Exhibit 99.1
 
 
 
For Immediate Release
 
NASDAQ Stock Market:
MCBC

Macatawa Bank Corporation Reports
First Quarter 2016 Results

HOLLAND, Mich. (April 28, 2016) – Macatawa Bank Corporation (NASDAQ: MCBC) today announced its results for the first quarter of 2016, reflecting continued improvement in financial performance.

Net income of $3.5 million in first quarter 2016, up 23% from $2.8 million in first quarter 2015
Strong growth in total loans - up $18.3 million since year-end 2015
Net interest income increase aided by growth in loans
First quarter revenue growth of $1.4 million, or 9%, compared to first quarter 2015
Past due loans only 0.07% of total loans at end of first quarter 2016, down from 0.22% at the end of first quarter 2015
Nonperforming assets down 55% from first quarter 2015
Strong loan collection results – five consecutive quarters of net recoveries

Macatawa reported net income of $3.5 million, or $0.10 per diluted share, in the first quarter 2016 compared to $2.8 million, or $0.08 per diluted share, in the first quarter 2015.

"We made excellent progress in the first quarter of 2016 with improved earnings performance, loan portfolio growth and improved asset quality.  First quarter net income grew by 23 percent over the prior year first quarter,” said Ronald L. Haan, President and CEO of the Company.  “Our earnings improvement was due primarily to increased net interest income fueled by our continued growth in portfolio loans, which were up $18.3 million since year end 2015.  Consistent with our objectives, we have achieved this loan growth while also improving the quality of our loan portfolio.  Quarter end delinquencies reached a new Company low at 0.07 percent of total portfolio loans.  We experienced net loan recoveries again this quarter and have for the past five quarters.  As a result, we again had a negative provision for loan losses.  While expenses associated with the administration and disposition of problem assets remained elevated during the first quarter of 2016, they were half of the level we experienced in the first quarter of 2015, and we had a further 9 percent reduction in the level of our non-performing assets since year end 2015.  We expect to continue to see reductions in non-performing asset expenses through the remainder of 2016.”

Mr. Haan continued:  "Non-interest income categories also improved during the first quarter of 2016.  Deposit service charges and earnings on our bank owned life insurance drove the increase in non-interest income.  We are pleased with the increase in our revenue sources as this diverse growth fosters further stability in our earnings performance.”
 

Macatawa Bank Corporation 1Q Results / page 2 of 5

Mr. Haan concluded:  "We continue to make excellent progress with momentum for continued growth and improved operating performance on a strong capital base.  The continued growth in our loan and deposit portfolios and significant reduction in problem assets puts us in a position to deliver even better operating performance going forward.”

Operating Results
Net interest income for the first quarter 2016 totaled $11.7 million, an increase of $277,000 from the fourth quarter 2015 and an increase of $1.1 million from the first quarter 2015.  Net interest margin was 3.09 percent, up 6 basis points from the fourth quarter 2015, and up 2 basis points from the first quarter 2015.

Average interest earning assets for the first quarter 2016 increased $12.1 million from the fourth quarter 2015 and were up $123.5 million from the first quarter 2015.

Non-interest income increased $105,000 in the first quarter 2016 compared to the fourth quarter 2015 and increased $313,000 from the first quarter 2015.  The increase in the first quarter 2016 was primarily due to an increase in income from bank owned life insurance, partially offset by a reduction in gains on sales of mortgage loans.  The Bank originated $18.9 million in loans for sale in the first quarter 2016 compared to $23.4 million in loans for sale in the fourth quarter 2015 and $23.4 million in loans for sale in the first quarter 2015.

Non-interest expense was $11.6 million for the first quarter 2016, compared to $12.6 million for the fourth quarter 2015 and $11.9 million for the first quarter 2015.  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 $1.3 million compared to the fourth quarter 2015 and $416,000 compared to the first quarter 2015.  The large fluction from the fourth quarter 2015 was due to a $1.1 million loss taken on the sale of the Bank’s largest individual other real estate owned property at the end of the fourth quarter 2015.  Other categories of non-interest expense were relatively flat compared to the fourth quarter 2015 and the first quarter 2015.

Federal income tax expense was $1.4 million for the first quarter 2016 compared to $1.6 million for the fourth quarter 2015 and $1.2 million for the first quarter 2015.  The effective tax rate was 28.6% for the first quarter 2016, compared to 30.6% for the fourth quarter 2015 and 30.4% for the first quarter 2015.  The decrease in the effective tax rate for the first quarter 2016 was due to the elevated level of earnings on bank owned life insurance during the quarter due to the payment of a death benefit during the quarter.
 

Macatawa Bank Corporation 1Q Results / page 3 of 5

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 net loan recoveries experienced in the first quarter 2016, a negative provision for loan losses of $100,000 was recorded in the first quarter 2016.  Net loan recoveries for the first quarter 2016 were $148,000, compared to fourth quarter 2015 net loan recoveries of $614,000 and first quarter 2015 net loan recoveries of $718,000.  The Company has experienced net loan recoveries in each of the past five quarters, and in nine of the past ten quarters. Total loans past due on payments by 30 days or more amounted to $796,000 at March 31, 2016, down 41.9 percent from $1.4 million at December 31, 2015 and down 68.0 percent from $2.5 million at March 31, 2015.  Delinquency as a percentage of total loans was 0.07 percent at March 31, 2016, a new quarterly low for the Company.

The allowance for loan losses of $17.1 million was 1.41 percent of total loans at March 31, 2016, compared to 1.43 percent of total loans at December 31, 2015, and 1.65 percent at March 31, 2015.  The coverage ratio of allowance for loan losses to nonperforming loans continued to be strong and significantly exceeded 1-to-1 coverage at 4,011.48 percent as of December 31, 2015, compared to 2,259.39 percent at December 31, 2015, and 190.40 percent at March 31, 2015.

At March 31, 2016, the Company's nonperforming loans had declined to $427,000, representing 0.04 percent of total loans.  This compares to $756,000 (0.06 percent of total loans) at December 31, 2015 and $9.8 million (0.86 percent of total loans) at March 31, 2015.  Other real estate owned and repossessed assets were $16.1 million at March 31, 2016, compared to $17.5 million at December 31, 2015 and $27.1 million at March 31, 2015. Total nonperforming assets, including other real estate owned and nonperforming loans, have decreased by $20.3 million, or 55.0 percent, from March 31, 2015 to March 31, 2016.

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

 
Dollars in 000s
 
March 31,
2016
   
December 31,
2015
   
September 30,
2015
   
June 30,
2015
   
March 31,
2015
 
                               
Commercial Real Estate
 
$
312
   
$
525
   
$
922
   
$
1,188
   
$
2,610
 
Commercial and Industrial
   
79
     
174
     
3,119
     
2,392
     
6,732
 
Total Commercial Loans
   
391
     
699
     
4,041
     
3,580
     
9,342
 
Residential Mortgage Loans
   
2
     
2
     
42
     
2
     
64
 
Consumer Loans
   
34
     
55
     
128
     
134
     
405
 
Total Non-Performing Loans
 
$
427
   
$
756
   
$
4,211
   
$
3,716
   
$
9,811
 
                                         
Residential Developer Loans (a)
 
$
---
   
$
195
   
$
369
   
$
174
   
$
213
 

(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.
 

Macatawa Bank Corporation 1Q Results / page 4 of 5

Total non-performing assets were $16.6 million, or 1.01 percent of total assets, at March 31, 2016.  A break-down of non-performing assets is shown in the table below.

 
Dollars in 000s
 
March 31,
2016
   
December 31,
2015
   
September 30,
2015
   
June 30,
2015
   
March 31,
2015
 
                               
Non-Performing Loans
 
$
427
   
$
756
   
$
4,211
   
$
3,716
   
$
9,811
 
Other Repossessed Assets
   
---
     
---
     
---
     
---
     
38
 
Other Real Estate Owned
   
16,162
     
17,572
     
25,671
     
26,303
     
27,038
 
Total Non-Performing Assets
 
$
16,589
   
$
18,328
   
$
29,882
   
$
30,019
   
$
36,887
 

Balance Sheet, Liquidity and Capital
Total assets were $1.64 billion at March 31, 2016, a decrease of $89.7 million from $1.73 billion at December 31, 2015 and an increase of $29.8 million from $1.60 billion at March 31, 2015.  Total assets were elevated at December 31, 2015 due to a year end seasonal inflow of business and municipal deposits.  Total loans were $1.22 billion at March 31, 2016, an increase of $18.3 million from $1.20 billion at December 31, 2015 and an increase of $80.9 million from $1.14 billion at March 31, 2015.

Commercial loans increased by $75.7 million from March 31, 2015 to March 31, 2016, along with an increase of $5.1 million in our residential mortgage and consumer loan portfolios.  Commercial real estate loans increased by $28.6 million and commercial and industrial loans increased by $47.1 million during the same period.

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

 
Dollars in 000s
 
March 31,
2016
   
December 31,
2015
   
September 30,
2015
   
June 30,
2015
   
March 31,
2015
 
                               
Construction and Development
 
$
73,621
   
$
74,210
   
$
77,320
   
$
77,363
   
$
77,494
 
Other Commercial Real Estate
   
443,095
     
434,462
     
427,797
     
397,042
     
410,578
 
Commercial Loans Secured by Real Estate
   
516,716
     
508,672
     
505,117
     
474,405
     
488,072
 
Commercial and Industrial
   
388,625
     
377,298
     
376,966
     
350,202
     
341,530
 
Total Commercial Loans
 
$
905,341
   
$
885,970
   
$
882,083
   
$
824,607
   
$
829,602
 
                                         
Residential Developer Loans (a)
 
$
28,521
   
$
30,112
   
$
32,147
   
$
29,741
   
$
29,415
 

(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.

At March 31, 2016, total performing loans amounted to $1.22 billion, an increase of $18.6 million from December 31, 2015 and an increase of $90.3 million from March 31, 2015.

Total deposits were $1.34 billion at March 31, 2016, down $94.7 million from $1.44 billion at December 31, 2015 and were up $20.3 million, or 1.5 percent, from $1.32 billion at March 31, 2015.  The decrease in total deposits from December 31, 2015 was primarily in demand deposits and money market deposits for municipal and business customers deploying their seasonal increase of year-end deposits in the first quarter of 2016.  Higher costing time deposits were also down $2.3 million from December 31, 2015.  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.
 

Macatawa Bank Corporation 1Q Results / page 5 of 5

The Bank's risk-based regulatory capital ratios were slightly higher at March 31, 2016 compared to March 31, 2015 and December 31, 2015 due to earnings growth, and continue to be at levels comfortably above those required to be categorized as “well capitalized” under applicable regulatory capital guidelines.  As such, the Bank was categorized as "well capitalized" at March 31, 2016.

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 recognized for the past five 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," "expect," "may," "should," "will," "continue," "improving," "additional," "focus," "forward," "future," "efforts," "strategy," "momentum," "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, reduce non-performing asset expenses, 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, 2015.  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)

EARNINGS SUMMARY
 
1st Qtr
2016
   
4th Qtr
2015
   
1st Qtr
2015
 
Total interest income
 
$
13,008
   
$
12,709
   
$
12,011
 
Total interest expense
   
1,270
     
1,248
     
1,359
 
Net interest income
   
11,738
     
11,461
     
10,652
 
Provision for loan losses
   
(100
)
   
(1,750
)
   
(1,000
)
Net interest income after provision for loan losses
   
11,838
     
13,211
     
11,652
 
                         
NON-INTEREST INCOME
                       
Deposit service charges
   
1,047
     
1,129
     
1,001
 
Net gains on mortgage loans
   
487
     
675
     
723
 
Trust fees
   
708
     
759
     
734
 
Other
   
2,366
     
1,940
     
1,837
 
Total non-interest income
   
4,608
     
4,503
     
4,295
 
                         
NON-INTEREST EXPENSE
                       
Salaries and benefits
   
6,187
     
6,194
     
6,182
 
Occupancy
   
982
     
891
     
972
 
Furniture and equipment
   
865
     
806
     
783
 
FDIC assessment
   
251
     
283
     
281
 
Administration and disposition of problem assets
   
411
     
1,720
     
827
 
Other
   
2,855
     
2,721
     
2,817
 
Total non-interest expense
   
11,551
     
12,615
     
11,862
 
Income before income tax
   
4,895
     
5,099
     
4,085
 
Income tax expense
   
1,400
     
1,561
     
1,245
 
Net income
 
$
3,495
   
$
3,538
   
$
2,840
 
                         
Basic earnings per common share
 
$
0.10
   
$
0.10
   
$
0.08
 
Diluted earnings per common share
 
$
0.10
   
$
0.10
   
$
0.08
 
Return on average assets
   
0.84
%
   
0.85
%
   
0.73
%
Return on average equity
   
9.06
%
   
9.40
%
   
7.89
%
Net interest margin
   
3.09
%
   
3.03
%
   
3.07
%
Efficiency ratio
   
70.67
%
   
79.02
%
   
79.36
%
 

BALANCE SHEET DATA
Assets
 
March 31,
2016
   
December 31
2015
   
March 31,
2015
 
Cash and due from banks
 
$
22,499
   
$
29,104
   
$
27,001
 
Federal funds sold and other short-term investments
   
72,104
     
152,372
     
107,078
 
Interest-bearing time deposits in other financial institutions
   
-
     
20,000
     
20,000
 
Securities available for sale
   
168,041
     
166,815
     
155,640
 
Securities held to maturity
   
51,303
     
51,856
     
43,042
 
Federal Home Loan Bank Stock
   
11,558
     
11,558
     
11,238
 
Loans held for sale
   
2,259
     
2,776
     
2,368
 
Total loans
   
1,216,184
     
1,197,932
     
1,135,311
 
Less allowance for loan loss
   
17,129
     
17,081
     
18,680
 
Net loans
   
1,199,055
     
1,180,851
     
1,116,631
 
Premises and equipment, net
   
50,944
     
51,456
     
52,506
 
Bank-owned life insurance
   
28,784
     
28,858
     
28,357
 
Other real estate owned
   
16,162
     
17,572
     
27,038
 
Other assets
   
17,276
     
16,425
     
19,310
 
                         
Total Assets
 
$
1,639,985
   
$
1,729,643
   
$
1,610,209
 
                         
Liabilities and Shareholders' Equity
                       
Noninterest-bearing deposits
 
$
424,356
   
$
477,032
   
$
373,215
 
Interest-bearing deposits
   
916,478
     
958,480
     
947,301
 
Total deposits
   
1,340,834
     
1,435,512
     
1,320,516
 
Other borrowed funds
   
94,840
     
96,169
     
96,836
 
Long-term debt
   
41,238
     
41,238
     
41,238
 
Other liabilities
   
7,832
     
4,747
     
6,038
 
Total Liabilities
   
1,484,744
     
1,577,666
     
1,464,628
 
                         
Shareholders' equity
   
155,241
     
151,977
     
145,581
 
                         
Total Liabilities and Shareholders' Equity
 
$
1,639,985
   
$
1,729,643
   
$
1,610,209
 
 

MACATAWA BANK CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Unaudited)

(Dollars in thousands except per share information)

   
Quarterly
 
   
1st Qtr
2016
   
4th Qtr
2015
   
3rd Qtr
2015
   
2nd Qtr
2015
   
1st Qtr
2015
 
EARNINGS SUMMARY
                             
Net interest income
 
$
11,738
   
$
11,461
   
$
11,121
   
$
10,845
   
$
10,652
 
Provision for loan losses
   
(100
)
   
(1,750
)
   
(250
)
   
(500
)
   
(1,000
)
Total non-interest income
   
4,608
     
4,503
     
4,484
     
4,512
     
4,295
 
Total non-interest expense
   
11,551
     
12,615
     
11,254
     
11,222
     
11,862
 
Federal income tax expense
   
1,400
     
1,561
     
1,400
     
1,420
     
1,245
 
Net income
 
$
3,495
   
$
3,538
   
$
3,201
   
$
3,215
   
$
2,840
 
                                         
Basic earnings per common share
 
$
0.10
   
$
0.10
   
$
0.09
   
$
0.09
   
$
0.08
 
Diluted earnings per common share
 
$
0.10
   
$
0.10
   
$
0.09
   
$
0.09
   
$
0.08
 
                                         
MARKET DATA
                                       
Book value per common share
 
$
4.58
   
$
4.48
   
$
4.42
   
$
4.34
   
$
4.30
 
Tangible book value per common share
 
$
4.58
   
$
4.48
   
$
4.42
   
$
4.34
   
$
4.30
 
Market value per common share
 
$
6.25
   
$
6.05
   
$
5.18
   
$
5.30
   
$
5.35
 
Average basic common shares
   
33,925,113
     
33,891,429
     
33,866,789
     
33,866,789
     
33,866,789
 
Average diluted common shares
   
33,925,113
     
33,891,429
     
33,866,789
     
33,866,789
     
33,866,789
 
Period end common shares
   
33,925,113
     
33,925,113
     
33,866,789
     
33,866,789
     
33,866,789
 
                                         
PERFORMANCE RATIOS
                                       
Return on average assets
   
0.84
%
   
0.85
%
   
0.77
%
   
0.81
%
   
0.73
%
Return on average equity
   
9.06
%
   
9.40
%
   
8.64
%
   
8.78
%
   
7.89
%
Net interest margin (fully taxable equivalent)
   
3.09
%
   
3.03
%
   
2.92
%
   
3.01
%
   
3.07
%
Efficiency ratio
   
70.67
%
   
79.02
%
   
72.12
%
   
73.07
%
   
79.36
%
Full-time equivalent employees (period end)
   
338
     
342
     
347
     
347
     
351
 
                                         
ASSET QUALITY
                                       
Gross charge-offs
 
$
76
   
$
252
   
$
170
   
$
202
   
$
78
 
Net charge-offs
 
$
(148
)
 
$
(614
)
 
$
(285
)
 
$
(1
)
 
$
(718
)
Net charge-offs to average loans (annualized)
   
-0.05
%
   
-0.21
%
   
-0.10
%
   
0.00
%
   
-0.26
%
Nonperforming loans
 
$
427
   
$
756
   
$
4,211
   
$
3,716
   
$
9,811
 
Other real estate and repossessed assets
 
$
16,162
   
$
17,572
   
$
25,671
   
$
26,303
   
$
27,076
 
Nonperforming loans to total loans
   
0.04
%
   
0.06
%
   
0.35
%
   
0.33
%
   
0.86
%
Nonperforming assets to total assets
   
1.01
%
   
1.06
%
   
1.80
%
   
1.86
%
   
2.29
%
Allowance for loan losses
 
$
17,129
   
$
17,081
   
$
18,217
   
$
18,181
   
$
18,680
 
Allowance for loan losses to total loans
   
1.41
%
   
1.43
%
   
1.53
%
   
1.61
%
   
1.65
%
Allowance for loan losses to nonperforming loans
   
4011.48
%
   
2259.39
%
   
432.61
%
   
489.26
%
   
190.40
%
                                         
CAPITAL
                                       
Average equity to average assets
   
9.27
%
   
9.07
%
   
8.89
%
   
9.18
%
   
9.29
%
Common equity tier 1 to risk weighted assets (Consolidated)
   
10.95
%
   
10.75
%
   
10.54
%
   
10.87
%
   
10.74
%
Tier 1 capital to average assets (Consolidated)
   
11.69
%
   
11.54
%
   
11.34
%
   
11.70
%
   
11.90
%
Total capital to risk-weighted assets (Consolidated)
   
15.01
%
   
14.80
%
   
14.61
%
   
15.09
%
   
14.97
%
Common equity tier 1 to risk weighted assets (Bank)
   
13.41
%
   
13.22
%
   
12.98
%
   
13.44
%
   
13.31
%
Tier 1 capital to average assets (Bank)
   
11.38
%
   
11.24
%
   
11.03
%
   
11.38
%
   
11.57
%
Total capital to risk-weighted assets (Bank)
   
14.63
%
   
14.43
%
   
14.23
%
   
14.69
%
   
14.57
%
Tangible common equity to assets
   
9.47
%
   
8.79
%
   
9.03
%
   
9.09
%
   
9.05
%
                                         
END OF PERIOD BALANCES
                                       
Total portfolio loans
 
$
1,216,184
   
$
1,197,932
   
$
1,192,878
   
$
1,130,024
   
$
1,135,311
 
Earning assets
   
1,518,752
     
1,602,599
     
1,527,714
     
1,480,839
     
1,471,945
 
Total assets
   
1,639,985
     
1,729,643
     
1,659,339
     
1,618,014
     
1,610,209
 
Deposits
   
1,340,834
     
1,435,512
     
1,366,849
     
1,327,813
     
1,320,516
 
Total shareholders' equity
   
155,241
     
151,977
     
149,733
     
146,843
     
145,581
 
                                         
AVERAGE BALANCES
                                       
Total portfolio loans
 
$
1,202,682
   
$
1,190,328
   
$
1,155,339
   
$
1,138,880
   
$
1,120,395
 
Earning assets
   
1,539,166
     
1,527,116
     
1,532,562
     
1,460,025
     
1,415,643
 
Total assets
   
1,663,590
     
1,660,869
     
1,667,736
     
1,594,365
     
1,550,377
 
Deposits
   
1,365,881
     
1,365,990
     
1,376,257
     
1,302,349
     
1,271,228
 
Total shareholders' equity
   
154,244
     
150,583
     
148,214
     
146,404
     
144,062