Macatawa Bank Corporation Reports Third Quarter 2020 Results
Macatawa Bank Corporation (NASDAQ: MCBC) reported a 13% decrease in net income for Q3 2020, totaling $7.1 million compared to $8.2 million in Q3 2019. The company allocated $500,000 for loan losses due to COVID-19, contrasting with no provision in Q3 2019. The net interest margin fell to 2.43% from 3.29% year-over-year, driven by federal funds rate cuts and low-yielding PPP loans. Non-interest income rose by 17% to $879,000. Overall, the bank maintains strong capital and liquidity levels, supporting its resilience against pandemic-induced challenges.
- Non-interest income increased by $879,000 (17%) from Q3 2019, attributed to higher residential mortgage volume.
- Loan portfolio balances rose by $165.1 million (12%) driven by PPP loans.
- Strong capital and liquidity levels provide stability during challenging market conditions.
- Approximately 75% of loans modified under the CARES Act returned to contractual terms by September 30, 2020.
- Net income decreased by 13% from Q3 2019, reflecting ongoing pandemic challenges.
- Net interest margin dropped to 2.43% from 3.29% year-over-year, primarily due to federal funds rate decreases.
- Provision for loan losses of $500,000 in Q3 2020 versus no provision in Q3 2019.
HOLLAND, Mich., Oct. 22, 2020 (GLOBE NEWSWIRE) -- Macatawa Bank Corporation (NASDAQ: MCBC), the holding company for Macatawa Bank (collectively, the “Company”), today announced its results for the third quarter of 2020.
- Net income of
$7.1 million in third quarter 2020 versus$8.2 million in third quarter 2019 – down13% - Provision for loan losses of
$500,000 in third quarter 2020 versus no provision in the third quarter 2019, due to additional qualitative allocations for effects of COVID-19 pandemic - Net loan recoveries of
$203,000 in third quarter 2020 versus$4.0 million net chargeoffs in second quarter 2020 and$259,000 net recoveries in third quarter 2019 - Net interest margin decreased to
2.43% in third quarter 2020 versus3.29% in third quarter 2019 primarily due to federal funds rate decreases during the past year, low-yielding Paycheck Protection Program (“PPP”) loans and high on-balance sheet liquidity - Growth in non-interest income of
$879,000 (17% ) from third quarter 2019 driven by increased residential mortgage volume - Modest increase in total non-interest expense – up
$524,000 (5% ) from third quarter 2019 - Loan portfolio balances up by
$165.1 million (12% ) from third quarter 2019, driven by PPP loans - Approximately
75% of loans modified under CARES Act have returned to contractual terms at September 30, 2020 - Core deposit balances up by
$350.4 million (19% ) from third quarter 2019 - Capital and liquidity levels remain strong
The Company reported net income of
"We are pleased to report solid profitability for the third quarter of 2020, despite the challenges of operating during a continuing world-wide pandemic,” said Ronald L. Haan, President and CEO of the Company. “The COVID-19 pandemic has continued to have a significant impact on our community, but the Company has again proven resilient and consistent in serving the financial needs of our customers and our community. We were active participants in the Small Business Administration’s Paycheck Protection Program (PPP) and originated 1,738 PPP loans totaling
Macatawa Bank Corporation 3Q Results
income in the third quarter of 2020 compared to the third quarter of 2019, as we increased our allowance for loan losses due to factors associated with COVID-19, including additional allocations provided to loans that remained under CARES Act modifications at September 30, 2020. We returned to achieving net loan recoveries in the third quarter of 2020 after experiencing a sizeable charge-off in the second quarter of 2020.”
Mr. Haan concluded: "We will continue to experience challenges relating to the impact of COVID-19 on our customers and our business. We have actively worked with our borrowers to provide payment relief where possible while protecting the Company’s position. We provided short-term modifications on
Operating Results
Net interest income for the third quarter 2020 totaled
Average interest earning assets for the third quarter 2020 increased
Macatawa Bank Corporation 3Q Results
Non-interest income increased
Non-interest expense was
Dollars in 000s | Q3 2020 to Q2 2020 | Q3 2020 To Q3 2019 | ||||||
| Salaries and other compensation | $ | 116 | $ | 158 | ||||
| Salary deferral from commercial loans | 300 | (10 | ) | |||||
| Bonus accrual | 242 | 12 | ||||||
| Mortgage production – variable comp | (17 | ) | 88 | |||||
| 401k matching contributions | 136 | 11 | ||||||
| Medical insurance costs | (63 | ) | (51 | ) | ||||
| Total change in salaries and benefits | $ | 714 | $ | 208 | ||||
Nonperforming asset expenses remained low in the third quarter 2020 at just
Macatawa Bank Corporation 3Q Results
Federal income tax expense was
Asset Quality
A provision for loan losses of
The allowance for loan losses of
The CARES Act enacted in the first quarter of 2020 allowed the Company to provide payment relief to borrowers that were current on their loan terms at December 31, 2019 without being required to identify those loans as troubled debt restructurings, essentially allowing the presumption of the borrowers not being in financial difficulty. The Company granted 726 of these modifications with principal balances totaling
Dollars in 000s | Number of COVID-19 Modifications | Balance of COVID-19 Modifications | ||||
| March 31, 2020 | 176 | $ | 87,917 | |||
| June 30, 2020 | 599 | 297,269 | ||||
| September 30, 2020 | 26 | 79,894 | ||||
At September 30, 2020, the Company's nonperforming loans were
Macatawa Bank Corporation 3Q Results
A break-down of non-performing loans is shown in the table below.
Dollars in 000s | Sept 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sept 30, 2019 | ||||||||||
| Commercial Real Estate | $ | 97 | $ | 2,857 | $ | 5,908 | $ | 98 | $ | 102 | |||||
| Commercial and Industrial | --- | --- | 1,211 | --- | --- | ||||||||||
| Total Commercial Loans | 97 | 2,857 | 7,119 | 98 | 102 | ||||||||||
| Residential Mortgage Loans | 98 | 100 | 103 | 105 | 109 | ||||||||||
| Consumer Loans | --- | --- | 8 | --- | --- | ||||||||||
| Total Non-Performing Loans | $ | 195 | $ | 2,957 | $ |
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FAQ
What were Macatawa Bank Corporation's Q3 2020 earnings?
Macatawa Bank Corporation reported net income of $7.1 million for Q3 2020.
How did COVID-19 affect Macatawa Bank Corporation's financials?
The bank recorded a $500,000 provision for loan losses in Q3 2020 due to the impacts of COVID-19.
What is the net interest margin for Macatawa Bank Corporation in Q3 2020?
The net interest margin for Q3 2020 was 2.43%, down from 3.29% in Q3 2019.
What contributed to the increase in non-interest income for Macatawa Bank Corporation?
Non-interest income increased by $879,000 in Q3 2020, driven by higher residential mortgage volume.
What percentage of loans modified under the CARES Act have returned to normal terms?
Approximately 75% of loans modified under the CARES Act returned to contractual terms by September 30, 2020.
Macatawa Bank Corp
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Banks - Regional
State Commercial Banks
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HOLLAND
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