[X] QUARTERLY REPORT
UNDER SECTION 13 OR 15(d)
OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
OR
[ ] TRANSITION REPORT
UNDER SECTION 13 OR 15(d)
OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number: 000-25927
MACATAWA BANK
CORPORATION
(Exact name of issuer
as specified in its charter)
|
Michigan
(State of other jurisdiction of incorporation or organization) |
38-3391345 (I.R.S. Employer Identification No.) |
10753 Macatawa Drive,
Holland, Michigan 49424
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (616) 820-1444
_________________
Indicate by check whether the
registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [__]
Indicate by check whether
the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes [X] No [__]
The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 8,385,831 shares of the Company’s Common Stock (no par value) were outstanding as of May 5, 2004.
Part I. Part II. Signatures |
Financial Information: Item 1. Consolidated Financial Statements Notes to Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Other Information: Item 1. Legal Proceedings Item 2. Changes in Securities and Use of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K |
Page Number 3 9 17 22 24 25 26 26 26 26 26 27 |
2
MACATAWA BANK
CORPORATION
CONSOLIDATED BALANCE
SHEETS
As of March 31, 2004 (unaudited)
and December 31, 2003
| (dollars in thousands except share data) | March 31, 2004 | December 31, 2003 | ||||||
|---|---|---|---|---|---|---|---|---|
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 30,991 | $ | 41,633 | ||||
| Federal funds sold | --- | 18,414 | ||||||
| Cash and cash equivalents | 30,991 | 60,047 | ||||||
| Securities available for sale | 120,562 | 107,049 | ||||||
| Securities held to maturity | 2,621 | 2,624 | ||||||
| Federal Home Loan Bank stock | 8,898 | 8,793 | ||||||
| Loans held for sale | 4,365 | 4,054 | ||||||
| Total loans | 1,224,243 | 1,157,107 | ||||||
| Allowance for loan losses | (16,958 | ) | (16,093 | ) | ||||
| 1,207,285 | 1,141,014 | |||||||
| Premises and equipment - net | 39,894 | 38,713 | ||||||
| Accrued interest receivable | 5,404 | 5,095 | ||||||
| Goodwill | 23,915 | 23,915 | ||||||
| Acquisition intangibles | 2,669 | 2,787 | ||||||
| Other assets | 9,824 | 7,020 | ||||||
| Total assets | $ | 1,456,428 | $ | 1,401,111 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Deposits | ||||||||
| Noninterest-bearing | $ | 123,940 | $ | 139,557 | ||||
| Interest-bearing | 985,336 | 969,842 | ||||||
| Total | 1,109,276 | 1,109,399 | ||||||
| Federal funds purchased | 26,083 | --- | ||||||
| Federal Home Loan Bank advances | 145,820 | 145,680 | ||||||
| Long-term debt | 41,238 | 19,655 | ||||||
| Accrued expenses and other liabilities | 9,148 | 4,477 | ||||||
| Total liabilities | 1,331,565 | 1,279,211 | ||||||
| Shareholders' equity | ||||||||
| Preferred stock, no par value, 500,000 shares | ||||||||
| authorized; no shares issued and outstanding | ||||||||
| Common stock, no par value, 20,000,000 shares | ||||||||
| authorized; 8,384,720 shares and 8,370,073 | ||||||||
| issued and outstanding as of March 31, 2004 and | ||||||||
| December 31, 2003, respectively | 114,689 | 114,568 | ||||||
| Retained earnings | 7,130 | 5,300 | ||||||
| Accumulated other comprehensive income | 3,044 | 2,032 | ||||||
| Total shareholders' equity | 124,863 | 121,900 | ||||||
| Total liabilities and shareholders' equity | $ | 1,456,428 | $ | 1,401,111 | ||||
See accompanying notes to consolidated financial statements
3
MACATAWA BANK
CORPORATION
CONSOLIDATED STATEMENTS
OF INCOME
Three Month Periods
Ended March 31, 2004 and 2003
(unaudited)
| (dollars in thousands except per share data) | Three Months ended March 31, 2004 | Three Months ended March 31, 2003 | ||||||
|---|---|---|---|---|---|---|---|---|
| Interest income | (unaudited) | (unaudited) | ||||||
| Loans, including fees | $ | 15,994 | $ | 14,267 | ||||
| Securities | 1,311 | 1,141 | ||||||
| Total interest income | 17,305 | 15,408 | ||||||
| Interest expense | ||||||||
| Deposits | 4,404 | 4,627 | ||||||
| Other | 1,509 | 1,173 | ||||||
| Total interest expense | 5,913 | 5,800 | ||||||
| Net interest income | 11,392 | 9,608 | ||||||
| Provision for loan losses | 1,225 | 995 | ||||||
| Net interest income after | ||||||||
| provision for loan losses | 10,167 | 8,613 | ||||||
| Noninterest income | ||||||||
| Service charges on deposit accounts | 651 | 600 | ||||||
| Loan production revenue | 529 | 986 | ||||||
| Trust fees | 738 | 583 | ||||||
| Other | 380 | 137 | ||||||
| Total noninterest income | 2,298 | 2,306 | ||||||
| Noninterest expense | ||||||||
| Salaries and benefits | 4,487 | 3,590 | ||||||
| Occupancy | 699 | 558 | ||||||
| Furniture and equipment | 677 | 594 | ||||||
| Legal and professional fees | 52 | 129 | ||||||
| Advertising | 286 | 201 | ||||||
| Data processing | 251 | 199 | ||||||
| Supplies | 143 | 132 | ||||||
| Other | 1,662 | 1,278 | ||||||
| Total noninterest expenses | 8,257 | 6,681 | ||||||
| Income before federal income tax | 4,208 | 4,238 | ||||||
| Income tax expense | 1,342 | 1,428 | ||||||
| Net income | $ | 2,866 | $ | 2,810 | ||||
| Basic earnings per share | $ | .33 | $ | .32 | ||||
| Diluted earnings per share | $ | .32 | $ | .32 | ||||
| Dividends per share | $ | .11 | $ | .09 | ||||
See accompanying notes to consolidated financial statements
4
MACATAWA BANK CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Month Periods Ended March 31, 2004 and 2003
(unaudited)
| (dollars in thousands) | Three Months ended March 31, 2004 | Three Months ended March 31, 2003 | ||||||
|---|---|---|---|---|---|---|---|---|
| (unaudited) | (unaudited) | |||||||
| Net income | $ | 2,866 | $ | 2,810 | ||||
| Other comprehensive income, net of tax: | ||||||||
| Unrealized gains/(losses) on securities | 478 | (187 | ) | |||||
| Unrealized gains/(losses) on derivative instruments | 534 | (9 | ) | |||||
| Comprehensive income | $ | 3,878 | $ | 2,614 | ||||
See accompanying notes to consolidated financial statements
5
MACATAWA BANK
CORPORATION
CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS’ EQUITY
Three Month Periods Ended March 31, 2004 and 2003
(unaudited)
| (dollars in thousands except per share data) |
Common Stock | Retained Earnings | Accumulated Other Comprehensive Income | Total Shareholders' Equity | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance, January 1, 2003 | $ | 105,201 | $ | 5,931 | $ | 2,842 | $ | 113,974 | ||||||
| Net income for three months ended | ||||||||||||||
| March 31, 2003 | 2,810 | 2,810 | ||||||||||||
| Other comprehensive income, net of tax: | ||||||||||||||
| Unrealized losses on securities | (187 | ) | (187 | ) | ||||||||||
| Unrealized losses on derivative instruments | (9 | ) | (9 | ) | ||||||||||
| Comprehensive income | 2,614 | |||||||||||||
| Proceeds from exercise of 74,672 stock options | 358 | 358 | ||||||||||||
| Cash dividends at $.09 per share | (793 | ) | (793 | ) | ||||||||||
| Balance, March 31, 2003 | $ | 105,559 | $ | 7,948 | $ | 2,646 | $ | 116,153 | ||||||
| Balance, January 1, 2004 | $ | 114,568 | $ | 5,300 | $ | 2,032 | $ | 121,900 | ||||||
| Net income for three months ended | ||||||||||||||
| March 31, 2004 | 2,866 | 2,866 | ||||||||||||
| Other comprehensive income, net of tax: | ||||||||||||||
| Unrealized gains on securities | 478 | 478 | ||||||||||||
| Unrealized gains on derivative instruments | 534 | 534 | ||||||||||||
| Comprehensive income | 3,878 | |||||||||||||
| Proceeds from exercise of 14,647 stock options | 121 | 121 | ||||||||||||
| Cash dividends at $.11 per share | (1,036 | ) | (1,036 | ) | ||||||||||
| Balance, March 31, 2004 | $ | 114,689 | $ | 7,130 | $ | 3,044 | $ | 124,863 | ||||||
See accompanying notes to consolidated financial statements
6
MACATAWA BANK
CORPORATION
CONSOLIDATED STATEMENTS
OF CASH FLOWS
Three Month Periods
Ended March 31, 2004 and 2003
(unaudited)
| (dollars in thousands) | Three Months Ended March 31, 2004 | Three Months Ended March 31, 2003 | ||||||
|---|---|---|---|---|---|---|---|---|
| (unaudited) | (unaudited) | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 2,866 | $ | 2,810 | ||||
| Adjustments to reconcile net income to net | ||||||||
| cash from operating activities: | ||||||||
| Depreciation and amortization | 763 | 712 | ||||||
| Provision for loan losses | 1,225 | 995 | ||||||
| Gain on sales of loans | (529 | ) | (986 | ) | ||||
| Origination of loans for sale | (35,362 | ) | (86,527 | ) | ||||
| Proceeds from sales of loans originated for sale | 35,580 | 93,931 | ||||||
| Net change in: | ||||||||
| Accrued interest receivable and other assets | (2,292 | ) | 3,521 | |||||
| Accrued expenses and other liabilities | 4,126 | (4,335 | ) | |||||
| Net cash from operating activities | 6,377 | 10,121 | ||||||
| Cash flows from investing activities | ||||||||
| Loan originations and payments, net | (67,496 | ) | (54,420 | ) | ||||
| Purchase of Federal Home Loan Bank Stock | (105 | ) | --- | |||||
| Purchases of securities available for sale | (22,466 | ) | (2,000 | ) | ||||
| Maturities and calls of securities available for sale | 9,500 | 3,973 | ||||||
| Principal paydowns on securities | 173 | 1,158 | ||||||
| Additions to premises and equipment | (1,807 | ) | (5,371 | ) | ||||
| Net cash used in investing activities | (82,201 | ) | (56,660 | ) | ||||
| Cash flows from financing activities | ||||||||
| Net increase/(decrease) in deposits | (123 | ) | 44,694 | |||||
| Net increase/(decrease) increase in short term borrowings | 26,083 | (6,500 | ) | |||||
| Proceeds from Federal Home Loan Bank advances | 25,000 | --- | ||||||
| Repayments of Federal Home Loan Bank advances | (24,860 | ) | (4,617 | ) | ||||
| Proceeds from long-term debt and other borrowings | 21,583 | 1,500 | ||||||
| Cash dividends paid | (1,036 | ) | (793 | ) | ||||
| Proceeds from sale of stock and exercises of options | 121 | 358 | ||||||
| Net cash from financing activities | 46,768 | 34,642 | ||||||
| Net change in cash and cash equivalents | (29,056 | ) | (11,897 | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||