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Macatawa Bank Corporation Reports Fourth Quarter and Full Year 2020 Results

HOLLAND, Mich., Jan. 28, 2021 (GLOBE NEWSWIRE) -- Macatawa Bank Corporation (NASDAQ: MCBC), the holding company for Macatawa Bank (collectively, the “Company”), today announced its results for the fourth quarter and full year of 2020.

  • Net income of $9.0 million in fourth quarter 2020 versus $8.2 million in fourth quarter 2019 – up 10%
  • Full year 2020 net income of $30.2 million versus $32.0 million in 2019 – down just 6% despite COVID-19 pandemic challenges
  • Provision for loan losses of $800,000 in the fourth quarter 2020 versus no provision in the fourth quarter 2019, due to additional qualitative allocations for effects of COVID-19 pandemic on economic conditions
  • Net interest margin increased 26 basis points to 2.69% during the fourth quarter 2020 primarily due to unamortized fees recognized upon forgiveness of $113.5 million of Paycheck Protection Program (“PPP”) loans in the quarter
  • Growth in non-interest income of $2.0 million (39%) from fourth quarter 2019 driven by increased gains on sales of mortgage loans
  • Loan portfolio balances up by $43.7 million (3%) from fourth quarter 2019, driven by PPP loans
  • Over 99% of loan balances modified under CARES Act have returned to contractual terms at December 31, 2020
  • Core deposit balances up by $545.3 million (31%) from fourth quarter 2019
  • Capital and liquidity levels increased further during the quarter and remain strong

The Company reported net income of $9.0 million, or $0.26 per diluted share, in the fourth quarter 2020 compared to $8.2 million, or $0.24 per diluted share, in the fourth quarter 2019. For the full year 2020, the Company reported net income of $30.2 million, or $0.88 per diluted share, compared to $32.0 million, or $0.94 per diluted share, for the same period in 2019.

"We are pleased to report solid profitability for the fourth quarter of 2020 and for the full year 2020,” 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 $346.7 million in 2020. The loans were distributed to many local small businesses in order to protect jobs and allow continued paychecks to employees in those companies. The SBA distributed $113.5 million in forgiveness disbursements related to these PPP loans during the fourth quarter 2020. We are participating in this program again in 2021 as reauthorized by Congress.

Despite a challenging environment, we produced $9.0 million in earnings for the fourth quarter and $30.2 million for the full year 2020. Mortgage gains in the fourth quarter of 2020 were over three times the level achieved a year ago and offset much of the reduction in net interest income caused by the decrease in market interest rates in 2020. An increase in provision for loan losses was the primary reason for the reduction in net income in the full year 2020 compared to 2019, as we increased our allowance for loan losses due to effects of the COVID-19 pandemic on economic conditions.”  

Mr. Haan concluded: "We continue to monitor 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, and over 99 percent of the balance of loans that had been modified during the COVID-19 pandemic have either paid off or have returned to their contractual loan payment terms. We look forward to further supporting the communities we serve through additional PPP lending, and we believe our strong balance sheet should provide the strength and stability to weather the remainder of these difficult times.”

Operating Results
Net interest income for the fourth quarter 2020 totaled $16.5 million, an increase of $1.8 million from the third quarter 2020 and an increase of $838,000 from the fourth quarter 2019. Net interest margin for the fourth quarter 2020 was 2.69 percent, up 26 basis points from the third quarter 2020, and down 55 basis points from the fourth quarter 2019. Net interest income for the fourth quarter 2020 benefitted from amortization of $3.2 million in fees from loans issued under the PPP in the second and third quarters of 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. At December 31, 2020, the Company had approved and received forgiveness disbursements from the SBA on 765 loans with balances totaling $113.5 million. The Company expects the related fee income amortization to continue to be elevated in the first quarter of 2021 as the SBA continues to process the larger, more complex, forgiveness applications, which will positively impact net interest income. Net interest margin was negatively impacted in the fourth quarter 2020 versus the third quarter 2020 by carrying significantly higher balances of federal funds sold due to the seasonal increase in deposits from municipal customers typically experienced. These balances, which earn only 10 basis points in interest, increased by $106.3 million, on average, from the third quarter 2020 and caused an 11 basis point decrease in net interest margin in the fourth quarter 2020. The most significant factor in the 55 basis point decrease in net interest margin from the fourth quarter 2019 to the fourth quarter 2020 was the impact of the 225 basis point decrease in the federal funds rate. 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 these federal funds rate decreases. Without these floors, net interest income for the quarter would have been lower than stated by approximately $1.0 million.

Average interest earning assets for the fourth quarter 2020 increased $41.7 million from the third quarter 2020 and were up $526.4 million from the fourth quarter 2019.   Increases in deposit balances, including seasonal municipal deposits and business customers holding higher balances at year end, accounted for the increase from third quarter 2020.  

Non-interest income increased $980,000 in the fourth quarter 2020 compared to the third quarter 2020 and increased $2.0 million from the fourth quarter 2019. Gains on sales of mortgage loans in the fourth quarter 2020 were up $886,000 compared to the third quarter 2020 and were up $1.7 million from the fourth quarter 2019. The Company originated $36.2 million in mortgage loans for sale in the fourth quarter 2020 compared to $40.8 million in the third quarter 2020 and $28.6 million in the fourth quarter 2019. Deposit service charges were up $86,000 in the fourth quarter 2020 compared to the third quarter 2020 and were down $74,000 compared to the fourth quarter 2019. These fees are lower than in recent years due to lower overdraft fees as customers have generally retained higher deposit balances due to uncertainty related to the COVID-19 pandemic.

Non-interest expense was $12.0 million for the fourth quarter 2020, compared to $11.5 million for the third quarter 2020 and $10.6 million for the fourth quarter 2019. The largest component of non-interest expense was salaries and benefit expenses. Salaries and benefit expenses were up $113,000 compared to the third quarter 2020 and were up $809,000 compared to the fourth quarter 2019. The increases compared to the fourth quarter 2019 were due to a combination of factors, including a higher level of salary and other compensation from staffing changes and merit increases, increased bonus accrual and variable based compensation from higher mortgage production and a higher level of medical insurance expense.   The table below identifies the primary components of the changes in salaries and benefits between periods.



Dollars in 000s
  Q4 2020
to
Q3 2020
  Q4 2020
To
Q4 2019
           
Salaries and other compensation   $ 70     $ 259  
Salary deferral from commercial loans     (31 )     (27 )
Bonus accrual     152       320  
Mortgage production – variable comp     51       129  
401k matching contributions     (30 )     (4 )
Medical insurance costs     (99 )     132  
Total change in salaries and benefits   $ 113     $ 809  
                 

Nonperforming asset expenses remained low in the fourth quarter 2020 at just $12,000 compared to $25,000 in the third quarter 2020 and $139,000 in the fourth quarter 2019. FDIC assessment expense was $194,000 in the fourth quarter 2020 and $131,000 in the third quarter 2020. There was no FDIC assessment expense in the fourth quarter 2019 as the FDIC assessment credits fully covered the assessment in that quarter. All of the Company’s FDIC assessment credits had been applied by the second quarter 2020, so expense increased in the last three quarters of 2020. Data processing expenses were up $287,000 in the fourth quarter 2020 compared to the third quarter 2020 and were up $295,000 compared to the fourth quarter 2019 due to online banking conversion related expenses incurred in the fourth quarter 2020. Other categories of non-interest expense were relatively flat compared to the third quarter 2020 and the fourth quarter 2019 due to a continued focus on expense management.

Federal income tax expense was $1.8 million for the fourth quarter 2020 compared to $1.6 million for the third quarter 2020 and $1.9 million for the fourth quarter 2019. Federal income tax expense for the fourth quarter 2020 benefitted from the reversal of $92,000 deferred tax valuation allowance at the end of 2020. The effective tax rate was 16.8 percent for the fourth quarter 2020, compared to 18.5 percent for the third quarter 2020 and 19.2 percent for the fourth quarter 2019.

Asset Quality
A provision for loan losses of $800,000 was recorded in the fourth quarter 2020 compared to $500,000 in the third quarter 2020 and no provision taken in the fourth quarter 2019. Net loan recoveries for the fourth quarter 2020 were $50,000, compared to third quarter 2020 net loan recoveries of $203,000 and fourth quarter 2019 net loan recoveries of $55,000. At December 31, 2020, the Company had experienced net loan recoveries in twenty-two of the past twenty-four quarters.   Total loans past due on payments by 30 days or more amounted to $581,000 at December 31, 2020, up slightly from $524,000 at September 30, 2020 and up from $405,000 at December 31, 2019. Delinquency as a percentage of total loans was 0.04 percent at December 31, 2020, well below the Company’s peer level.

The allowance for loan losses of $17.4 million was 1.22 percent of total loans at December 31, 2020, compared to 1.07 percent of total loans at September 30, 2020, and 1.24 percent at December 31, 2019. The ratio at December 31, 2020 and at September 30, 2020 includes the PPP loans originated in the second and third quarters, which are fully guaranteed by the SBA and receive no allowance allocation. The ratio at December 31, 2020 and September 30, 2020 excluding PPP loans was 1.45 percent and 1.38 percent, respectively. The coverage ratio of allowance for loan losses to nonperforming loans continued to be strong and significantly exceeded 1-to-1 coverage at 33-to-1 as of December 31, 2020.

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. The Company granted 733 of these modifications with principal balances totaling $337.2 million in 2020, the large majority of which were granted an interest only period of 90 days. Some borrowers were granted an additional 90 day modification. At December 31, 2020, over 99 percent of the modifications granted had expired and the loans were back to their contractual terms. The table below shows the number of loans and balances that were under such modifications as of the end of the quarter for the dates indicated.



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
December 31, 2020     6     2,018
             

At December 31, 2020, the Company's nonperforming loans were $533,000, representing 0.04 percent of total loans. This compares to $195,000 (0.01 percent of total loans) at September 30, 2020 and $203,000 (0.01 percent of total loans) at December 31, 2019. Other real estate owned and repossessed assets were $2.5 million at December 31, 2020, compared to $2.6 million at September 30, 2020 and $2.7 million at December 31, 2019. Total non-performing assets, including other real estate owned and nonperforming loans, were $3.1 million, or 0.12 percent of total assets, at December 31, 2020. Total nonperforming assets, including other real estate owned and nonperforming loans, decreased by $119,000 from December 31, 2019 to December 31, 2020.

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


Dollars in 000s
  Dec 31,
2020
  Sept 30,
2020
  Jun 30,
2020
  Mar 31,
2020
  Dec 31,
2019
 
                               
Commercial Real Estate   $ 438   $ 97   $ 2,857   $ 5,908   $ 98  
Commercial and Industrial     ---     ---     ---     1,211     ---  
Total Commercial Loans     438     97     2,857     7,119     98  
Residential Mortgage Loans     95     98     100     103     105  
Consumer Loans     ---     ---     ---     8     ---  
Total Non-Performing Loans   $ 533   $ 195   $ 2,957   $ 7,230   $ 203  
                                 

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


Dollars in 000s
  Dec 31,
2020
  Sept 30,
2020
  Jun 30,
2020
  Mar 31,
2020
  Dec 31,
2019
 
                               
Non-Performing Loans   $ 533   $ 195   $ 2,957   $ 7,230   $ 203  
Other Repossessed Assets     ---     ---     ---     ---     ---  
Other Real Estate Owned     2,537     2,624     2,624     2,626     2,748  
Total Non-Performing Assets   $ 3,070   $ 2,819   $ 5,581   $ 9,856   $ 2,951  
                                 

Balance Sheet, Liquidity and Capital

Total assets were $2.64 billion at December 31, 2020, an increase of $133.3 million from $2.51 billion at September 30, 2020 and an increase of $573.3 million from $2.07 billion at December 31, 2019. Assets were elevated at December 31, 2020 and September 30, 2020 due to customers holding a higher level of deposits during the COVID-19 pandemic, including unused balances from PPP loan proceeds, particularly in the third quarter 2020. Total loans were $1.43 billion at December 31, 2020, a decrease of $113.0 million from $1.54 billion at September 30, 2020 and an increase of $43.7 million from $1.39 billion at December 31, 2019.

Commercial loans increased by $119.6 million from December 31, 2019 to December 31, 2020, partially offset by a decrease of $61.5 million in the residential mortgage portfolio, and a decrease of $14.4 million in the consumer loan portfolio. Commercial real estate loans decreased by $46.3 million, commercial and industrial loans decreased by $63.2 million and PPP loans increased by $229.1 million, net of SBA forgiveness received, during the same period.

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


Dollars in 000s
  Dec 31,
2020
  Sept 30,
2020
  Jun 30,
2020
  Mar 31,
2020
  Dec 31,
2019
 
                               
Construction and Development   $ 118,665   $ 121,578   $ 127,094   $ 135,648   $ 134,710  
Other Commercial Real Estate     433,508     437,345     442,862     457,003     463,748  
Commercial Loans Secured by Real Estate     552,173     558,923     569,956     592,651     598,458  
Commercial and Industrial     436,331     413,702     405,093     527,590     499,572  
Paycheck Protection Program     229,079     339,216     335,668     ---     ---  
Total Commercial Loans   $ 1,217,583   $ 1,311,841   $ 1,310,717   $ 1,120,241   $ 1,098,030  
                                 

Total deposits were $2.30 billion at December 31, 2020, up $128.0 million, or 6 percent, from $2.22 billion at September 30, 2020 and were up $545.3 million, or 31 percent, from $1.75 billion at December 31, 2019. Demand deposits were up $153.8 million in the fourth quarter 2020 compared to the third quarter 2020 and were up $490.5 million compared to the fourth quarter 2019. Money market deposits and savings deposits were down $14.3 million from the third quarter 2020 and were up $102.5 million from the fourth quarter 2019. Certificates of deposit were down $11.4 million at December 31, 2020 compared to September 30, 2020 and were down $47.7 million compared to December 31, 2019 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.

The Company's total risk-based regulatory capital ratio at December 31, 2020 was higher than the ratios at both September 30, 2020 and December 31, 2019. Macatawa Bank’s risk-based regulatory capital ratios continue to be at levels comfortably above those required to be categorized as “well capitalized” under applicable regulatory capital guidelines. As such, the Bank was categorized as "well capitalized" at December 31, 2020.

About Macatawa Bank
Headquartered in Holland, Mich., 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 “Part II, Item 1A – Risk Factors” in our Quarterly Report on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020 and in "Item 1A - Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2019. 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   Twelve Months Ended
  4th Qtr   3rd Qtr   4th Qtr   December 31
EARNINGS SUMMARY   2020       2020       2019       2020       2019  
Total interest income $ 17,401     $ 15,822     $ 18,435     $ 67,224     $ 75,942  
Total interest expense   888       1,148       2,760       5,687       12,455  
Net interest income   16,513       14,674       15,675       61,537       63,487  
Provision for loan losses   800       500       -       3,000       (450 )
Net interest income after provision for loan losses   15,713       14,174       15,675       58,537       63,937  
                   
NON-INTEREST INCOME                  
Deposit service charges   1,073       987       1,147       4,030       4,415  
Net gains on mortgage loans   2,432       1,546       697       6,477       2,347  
Trust fees   957       921       999       3,758       3,812  
Other   2,610       2,638       2,246       9,711       9,154  
Total non-interest income   7,072       6,092       5,089       23,976       19,728  
                   
NON-INTEREST EXPENSE                  
Salaries and benefits   6,593       6,480       5,784       25,530       24,679  
Occupancy   971       1,026       940       3,955       3,994  
Furniture and equipment   974       967       823       3,678       3,420  
FDIC assessment   194       131       -       400       239  
Problem asset costs, including losses and (gains)   12       25       139       115       253  
Other   3,222       2,904       2,957       12,047       11,639  
Total non-interest expense   11,966       11,533       10,643       45,725       44,224  
Income before income tax   10,819       8,733       10,121       36,788       39,441  
Income tax expense   1,822       1,613       1,949       6,623       7,462  
Net income $ 8,997     $ 7,120     $ 8,172     $ 30,165     $ 31,979  
                   
Basic earnings per common share $ 0.26     $ 0.21     $ 0.24     $ 0.88     $ 0.94  
Diluted earnings per common share $ 0.26     $ 0.21     $ 0.24     $ 0.88     $ 0.94  
Return on average assets   1.39 %     1.12 %     1.59 %     1.27 %     1.59 %
Return on average equity   15.24 %     12.29 %     15.27 %     13.19 %     15.66 %
Net interest margin (fully taxable equivalent)   2.69 %     2.43 %     3.24 %     2.75 %     3.38 %
Efficiency ratio   50.74 %     55.54 %     51.26 %     53.47 %     53.14 %
                   
BALANCE SHEET DATA         December 31   September 30   December 31
Assets           2020       2020       2019  
Cash and due from banks         $ 31,480     $ 28,294     $ 31,942  
Federal funds sold and other short-term investments           752,256       504,706       240,508  
Debt securities available for sale           236,832       229,928       225,249  
Debt securities held to maturity           79,468       91,394       82,720  
Federal Home Loan Bank Stock           11,558       11,558       11,558  
Loans held for sale           5,422       3,508       3,294  
Total loans           1,429,331       1,542,335       1,385,627  
Less allowance for loan loss           17,408       16,558       17,200  
Net loans           1,411,923       1,525,777       1,368,427  
Premises and equipment, net           43,254       43,733       43,417  
Bank-owned life insurance           42,516       42,368       42,156  
Other real estate owned           2,537       2,624       2,748  
Other assets           24,780       24,828       16,751  
                   
Total Assets         $ 2,642,026     $ 2,508,718     $ 2,068,770  
                   
Liabilities and Shareholders' Equity                  
Noninterest-bearing deposits         $ 809,437     $ 738,471     $ 482,499  
Interest-bearing deposits           1,489,150       1,432,108       1,270,795  
Total deposits           2,298,587       2,170,579       1,753,294  
Other borrowed funds           70,000       70,000       60,000  
Long-term debt           20,619       20,619       20,619  
Other liabilities           12,977       13,655       17,388  
Total Liabilities           2,402,183       2,274,853       1,851,301  
                   
Shareholders' equity           239,843       233,865       217,469  
                   
Total Liabilities and Shareholders' Equity         $ 2,642,026     $ 2,508,718     $ 2,068,770  
                   


MACATAWA BANK CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands except per share information)
                             
    Quarterly   Year to Date
                             
    4th Qtr   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr        
      2020       2020       2020       2020       2019       2020       2019  
EARNINGS SUMMARY                            
Net interest income   $ 16,513     $ 14,674     $ 15,047     $ 15,303     $ 15,675     $ 61,537     $ 63,487  
Provision for loan losses     800       500       1,000       700       -       3,000       (450 )
Total non-interest income     7,072       6,092       5,854       4,959       5,089       23,976       19,728  
Total non-interest expense     11,966       11,533       10,504       11,722       10,643       45,725       44,224  
Federal income tax expense     1,822       1,613       1,759       1,429       1,949       6,623       7,462  
Net income   $ 8,997     $ 7,120     $ 7,638     $ 6,411     $ 8,172     $ 30,165     $ 31,979  
                             
Basic earnings per common share   $ 0.26     $ 0.21     $ 0.22     $ 0.19     $ 0.24     $ 0.88     $ 0.94  
Diluted earnings per common share   $ 0.26     $ 0.21     $ 0.22     $ 0.19     $ 0.24     $ 0.88     $ 0.94  
                             
MARKET DATA                            
Book value per common share   $ 7.01     $ 6.86     $ 6.72     $ 6.56     $ 6.38     $ 7.01     $ 6.38  
Tangible book value per common share   $ 7.01     $ 6.86     $ 6.72     $ 6.56     $ 6.38     $ 7.01     $ 6.38  
Market value per common share   $ 8.37     $ 6.53     $ 7.82     $ 7.12     $ 11.13     $ 8.37     $ 11.13  
Average basic common shares     34,154,820       34,109,901       34,108,982       34,106,719       34,080,275       34,120,275       34,056,200  
Average diluted common shares     34,154,820       34,109,901       34,108,982       34,106,719       34,080,275       34,120,275       34,056,200  
Period end common shares     34,197,519       34,101,320       34,114,901       34,107,995       34,103,542       34,197,519       34,103,542  
                             
PERFORMANCE RATIOS                            
Return on average assets     1.39 %     1.12 %     1.31 %     1.27 %     1.59 %     1.27 %     1.59 %
Return on average equity     15.24 %     12.29 %     13.50 %     11.63 %     15.27 %     13.19 %     15.66 %
Net interest margin (fully taxable equivalent)     2.69 %     2.43 %     2.74 %     3.25 %     3.24 %     2.75 %     3.38 %
Efficiency ratio     50.74 %     55.54 %     50.26 %     57.85 %     51.26 %     53.47 %     53.14 %
Full-time equivalent employees (period end)     328       327       335       331       325       328       325  
                             
ASSET QUALITY                            
Gross charge-offs   $ 22     $ 24     $ 4,183     $ 39     $ 33     $ 4,268     $ 279  
Net charge-offs/(recoveries)   $ (50 )   $ (203 )   $ 4,034     $ (989 )   $ (55 )   $ 2,792     $ (774 )
Net charge-offs to average loans (annualized)     -0.01 %     -0.05 %     1.03 %     -0.29 %     -0.02 %     0.19 %     -0.06 %
Nonperforming loans   $ 533     $ 195     $ 2,957     $ 7,230     $ 203     $ 533     $ 203  
Other real estate and repossessed assets   $ 2,537     $ 2,624     $ 2,624     $ 2,626     $ 2,748     $ 2,537     $ 2,748  
Nonperforming loans to total loans     0.04 %     0.01 %     0.19 %     0.52 %     0.01 %     0.04 %     0.01 %
Nonperforming assets to total assets     0.12 %     0.11 %     0.23 %     0.49 %     0.14 %     0.12 %     0.14 %
Allowance for loan losses   $ 17,408     $ 16,558     $ 15,855     $ 18,889     $ 17,200     $ 17,408     $ 17,200  
Allowance for loan losses to total loans     1.22 %     1.07 %     1.01 %     1.35 %     1.24 %     1.22 %     1.24 %
Allowance for loan losses to total loans (excluding PPP loans)     1.45 %     1.38 %     1.29 %     1.35 %     1.24 %     1.45 %     1.24 %
Allowance for loan losses to nonperforming loans     3266.04 %     8491.28 %     536.19 %     261.26 %     8472.91 %     3266.04 %     8472.91 %
                             
CAPITAL                            
Average equity to average assets     9.11 %     9.07 %     9.68 %     10.93 %     10.42 %     9.62 %     10.17 %
Common equity tier 1 to risk weighted assets (Consolidated)     15.79 %     15.30 %     14.92 %     13.43 %     13.46 %     15.79 %     13.45 %
Tier 1 capital to average assets (Consolidated)     9.89 %     9.78 %     10.49 %     11.90 %     11.49 %     9.89 %     11.49 %
Total capital to risk-weighted assets (Consolidated)     18.29 %     17.74 %     17.30 %     15.81 %     15.78 %     18.29 %     15.77 %
Common equity tier 1 to risk weighted assets (Bank)     16.67 %     16.18 %     15.81 %     14.23 %     14.26 %     16.67 %     14.25 %
Tier 1 capital to average assets (Bank)     9.63 %     9.52 %     10.21 %     11.56 %     11.15 %     9.63 %     11.15 %
Total capital to risk-weighted assets (Bank)     17.84 %     17.28 %     16.87 %     15.39 %     15.33 %     17.84 %     15.32 %
Common equity to assets     9.08 %     9.32 %     9.36 %     11.01 %     10.52 %     9.08 %     10.51 %
Tangible common equity to assets     9.08 %     9.32 %     9.36 %     11.01 %     10.52 %     9.08 %     10.51 %
                             
END OF PERIOD BALANCES                            
Total portfolio loans   $ 1,429,331     $ 1,542,335     $ 1,562,688     $ 1,395,341     $ 1,385,627     $ 1,429,331     $ 1,385,627  
Earning assets     2,510,882       2,376,943       2,316,213       1,912,400       1,943,356       2,510,882       1,943,356  
Total assets     2,642,026       2,508,718       2,451,148       2,031,090       2,068,770       2,642,026       2,068,770  
Deposits     2,298,587       2,170,579       2,118,291       1,705,380       1,753,294       2,298,587       1,753,294  
Total shareholders' equity     239,843       233,865       229,338       223,580       217,469       239,843       217,469  
                             
AVERAGE BALANCES                            
Total portfolio loans   $ 1,481,054     $ 1,542,838     $ 1,571,544     $ 1,384,465     $ 1,377,051     $ 1,495,068     $ 1,372,905  
Earning assets     2,457,746       2,416,072       2,216,193       1,897,236       1,931,333       2,247,850       1,887,101  
Total assets     2,590,875       2,554,198       2,338,888       2,017,823       2,055,398       2,376,523       2,008,302  
Deposits     2,249,679       2,215,509       2,007,258       1,701,994       1,727,946       2,044,643       1,692,935  
Total shareholders' equity     236,127       231,702       226,288       220,538       214,112       228,692       204,191  

Contact:
Jon Swets, CFO
616-494-7645

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