1,373,157
     
1,358,219
     
1,337,822
     
1,349,971
 
Total assets
   
1,550,377
     
1,508,441
     
1,497,386
     
1,477,114
     
1,493,201
 
Deposits
   
1,271,228
     
1,232,343
     
1,224,041
     
1,205,194
     
1,223,928
 
Total shareholders' equity
   
144,062
     
141,720
     
139,107
     
137,163
     
134,488