Macatawa Bank Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Note 12 - Shareholders' Equity

Note 12 - Shareholders' Equity

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

NOTE 12 – SHAREHOLDERS' EQUITY

Regulatory Capital

The Company and the Bank are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors, and the regulators can lower classifications in certain cases. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the financial statements.

The prompt corrective action regulations provide five categories, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If a bank is only adequately capitalized, regulatory approval is required to, among other things, accept, renew or roll-over brokered deposits. If a bank is undercapitalized, capital distributions and growth and expansion are limited, and plans for capital restoration are required.

NOTE 12 – SHAREHOLDERS' EQUITY (Continued)

The regulatory capital requirements include a common equity Tier 1 capital to risk-weighted assets ratio (CET1 ratio) of 4.5% and a capital conservation buffer of 2.5% of risk-weighted assets, which effectively results in a minimum CET1 ratio of 7.0%. The minimum ratio of Tier 1 capital to risk-weighted assets is 6.0% (which, with the capital conservation buffer, effectively results in a minimum Tier 1 capital ratio of 8.5%), which effectively results in a minimum total capital to risk-weighted assets ratio of 10.5% (with the capital conservation buffer). The minimum leverage ratio is 4.0%.

At March 31, 2024 and December 31, 2023, actual capital levels and minimum required levels were (dollars in thousands):

																To Be Well
						Minimum					Minimum Capital					Capitalized Under
						Capital					Adequacy With					Prompt Corrective
	Actual					Adequacy					Capital Buffer					Action Regulations
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
March 31, 2024
CET1 capital (to risk weighted assets)
Consolidated	$	316,892		18.2	%	$	78,541		4.5	%	$	122,174		7.0	%		N/A		N/A
Bank		308,429		17.7			78,538		4.5			122,170		7.0		$	113,443		6.5	%
Tier 1 capital (to risk weighted assets)
Consolidated		316,892		18.2			104,721		6.0			148,354		8.5			N/A		N/A
Bank		308,429		17.7			104,717		6.0			148,349		8.5			139,622		8.0
Total capital (to risk weighted assets)
Consolidated		334,332		19.2			139,628		8.0			183,261		10.5			N/A		N/A
Bank		325,869		18.7			139,622		8.0			183,254		10.5			174,528		10.0
Tier 1 capital (to average assets)
Consolidated		316,892		11.8			107,121		4.0			N/A		N/A			N/A		N/A
Bank		308,429		11.5			107,116		4.0			N/A		N/A			133,895		5.0

December 31, 2023
CET1 capital (to risk weighted assets)
Consolidated	$	310,015		17.7	%	$	78,836		4.5	%	$	122,634		7.0	%		N/A		N/A
Bank		300,943		17.2			78,825		4.5			122,617		7.0		$	113,859		6.5	%
Tier 1 capital (to risk weighted assets)
Consolidated		310,015		17.7			105,115		6.0			148,913		8.5			N/A		N/A
Bank		300,943		17.2			105,100		6.0			148,892		8.5			140,134		8.0
Total capital (to risk weighted assets)
Consolidated		327,457		18.7			140,153		8.0			183,951		10.5			N/A		N/A
Bank		318,385		18.2			140,134		8.0			183,925		10.5			175,167		10.0
Tier 1 capital (to average assets)
Consolidated		310,015		11.4			109,284		4.0			N/A		N/A			N/A		N/A
Bank		300,943		11.0			109,283		4.0			N/A		N/A			136,604		5.0

The Bank was categorized as "well capitalized" at March 31, 2024 and December 31, 2023.

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

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