• Macatawa Bank Corporation Reports Third Quarter 2021 Results

    Source: Nasdaq GlobeNewswire / 28 Oct 2021 15:15:01   America/Chicago

    HOLLAND, Mich., Oct. 28, 2021 (GLOBE NEWSWIRE) -- Macatawa Bank Corporation (NASDAQ: MCBC), the holding company for Macatawa Bank (collectively, the “Company”), today announced its results for the third quarter 2021.

    • Net income of $7.2 million in third quarter 2021 versus $7.1 million in third quarter 2020
    • Provision for loan losses benefit of $550,000 in the third quarter 2021 versus $500,000 provision expense in the third quarter 2020
    • Loan portfolio balances down by $405.7 million (26%) from third quarter 2020 reflecting a net decrease of $261.6 million in PPP loans in the same time period
    • New commercial loan origination activity accelerated in the third quarter 2021 - $114.6 million versus $88.2 million in third quarter 2020 and $62.0 million in second quarter 2021
    • Deposit balances up by $382.6 million (18%) from third quarter 2020
    • The Company redeemed its remaining $20 million trust preferred securities on July 7, 2021
    • Capital and liquidity levels increased further during the quarter and remain strong

    The Company reported net income of $7.2 million, or $0.21 per diluted share, in the third quarter 2021 compared to $7.1 million, or $0.21 per diluted share, in the third quarter 2020. For the first nine months of 2021, the Company reported net income of $22.8 million, or $0.67 per diluted share, compared to $21.2 million, or $0.62 per diluted share, for the same period in 2020.   

    "We are pleased to report solid results for the third quarter of 2021,” said Ronald L. Haan, President and CEO of the Company. “We are encouraged by our increase in commercial loan origination activity. Originations were up 30 percent in third quarter 2021 over third quarter 2020 and were up 85 percent over second quarter 2021. Our credit quality remains strong and we experienced no commercial loan chargeoffs during the third quarter 2021, allowing for a provision for loan loss benefit of $550,000 during the third quarter 2021.”

    “In addition, our customers’ deposits remain high. They are continuing to retain an unprecedented level of balances with us, with total deposits having grown from $1.7 billion at March 31, 2020 to over $2.5 billion at September 30, 2021. This not only speaks to the strength of our customers, but their confidence in us as their banking institution.”   

    “Our strong liquidity and capital position allowed us to redeem the remaining $20.0 million of trust preferred securities in the third quarter 2021. This simplifies our capital structure and will reduce interest expense by approximately $600,000 annually.”

    Mr. Haan concluded: "Despite a challenging environment, we produced strong earnings for the third quarter of 2021. Our asset quality is strong and we are well-positioned to build on our third quarter momentum and seize more opportunities to safely deploy the excess funds our customers have entrusted us with.”

    Operating Results
    Net interest income for the third quarter 2021 totaled $14.3 million, a decrease of $161,000 from the second quarter 2021 and a decrease of $378,000 from the third quarter 2020. Net interest margin for the third quarter 2021 was 2.04 percent, down 15 basis points from the second quarter 2021, and down 39 basis points from the third quarter 2020. Net interest income for the third quarter 2021 benefitted from amortization of $2.8 million in fees from loans originated under the PPP, compared to $2.4 million in the second quarter 2021 and $1.2 million in the third quarter 2020. These fees are amortized over the loans’ contractual maturity, which is 24 months or 60 months, as applicable. Upon SBA forgiveness, the remaining unamortized fees are recognized into interest income. During the third quarter 2021, the Company had approved and received forgiveness disbursements from the SBA on 909 loans with balances totaling $92.4 million. In the second quarter 2021, the Company had approved and received forgiveness disbursements from the SBA on 200 loans with balances totaling $107.7 million. Net interest margin was negatively impacted in the third quarter 2021 versus the third quarter 2020 by our carrying significantly higher balances of federal funds sold due to the significant increase in balances held by depositors throughout the COVID-19 pandemic. These balances, which earn only 10-15 basis points in interest, increased by $692.4 million, on average, from the third quarter 2020 and caused a 67 basis point decrease in net interest margin in the third quarter 2021 compared to third quarter 2020 and an 18 basis point decrease compared to second quarter 2021. Floor rates established by the Company on its variable rate loans over recent years served to soften the negative impact on net interest income of the 2020 federal funds rate decreases. Without these floors, net interest income for the quarter would have been lower than stated by approximately $1.0 million.

    On July 7, 2021, the Company redeemed its remaining $20.0 million of trust preferred securities. The Company estimates that this will save approximately $600,000 of interest expense annually, with regulatory capital remaining significantly above levels required to be categorized as well capitalized.

    Non-interest income decreased $527,000 in the third quarter 2021 compared to the second quarter 2021 and decreased $450,000 from the third quarter 2020. Gains on sales of mortgage loans in the third quarter 2021 were down $460,000 compared to the second quarter 2021 and were down $695,000 from the third quarter 2020. The Company originated $21.3 million in mortgage loans for sale in the third quarter 2021 compared to $39.2 million in the second quarter 2021 and $40.8 million in the third quarter 2020. Higher deposit service charge income, wealth management fees and debit card interchange income from customer usage softened the effect of a lower level of mortgage gains recognized in the quarter.  

    Non-interest expense was $11.6 million for the third quarter 2021, compared to $11.7 million for the second quarter 2021 and $11.5 million for the third quarter 2020. The largest component of non-interest expense was salaries and benefit expenses. Salaries and benefit expenses were down $224,000 compared to the second quarter 2021 and were down $202,000 compared to the third quarter 2020. The decreases compared to the second quarter 2021 and the third quarter 2020 were due largely to lower level of commissions from mortgage production as volume decreased, and were also due to lower medical insurance costs. The table below identifies the primary components of the changes in salaries and benefits between periods.



    Dollars in 000s    		 Q3 2021
    to
    Q2 2021    		 Q3 2021
    to
    Q3 2020
          
    Salaries and other compensation $0  $30 
    Salary deferral from commercial loans  65   25 
    Bonus accrual  72   (7)
    Mortgage production – variable comp  (193)  (129)
    401k matching contributions  (5)  (96)
    Medical insurance costs  (163)  (25)
    Total change in salaries and benefits $(224) $(202)

    FDIC assessment expense was $204,000 in the third quarter 2021 compared to $159,000 in the second quarter 2021 and $131,000 in the third quarter 2020. FDIC assessment expense increased primarily as a result of the significant increase in deposit balances between periods. In addition, assessment credits of $172,000 were applied in the nine months ended September 30, 2020, contributing to the increase in the 2021 periods compared to 2020. Data processing expenses were down $15,000 in the third quarter 2021 compared to the second quarter 2021 and were up $78,000 compared to the third quarter 2020 due to higher ongoing online banking expenses from higher usage by deposit customers. Other categories of non-interest expense were relatively flat compared to the second quarter 2021 and the third quarter 2020 due to a continued focus on expense management.  

    Federal income tax expense was $1.7 million for the third quarter 2021, $1.8 million for the second quarter 2021, and $1.6 million for the third quarter 2020. The effective tax rate was 19.4 percent for the third quarter 2021, compared to 19.1 percent for the second quarter 2021 and 18.5 percent for the third quarter 2020.  

    Asset Quality
    A provision for loan losses benefit of $550,000 was recorded in the third quarter 2021 compared to provision benefit of $750,000 in the second quarter 2021 and provision expense of $500,000 in the third quarter 2020. Net loan recoveries for the third quarter 2021 were $276,000, compared to second quarter 2021 net loan recoveries of $104,000 and third quarter 2020 net loan recoveries of $203,000. At September 30, 2021, the Company had experienced net loan recoveries in twenty-five of the past twenty-seven quarters.   Total loans past due on payments by 30 days or more amounted to $437,000 at September 30, 2021, up $311,000 from $126,000 at June 30, 2021 and down $87,000 from $524,000 at September 30, 2020. Delinquencies at September 30, 2021 were comprised of just four individual loans and the increase in overall delinquencies was due primarily to one loan that went past maturity at quarter end. Delinquency as a percentage of total loans was just 0.04 percent at September 30, 2021, well below the Company’s peer level.

    The allowance for loan losses of $16.5 million was 1.45 percent of total loans at September 30, 2021, compared to $16.8 million or 1.36 percent of total loans at June 30, 2021, and $16.6 million or 1.07 percent at September 30, 2020. The ratio at September 30, 2021, June 30, 2021 and September 30, 2020 includes PPP loans, which are fully guaranteed by the SBA and receive no allowance allocation. The ratio excluding PPP loans was 1.56 percent at September 30, 2021, 1.57 percent at June 30, 2021 and 1.38 percent at September 30, 2020. The coverage ratio of allowance for loan losses to nonperforming loans continued to be strong and significantly exceeded 1-to-1 coverage at 39-to-1 as of September 30, 2021.

    At September 30, 2021, the Company's nonperforming loans were $420,000, representing 0.04 percent of total loans. This compares to $433,000 (0.03 percent of total loans) at June 30, 2021 and $195,000 (0.01 percent of total loans) at September 30, 2020. Other real estate owned and repossessed assets were $2.3 million at September 30, 2021, compared to $2.3 million at June 30, 2021 and $2.6 million at September 30, 2020. Total non-performing assets, including other real estate owned and nonperforming loans, were $2.8 million, or 0.10 percent of total assets, at September 30, 2021. Total nonperforming assets, including other real estate owned and nonperforming loans, decreased by $56,000 from September 30, 2020 to September 30, 2021.

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

    Dollars in 000s Sept 30,
    2021    		 June 30,
    2021    		 Mar 31,
    2021    		 Dec 31,
    2020    		 Sept 30,
    2020
                   
    Commercial Real Estate $332 $341 $432 $438 $97
    Commercial and Industrial  ---  ---  ---  ---  ---
    Total Commercial Loans  332  341  432  438  97
    Residential Mortgage Loans  88  92  93  95  98
    Consumer Loans  ---  ---  ---  ---  ---
    Total Non-Performing Loans $420 $433 $525 $533 $195
                    

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

    Dollars in 000s Sept 30,
    2021    		 June 30,
    2021    		 Mar 31,
    2021    		 Dec 31,
    2020    		 Sept 30,
    2020
                   
    Non-Performing Loans $420 $433 $525 $533 $195
    Other Repossessed Assets  ---  ---  ---  ---  ---
    Other Real Estate Owned  2,343  2,343  2,371  2,537  2,624
    Total Non-Performing Assets $2,763 $2,776 $2,896 $3,070 $2,819

    Balance Sheet, Liquidity and Capital

    Total assets were $2.90 billion at September 30, 2021, a decrease of $39.6 million from $2.94 billion at June 30, 2021 and an increase of $392.8 million from $2.51 billion at September 30, 2020. Assets were elevated at each period due to customers holding a higher level of deposits during the COVID-19 pandemic, including balances from PPP loan proceeds. Total loans were $1.14 billion at September 30, 2021, a decrease of $101.7 million from $1.24 billion at June 30, 2021 and a decrease of $405.7 million from $1.54 billion at September 30, 2020.

    Commercial loans decreased by $350.2 million from September 30, 2020 to September 30, 2021, along with a decrease of $45.7 million in the residential mortgage portfolio, and a decrease of $9.8 million in the consumer loan portfolio. Within commercial loans, commercial real estate loans decreased by $31.7 million and commercial and industrial loans decreased by $56.9 million. However, the largest decrease in commercial loans was in PPP loans which decreased by $261.6 million due to forgiveness by the SBA of $388.5 million in PPP loans, partially offset by new PPP loan originations of $126.9 million.

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

    Dollars in 000s Sept 30,
    2021    		 June 30,
    2021    		 Mar 31,
    2021    		 Dec 31,
    2020    		 Sept 30,
    2020
                   
    Construction and Development $104,636 $102,608 $117,178 $118,665 $121,578
    Other Commercial Real Estate  422,574  427,291  423,424  433,508  437,345
    Commercial Loans Secured
    by Real Estate    		  527,210  529,899  540,602  552,173  558,923
    Commercial and Industrial  356,812  359,846  392,208  436,331  413,702
    Paycheck Protection Program  77,571  169,679  253,811  229,079  339,216
    Total Commercial Loans $961,593 $1,059,424 $1,186,621 $1,217,583 $1,311,841
                    

    Bank owned life insurance was $52.8 million at September 30, 2021, up $274,000 from $52.5 million at June 30, 2021 and up $10.4 million from $42.4 million at September 30, 2020 due to an additional $10.0 million in insurance policies purchased early in the second quarter 2021 and earnings on the underlying investments.

    Total deposits were $2.55 billion at September 30, 2021, down $46.9 million, or 1.8 percent, from $2.60 billion at June 30, 2021 and were up $382.6 million, or 17.6 percent, from $2.17 billion at September 30, 2020. Demand deposits were down $57.5 million in the third quarter 2021 compared to the second quarter 2021 and were up $342.2 million compared to the third quarter 2020. Money market deposits and savings deposits were up $13.2 million from the second quarter 2021 and were up $61.2 million from the third quarter 2020. Certificates of deposit were down $2.6 million at September 30, 2021 compared to June 30, 2021 and were down $20.8 million compared to September 30, 2020 as customers reacted to changes in market interest rates. As deposit rates have dropped, the Company has experienced some shifting between deposit types and, overall, deposit customers are holding higher levels of liquid deposit balances in the low interest rate environment and due to uncertainty related to the COVID-19 pandemic. The Company 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.

    Other borrowed funds were up $25.0 million to $85.0 million at September 30, 2021 compared to $60.0 million at June 30, 2021 and were up $15.0 million compared to $70.0 million at September 30, 2021. The increases were due to an additional $25.0 million advance taken in the third quarter 2021. This advance is putable quarterly by the FHLB and carries a rate of 0.01%. Considering the additional dividend provided by the FHLB on activity based stock, this advance effectively carries a negative interest rate, resulting in positive income for the Company from the advance.

    The Company's total risk-based regulatory capital ratio at September 30, 2021 was lower than the ratio at June 30, 2021 due to the redemption of the remaining trust preferred securities in the third quarter 2021, but remained higher than at September 30, 2020. Macatawa Bank’s risk-based regulatory capital ratios continue to be at levels considerably above those required to be categorized as “well capitalized” under applicable regulatory capital guidelines. As such, the Bank was categorized as "well capitalized" at September 30, 2021.

    About Macatawa Bank
    Headquartered in Holland, Michigan, 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 ten 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 “anticipates,” "believe," "expect," "may," "should," "will," ”intend,” "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 risks and uncertainties related to, and the impact of, the global coronavirus (COVID-19) pandemic on the business, financial condition and results of operations of our company and our customers, 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, 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, extent, 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, 2020. 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)
                   
          Quarterly Nine Months Ended
          3rd Qtr 2nd Qtr 3rd Qtr September 30
    EARNINGS SUMMARY      2021   2021   2020   2021   2020 
    Total interest income     $14,842  $15,184  $15,822  $45,300  $49,823 
    Total interest expense      546   727   1,148   2,057   4,799 
    Net interest income      14,296   14,457   14,674   43,243   45,024 
    Provision for loan losses      (550)  (750)  500   (1,300)  2,200 
    Net interest income after provision for loan losses      14,846   15,207   14,174   44,543   42,824 
                   
    NON-INTEREST INCOME              
    Deposit service charges      1,183   1,065   987   3,240   2,957 
    Net gains on mortgage loans      851   1,311   1,546   4,177   4,045 
    Trust fees      1,079   1,133   921   3,217   2,801 
    Other      2,529   2,660   2,638   7,715   7,101 
    Total non-interest income      5,642   6,169   6,092   18,349   16,904 
                   
    NON-INTEREST EXPENSE              
    Salaries and benefits      6,278   6,502   6,480   19,192   18,937 
    Occupancy      992   994   1,026   3,023   2,984 
    Furniture and equipment      1,014   978   967   2,929   2,704 
    FDIC assessment      204   159   131   532   207 
    Other      3,062   3,085   2,929   9,077   8,927 
    Total non-interest expense      11,550   11,718   11,533   34,753   33,759 
    Income before income tax      8,938   9,658   8,733   28,139   25,969 
    Income tax expense      1,736   1,840   1,613   5,341   4,800 
    Net income     $7,202  $7,818  $7,120  $22,798  $21,169 
                   
    Basic earnings per common share     $0.21  $0.23  $0.21  $0.67  $0.62 
    Diluted earnings per common share     $0.21  $0.23  $0.21  $0.67  $0.62 
    Return on average assets      0.98%  1.11%  1.12%  1.08%  1.22%
    Return on average equity      11.52%  12.79%  12.29%  12.40%  12.48%
    Net interest margin (fully taxable equivalent)      2.04%  2.19%  2.43%  2.18%  2.77%
    Efficiency ratio      57.93%  56.81%  55.54%  56.42%  54.51%
                   
    BALANCE SHEET DATA          September 30June 30 September 30
    Assets          2021   2021   2020 
    Cash and due from banks         $30,413  $31,051  $28,294 
    Federal funds sold and other short-term investments          1,239,525   1,189,266   504,706 
    Debt securities available for sale          241,475   239,955   229,928 
    Debt securities held to maturity          137,569   121,867   91,394 
    Federal Home Loan Bank Stock          11,558   11,558   11,558 
    Loans held for sale          2,635   4,752   3,508 
    Total loans          1,136,613   1,238,327   1,542,335 
    Less allowance for loan loss          16,532   16,806   16,558 
    Net loans          1,120,081   1,221,521   1,525,777 
    Premises and equipment, net          42,343   42,906   43,733 
    Bank-owned life insurance          52,781   52,507   42,368 
    Other real estate owned          2,343   2,343   2,624 
    Other assets          20,777   23,360   24,828 
                   
    Total Assets         $2,901,500  $2,941,086  $2,508,718 
                   
    Liabilities and Shareholders' Equity              
    Noninterest-bearing deposits         $934,477  $956,961  $738,471 
    Interest-bearing deposits          1,618,698   1,643,115   1,432,108 
    Total deposits          2,553,175   2,600,076   2,170,579 
    Other borrowed funds          85,000   60,000   70,000 
    Long-term debt          -   20,619   20,619 
    Other liabilities          11,112   12,174   13,655 
    Total Liabilities          2,649,287   2,692,869   2,274,853 
                   
    Shareholders' equity          252,213   248,217   233,865 
                   
    Total Liabilities and Shareholders' Equity         $2,901,500  $2,941,086  $2,508,718 
                   
                   
    MACATAWA BANK CORPORATION
    SELECTED CONSOLIDATED FINANCIAL DATA
    (Unaudited)
    (Dollars in thousands except per share information)
                   
      Quarterly Year to Date
                   
      3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr    
       2021   2021   2021   2020   2020   2021   2020 
    EARNINGS SUMMARY              
    Net interest income $14,296  $14,457  $14,490  $16,513  $14,674  $43,243  $45,024 
    Provision for loan losses  (550)  (750)  -   800   500   (1,300)  2,200 
    Total non-interest income  5,642   6,169   6,539   7,072   6,092   18,349   16,904 
    Total non-interest expense  11,550   11,718   11,485   11,966   11,533   34,753   33,759 
    Federal income tax expense  1,736   1,840   1,766   1,822   1,613   5,341   4,800 
    Net income $7,202  $7,818  $7,778  $8,997  $7,120  $22,798  $21,169 
                   
    Basic earnings per common share $0.21  $0.23  $0.23  $0.26  $0.21  $0.67  $0.62 
    Diluted earnings per common share $0.21  $0.23  $0.23  $0.26  $0.21  $0.67  $0.62 
                   
    MARKET DATA              
    Book value per common share $7.38  $7.26  $7.09  $7.01  $6.86  $7.38  $6.86 
    Tangible book value per common share $7.38  $7.26  $7.09  $7.01  $6.86  $7.38  $6.86 
    Market value per common share $8.03  $8.75  $9.95  $8.37  $6.53  $8.03  $6.53 
    Average basic common shares  34,190,264   34,193,016   34,195,526   34,154,820   34,109,901   34,192,916   34,108,676 
    Average diluted common shares  34,190,264   34,193,016   34,195,526   34,154,820   34,109,901   34,192,916   34,108,676 
    Period end common shares  34,189,799   34,192,317   34,193,132   34,197,519   34,101,320   34,189,799   34,101,320 
                   
    PERFORMANCE RATIOS              
    Return on average assets  0.98%  1.11%  1.17%  1.39%  1.12%  1.08%  1.22%
    Return on average equity  11.52%  12.79%  12.91%  15.24%  12.29%  12.40%  12.48%
    Net interest margin (fully taxable equivalent)  2.04%  2.19%  2.33%  2.69%  2.43%  2.18%  2.77%
    Efficiency ratio  57.93%  56.81%  54.62%  50.74%  55.54%  56.42%  54.51%
    Full-time equivalent employees (period end)  318   321   327   328   327   318   327 
                   
    ASSET QUALITY              
    Gross charge-offs $22  $30  $50  $22  $24  $102  $4,246 
    Net charge-offs/(recoveries) $(276) $(104) $(44) $(50) $(203) $(424) $2,842 
    Net charge-offs to average loans (annualized)  -0.09%  -0.03%  -0.01%  -0.01%  -0.05%  -0.04%  0.25%
    Nonperforming loans $420  $433  $525  $533  $195  $420  $195 
    Other real estate and repossessed assets $2,343  $2,343  $2,371  $2,537  $2,624  $2,343  $2,624 
    Nonperforming loans to total loans  0.04%  0.03%  0.04%  0.04%  0.01%  0.04%  0.01%
    Nonperforming assets to total assets  0.10%  0.09%  0.11%  0.12%  0.11%  0.10%  0.11%
    Allowance for loan losses $16,532  $16,806  $17,452  $17,408  $16,558  $16,532  $16,558 
    Allowance for loan losses to total loans  1.45%  1.36%  1.26%  1.22%  1.07%  1.45%  1.07%
    Allowance for loan losses to total loans (excluding PPP loans) 1.56%  1.57%  1.55%  1.45%  1.38%  1.56%  1.38%
    Allowance for loan losses to nonperforming loans  3936.19%  3881.29%  3324.19%  3266.04%  8491.28%  3936.19%  8491.28%
                   
    CAPITAL              
    Average equity to average assets  8.48%  8.70%  9.04%  9.11%  9.07%  8.73%  9.82%
    Common equity tier 1 to risk weighted assets (Consolidated)  17.43%  17.10%  16.73%  15.79%  15.30%  17.43%  15.30%
    Tier 1 capital to average assets (Consolidated)  8.51%  9.48%  9.80%  9.89%  9.78%  8.51%  9.78%
    Total capital to risk-weighted assets (Consolidated)  18.58%  19.66%  19.33%  18.29%  17.74%  18.58%  17.74%
    Common equity tier 1 to risk weighted assets (Bank)  16.88%  16.57%  17.60%  16.67%  16.18%  16.88%  16.18%
    Tier 1 capital to average assets (Bank)  8.24%  8.49%  9.52%  9.63%  9.52%  8.24%  9.52%
    Total capital to risk-weighted assets (Bank)  18.02%  17.73%  18.81%  17.84%  17.28%  18.02%  17.28%
    Common equity to assets  8.69%  8.44%  8.87%  9.08%  9.32%  8.69%  9.32%
    Tangible common equity to assets  8.69%  8.44%  8.87%  9.08%  9.32%  8.69%  9.32%
                   
    END OF PERIOD BALANCES              
    Total portfolio loans $1,136,613  $1,238,327  $1,382,951  $1,429,331  $1,542,335  $1,136,613  $1,542,335 
    Earning assets  2,768,507   2,803,634   2,611,093   2,510,882   2,376,943   2,768,507   2,376,943 
    Total assets  2,901,500   2,941,086   2,734,341   2,642,026   2,508,718   2,901,500   2,508,718 
    Deposits  2,553,175   2,600,076   2,387,945   2,298,587   2,170,579   2,553,175   2,170,579 
    Total shareholders' equity  252,213   248,217   242,379   239,843   233,865   252,213   233,865 
                   
    AVERAGE BALANCES              
    Total portfolio loans $1,182,633  $1,324,915  $1,401,399  $1,481,054  $1,542,838  $1,302,181  $1,499,774 
    Earning assets  2,804,157   2,669,862   2,537,300   2,457,746   2,416,072   2,671,417   2,177,374 
    Total assets  2,948,664   2,809,487   2,666,802   2,590,875   2,554,198   2,809,350   2,304,551 
    Deposits  2,605,043   2,468,398   2,321,012   2,249,679   2,215,509   2,465,858   1,975,799 
    Total shareholders' equity  249,994   244,516   241,023   236,127   231,702   245,211   226,196 
                   

    Contact:
Jon Swets, CFO
616-494-7645

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