Macatawa Bank(US:MCBC)2023-04-27 20:53Financial Performance - Net income for the three months ended March 31, 2023, was $12.0 million, a 100% increase from $6.0 million in the same period in 2022[164]. - Net interest income increased to $22.6 million for the three months ended March 31, 2023, compared to $12.7 million in the same period in 2022, reflecting an increase of $10.0 million[167]. - Noninterest income decreased to $4.5 million for the three months ended March 31, 2023, down from $5.0 million in the same period in 2022, primarily due to a $297,000 decrease in net gains on mortgage loans[178][179]. - Noninterest expense increased by $426,000 to $12.2 million for the three months ended March 31, 2023, with salaries and benefits rising by $409,000[180]. - Federal income tax expense was $3.0 million for the three months ended March 31, 2023, compared to $1.4 million for the same period in 2022, with an effective tax rate of 19.86%[182]. Asset and Liability Management - As of March 31, 2023, total assets were $2.64 billion, total loans were $1.22 billion, total deposits were $2.33 billion, and shareholders' equity was $260.6 million[158]. - Total assets decreased by $269.8 million to $2.64 billion at March 31, 2023, primarily due to a decrease in total deposits of $284.2 million[183]. - Cash and cash equivalents decreased to $420.7 million at March 31, 2023, down from $755.2 million at December 31, 2022[184]. - Total deposits decreased by $284.2 million to $2.33 billion at March 31, 2023, compared to $2.62 billion at December 31, 2022[218]. - Uninsured deposits totaled approximately $962.7 million, representing 41% of total deposits, with liquidity sources exceeding uninsured deposit balances by over $300 million[161]. Loan Portfolio - Total loans increased by $43.2 million in the first three months of 2023, with net loan recoveries of $33,000 compared to $227,000 in the same period in 2022[174][175]. - Total loan originations for the first three months of 2023 were $90.628 million, a decrease from $158.523 million in the same period of 2022[192]. - The commercial loan portfolio increased by $37.4 million in Q1 2023, with commercial and industrial loans up by $31.7 million and commercial real estate loans up by $5.7 million[192]. - The consumer residential mortgage loan portfolio comprised 12.2% of total loans at March 31, 2023, an increase from 11.8% at December 31, 2022[196]. - Nonperforming loans decreased from $90,000 at March 31, 2022 to $75,000 at March 31, 2023, indicating improved asset quality[206]. Capital and Equity - Total shareholders' equity increased by $13.5 million to $260.6 million at March 31, 2023, primarily due to net income of $12.0 million[224]. - The total capital to risk-weighted assets ratio was 18.1% at March 31, 2023, exceeding the well-capitalized minimum requirements[226]. - The allowance for credit losses increased to $16.8 million, representing 1.38% of total portfolio loans at March 31, 2023, up from 1.30% at December 31, 2022[204]. Interest Rate and Economic Impact - The Federal Reserve Bank raised the federal funds rate to 5.00% during the three months ended March 31, 2023, impacting net interest income positively[165]. - Under a scenario of interest rates increasing by 200 basis points, the economic value of equity would decrease by 6.13% to $380.3 million, while net interest income would increase by 1.64% to $92.8 million[245]. Deposit Composition and Management - Core deposits, sourced within local markets, represented 100% of total deposits at March 31, 2023, reflecting a $625.5 million increase, or 37%, over pre-pandemic totals[162]. - Deposit balances in excess of the $250,000 FDIC insured limit totaled approximately $962.7 million, or 41% of total deposits, at March 31, 2023[222]. - Noninterest checking account balances decreased by $144.4 million during the first three months of 2023[220]. Risk Management and Liquidity - The Bank has maintained no brokered deposits since December 2011, focusing on reducing reliance on non-core funding sources[229]. - The Bank's liquidity management includes a contingency funding plan to address potential liquidity shortages from rapid loan growth or loss of deposits[228]. - As of March 31, 2023, the Bank has a borrowing capacity of approximately $642.2 million under the Federal Reserve Bank's new Bank Term Funding Program[227].