Macatawa Bank Corp. (MCBC, Financial) filed Quarterly Report for the period ended 2009-09-30.
Macatawa Bank Corporation is a bank holding company. The company provides a full range of commercial and consumer banking services primarily in the communities of Holland and Zeeland Michigan as well as the surrounding market area principally located in Ottawa County. The company's services include checking and savings accounts safe deposit boxes travelerschecks money orders trust services and commercial mortgage and consumerloans. Macatawa Bank Corp. has a market cap of $34.9 million; its shares were traded at around $1.98 with and P/S ratio of 0.3. Macatawa Bank Corp. had an annual average earning growth of 10.4% over the past 5 years.
Both the three and nine month periods ended September 30, 2009 were significantly impacted by the cost associated with problem loans and non-performing assets. The provision for loan losses remained elevated and was $21.6 million and $52.7 million for the three and nine months ended September 30, 2009 compared to $2.4 million and $23.6 million for the three and nine months ended September 30, 2008. Costs associated with nonperforming assets were $3.1 million and $7.7 million for the three and nine months ended September 30, 2009 compared to $1.6 million and $3.4 million for the three and nine months ended September 30, 2008. Lost interest from rising balances of non-performing assets was approximately $2.2 million and $6.8 million for the three and nine months ended September 30, 2009 compared to $1.4 million and $4.1 million for the three and nine months ended September 30, 2008. Each of these items is discussed more fully below.
Provision for Loan Losses: The provision for loan losses for the three and nine month periods ended September 30, 2009 was $21.6 million and $52.7 million compared to $2.4 million and $23.6 for the same periods in the prior year. The provision for loan losses remained elevated as we respond to continued declines in real estate values due to the prolonged weakness in the economy and its impact on our loan portfolio, primarily residential land development loans. The $19.2 million and $29.1 million increase in the provision for loan losses for the three and nine month periods ended September 30, 2009 related primarily to higher levels of net charge-offs and additional reserve requirements for impaired loans associated with these declines in real estate values. A decline in total portfolio loans during these periods partially offset the increase in the provision.
Noninterest Income: Noninterest income for the three and nine month periods ended September 30, 2009 decreased to $3.6 million and $13.2 million, respectively, from $4.1 million and $14.2 million for the same periods in the prior year. Non-interest income for the nine month period ended September 30, 2008 included approximately $412,000, $243,000 and $832,000, respectively, of gains on the sale of securities, gains on the termination of certain borrowings and gains on the settlement of interest rate swaps.
FINANCIAL CONDITION Summary: In light of the persistent weak economic conditions that began in 2008, management has focused its efforts in 2009 on reducing its loan portfolio in higher concentration areas to improve its financial condition through preservation of capital, improved on-balance sheet liquidity and reduced reliance on non-core funding. Total assets were $1.98 billion at September 30, 2009 a decrease of $167.6 million from $2.15 billion at December 31, 2008. The overall decrease in total assets reflected a decline of $217.2 million in our loan portfolio and $42.9 million in available for sale securities partially used to increase short-term investments by $108.4 million. The decline in assets was primarily offset by a decline in deposits generated through brokers and rate sensitive in-market deposits.
Foreclosed assets totaled $33.4 million at September 30, 2009 compared to $19.5 million at December 31, 2008. Of the $33.4 million, there were 66 commercial real estate relationships totaling approximately $31.0 million. The remaining balance was comprised of 15 residential mortgage properties totaling approximately $2.4 million. All properties acquired through or in lieu of foreclosure are initially transferred at their fair value less costs to sell and then evaluated for impairment after transfer using a lower of cost or market approach. Proceeds from sales of foreclosed properties were $1.3 million and $6.1 million during the three and nine month periods ended September 30, 2009 resulting in a net gain of $4,000 and $113,000, respectively.
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Macatawa Bank Corporation is a bank holding company. The company provides a full range of commercial and consumer banking services primarily in the communities of Holland and Zeeland Michigan as well as the surrounding market area principally located in Ottawa County. The company's services include checking and savings accounts safe deposit boxes travelerschecks money orders trust services and commercial mortgage and consumerloans. Macatawa Bank Corp. has a market cap of $34.9 million; its shares were traded at around $1.98 with and P/S ratio of 0.3. Macatawa Bank Corp. had an annual average earning growth of 10.4% over the past 5 years.
Highlight of Business Operations:
RESULTS OF OPERATIONS Summary: Net loss available to common shares for the quarter ended September 30, 2009 was $20.9 million, compared to third quarter 2008 net income of $1.9 million. Loss per common share on a diluted basis was $1.18 for the third quarter of 2009 compared to earnings per common share of $0.11 for the same period in 2008. Net loss available to common shares for the nine months ended September 30, 2009 was $57.3 million compared to a net loss of $3.8 million for the same period in the prior year. Loss per common share on a diluted basis was $3.30 for the nine months ended September 30, 2009 compared to $0.22 for the same period in the prior year.Both the three and nine month periods ended September 30, 2009 were significantly impacted by the cost associated with problem loans and non-performing assets. The provision for loan losses remained elevated and was $21.6 million and $52.7 million for the three and nine months ended September 30, 2009 compared to $2.4 million and $23.6 million for the three and nine months ended September 30, 2008. Costs associated with nonperforming assets were $3.1 million and $7.7 million for the three and nine months ended September 30, 2009 compared to $1.6 million and $3.4 million for the three and nine months ended September 30, 2008. Lost interest from rising balances of non-performing assets was approximately $2.2 million and $6.8 million for the three and nine months ended September 30, 2009 compared to $1.4 million and $4.1 million for the three and nine months ended September 30, 2008. Each of these items is discussed more fully below.
Provision for Loan Losses: The provision for loan losses for the three and nine month periods ended September 30, 2009 was $21.6 million and $52.7 million compared to $2.4 million and $23.6 for the same periods in the prior year. The provision for loan losses remained elevated as we respond to continued declines in real estate values due to the prolonged weakness in the economy and its impact on our loan portfolio, primarily residential land development loans. The $19.2 million and $29.1 million increase in the provision for loan losses for the three and nine month periods ended September 30, 2009 related primarily to higher levels of net charge-offs and additional reserve requirements for impaired loans associated with these declines in real estate values. A decline in total portfolio loans during these periods partially offset the increase in the provision.
Noninterest Income: Noninterest income for the three and nine month periods ended September 30, 2009 decreased to $3.6 million and $13.2 million, respectively, from $4.1 million and $14.2 million for the same periods in the prior year. Non-interest income for the nine month period ended September 30, 2008 included approximately $412,000, $243,000 and $832,000, respectively, of gains on the sale of securities, gains on the termination of certain borrowings and gains on the settlement of interest rate swaps.
FINANCIAL CONDITION Summary: In light of the persistent weak economic conditions that began in 2008, management has focused its efforts in 2009 on reducing its loan portfolio in higher concentration areas to improve its financial condition through preservation of capital, improved on-balance sheet liquidity and reduced reliance on non-core funding. Total assets were $1.98 billion at September 30, 2009 a decrease of $167.6 million from $2.15 billion at December 31, 2008. The overall decrease in total assets reflected a decline of $217.2 million in our loan portfolio and $42.9 million in available for sale securities partially used to increase short-term investments by $108.4 million. The decline in assets was primarily offset by a decline in deposits generated through brokers and rate sensitive in-market deposits.
Foreclosed assets totaled $33.4 million at September 30, 2009 compared to $19.5 million at December 31, 2008. Of the $33.4 million, there were 66 commercial real estate relationships totaling approximately $31.0 million. The remaining balance was comprised of 15 residential mortgage properties totaling approximately $2.4 million. All properties acquired through or in lieu of foreclosure are initially transferred at their fair value less costs to sell and then evaluated for impairment after transfer using a lower of cost or market approach. Proceeds from sales of foreclosed properties were $1.3 million and $6.1 million during the three and nine month periods ended September 30, 2009 resulting in a net gain of $4,000 and $113,000, respectively.
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