ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
|
|
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
|
Smaller reporting company
|
Emerging growth company
|
PART 1
|
Page
|
|
Item 1:
|
1
|
|
Item 1A:
|
12
|
|
Item 1B:
|
20
|
|
Item 2:
|
20
|
|
Item 3:
|
20
|
|
Item 4:
|
20
|
|
PART II
|
||
Item 5:
|
21
|
|
Item 6:
|
22
|
|
Item 7:
|
23
|
|
Item 7A:
|
39
|
|
Item 8:
|
41
|
|
41
|
||
Item 9:
|
83
|
|
Item 9A:
|
83
|
|
Item 9B:
|
85
|
|
PART III
|
||
Item 10:
|
85
|
|
Item 11:
|
85
|
|
Item 12:
|
85
|
|
Item 13:
|
85
|
|
Item 14:
|
85
|
|
PART IV
|
||
Item 15:
|
86
|
|
Item 16:
|
87
|
|
87
|
ITEM 1: |
Business.
|
• |
The Bank originated 1,738 PPP loans totaling $346.7 million in principal.
|
• |
Fees generated totaled $10.0 million.
|
• |
765 PPP loans totaling $113.5 million were forgiven.
|
• |
Total net fees of $5.4 million were recognized.
|
• |
The Bank originated 1,000 PPP loans totaling $128.1 million in principal.
|
• |
Fees generated totaled $5.6 million.
|
• |
1,722 PPP loans totaling $318.4 million were forgiven.
|
• |
Total net fees of $8.3 million were recognized.
|
• |
251 PPP loans totaling $43.2 million were forgiven.
|
• |
Total net fees of $1.3 million were recognized.
|
December 31,
|
||||||||||||
(Dollars in thousands)
|
2022
|
2021
|
2020
|
|||||||||
Nonperforming loans
|
$
|
78
|
$
|
92
|
$
|
533
|
||||||
Other repossessed assets
|
—
|
—
|
—
|
|||||||||
Other real estate owned
|
2,343
|
2,343
|
2,537
|
|||||||||
Total nonperforming assets
|
$
|
2,421
|
$
|
2,435
|
$
|
3,070
|
||||||
Total delinquencies 30 days or greater past due
|
$
|
172
|
$
|
129
|
$
|
581
|
For the Year Ended December 31,
|
||||||||||||
(Dollars in thousands)
|
2022
|
2021
|
2020
|
|||||||||
Provision for loan losses
|
$
|
(1,125
|
)
|
$
|
(2,050
|
)
|
$
|
3,000
|
||||
Net charge-offs (recoveries)
|
(521
|
)
|
(531
|
)
|
2,792
|
|||||||
Net charge-offs (recoveries) to average loans
|
(0.05
|
)%
|
(0.04
|
)%
|
0.19
|
%
|
||||||
Nonperforming loans to total loans
|
0.01
|
%
|
0.01
|
%
|
0.04
|
%
|
||||||
Loans transferred to ORE to average loans
|
—
|
—
|
—
|
|||||||||
Performing troubled debt restructurings ("TDRs") to average
loans
|
0.63
|
%
|
0.60
|
%
|
0.60
|
%
|
December 31
|
||||||||||||||||
2022
|
2021
|
|||||||||||||||
(Dollars in thousands)
|
Amount
|
% of
Total
Loans
|
Amount
|
% of
Total
Loans
|
||||||||||||
Real estate - construction (1)
|
$
|
61,247
|
5
|
%
|
$
|
52,019
|
4
|
%
|
||||||||
Real estate - mortgage
|
476,356
|
40
|
464,082
|
42
|
||||||||||||
Comml and industrial, excl PPP
|
441,716
|
38
|
378,318
|
34
|
||||||||||||
PPP loans
|
—
|
—
|
41,939
|
4
|
||||||||||||
Total commercial
|
979,319
|
83
|
936,358
|
84
|
||||||||||||
Residential mortgage
|
139,148
|
12
|
117,800
|
11
|
||||||||||||
Consumer
|
59,281
|
5
|
54,835
|
5
|
||||||||||||
Total loans
|
1,177,748
|
100
|
%
|
1,108,993
|
100
|
%
|
||||||||||
Less: allowance for loan losses
|
(15,285
|
)
|
(15,889
|
)
|
||||||||||||
Total loans, net
|
$
|
1,162,463
|
$
|
1,093,104
|
(1) |
Consists of construction and development loans.
|
Maturing
|
||||||||||||||||||||
(Dollars in thousands)
|
Within One
Year
|
After One, But
Within Five
Years
|
After Five, But
Within Fifteen
Years
|
After Fifteen
Years
|
Total
|
|||||||||||||||
Real estate - construction (1)
|
$
|
35,280
|
$
|
6,186
|
$
|
19,781
|
$
|
—
|
$
|
61,247
|
||||||||||
Real estate - mortgage
|
30,253
|
262,727
|
183,376
|
—
|
476,356
|
|||||||||||||||
Commercial and industrial
|
183,959
|
202,689
|
55,068
|
—
|
441,716
|
|||||||||||||||
Total commercial
|
249,492
|
471,602
|
258,225
|
—
|
979,319
|
|||||||||||||||
Residential mortgage
|
80
|
3,555
|
51,511
|
84,002
|
139,148
|
|||||||||||||||
Consumer
|
2,474
|
4,134
|
5,269
|
47,404
|
59,281
|
|||||||||||||||
Total loans
|
$
|
252,046
|
$
|
479,291
|
$
|
315,005
|
$
|
131,406
|
$
|
1,177,748
|
Predetermined Interest Rates
|
Floating or Variable Rate
|
Total
|
||||||||||
Loans above maturing after one year:
|
||||||||||||
Real estate - construction (1)
|
$
|
20,932
|
$
|
5,035
|
$
|
25,967
|
||||||
Real estate - mortgage
|
341,591
|
104,512
|
446,103
|
|||||||||
Commercial and industrial
|
188,471
|
69,286
|
257,757
|
|||||||||
Total commercial
|
550,994
|
178,833
|
729,827
|
|||||||||
Residential mortgage
|
65,004
|
74,064
|
139,068
|
|||||||||
Consumer
|
6,677
|
50,130
|
56,807
|
|||||||||
Total loans
|
$
|
622,675
|
$
|
303,027
|
$
|
925,702
|
(1) |
Consists of construction and development loans.
|
December 31
|
||||||||||||||||
2022
|
2021
|
|||||||||||||||
(Dollars in thousands)
|
Average
Amount
|
Average
Rate
|
Average
Amount
|
Average
Rate
|
||||||||||||
Noninterest bearing demand
|
$
|
884,579
|
—
|
%
|
$
|
885,838
|
—
|
%
|
||||||||
Interest bearing demand
|
704,926
|
0.14
|
681,411
|
0.03
|
||||||||||||
Savings and money market accounts
|
879,273
|
0.28
|
822,235
|
0.03
|
||||||||||||
Time
|
88,218
|
0.40
|
101,353
|
0.49
|
||||||||||||
Total deposits
|
$
|
2,556,996
|
0.15
|
%
|
$
|
2,490,837
|
0.04
|
%
|
Non-maturity deposits
|
Time
|
Total
|
||||||||||
December 31, 2022
|
||||||||||||
Three months or less
|
$
|
1,182,059
|
$
|
4,259
|
$
|
1,186,318
|
||||||
Over 3 months through 6 months
|
—
|
6,240
|
6,240
|
|||||||||
Over 6 months through 1 year
|
—
|
8,344
|
8,344
|
|||||||||
Over 1 year
|
—
|
10,824
|
10,824
|
|||||||||
$
|
1,182,059
|
$
|
29,667
|
$
|
1,211,726
|
Non-maturity deposits
|
Time
|
Total
|
||||||||||
December 31, 2021
|
||||||||||||
Three months or less
|
$
|
1,167,790
|
$
|
5,706
|
$
|
1,173,496
|
||||||
Over 3 months through 6 months
|
—
|
7,310
|
7,310
|
|||||||||
Over 6 months through 1 year
|
—
|
8,747
|
8,747
|
|||||||||
Over 1 year
|
—
|
6,465
|
6,465
|
|||||||||
$
|
1,167,790
|
$
|
28,228
|
$
|
1,196,018
|
December 31,
|
||||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
U.S. Treasury and federal agency securities
|
$
|
475,941
|
$
|
206,845
|
||||
U.S. Agency MBS and CMOs
|
113,818
|
86,797
|
||||||
Tax-exempt state and municipal bonds
|
134,168
|
174,559
|
||||||
Taxable state and municipal bonds
|
112,171
|
79,561
|
||||||
Corporate bonds
|
11,924
|
5,304
|
||||||
Total
|
$
|
848,022
|
$
|
553,066
|
Due Within One Year
|
One to Five Years
|
Five to Ten Years
|
After Ten Years
|
|||||||||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Average
Yield
|
Amount
|
Average
Yield
|
Amount
|
Average
Yield
|
Amount
|
Average
Yield
|
||||||||||||||||||||||||
U.S. Treasury and federal agency securities
|
$
|
—
|
0.00
|
%
|
$
|
444,361
|
2.17
|
%
|
$
|
17,904
|
1.08
|
%
|
$
|
—
|
—
|
%
|
||||||||||||||||
U.S. Agency MBS and CMOs
|
12
|
2.49
|
383
|
2.62
|
941
|
2.02
|
112,481
|
2.76
|
||||||||||||||||||||||||
Tax-exempt state and municipal bonds (1)
|
34,722
|
1.44
|
83,401
|
1.86
|
29,723
|
3.45
|
—
|
—
|
||||||||||||||||||||||||
Taxable state and municipal bonds
|
5,571
|
2.53
|
97,989
|
2.69
|
8,610
|
1.57
|
—
|
—
|
||||||||||||||||||||||||
Corporate bonds
|
299
|
3.28
|
11,625
|
1.35
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
Total (1)
|
$
|
40,604
|
1.61
|
%
|
$
|
637,759
|
2.22
|
%
|
$
|
57,178
|
2.31
|
%
|
$
|
112,481
|
2.76
|
%
|
(1) |
Yields on tax-exempt securities are computed on a fully taxable-equivalent basis and calculated on a weighted average basis using the investment balances and respective average yields for each investment
category.
|
CET1 Risk-Based
Capital Ratio |
Tier 1 Risk-Based
Capital Ratio |
Total Risk-Based
Capital Ratio |
Leverage Ratio
|
|||||
Well capitalized
|
6.5% or above
|
8% or above
|
10% or above
|
5% or above
|
||||
Adequately capitalized
|
4.5% or above
|
6% or above
|
8% or above
|
4% or above
|
||||
Undercapitalized
|
Less than 4.5%
|
Less than 6%
|
Less than 8%
|
Less than 4%
|
||||
Significantly undercapitalized
|
Less than 3%
|
Less than 4%
|
Less than 6%
|
Less than 3%
|
||||
Critically undercapitalized
|
—
|
—
|
—
|
Ratio of tangible equity to total assets of 2% or less
|
ITEM 1A: |
Risk Factors.
|
• |
Variations in our anticipated or actual operating results or the results of our competitors;
|
• |
Changes in investors' or analysts' perceptions of the risks and conditions of our business;
|
• |
The size of the public float of our common stock;
|
• |
Regulatory developments, including changes to regulatory capital levels, components of regulatory capital and how regulatory capital is calculated;
|
• |
Interest rate changes or credit loss trends;
|
• |
Trading volume in our common stock;
|
• |
Market conditions; and
|
• |
General economic conditions.
|
ITEM 1B: |
Unresolved Staff Comments.
|
ITEM 2: |
Properties.
|
Location of Facility
|
Use
|
10753 Macatawa Drive, Holland
|
Main Branch, Administrative, and Loan Processing Offices
|
815 E. Main Street, Zeeland
|
Branch Office
|
116 Ottawa Avenue N.W., Grand Rapids
|
Branch Office (Leased facility, lease expires December 2025)
|
126 Ottawa Avenue N.W., Grand Rapids
|
Loan Center (Leased facility, lease expires December 2023)
|
141 E. 8th Street, Holland
|
Branch Office
|
489 Butternut Dr., Holland
|
Branch Office
|
145 Columbia Avenue, Holland
|
Satellite Office (Leased facility, lease expires March 2023)
|
701 Maple Avenue, Holland
|
Branch Office
|
699 E. 16th Street, Holland
|
Branch Office
|
41 N. State Street, Zeeland
|
Branch Office
|
2020 Baldwin Street, Jenison
|
Branch Office
|
6299 Lake Michigan Dr., Allendale
|
Branch Office
|
132 South Washington, Douglas
|
Branch Office
|
4758 – 136th Street, Hamilton
|
Branch Office (Leased facility, lease expires December 2023)
|
3526 Chicago Drive, Hudsonville
|
Branch Office
|
20 E. Lakewood Blvd., Holland
|
Branch Office
|
3191 – 44th Street, S.W., Grandville
|
Branch Office
|
2261 Byron Center Avenue S.W., Byron Center
|
Branch Office
|
5271 Clyde Park Avenue, S.W., Wyoming
|
Branch Office
|
4590 Cascade Road, Grand Rapids
|
Branch Office
|
3177 Knapp Street, N.E., Grand Rapids
|
Branch Office
|
15135 Whittaker Way, Grand Haven
|
Branch Office
|
12415 Riley Street, Holland
|
Branch Office
|
2750 Walker N.W., Walker
|
Branch Office
|
1575 – 68th Street S.E., Grand Rapids
|
Branch Office
|
2820 – 10 Mile Road, Rockford
|
Branch Office
|
520 Baldwin Street, Jenison
|
Branch Office
|
2440 Burton Street, S.E., Grand Rapids
|
Branch Office
|
6330 28th Street, S.E., Grand Rapids
|
Branch Office
|
ITEM 3: |
Legal Proceedings.
|
ITEM 4: |
Mine Safety Disclosures.
|
ITEM 5: |
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
2022
|
2021
|
|||||||||||||||||||||||
Quarter
|
High
|
Low
|
Dividends
Declared
|
High
|
Low
|
Dividends
Declared
|
||||||||||||||||||
First Quarter
|
$
|
9.56
|
$
|
8.76
|
$
|
0.08
|
$
|
10.66
|
$
|
8.17
|
$
|
0.08
|
||||||||||||
Second Quarter
|
9.31
|
8.38
|
0.08
|
10.15
|
8.74
|
0.08
|
||||||||||||||||||
Third Quarter
|
10.28
|
8.65
|
0.08
|
8.90
|
7.37
|
0.08
|
||||||||||||||||||
Fourth Quarter
|
11.84
|
9.21
|
0.08
|
9.08
|
7.96
|
0.08
|
Period Ending
|
||||||||||||||||||||||||
Index
|
12/31/17
|
12/31/18
|
12/31/19
|
12/31/20
|
12/31/21
|
12/31/22
|
||||||||||||||||||
Macatawa Bank Corporation
|
100.00
|
98.41
|
116.96
|
91.58
|
100.07
|
129.35
|
||||||||||||||||||
Russell 2000
|
100.00
|
88.99
|
111.70
|
134.00
|
153.85
|
122.41
|
||||||||||||||||||
KBW Bank NASDAQ
|
100.00
|
82.29
|
112.01
|
100.46
|
138.97
|
109.23
|
Macatawa Bank Corporation Purchases of Equity Securities
|
||||||||
Total
Number of
Shares
Purchased
|
Average
Price Paid
Per Share
|
|||||||
Period
|
||||||||
October 1 - October 31, 2022
|
||||||||
Employee Transactions
|
—
|
—
|
||||||
November 1 - November 30, 2022
|
||||||||
Employee Transactions
|
15,246
|
$
|
11.30
|
|||||
December 1 - December 31, 2022
|
||||||||
Employee Transactions
|
—
|
—
|
||||||
Total for Fourth Quarter ended December 31, 2022
|
||||||||
Employee Transactions
|
15,246
|
$
|
11.30
|
ITEM 6: |
[Reserved]
|
ITEM 7. |
Management’s Discussion and Analysis of Results of Operations and Financial Condition.
|
As of and for the Year Ended December 31,
|
||||||||||||||||||||
(Dollars in thousands, except per share data)
|
2022
|
2021
|
2020
|
2019
|
2018
|
|||||||||||||||
Financial Condition
|
||||||||||||||||||||
Total assets
|
$
|
2,906,919
|
$
|
2,928,751
|
$
|
2,642,026
|
$
|
2,068,770
|
$
|
1,975,124
|
||||||||||
Securities
|
848,022
|
553,066
|
316,300
|
307,969
|
297,320
|
|||||||||||||||
Loans
|
1,177,748
|
1,108,993
|
1,429,331
|
1,385,627
|
1,405,658
|
|||||||||||||||
Deposits
|
2,615,142
|
2,577,958
|
2,298,587
|
1,753,294
|
1,676,739
|
|||||||||||||||
Long-term debt
|
—
|
—
|
20,619
|
20,619
|
41,238
|
|||||||||||||||
Other borrowed funds
|
30,000
|
85,000
|
70,000
|
60,000
|
60,000
|
|||||||||||||||
Shareholders' equity
|
247,038
|
254,005
|
239,843
|
217,469
|
190,853
|
|||||||||||||||
Share Information*
|
||||||||||||||||||||
Basic earnings (loss) per common share
|
$
|
1.01
|
$
|
0.85
|
$
|
0.88
|
$
|
0.94
|
$
|
0.78
|
||||||||||
Diluted earnings (loss) per common share
|
1.01
|
0.85
|
0.88
|
0.94
|
0.78
|
|||||||||||||||
Book value per common share
|
7.20
|
7.41
|
7.01
|
6.38
|
5.61
|
|||||||||||||||
Dividends per common share
|
0.32
|
0.32
|
0.32
|
0.28
|
0.25
|
|||||||||||||||
Dividend payout ratio
|
31.68
|
%
|
37.65
|
%
|
36.36
|
%
|
29.79
|
%
|
32.05
|
%
|
||||||||||
Average dilutive common shares outstanding
|
34,259,604
|
34,202,179
|
34,120,275
|
34,056,200
|
34,018,554
|
|||||||||||||||
Common shares outstanding at period end
|
34,298,640
|
34,259,945
|
34,197,519
|
34,103,542
|
34,045,411
|
|||||||||||||||
Operations
|
||||||||||||||||||||
Interest income
|
$
|
74,906
|
$
|
58,634
|
$
|
67,224
|
$
|
75,942
|
$
|
69,037
|
||||||||||
Interest expense
|
4,760
|
2,565
|
5,687
|
12,455
|
9,411
|
|||||||||||||||
Net interest income
|
70,146
|
56,069
|
61,537
|
63,487
|
59,626
|
|||||||||||||||
Provision for loan losses
|
(1,125
|
)
|
(2,050
|
)
|
3,000
|
(450
|
)
|
450
|
||||||||||||
Net interest income after provision for loan losses
|
71,271
|
58,119
|
58,537
|
63,937
|
59,176
|
|||||||||||||||
Total noninterest income
|
20,019
|
23,695
|
23,976
|
19,728
|
17,503
|
|||||||||||||||
Total noninterest expense
|
48,226
|
46,090
|
45,725
|
44,224
|
44,329
|
|||||||||||||||
Income before income tax
|
43,064
|
35,724
|
36,788
|
39,441
|
32,350
|
|||||||||||||||
Federal income tax
|
8,333
|
6,710
|
6,623
|
7,462
|
5,971
|
|||||||||||||||
Net income attributable to common shares
|
34,731
|
29,014
|
30,165
|
31,979
|
26,379
|
|||||||||||||||
Performance Ratios
|
||||||||||||||||||||
Return on average equity
|
14.19
|
%
|
11.74
|
%
|
13.19
|
%
|
15.66
|
%
|
14.69
|
%
|
||||||||||
Return on average assets
|
1.21
|
1.02
|
1.27
|
1.59
|
1.40
|
|||||||||||||||
Yield on average interest-earning assets
|
2.73
|
2.19
|
3.00
|
4.04
|
3.91
|
|||||||||||||||
Cost on average interest-bearing liabilities
|
0.28
|
0.15
|
0.38
|
0.94
|
0.76
|
|||||||||||||||
Average net interest spread
|
2.45
|
2.04
|
2.62
|
3.10
|
3.15
|
|||||||||||||||
Average net interest margin
|
2.56
|
2.09
|
2.75
|
3.38
|
3.38
|
|||||||||||||||
Efficiency ratio
|
53.49
|
57.78
|
53.47
|
53.14
|
57.47
|
|||||||||||||||
Capital Ratios
|
||||||||||||||||||||
Period-end equity to total assets
|
8.50
|
%
|
8.67
|
%
|
9.08
|
%
|
10.51
|
%
|
9.66
|
%
|
||||||||||
Average equity to average assets
|
8.55
|
8.71
|
9.62
|
10.17
|
9.51
|
|||||||||||||||
Total risk-based capital ratio (consolidated)
|
17.87
|
18.32
|
18.29
|
15.78
|
15.54
|
|||||||||||||||
Credit Quality Ratios
|
||||||||||||||||||||
Allowance for loan losses to total loans
|
1.30
|
%
|
1.43
|
%
|
1.22
|
%
|
1.24
|
%
|
1.20
|
%
|
||||||||||
Nonperforming assets to total assets
|
0.08
|
0.08
|
0.12
|
0.14
|
0.24
|
|||||||||||||||
Nonaccrual loans to total loans
|
0.01
|
0.01
|
0.04
|
0.01
|
0.09
|
|||||||||||||||
Allowance for loan losses to nonaccrual loans
|
19,596.15
|
17,270.65
|
3,266.04
|
8,472.91
|
1,293.18
|
|||||||||||||||
Net charge-offs / (recoveries) to average loans
|
(0.05
|
)
|
(0.04
|
)
|
0.19
|
(0.06
|
)
|
0.01
|
For the years ended December 31,
|
||||||||||||||||||||||||
2022
|
2021
|
|||||||||||||||||||||||
Average
Balance
|
Interest
Earned
or Paid
|
Average
Yield
or Cost
|
Average
Balance
|
Interest
Earned
or Paid
|
Average
Yield
or Cost
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Taxable securities
|
$
|
597,899
|
$
|
11,333
|
1.90
|
%
|
$
|
210,513
|
$
|
3,283
|
1.56
|
%
|
||||||||||||
Tax-exempt securities (1)
|
151,888
|
2,803
|
2.38
|
152,459
|
3,056
|
2.58
|
||||||||||||||||||
Commercial loans (2)
|
938,817
|
40,197
|
4.23
|
1,068,667
|
43,875
|
4.06
|
||||||||||||||||||
Residential mortgage loans
|
125,202
|
4,211
|
3.36
|
132,472
|
4,521
|
3.41
|
||||||||||||||||||
Consumer loans
|
56,684
|
2,768
|
4.88
|
55,940
|
2,268
|
4.05
|
||||||||||||||||||
Federal Home Loan Bank stock
|
10,411
|
199
|
1.89
|
11,558
|
211
|
1.80
|
||||||||||||||||||
Federal funds sold and other short-term investments
|
862,240
|
13,395
|
1.53
|
1,067,237
|
1,420
|
0.13
|
||||||||||||||||||
Total interest earning
assets (1)
|
2,743,141
|
74,906
|
2.73
|
2,698,846
|
58,634
|
2.19
|
||||||||||||||||||
Noninterest earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
36,428
|
34,740
|
||||||||||||||||||||||
Other
|
85,685
|
103,041
|
||||||||||||||||||||||
Total assets
|
$
|
2,865,254
|
$
|
2,836,627
|
||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||
Interest bearing demand
|
$
|
704,926
|
$
|
952
|
0.14
|
%
|
$
|
681,411
|
$
|
166
|
0.03
|
%
|
||||||||||||
Savings and money
market accounts
|
879,273
|
2,474
|
0.28
|
822,235
|
246
|
0.03
|
||||||||||||||||||
Time deposits
|
88,218
|
347
|
0.40
|
101,353
|
503
|
0.49
|
||||||||||||||||||
Borrowings:
|
||||||||||||||||||||||||
Other borrowed funds
|
49,622
|
987
|
1.96
|
74,246
|
1,331
|
1.77
|
||||||||||||||||||
Long-term debt
|
—
|
—
|
—
|
10,564
|
319
|
2.98
|
||||||||||||||||||
Total interest bearing liabilities
|
1,722,039
|
4,760
|
0.28
|
1,689,809
|
2,565
|
0.15
|
||||||||||||||||||
Noninterest bearing liabilities:
|
||||||||||||||||||||||||
Noninterest bearing demand accounts
|
884,579
|
885,838
|
||||||||||||||||||||||
Other noninterest bearing liabilities
|
13,795
|
13,905
|
||||||||||||||||||||||
Shareholders' equity
|
244,841
|
247,075
|
||||||||||||||||||||||
Total liabilities and shareholders' equity
|
$
|
2,865,254
|
$
|
2,836,627
|
||||||||||||||||||||
Net interest income
|
$
|
70,146
|
$
|
56,069
|
||||||||||||||||||||
Net interest spread (1)
|
2.45
|
%
|
2.04
|
%
|
||||||||||||||||||||
Net interest margin (1)
|
2.56
|
%
|
2.09
|
%
|
||||||||||||||||||||
Ratio of average interest earning assets to average interest bearing liabilities
|
159.30
|
%
|
159.71
|
%
|
(1) |
Yields are presented on a tax equivalent basis using a 21% tax rate.
|
(2) |
Loan fees of $1.8 million and $9.4 million for 2022 and 2021, respectively, are included in interest income. Included in these fee amounts were $1.3 million and $8.3 million in fees on PPP loans in 2022
and 2021, respectively. Includes average nonaccrual loans of approximately $86,000 and $431,000 for 2022 and 2021, respectively.
|
For the years ended December 31,
|
||||||||||||
2022 vs 2021
Increase (Decrease) Due to
|
||||||||||||
Volume
|
Rate
|
Total
|
||||||||||
(Dollars in thousands)
|
||||||||||||
Interest income
|
||||||||||||
Taxable securities
|
$
|
7,206
|
$
|
844
|
$
|
8,050
|
||||||
Tax-exempt securities
|
(11
|
)
|
(242
|
)
|
(253
|
)
|
||||||
Commercial loans
|
(5,462
|
)
|
1,784
|
(3,678
|
)
|
|||||||
Residential mortgage loans
|
(245
|
)
|
(65
|
)
|
(310
|
)
|
||||||
Consumer loans
|
31
|
469
|
500
|
|||||||||
Federal Home Loan Bank stock
|
(23
|
)
|
11
|
(12
|
)
|
|||||||
Federal funds sold and other short-term investments
|
(324
|
)
|
12,299
|
11,975
|
||||||||
Total interest income
|
1,172
|
15,100
|
16,272
|
|||||||||
Interest expense
|
||||||||||||
Interest bearing demand
|
$
|
6
|
$
|
780
|
$
|
786
|
||||||
Savings and money market accounts
|
18
|
2,210
|
2,228
|
|||||||||
Time deposits
|
(60
|
)
|
(96
|
)
|
(156
|
)
|
||||||
Other borrowed funds
|
(475
|
)
|
131
|
(344
|
)
|
|||||||
Long-term debt
|
(319
|
)
|
—
|
(319
|
)
|
|||||||
Total interest expense
|
(830
|
)
|
3,025
|
2,195
|
||||||||
Net interest income
|
$
|
2,002
|
$
|
12,075
|
$
|
14,077
|
2022
|
2021
|
|||||||
Service charges and fees on deposit accounts
|
$
|
4,769
|
$
|
4,446
|
||||
Net gains on mortgage loans
|
706
|
4,691
|
||||||
Trust fees
|
4,143
|
4,331
|
||||||
ATM and debit card fees
|
6,768
|
6,505
|
||||||
Bank owned life insurance (“BOLI”) income
|
878
|
1,033
|
||||||
Investment services fees
|
1,691
|
1,505
|
||||||
Other income
|
1,064
|
1,184
|
||||||
Total noninterest income
|
$
|
20,019
|
$
|
23,695
|
For the Year Ended December 31,
|
||||||||
2022
|
2021
|
|||||||
Gain on sales of loans
|
$
|
706
|
$
|
4,691
|
||||
Real estate mortgage loans originated for sale
|
$
|
26,236
|
$
|
124,287
|
||||
Real estate mortgage loans sold
|
28,134
|
132,993
|
||||||
Net gain on the sale of mortgage loans as a percent of real estate mortgage loans sold ("Loan sale margin")
|
2.51
|
%
|
3.53
|
%
|
2022
|
2021
|
|||||||
Salaries and benefits
|
$
|
26,194
|
$
|
25,216
|
||||
Occupancy of premises
|
4,200
|
3,986
|
||||||
Furniture and equipment
|
4,008
|
3,940
|
||||||
Legal and professional
|
961
|
1,042
|
||||||
Marketing and promotion
|
803
|
723
|
||||||
Data processing
|
3,756
|
3,456
|
||||||
FDIC assessment
|
789
|
749
|
||||||
Interchange and other card expense
|
1,586
|
1,517
|
||||||
Bond and D&O insurance
|
518
|
448
|
||||||
Outside services
|
2,139
|
1,922
|
||||||
Other noninterest expense
|
3,272
|
3,091
|
||||||
Total noninterest expense
|
$
|
48,226
|
$
|
46,090
|
2022
|
2021
|
|||||||
Salaries and other compensation
|
22,694
|
22,171
|
||||||
Salary deferral from commercial loans
|
(855
|
)
|
(1,062
|
)
|
||||
Bonus
|
1,154
|
1,121
|
||||||
Mortgage production - variable comp
|
430
|
1,049
|
||||||
Brokerage - variable comp
|
470
|
440
|
||||||
401(k) matching contributions
|
755
|
412
|
||||||
Medical insurance costs
|
1,546
|
1,085
|
||||||
Total salaries and benefits
|
$
|
26,194
|
$
|
25,216
|
December 31, 2022
|
December 31, 2021
|
|||||||||||||||
Balance
|
Percent of
Total Loans
|
Balance
|
Percent of
Total Loans
|
|||||||||||||
Commercial real estate: (1)
|
||||||||||||||||
Residential developed
|
$
|
7,234
|
0.6
|
%
|
$
|
4,862
|
0.4
|
%
|
||||||||
Unsecured to residential developers
|
—
|
—
|
5,000
|
0.4
|
||||||||||||
Vacant and unimproved
|
36,270
|
3.1
|
36,240
|
3.3
|
||||||||||||
Commercial development
|
103
|
—
|
171
|
—
|
||||||||||||
Residential improved
|
112,791
|
9.6
|
100,077
|
9.0
|
||||||||||||
Commercial improved
|
259,281
|
22.0
|
259,039
|
23.4
|
||||||||||||
Manufacturing and industrial
|
121,924
|
10.4
|
110,712
|
10.0
|
||||||||||||
Total commercial real estate
|
537,603
|
45.7
|
516,101
|
46.5
|
||||||||||||
Commercial and industrial, excluding PPP
|
441,716
|
37.5
|
378,318
|
34.1
|
||||||||||||
Paycheck Protection Program (PPP)
|
—
|
—
|
41,939
|
3.8
|
||||||||||||
Total commercial
|
979,319
|
83.2
|
936,358
|
84.4
|
||||||||||||
Consumer
|
||||||||||||||||
Residential mortgage
|
139,148
|
11.8
|
117,800
|
10.7
|
||||||||||||
Unsecured
|
121
|
—
|
210
|
—
|
||||||||||||
Home equity
|
56,321
|
4.8
|
51,269
|
4.6
|
||||||||||||
Other secured
|
2,839
|
0.2
|
3,356
|
0.3
|
||||||||||||
Total consumer
|
198,429
|
16.8
|
172,635
|
15.6
|
||||||||||||
Total loans
|
$
|
1,177,748
|
100.0
|
%
|
$
|
1,108,993
|
100.0
|
%
|
(1) |
Includes both owner occupied and non-owner occupied commercial real estate.
|
Year ended December 31, 2022
|
Year ended December 31, 2021
|
|||||||||||||||||||||||
Portfolio
Originations
|
Percent of
Total
Originations
|
Average
Loan Size
|
Portfolio
Originations
|
Percent of
Total
Originations
|
Average
Loan Size
|
|||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||
Residential developed
|
$
|
5,998
|
1.2
|
%
|
$
|
600
|
$
|
7,620
|
1.4
|
%
|
$
|
423
|
||||||||||||
Unsecured to residential developers
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Vacant and unimproved
|
10,982
|
2.2
|
998
|
18,762
|
3.3
|
1,173
|
||||||||||||||||||
Commercial development
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Residential improved
|
51,565
|
10.5
|
549
|
101,492
|
17.9
|
634
|
||||||||||||||||||
Commercial improved
|
76,523
|
15.5
|
1,594
|
71,486
|
12.6
|
1,191
|
||||||||||||||||||
Manufacturing and industrial
|
71,641
|
14.6
|
2,470
|
25,827
|
4.6
|
922
|
||||||||||||||||||
Total commercial real estate
|
216,709
|
44.0
|
1,129
|
225,187
|
39.8
|
799
|
||||||||||||||||||
Commercial and industrial, excluding PPP
|
164,535
|
33.4
|
885
|
110,667
|
19.5
|
838
|
||||||||||||||||||
PPP loans
|
—
|
—
|
—
|
128,473
|
22.7
|
128
|
||||||||||||||||||
Total commercial
|
381,244
|
77.4
|
1,009
|
464,327
|
82.0
|
327
|
||||||||||||||||||
Consumer
|
||||||||||||||||||||||||
Residential mortgage
|
55,289
|
11.2
|
302
|
48,930
|
8.6
|
314
|
||||||||||||||||||
Unsecured
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Home equity
|
54,249
|
11.0
|
134
|
51,270
|
9.1
|
125
|
||||||||||||||||||
Other secured
|
1,855
|
0.4
|
36
|
1,567
|
0.3
|
23
|
||||||||||||||||||
Total consumer
|
111,393
|
22.6
|
174
|
101,767
|
18.0
|
161
|
||||||||||||||||||
Total loans
|
$
|
492,637
|
100.0
|
%
|
484
|
$
|
566,094
|
100.0
|
%
|
275
|
December 31,
|
||||||||||||||||||||
2022
|
2021
|
2020
|
2019
|
2018
|
||||||||||||||||
Nonaccrual loans
|
$
|
78
|
$
|
91
|
$
|
533
|
$
|
203
|
$
|
1,303
|
||||||||||
Loans 90 days or more delinquent and still accruing
|
—
|
1
|
—
|
—
|
1
|
|||||||||||||||
Total nonperforming loans (NPLs)
|
78
|
92
|
533
|
203
|
1,304
|
|||||||||||||||
Foreclosed assets
|
2,343
|
2,343
|
2,537
|
2,748
|
3,380
|
|||||||||||||||
Repossessed assets
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Total nonperforming assets (NPAs)
|
$
|
2,421
|
$
|
2,435
|
$
|
3,070
|
$
|
2,951
|
$
|
4,684
|
||||||||||
NPLs to total loans
|
0.01
|
%
|
0.01
|
%
|
0.04
|
%
|
0.01
|
%
|
0.09
|
%
|
||||||||||
NPAs to total assets
|
0.08
|
%
|
0.08
|
%
|
0.12
|
%
|
0.14
|
%
|
0.24
|
%
|
December 31, 2022
|
December 31, 2021
|
|||||||||||||||||||||||
Commercial
|
Consumer
|
Total
|
Commercial
|
Consumer
|
Total
|
|||||||||||||||||||
Performing TDRs
|
$
|
4,121
|
$
|
2,886
|
$
|
7,007
|
$
|
4,497
|
$
|
3,024
|
$
|
7,521
|
||||||||||||
Nonperforming TDRs (1)
|
—
|
—
|
—
|
5
|
—
|
5
|
||||||||||||||||||
Total TDRs
|
$
|
4,121
|
$
|
2,886
|
$
|
7,007
|
$
|
4,502
|
$
|
3,024
|
$
|
7,526
|
(1) |
Included in nonperforming asset table above
|
December 31,
|
||||||||||||||||||||
2022
|
2021
|
2020
|
2019
|
2018
|
||||||||||||||||
Commercial and industrial TDRs
|
$
|
3,604
|
$
|
3,375
|
$
|
3,957
|
$
|
5,797
|
$
|
6,502
|
||||||||||
Commercial real estate TDRs
|
517
|
1,127
|
1,439
|
2,770
|
3,305
|
|||||||||||||||
Consumer TDRs
|
2,886
|
3,024
|
4,049
|
5,140
|
6,346
|
|||||||||||||||
Total TDRs
|
$
|
7,007
|
$
|
7,526
|
$
|
9,445
|
$
|
13,707
|
$
|
16,153
|
December 31
|
||||||||
2022
|
2021
|
|||||||
Ratios:
|
||||||||
Net charge-offs (recoveries) to average loans outstanding - Total
|
(0.05
|
)%
|
(0.04
|
)%
|
||||
Net charge-offs (recoveries) to average loans outstanding - Commercial Loans
|
(0.05
|
)%
|
(0.05
|
)%
|
||||
Net charge-offs (recoveries) to average loans outstanding - Residential Mortgage Loans
|
(0.02
|
)%
|
(0.01
|
)%
|
||||
Net charge-offs (recoveries) to average loans outstanding - Consumer Loans
|
(0.07
|
)%
|
0.05
|
%
|
||||
Nonaccrual loans to loans outstanding at year-end
|
0.01
|
%
|
0.01
|
%
|
||||
Allowance for loan losses to loans outstanding at year-end
|
1.30
|
%
|
1.43
|
%
|
||||
Allowance for loan losses to nonaccrual loans at year-end
|
19,596
|
%
|
17,640
|
%
|
||||
Allowance for loan losses to nonperforming loans at year-end
|
19,596
|
%
|
17,271
|
%
|
(Dollars in millions)
|
2022
|
2021
|
2020
|
2019
|
2018
|
|||||||||||||||
Commercial loans
|
$
|
979.3
|
$
|
936.4
|
$
|
1,217.6
|
$
|
1,098.0
|
$
|
1,082.1
|
||||||||||
Nonperforming loans
|
0.1
|
0.1
|
0.5
|
0.2
|
1.3
|
|||||||||||||||
Other real estate owned and repo assets
|
2.3
|
2.3
|
2.5
|
2.7
|
3.4
|
|||||||||||||||
Total nonperforming assets
|
2.4
|
2.4
|
3.0
|
3.0
|
4.7
|
|||||||||||||||
Net charge-offs (recoveries)
|
(0.5
|
)
|
(0.5
|
)
|
2.8
|
(0.8
|
)
|
0.2
|
||||||||||||
Total delinquencies
|
0.2
|
0.1
|
0.6
|
0.4
|
0.9
|
December 31,
|
||||||||||||||||
2022
|
2021
|
|||||||||||||||
(Dollars in thousands)
|
Allowance
Amount
|
% of
Each
Category
to Total
Loans
|
Allowance
Amount
|
% of
Each
Category
to Total
Loans
|
||||||||||||
Commercial and commercial real estate
|
$
|
12,827
|
84
|
%
|
$
|
13,256
|
84
|
%
|
||||||||
Residential mortgage
|
1,755
|
11
|
1,836
|
11
|
||||||||||||
Consumer
|
703
|
5
|
797
|
5
|
||||||||||||
Total
|
$
|
15,285
|
100
|
%
|
$
|
15,889
|
100
|
%
|
December 31,
|
||||||||||||||||
2022
|
2021
|
|||||||||||||||
(Dollars in thousands)
|
Balance of
Loans
|
Allowance
Amount
|
Balance of
Loans
|
Allowance
Amount
|
||||||||||||
Commercial and commercial real estate:
|
||||||||||||||||
Impaired with allowance recorded
|
$
|
812
|
$
|
75
|
$
|
3,215
|
$
|
327
|
||||||||
Impaired with no allowance recorded
|
3,309
|
—
|
1,287
|
—
|
||||||||||||
Loss allocation factor on non-impaired loans
|
975,198
|
12,751
|
931,856
|
12,929
|
||||||||||||
979,319
|
12,826
|
936,358
|
13,256
|
|||||||||||||
Residential mortgage and consumer:
|
||||||||||||||||
Reserves on troubled debt restructurings
|
2,886
|
220
|
3,024
|
238
|
||||||||||||
Loss allocation factor
|
195,543
|
2,239
|
169,611
|
2,395
|
||||||||||||
Total
|
$
|
1,177,748
|
$
|
15,285
|
$
|
1,108,993
|
$
|
15,889
|
December 31, 2022
|
||||||||||||||||
Total
|
Percent of
Total Loans
|
Percent Grade 4 or
Better
|
Percent Grade 5 or
Worse
|
|||||||||||||
Industry:
|
||||||||||||||||
Agricultural Products
|
$
|
41,194
|
4.21
|
%
|
92.04
|
%
|
7.96
|
%
|
||||||||
Mining and Oil Extraction
|
406
|
0.04
|
%
|
87.93
|
%
|
12.07
|
%
|
|||||||||
Utilities
|
—
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
|||||||||
Construction
|
80,670
|
8.24
|
%
|
97.68
|
%
|
2.32
|
%
|
|||||||||
Manufacturing
|
131,376
|
13.42
|
%
|
96.55
|
%
|
3.45
|
%
|
|||||||||
Wholesale Trade
|
64,377
|
6.57
|
%
|
100.00
|
%
|
0.00
|
%
|
|||||||||
Retail Trade
|
113,484
|
11.59
|
%
|
99.95
|
%
|
0.05
|
%
|
|||||||||
Transportation and Warehousing
|
62,825
|
6.42
|
%
|
99.73
|
%
|
0.27
|
%
|
|||||||||
Information
|
568
|
0.06
|
%
|
5.99
|
%
|
94.01
|
%
|
|||||||||
Finance and Insurance
|
47,940
|
4.90
|
%
|
100.00
|
%
|
0.00
|
%
|
|||||||||
Real Estate and Rental and Leasing
|
274,151
|
27.99
|
%
|
99.95
|
%
|
0.05
|
%
|
|||||||||
Professional, Scientific and Technical Services
|
5,698
|
0.58
|
%
|
96.51
|
%
|
3.49
|
%
|
|||||||||
Management of Companies and Enterprises
|
7,049
|
0.72
|
%
|
100.00
|
%
|
0.00
|
%
|
|||||||||
Administrative and Support Services
|
21,703
|
2.22
|
%
|
97.99
|
%
|
2.01
|
%
|
|||||||||
Education Services
|
5,268
|
0.54
|
%
|
100.00
|
%
|
0.00
|
%
|
|||||||||
Health Care and Social Assistance
|
34,486
|
3.52
|
%
|
100.00
|
%
|
0.00
|
%
|
|||||||||
Arts, Entertainment and Recreation
|
3,675
|
0.38
|
%
|
91.65
|
%
|
8.35
|
%
|
|||||||||
Accommodations and Food Services
|
52,322
|
5.34
|
%
|
86.71
|
%
|
13.29
|
%
|
|||||||||
Other Services
|
32,127
|
3.28
|
%
|
100.00
|
%
|
0.00
|
%
|
|||||||||
Public Administration
|
—
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
|||||||||
Private Households
|
—
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
|||||||||
Total commercial loans
|
$
|
979,319
|
100.00
|
%
|
98.11
|
%
|
1.89
|
%
|
December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Total capital to risk weighted assets
|
17.9
|
%
|
18.3
|
%
|
18.3
|
%
|
||||||
Common Equity Tier 1 to risk weighted assets
|
16.9
|
17.2
|
15.8
|
|||||||||
Tier 1 capital to risk weighted assets
|
16.9
|
17.2
|
17.1
|
|||||||||
Tier 1 capital to average assets
|
9.7
|
8.7
|
9.9
|
December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Average equity to average assets
|
8.3
|
%
|
8.8
|
%
|
10.2
|
%
|
||||||
Total capital to risk weighted assets
|
17.4
|
17.8
|
17.8
|
|||||||||
Common Equity Tier 1 to risk weighted assets
|
16.4
|
16.7
|
16.7
|
|||||||||
Tier 1 capital to risk weighted assets
|
16.4
|
16.7
|
16.7
|
|||||||||
Tier 1 capital to average assets
|
9.4
|
8.4
|
9.6
|
Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk.
|
Interest Rate Scenario
|
Economic
Value of
Equity
|
Percent
Change
|
Net Interest
Income
|
Percent
Change
|
||||||||||||
Interest rates up 200 basis points
|
$
|
399,394
|
(2.88
|
)%
|
$
|
107,097
|
3.78
|
%
|
||||||||
Interest rates up 100 basis points
|
405,735
|
(1.33
|
)
|
105,139
|
1.89
|
|||||||||||
No change
|
411,224
|
—
|
103,193
|
—
|
||||||||||||
Interest rates down 100 basis points
|
410,965
|
(0.06
|
)
|
100,847
|
(2.27
|
)
|
||||||||||
Interest rates down 200 basis points
|
387,338
|
(5.81
|
)
|
96,611
|
(6.38
|
)
|
ITEM 8: |
Financial Statements and Supplementary Data.
|
• |
Testing the design and operating effectiveness of internal controls over the data used by management to assess certain qualitative factors and their effect on the estimation of
inherent losses within the loan portfolio.
|
• |
Evaluating the reliability of the data and assumptions used by management to support their assessment of the qualitative factors by vouching to
internal and external sources, including considerations of contradictory evidence.
|
• |
Evaluating the reasonableness of management’s conclusion on the qualitative assessment and the resulting adjustment to the allowance.
|
2022
|
2021
|
|||||||
ASSETS
|
||||||||
Cash and due from banks
|
$
|
|
$
|
|
||||
Federal funds sold and other short-term investments
|
|
|
||||||
Cash and cash equivalents
|
|
|
||||||
Securities available for sale, at fair value
|
|
|
||||||
Securities held to maturity (fair value 2022 -
$
|
|
|
||||||
Federal Home Loan Bank (FHLB) stock
|
|
|
||||||
Loans held for sale, at fair value
|
|
|
||||||
Total loans
|
|
|
||||||
Allowance for loan losses
|
(
|
)
|
(
|
)
|
||||
Net loans
|
|
|
||||||
Premises and equipment – net
|
|
|
||||||
Accrued interest receivable
|
|
|
||||||
Bank-owned life insurance (BOLI)
|
|
|
||||||
Other real estate owned - net
|
|
|
||||||
Net deferred tax asset
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Deposits
|
||||||||
Noninterest-bearing
|
$
|
|
$
|
|
||||
Interest-bearing
|
|
|
||||||
Total deposits
|
|
|
||||||
Other borrowed funds
|
|
|
||||||
Long-term debt
|
|
|
||||||
Accrued expenses and other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and Contingencies
|
|
|
||||||
Shareholders’ equity
|
||||||||
Common stock,
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Total shareholders’ equity
|
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
2022
|
2021
|
|||||||
Interest income
|
||||||||
Loans, including fees
|
$
|
|
$
|
|
||||
Securities
|
||||||||
Taxable
|
|
|
||||||
Tax-exempt
|
|
|
||||||
FHLB Stock
|
|
|
||||||
Federal funds sold and other short-term investments
|
|
|
||||||
Total interest income
|
|
|
||||||
Interest expense
|
||||||||
Deposits
|
|
|
||||||
Other borrowings
|
|
|
||||||
Long-term debt
|
|
|
||||||
Total interest expense
|
|
|
||||||
Net interest income
|
|
|
||||||
Provision for loan losses
|
(
|
)
|
(
|
)
|
||||
Net interest income after provision for loan losses
|
|
|
||||||
Noninterest income
|
||||||||
Service charges and fees
|
|
|
||||||
Net gains on mortgage loans
|
|
|
||||||
Trust fees
|
|
|
||||||
ATM and debit card fees
|
|
|
||||||
BOLI income
|
|
|
||||||
Other
|
|
|
||||||
Total noninterest income
|
|
|
||||||
Noninterest expense
|
||||||||
Salaries and benefits
|
|
|
||||||
Occupancy of premises
|
|
|
||||||
Furniture and equipment
|
|
|
||||||
Legal and professional
|
|
|
||||||
Marketing and promotion
|
|
|
||||||
Data processing
|
|
|
||||||
FDIC assessment
|
|
|
||||||
Interchange and other card expense
|
|
|
||||||
Bond and D&O Insurance
|
|
|
||||||
Other
|
|
|
||||||
Total noninterest expenses
|
|
|
||||||
Income before income tax
|
|
|
||||||
Income tax expense
|
|
|
||||||
Net income
|
$
|
|
$
|
|
||||
Basic earnings per common share
|
$
|
|
$
|
|
||||
Diluted earnings per common share
|
$
|
|
$
|
|
||||
Cash dividends per common share
|
$
|
|
$
|
|
2022
|
2021
|
|||||||
Net income
|
$
|
|
$
|
|
||||
Other comprehensive income:
|
||||||||
Unrealized gains (losses):
|
||||||||
Net change in unrealized losses on debt securities available for sale
|
(
|
)
|
(
|
)
|
||||
Net unrealized gain at time of transfer on securities transferred to held-to-maturity
|
||||||||
Amortization of net unrealized gains on securities transferred to held-to-maturity
|
( |
) | ||||||
Tax effect
|
|
|
||||||
Net change in unrealized gains (losses) on securities available for sale, net of tax
|
(
|
)
|
(
|
)
|
||||
Other comprehensive loss, net of tax
|
(
|
)
|
(
|
)
|
||||
Comprehensive income
|
$
|
|
$
|
|
Common
Stock
|
Retained Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
Shareholders’
Equity
|
|||||||||||||
Balance, January 1, 2021
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Net income
|
|
|
|
|
||||||||||||
Cash dividends at $
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Repurchase of
|
(
|
)
|
|
|
(
|
)
|
||||||||||
Net change in unrealized gain (loss) on securities available for sale, net of tax
|
|
|
(
|
)
|
(
|
)
|
||||||||||
Stock compensation expense
|
|
|
|
|
||||||||||||
Balance, December 31, 2021
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Net income
|
|
|
|
|
||||||||||||
Cash dividends at $
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Repurchase of
|
(
|
)
|
|
|
(
|
)
|
||||||||||
Net change in unrealized gain (loss) on securities available for sale and amortization,net of tax
|
|
|
(
|
)
|
(
|
)
|
||||||||||
Stock compensation expense
|
|
|
|
|
||||||||||||
Balance, December 31, 2022
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
2022
|
2021
|
|||||||
Cash flows from operating activities
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to net cash from operating activities:
|
||||||||
Depreciation, amortization and accretion
|
|
|
||||||
Stock compensation expense
|
|
|
||||||
Provision for loan losses
|
(
|
)
|
(
|
)
|
||||
Origination of loans for sale
|
(
|
)
|
(
|
)
|
||||
Proceeds from sales of loans originated for sale
|
|
|
||||||
Net gains on mortgage loans
|
(
|
)
|
(
|
)
|
||||
Write-down of other real estate
|
|
|
||||||
Net (gain) loss on sales of other real estate
|
(
|
)
|
|
|||||
Deferred income tax expense
|
|
|
||||||
Change in accrued interest receivable and other assets
|
(
|
)
|
|
|||||
Earnings in bank-owned life insurance
|
(
|
)
|
(
|
)
|
||||
Change in accrued expenses and other liabilities
|
|
(
|
)
|
|||||
Net cash from operating activities
|
|
|
||||||
Cash flows from investing activities
|
||||||||
Loan originations and payments, net
|
(
|
)
|
|
|||||
Purchases of securities available for sale
|
(
|
)
|
(
|
)
|
||||
Purchases of securities held to maturity
|
(
|
)
|
(
|
)
|
||||
Purchase of bank-owned life insurance |
( |
) | ||||||
Proceeds from:
|
||||||||
Maturities and calls of securities available for sale
|
|
|
||||||
Maturities and calls of securities held to maturity
|
||||||||
Principal paydowns on securities available for sale
|
|
|
||||||
Principal paydowns on securities held to maturity
|
||||||||
Sales of other real estate
|
|
|
||||||
Payout of bank-owned insurance claim
|
|
|||||||
Redemption of FHLB stock
|
||||||||
Additions to premises and equipment
|
(
|
)
|
(
|
)
|
||||
Net cash from investing activities
|
(
|
)
|
|
|||||
Cash flows from financing activities
|
||||||||
Change in deposits
|
|
|
||||||
Repayments and maturities of other borrowed funds
|
(
|
)
|
(
|
)
|
||||
Proceeds from other borrowed funds
|
|
|
||||||
Cash dividends paid
|
(
|
)
|
(
|
)
|
||||
Repurchase of shares for taxes withheld on vested restricted stock
|
(
|
)
|
(
|
)
|
||||
Net cash from financing activities
|
(
|
)
|
|
|||||
Net change in cash and cash equivalents
|
(
|
)
|
|
|||||
Cash and cash equivalents at beginning of period
|
|
|
||||||
Cash and cash equivalents at end of period
|
$
|
|
$
|
|
2022
|
2021
|
|||||||
Supplemental cash flow information
|
||||||||
Interest paid
|
$
|
|
$
|
|
||||
Income taxes paid
|
|
|
||||||
Supplemental noncash disclosures:
|
||||||||
Transfer of securities from available for sale to held to maturity
|
||||||||
Security settlement
|
|
|
•
|
The Bank originated
|
•
|
Fees generated totaled $
|
•
|
|
•
|
Total net fees of $
|
•
|
|
•
|
Total net fees of $
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||
December 31, 2022
|
||||||||||||||||
Available for Sale:
|
||||||||||||||||
U.S. Treasury and federal agency securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
U.S. Agency MBS and CMOs
|
|
|
(
|
)
|
|
|||||||||||
Tax-exempt state and municipal bonds
|
|
|
(
|
)
|
|
|||||||||||
Taxable state and municipal bonds
|
|
|
(
|
)
|
|
|||||||||||
Corporate bonds and other debt securities
|
|
|
(
|
)
|
|
|||||||||||
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||
Held to Maturity
|
||||||||||||||||
U.S. Treasury
|
$ |
$ |
$ |
( |
) | |
||||||||||
Tax-exempt state and municipal bonds
|
|
|
|
|
|
(
|
)
|
|
|
|||||||
$ |
$ | $ |
( |
) | $ |
|||||||||||
December 31, 2021
|
||||||||||||||||
Available for Sale:
|
||||||||||||||||
U.S. Treasury and federal agency securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
U.S. Agency MBS and CMOs
|
|
|
(
|
)
|
|
|||||||||||
Tax-exempt state and municipal bonds
|
|
|
|
|
||||||||||||
Taxable state and municipal bonds
|
|
|
(
|
)
|
|
|||||||||||
Corporate bonds and other debt securities
|
|
|
(
|
)
|
|
|||||||||||
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||
Held to Maturity
|
||||||||||||||||
Tax-exempt state and municipal bonds
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Held–to-Maturity Securities
|
Available-for-Sale Securities
|
|||||||||||||||
Amortized
Cost
|
Fair
Value
|
Amortized
Cost
|
Fair
Value
|
|||||||||||||
Due in one year or less
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Due from one to five years
|
|
|
|
|
||||||||||||
Due from five to ten years
|
|
|
|
|
||||||||||||
Due after ten years
|
|
|
|
|
||||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
December 31, 2022
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
||||||||||||||||||
Available for Sale:
|
||||||||||||||||||||||||
U.S. Treasury and federal agency securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
U.S. Agency MBS and CMOs
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Tax-exempt state and municipal bonds
|
|
(
|
)
|
|
|
|
(
|
)
|
||||||||||||||||
Taxable state and municipal bonds
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Corporate bonds and other debt securities
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
Held to Maturity:
|
||||||||||||||||||||||||
U.S. Treasury | $ |
$ |
( |
) | $ |
$ |
$ |
$ |
( |
) | ||||||||||||||
Tax-exempt state and municipal bonds
|
|
|
|
(
|
)
|
|
|
|
(
|
)
|
|
|
|
(
|
)
|
|||||||||
$ |
$ |
( |
) | $ |
$ |
( |
) | $ |
$ |
( |
) |
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
December 31, 2021
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
||||||||||||||||||
Available for Sale:
|
||||||||||||||||||||||||
U.S. Treasury and federal agency securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
U.S. Agency MBS and CMOs
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Tax-exempt state and municipal bonds
|
|
|
|
|
|
|
||||||||||||||||||
Taxable state and municipal bonds
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Corporate bonds and other debt securities
|
|
(
|
)
|
|
|
|
(
|
)
|
||||||||||||||||
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
Held to Maturity:
|
||||||||||||||||||||||||
Tax-exempt state and municipal bonds
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
2022
|
2021
|
|||||||
Commercial and industrial
|
||||||||
Commercial and industrial, excluding PPP
|
$
|
|
$
|
|
||||
PPP
|
|
|
||||||
Total commercial and industrial
|
|
|
||||||
Commercial real estate:
|
||||||||
Residential developed
|
|
|
||||||
Unsecured to residential developers
|
||||||||
Vacant and unimproved
|
|
|
||||||
Commercial development
|
|
|
||||||
Residential improved
|
|
|
||||||
Commercial improved
|
|
|
||||||
Manufacturing and industrial
|
|
|
||||||
Total commercial real estate
|
|
|
||||||
Consumer
|
||||||||
Residential mortgage
|
|
|
||||||
Unsecured
|
|
|
||||||
Home equity
|
|
|
||||||
Other secured
|
|
|
||||||
Total consumer
|
|
|
||||||
Total loans
|
|
|
||||||
Allowance for loan losses
|
(
|
)
|
(
|
)
|
||||
$
|
|
$
|
|
2022
|
Commercial
and
Industrial
|
Commercial
Real Estate
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Charge-offs
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
||||||||||||
Recoveries
|
|
|
|
|
|
|||||||||||||||
Provision for loan losses
|
|
(
|
)
|
(
|
)
|
|
(
|
)
|
||||||||||||
Ending Balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
2021
|
Commercial
and
Industrial
|
Commercial
Real Estate
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Charge-offs
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||
Recoveries
|
|
|
|
|
|
|||||||||||||||
Provision for loan losses
|
(
|
)
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|||||||||||
Ending Balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
Commercial
and
Industrial
|
Commercial
Real Estate
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||
Ending allowance attributable to loans:
|
||||||||||||||||||||
Individually reviewed for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Collectively evaluated for impairment
|
|
|
|
|
|
|||||||||||||||
Total ending allowance balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Loans:
|
||||||||||||||||||||
Individually reviewed for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Collectively evaluated for impairment
|
|
|
|
|
|
|||||||||||||||
Total ending loans balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2021
|
Commercial
and
Industrial
|
Commercial
Real Estate
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||
Ending allowance attributable to loans:
|
||||||||||||||||||||
Individually reviewed for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Collectively evaluated for impairment
|
|
|
|
|
|
|||||||||||||||
Total ending allowance balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Loans:
|
||||||||||||||||||||
Individually reviewed for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Collectively evaluated for impairment
|
|
|
|
|
|
|||||||||||||||
Total ending loans balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
Unpaid
Principal
Balance
|
Recorded
Investment
|
Allowance
Allocated
|
|||||||||
With no related allowance recorded:
|
||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
—
|
||||||
Commercial real estate:
|
||||||||||||
Residential improved
|
|
|
—
|
|||||||||
|
|
—
|
||||||||||
Consumer
|
|
|
—
|
|||||||||
Total with no related allowance recorded
|
$
|
|
$
|
|
$
|
—
|
||||||
With an allowance recorded:
|
||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
|
||||||
Commercial real estate:
|
||||||||||||
Commercial improved
|
|
|
|
|||||||||
Manufacturing and industrial
|
|
|
|
|||||||||
|
|
|
||||||||||
Consumer:
|
||||||||||||
Residential mortgage
|
|
|
|
|||||||||
Unsecured
|
|
|
|
|||||||||
Home equity
|
|
|
|
|||||||||
|
|
|
||||||||||
Total with an allowance recorded
|
$
|
|
$
|
|
$
|
|
||||||
Total
|
$
|
|
$
|
|
$
|
|
December 31, 2021
|
Unpaid
Principal
Balance
|
Recorded
Investment
|
Allowance
Allocated
|
|||||||||
With no related allowance recorded:
|
||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
—
|
||||||
Commercial real estate:
|
||||||||||||
Residential improved
|
|
|
—
|
|||||||||
Commercial improved
|
|
|
—
|
|||||||||
|
|
—
|
||||||||||
Consumer
|
|
|
—
|
|||||||||
Total with no related allowance recorded
|
$
|
|
$
|
|
$
|
—
|
||||||
With an allowance recorded:
|
||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
|
||||||
Commercial real estate:
|
||||||||||||
Commercial improved
|
|
|
|
|||||||||
Manufacturing and industrial
|
|
|
|
|||||||||
|
|
|
||||||||||
Consumer:
|
||||||||||||
Residential mortgage
|
|
|
|
|||||||||
Unsecured
|
|
|
|
|||||||||
Home equity
|
|
|
|
|||||||||
Other secured
|
|
|
|
|||||||||
|
|
|
||||||||||
Total with an allowance recorded
|
$
|
|
$
|
|
$
|
|
||||||
Total
|
$
|
|
$
|
|
$
|
|
2022
|
2021
|
|||||||
Average of impaired loans during the period:
|
||||||||
Commercial and industrial
|
$
|
|
$
|
|
||||
|
||||||||
Commercial real estate:
|
||||||||
Residential developed
|
|
|
||||||
Residential improved
|
|
|
||||||
Commercial improved
|
|
|
||||||
Manufacturing and industrial
|
|
|
||||||
|
||||||||
Consumer
|
|
|
||||||
Interest income recognized during impairment:
|
||||||||
Commercial and industrial
|
|
|
||||||
Commercial real estate
|
|
|
||||||
Consumer
|
|
|
||||||
Cash-basis interest income recognized
|
||||||||
Commercial and industrial
|
|
|
||||||
Commercial real estate
|
|
|
||||||
Consumer
|
|
|
December 31, 2022
|
Nonaccrual
|
Over 90 days
Accruing
|
||||||
Commercial and industrial
|
$
|
|
$
|
|
||||
Commercial real estate
|
|
|
||||||
Consumer:
|
||||||||
Residential mortgage
|
|
|
||||||
|
|
|||||||
Total
|
$
|
|
$
|
|
December 31, 2021
|
Nonaccrual
|
Over 90 days
Accruing
|
||||||
Commercial and industrial
|
$
|
|
$
|
|
||||
Commercial real estate:
|
||||||||
Residential improved
|
|
|
||||||
Commercial improved
|
||||||||
|
|
|||||||
Consumer:
|
||||||||
Residential mortgage
|
|
|
||||||
|
|
|||||||
Total
|
$
|
|
$
|
|
December 31, 2022
|
30-90
Days
|
Greater
Than
90 Days
|
Total
Past Due
|
Loans Not
Past Due
|
Total
|
|||||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Commercial real estate:
|
||||||||||||||||||||
Residential developed
|
|
|
|
|
|
|||||||||||||||
Unsecured to residential developers
|
||||||||||||||||||||
Vacant and unimproved
|
|
|
|
|
|
|||||||||||||||
Commercial development
|
|
|
|
|
|
|||||||||||||||
Residential improved
|
|
|
|
|
|
|||||||||||||||
Commercial improved
|
|
|
|
|
|
|||||||||||||||
Manufacturing and industrial
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
||||||||||||||||
Consumer:
|
||||||||||||||||||||
Residential mortgage
|
|
|
|
|
|
|||||||||||||||
Unsecured
|
|
|
|
|
|
|||||||||||||||
Home equity
|
|
|
|
|
|
|||||||||||||||
Other secured
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2021
|
30-90
Days
|
Greater
Than
90 Days
|
Total
Past Due
|
Loans Not
Past Due
|
Total
|
|||||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Commercial real estate:
|
||||||||||||||||||||
Residential developed
|
|
|
|
|
|
|||||||||||||||
Unsecured to residential developers
|
||||||||||||||||||||
Vacant and unimproved
|
|
|
|
|
|
|||||||||||||||
Commercial development
|
|
|
|
|
|
|||||||||||||||
Residential improved
|
|
|
|
|
|
|||||||||||||||
Commercial improved
|
|
|
|
|
|
|||||||||||||||
Manufacturing and industrial
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
||||||||||||||||
Consumer:
|
||||||||||||||||||||
Residential mortgage
|
|
|
|
|
|
|||||||||||||||
Unsecured
|
|
|
|
|
|
|||||||||||||||
Home equity
|
|
|
|
|
|
|||||||||||||||
Other secured
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
2022
|
2021
|
|||||||||||||||
Number of
Loans
|
Outstanding
Recorded
Balance
|
Number of
Loans
|
Outstanding
Recorded
Balance
|
|||||||||||||
Commercial and industrial
|
|
$
|
|
|
$
|
|
||||||||||
Commercial real estate
|
|
|
|
|
||||||||||||
Consumer
|
|
|
|
|
||||||||||||
|
$
|
|
|
$
|
|
2022
|
2021
|
|||||||
Accruing TDR - nonaccrual at restructuring
|
$
|
|
$
|
|
||||
Accruing TDR - accruing at restructuring
|
|
|
||||||
Accruing TDR - upgraded to accruing after six consecutive payments
|
|
|
||||||
$
|
|
$
|
|
2022
|
2021
|
|||||||||||||||||||||||
Number of
Loans
|
Pre-TDR
Balance
|
Writedown
Upon
TDR
|
Number of
Loans
|
Pre-TDR
Balance
|
Writedown
Upon
TDR
|
|||||||||||||||||||
Commercial and industrial
|
|
$
|
|
$
|
|
|
$
|
|
$
|
|
||||||||||||||
Commercial real estate
|
|
|
|
|
|
|
||||||||||||||||||
Consumer
|
|
|
|
|
|
|
||||||||||||||||||
|
$
|
|
$
|
|
|
$
|
|
$
|
|
December 31, 2022
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
Total
|
|||||||||||||||||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||||||||||||||
Residential developed
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Unsecured to residential developers
|
||||||||||||||||||||||||||||||||||||
Vacant and unimproved
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Commercial development
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Residential improved
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Commercial improved
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Manufacturing & industrial
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2021
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
Total
|
|||||||||||||||||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||||||||||||||
Residential developed
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Unsecured to residential developers
|
||||||||||||||||||||||||||||||||||||
Vacant and unimproved
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Commercial development
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Residential improved
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Commercial improved
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Manufacturing & industrial
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
2022
|
2021
|
|||||||
Not classified as impaired
|
$
|
|
$
|
|
||||
Classified as impaired
|
|
|
||||||
Total commercial loans classified substandard or worse
|
$
|
|
$
|
|
December 31, 2022
|
Residential
Mortgage
|
Consumer
Unsecured
|
Home
Equity
|
Consumer
Other
|
||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Nonperforming
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2021
|
Residential
Mortgage
|
Consumer
Unsecured
|
Home
Equity
|
Consumer
Other
|
||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Nonperforming
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
2022
|
2021
|
|||||||
Beginning balance
|
$
|
|
$
|
|
||||
Additions, transfers from loans
|
|
|
||||||
Proceeds from sales of other real estate owned and repossessed assets
|
(
|
)
|
(
|
)
|
||||
Valuation allowance reversal upon sale
|
(
|
)
|
(
|
)
|
||||
Gain (loss) on sales of other real estate owned and repossessed assets
|
|
(
|
)
|
|||||
|
|
|||||||
Less: valuation allowance
|
|
(
|
)
|
|||||
Ending balance
|
$
|
|
$
|
|
2022
|
2021
|
|||||||
Beginning balance
|
$
|
|
$
|
|
||||
Additions charged to expense
|
|
|
||||||
Reversals upon sale
|
(
|
)
|
(
|
)
|
||||
Ending balance
|
$
|
|
$
|
|
Fair
Value
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
December 31, 2022
|
||||||||||||||||
Available for sale securities
|
||||||||||||||||
U.S. Treasury and federal agency securities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
U.S. Agency MBS and CMOs
|
|
|
|
|
||||||||||||
Tax-exempt state and municipal bonds
|
|
|
|
|
||||||||||||
Taxable state and municipal bonds
|
|
|
|
|
||||||||||||
Corporate bonds and other debt securities
|
|
|
|
|
||||||||||||
Other equity securities
|
|
|
|
|
||||||||||||
Loans held for sale
|
|
|
|
|
||||||||||||
Interest rate swaps
|
|
|
|
|
||||||||||||
Total assets measured at fair value on recurring basis
|
$ | $ | $ | $ | ||||||||||||
Interest rate swaps
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Total liabilities measured at fair value on recurring basis
|
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
December 31, 2021
|
||||||||||||||||
Available for sale securities
|
||||||||||||||||
U.S. Treasury and federal agency securities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
U.S. Agency MBS and CMOs
|
|
|
|
|
||||||||||||
Tax-exempt state and municipal bonds
|
|
|
|
|
||||||||||||
Taxable state and municipal bonds
|
|
|
|
|
||||||||||||
Corporate bonds and other debt securities
|
|
|
|
|
||||||||||||
Other equity securities
|
|
|
|
|
||||||||||||
Loans held for sale
|
|
|
|
|
||||||||||||
Interest rate swaps
|
|
|
|
|
||||||||||||
Total assets measured at fair value on recurring basis
|
$ | $ | $ | $ | ||||||||||||
Interest rate swaps
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Total liabilities measured at fair value on recurring basis
|
$ | ( |
) | $ | $ | ( |
) | $ |
Fair
Value
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
December 31, 2022
|
||||||||||||||||
Impaired loans
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
December 31, 2021
|
||||||||||||||||
Impaired loans
|
$
|
|
$
|
|
$
|
|
$
|
|
Asset
Fair
Value
|
Valuation
Technique
|
Unobservable
Inputs
|
Range (%)
|
||||||
December 31, 2022
|
|||||||||
Impaired loans
|
$
|
|
Sales comparison approach
|
Adjustment for differences
between comparable sales
|
|
||||
Income approach
|
Capitalization rate
|
|
|||||||
Asset
Fair
Value
|
Valuation
Technique
|
Unobservable
Inputs
|
Range (%)
|
||||||
December 31, 2021
|
|||||||||
Impaired loans
|
$
|
|
Sales comparison approach
|
Adjustment for differences
between comparable sales
|
|
||||
Income approach
|
Capitalization rate
|
|
2022 | 2021 | ||||||||||||||||
Level in
Fair Value
Hierarchy
|
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||||||
Financial assets
|
|||||||||||||||||
Cash and due from banks
|
Level 1
|
$ |
$
|
|
$
|
|
$
|
|
|||||||||
Federal funds sold and other short-term investments
|
Level 1
|
|
|
|
|||||||||||||
Securities held to maturity - U.S. Treasury
|
Level 2 |
||||||||||||||||
Securities held to maturity - tax-exempt and muni
|
Level 3
|
|
|
|
|||||||||||||
FHLB stock
|
Level 3 |
|
|
||||||||||||||
Loans, net
|
Level 2
|
|
|
|
|||||||||||||
Bank owned life insurance
|
Level 3
|
|
|
|
|||||||||||||
Accrued interest receivable
|
Level 2
|
|
|
|
|||||||||||||
Financial liabilities
|
|||||||||||||||||
Deposits
|
Level 2
|
( |
) |
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Other borrowed funds
|
Level 2
|
( |
) |
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Accrued interest payable
|
Level 2
|
( |
) |
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Off-balance sheet credit-related items
|
|||||||||||||||||
Loan commitments
|
|
|
|
Notional
Amount
|
Balance Sheet Location
|
Fair Value
|
|||||||
December 31, 2022
|
|||||||||
Derivative assets
|
|||||||||
Interest rate swaps
|
$
|
|
Other Assets
|
$
|
|
||||
Derivative liabilities
|
|||||||||
Interest rate swaps
|
|
|
|
||||||
Notional
Amount
|
Balance Sheet Location
|
Fair Value
|
|||||||
December 31, 2021
|
|||||||||
Derivative assets
|
|||||||||
Interest rate swaps
|
$
|
|
Other Assets
|
$
|
|
||||
Derivative liabilities
|
|||||||||
Interest rate swaps
|
|
|
|
2022
|
2021
|
|||||||
Land
|
$
|
|
$
|
|
||||
Building
|
|
|
||||||
Leasehold improvements
|
|
|
||||||
Furniture and equipment
|
|
|
||||||
Construction in progress
|
|
|
||||||
|
|
|||||||
Less accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
$
|
|
$
|
|
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Thereafter
|
|
|||
Total undiscounted lease payments
|
|
|||
Less effect of discounting
|
(
|
)
|
||
Present value of estimated lease payments (lease liability)
|
$
|
|
2022
|
2021
|
|||||||
Noninterest-bearing demand
|
$
|
|
$
|
|
||||
Interest bearing demand
|
|
|
||||||
Savings and money market accounts
|
|
|
||||||
Certificates of deposit
|
|
|
||||||
$
|
|
$
|
|
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Thereafter
|
|
|||
$
|
|
Principal Terms
|
Advance
Amount
|
Range of Maturities
|
Weighted
Average
Interest Rate
|
||||||
December 31, 2022
|
|||||||||
Single maturity fixed rate advances
|
$
|
|
February
|
|
%
|
||||
Putable advances
|
|
November
|
|
%
|
|||||
$
|
|
Principal Terms
|
Advance
Amount
|
Range of Maturities
|
Weighted
Average
Interest Rate
|
||||||
December 31, 2021
|
|||||||||
Single maturity fixed rate advances
|
$
|
|
May to July
|
|
%
|
||||
Putable advances
|
|
November to July
|
|
%
|
|||||
$
|
|
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Thereafter
|
|
|||
$
|
|
2022
|
2021
|
|||||||
Beginning balance
|
$
|
|
$
|
|
||||
New loans and renewals
|
|
|
||||||
Repayments and renewals
|
(
|
)
|
(
|
)
|
||||
Effect of changes in related parties
|
|
|
||||||
Ending balance
|
$
|
|
$
|
|
Nonvested Stock Awards
|
Shares
|
Weighted-
Average
Grant-Date Fair
Value
|
Aggregate
Intrinsic
Value
|
|||||||||
Outstanding at January 1, 2021
|
|
$
|
|
$
|
|
|||||||
Granted
|
|
|
|
|||||||||
Vested
|
(
|
)
|
|
(
|
)
|
|||||||
Forfeited
|
(
|
)
|
|
(
|
)
|
|||||||
Outstanding at December 31, 2022
|
|
$
|
|
$
|
|
2022
|
2021
|
|||||||
Net income
|
$
|
|
$
|
|
||||
Weighted average shares outstanding, including participating stock awards - Basic
|
|
|
||||||
Dilutive potential common shares:
|
||||||||
Stock options
|
|
|
||||||
Weighted average shares outstanding - Diluted
|
|
|
||||||
Basic earnings per common share
|
$
|
|
$
|
|
||||
Diluted earnings per common share
|
$
|
|
$
|
|
2022
|
2021
|
|||||||
Current
|
$
|
|
$
|
|
||||
Deferred
|
|
|
||||||
$
|
|
$
|
|
2022
|
2021
|
|||||||
Statutory rate
|
|
%
|
|
%
|
||||
Statutory rate applied to income before taxes
|
$
|
|
$
|
|
||||
Adjust for:
|
||||||||
Tax-exempt interest income
|
(
|
)
|
(
|
)
|
||||
Bank-owned life insurance
|
(
|
)
|
(
|
)
|
||||
Other, net
|
|
|
||||||
$
|
|
$
|
|
2022
|
2021
|
|||||||
Deferred tax assets
|
||||||||
Allowance for loan losses
|
$
|
|
$
|
|
||||
Net deferred loan fees
|
|
|
||||||
Nonaccrual loan interest
|
|
|
||||||
Valuation allowance on other real estate owned and property held for sale
|
|
|
||||||
Unrealized loss on securities available for sale
|
|
|
||||||
Other
|
|
|
||||||
Gross deferred tax assets
|
|
|
||||||
Valuation allowance
|
|
|
||||||
Total net deferred tax assets
|
|
|
||||||
Deferred tax liabilities
|
||||||||
Depreciation
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Prepaid expenses
|
(
|
)
|
(
|
)
|
||||
Net deferred loan costs
|
(
|
)
|
|
|||||
Other
|
(
|
)
|
(
|
)
|
||||
Gross deferred tax liabilities
|
(
|
)
|
(
|
)
|
||||
Net deferred tax asset
|
$
|
|
$
|
|
2022
|
2021
|
|||||||
Commitments to extend credit
|
$
|
|
$
|
|
||||
Letters of credit
|
|
|
||||||
Unused lines of credit
|
|
|
Actual
|
Minimum
Capital
Adequacy
|
Minimum Capital
Adequacy With
Capital Buffer
|
To Be Well
Capitalized Under
Prompt Corrective
Action Regulations
|
|||||||||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||||||||
December 31, 2022
|
||||||||||||||||||||||||||||||||
CET1 capital (to risk weighted
assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||||
Bank
|
|
|
|
|
|
|
$
|
|
|
%
|
||||||||||||||||||||||
Tier 1 capital (to risk weighted
assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
|
|
|
|
|
|
N/A
|
N/A
|
||||||||||||||||||||||||
Bank
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total capital (to risk weighted
assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
|
|
|
|
|
|
N/A
|
N/A
|
||||||||||||||||||||||||
Bank
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Tier 1 capital (to average
assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
|
|
|
|
N/A
|
N/A
|
N/A
|
N/A
|
||||||||||||||||||||||||
Bank
|
|
|
|
|
N/A
|
N/A
|
|
|
||||||||||||||||||||||||
December 31, 2021
|
||||||||||||||||||||||||||||||||
CET1 capital (to risk weighted
assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||||
Bank
|
|
|
|
|
|
|
$
|
|
|
%
|
||||||||||||||||||||||
Tier 1 capital (to risk weighted
assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
|
|
|
|
|
|
N/A
|
N/A
|
||||||||||||||||||||||||
Bank
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total capital (to risk weighted
assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
|
|
|
|
|
|
N/A
|
N/A
|
||||||||||||||||||||||||
Bank
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Tier 1 capital (to average
assets)
|
||||||||||||||||||||||||||||||||
Consolidated
|
|
|
|
|
N/A
|
N/A
|
N/A
|
N/A
|
||||||||||||||||||||||||
Bank
|
|
|
|
|
N/A
|
N/A
|
|
|
2022
|
2021
|
|||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Investment in Bank subsidiary
|
|
|
||||||
Investment in other subsidiaries
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Long-term debt
|
|
|
||||||
Other liabilities
|
|
|
||||||
Total liabilities
|
$ |
|
|
|||||
Total shareholders’ equity
|
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
2022
|
2021
|
|||||||
INCOME
|
||||||||
Dividends from subsidiaries
|
$
|
|
$
|
|
||||
Other
|
|
|
||||||
Total income
|
|
|
||||||
EXPENSE
|
||||||||
Interest expense
|
|
|
||||||
Other expense
|
|
|
||||||
Total expense
|
|
|
||||||
Income before income tax and equity in undistributed earnings of subsidiaries
|
|
|
||||||
Equity in undistributed earnings of subsidiaries
|
|
(
|
)
|
|||||
Income before income tax
|
|
|
||||||
Income tax benefit
|
(
|
)
|
(
|
)
|
||||
Net income
|
$
|
|
$
|
|
||||
Comprehensive income
|
$
|
|
$
|
|
2022
|
2021
|
|||||||
Cash flows from operating activities
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to net cash from operating activities:
|
||||||||
Equity in undistributed earnings of subsidiaries
|
(
|
)
|
|
|||||
Stock compensation expense
|
|
|
||||||
Change in other assets
|
|
(
|
)
|
|||||
Change in other liabilities
|
(
|
)
|
(
|
)
|
||||
Net cash from operating activities
|
|
|
||||||
Cash flows from investing activities
|
||||||||
Investment in subsidiaries
|
|
|
||||||
Net cash from investing activities
|
|
|
||||||
Cash flows from financing activities
|
||||||||
Repayment of other borrowings
|
|
(
|
)
|
|||||
Cash dividends paid
|
(
|
)
|
(
|
)
|
||||
Repurchases of shares
|
(
|
)
|
(
|
)
|
||||
Net cash from financing activities
|
(
|
)
|
(
|
)
|
||||
Net change in cash and cash equivalents
|
|
|
||||||
Cash and cash equivalents at beginning of year
|
|
|
||||||
Cash and cash equivalents at end of year
|
$
|
|
$
|
|
Earnings Per Common Share
|
||||||||||||||||||||||||
Interest
Income
|
Net Interest
Income
|
Provision for
Loan Losses
|
Net
Income
|
Basic
|
Diluted
|
|||||||||||||||||||
2022
|
||||||||||||||||||||||||
First quarter
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
|||||||||||
Second quarter
|
|
|
|
|
|
|
||||||||||||||||||
Third quarter
|
|
|
|
|
|
|
||||||||||||||||||
Fourth quarter
|
|
|
|
|
|
|
2021
|
||||||||||||||||||||||||
First quarter
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Second quarter
|
|
|
(
|
)
|
|
|
|
|||||||||||||||||
Third quarter
|
|
|
(
|
)
|
|
|
|
|||||||||||||||||
Fourth quarter
|
|
|
(
|
)
|
|
|
|
ITEM 9: |
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
|
ITEM 9A: |
Controls and Procedures.
|
(a) |
Evaluation of Disclosure Controls and Procedures.
|
(b) |
Changes in Internal Controls.
|
(c) |
Management's Report on Internal Control over Financial Reporting.
|
(d) |
Report of Independent Registered Public Accounting Firm.
|
ITEM 9B: |
Other Information.
|
ITEM 10: |
Directors, Executive Officers and Corporate Governance.
|
ITEM 11: |
Executive Compensation.
|
ITEM 12: |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Equity Compensation Plan Information
|
||||||
Plan Category
|
(a)
Number of securities
to
be issued upon
exercise
of outstanding
options,
warrants and rights
|
(b)
Weighted-average
Exercise price of
outstanding options,
warrants and rights
|
(c)
Number of securities remaining
available for future issuance
under
equity compensation plans
(excluding securities reflected in
column (a))
|
|||
Equity compensation plans approved by security holders (1)
|
0
|
N/A
|
973,550
|
|||
Equity compensation plans not approved by security holders
|
0
|
N/A
|
0
|
|||
Total
|
0
|
N/A
|
973,550
|
(1) |
Consists of the Macatawa Bank Corporation Stock Incentive Plan of 2015. The number of shares reflected in column (c) above with respect to the Macatawa Bank Corporation Stock Compensation Plan of 2015
(973,550 shares) represents shares that may be issued other than upon the exercise of an outstanding option, warrant or right. This plan contains customary anti-dilution provisions that are applicable in the event of a stock split or
certain other changes in capitalization.
|
ITEM 13: |
Certain Relationships and Related Transactions, and Director Independence.
|
ITEM 14: |
Principal Accountant Fees and Services.
|
ITEM 15: |
Exhibits and Financial Statement Schedules.
|
(a) 1.
|
The following documents are filed as part of Item 8 of this report:
|
|
Report of Independent Registered Public Accounting Firm
|
||
Consolidated Balance Sheets as of December 31, 2022 and 2021
|
||
Consolidated Statements of Income for the years ended December 31, 2022 and 2021
|
||
Consolidated Statements of Comprehensive Income for the years ended December 31, 2022 and 2021
|
||
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021
|
||
Notes to Consolidated Financial Statements
|
||
(a) 2.
|
Financial statement schedules are omitted because they are not required or because the information is set forth in the consolidated financial statements or related notes.
|
|
(a) 3.
|
The following exhibits are filed as part of this report:
|
Restated Articles of Incorporation. Previously filed with the Commission on October 27, 2016 in Macatawa Bank Corporation’s Quarterly Report on Form 10-Q, Exhibit 3.1. Here incorporated by reference.
|
||
Bylaws. Previously filed with the Commission on February 19, 2015 in Macatawa Bank Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014. Exhibit 3.2.
|
||
Restated Articles of Incorporation. Exhibit 3.1 is here incorporated by reference.
|
||
Bylaws. Exhibit 3.2 is here incorporated by reference.
|
||
4.3
|
Long-Term Debt. The registrant has outstanding long-term debt which at the time of this report does not exceed 10% of the registrant's total consolidated assets. The registrant agrees to
furnish copies of the agreements defining the rights of holders of such long-term debt to the SEC upon request.
|
|
Description of Rights of Shareholders. Previously filed with the Commission on February 20, 2020 in Macatawa Bank Corporation’s Annual Report on Form 10-K for the year ended December 31,
2019, Exhibit 4.4. Here incorporated by reference.
|
||
Form of Restricted Stock Agreement. Previously filed with the Commission on February 14, 2019 in Macatawa Bank Corporation’s Annual Report on Form 10-K for the year ended December 31,
2018, Exhibit 10.1. Here incorporated by reference.
|
||
Macatawa Bank Corporation Stock Incentive Plan of 2015. Previously filed with the Commission on March 20, 2015 in Macatawa Bank Corporation’s 2015 Definitive Proxy Statement on Form DEF
14A. Here incorporated by reference.
|
||
Change in control agreements between Macatawa Bank Corporation and its Chief Executive Officer, its Chief Operating Officer, and its Chief Financial Officer. Previously filed with the
Commission on Form 8-K on June 22, 2015, Exhibits 10.1 and 10.2, and on Form 8-K on February 1, 2017, Exhibit 10.1. Here incorporated by reference.
|
||
Form of Indemnity Agreement between Macatawa Bank Corporation and certain of its directors. Previously filed with the Commission on February 18, 2016 in Macatawa Bank Corporation’s Annual
Report on Form 10-K for the year ended December 31, 2015, Exhibit 10.10. Here incorporated by reference.
|
||
Board Representation Agreement dated November 5, 2008, between Macatawa Bank Corporation and White Bay Capital, LLC. Previously filed with the Commission on February 19, 2015, in Macatawa
Bank Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014, Exhibit 10.11. Here incorporated by reference.
|
||
Subsidiaries of the Registrant.
|
||
Consent of BDO USA, LLP, independent registered public accounting firm.
|
||
Powers of Attorney.
|
||
Certification of Chief Executive Officer.
|
||
Certification of Chief Financial Officer.
|
||
Certification pursuant to 18 U.S.C. § 1350.
|
||
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
ITEM 16: |
Form 10-K Summary.
|
MACATAWA BANK CORPORATION
|
|
/s/ Ronald L. Haan
|
|
Ronald L. Haan
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
/s/ Jon W. Swets
|
|
Jon W. Swets
|
|
Senior Vice President and Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
Signature
|
||
*/s/ Richard L. Postma
|
February 16, 2023
|
|
Richard L. Postma, Chairman of the Board
|
||
/s/ Ronald L. Haan
|
February 16, 2023
|
|
Ronald L. Haan, Chief Executive Officer
|
||
*/s/ Douglas B. Padnos
|
February 16, 2023
|
|
Douglas B. Padnos, Director
|
||
*/s/ Michael K. Le Roy
|
February 16, 2023
|
|
Michael K. Le Roy, Director
|
||
*/s/ Charles A. Geenen
|
February 16, 2023
|
|
Charles A. Geenen, Director
|
||
*/s/ Birgit M. Klohs
|
February 16, 2023
|
|
Birgit M. Klohs, Director
|
||
*/s/ Robert L. Herr
|
February 16, 2023
|
|
Robert L. Herr, Director
|
||
*/s/ Nicole S. Dandridge
|
February 16, 2023
|
|
Nicole S. Dandridge, Director
|
||
*/s/ Thomas P. Rosenbach
|
February 16, 2023
|
|
Thomas P. Rosenbach, Director
|
*By:
|
/s/ Jon W. Swets
|
Jon W. Swets
Attorney-in-Fact
|
Dated: January 6, 2023
|
/s/ Richard L. Postma
|
(signature)
|
|
Richard L. Postma
|
|
(type or print name)
|
Dated: January 9, 2022
|
/s/ Ronald L. Haan
|
(signature)
|
|
Ronald L. Haan
|
|
(type or print name)
|
Dated: January 6, 2023
|
/s/ Douglas B. Padnos
|
(signature)
|
|
Douglas B. Padnos
|
|
(type or print name)
|
Dated: January 17, 2023
|
/s/ Michael K. Le Roy
|
(signature)
|
|
Michael K. Le Roy
|
|
(type or print name)
|
Dated: January 9, 2023
|
/s/ Charles A. Geenen
|
(signature)
|
|
Charles A. Geenen
|
|
(type or print name)
|
Dated: January 11, 2023
|
/s/ Birgit M. Klohs
|
(signature)
|
|
Birgit M. Klohs
|
|
(type or print name)
|
Dated: January 14, 2023
|
/s/ Robert L. Herr
|
(signature)
|
|
Robert L. Herr
|
|
(type or print name)
|
Dated: January 24, 2023
|
/s/ Nicole S. Dandridge
|
(signature)
|
|
Nicole S. Dandridge
|
|
(type or print name)
|
Dated: January 27, 2023
|
/s/ Thomas P. Rosenbach
|
(signature)
|
|
Thomas P. Rosenbach
|
|
(type or print name)
|
1. |
I have reviewed this annual report on Form 10-K of Macatawa Bank Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d‑15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated: February 16, 2023
|
|
/s/ Ronald L. Haan
|
|
Ronald L. Haan
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
1. |
I have reviewed this annual report on Form 10-K of Macatawa Bank Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d‑15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated: February 16, 2023
|
|
/s/ Jon W. Swets
|
|
Jon W. Swets
|
|
Senior Vice President and
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
/s/ Ronald L. Haan
|
|
Ronald L. Haan
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
/s/ Jon W. Swets
|
|
Jon W. Swets
|
|
Senior Vice President and
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
|
Dated: February 16, 2023
|
?,L7_ 1QG_9R3Z@4O_"L-&U.!SXR:;Q+>RXWRWSG
M9'SG$4:D+&/IR>YH \X^$OB33O%_A>(^&-$L/"=W;3-;12QZ@%"J I!VXW39
M).588_VJ]$?3+^SF\WQDLWB*U4[EGMHR(H_]ZT&
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
ASSETS | ||
Securities held to maturity fair value | $ 332,650 | $ 139,272 |
Shareholders' equity | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 34,298,640 | 34,259,945 |
Common stock, shares outstanding (in shares) | 34,298,640 | 34,259,945 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | ||
Net income | $ 34,731 | $ 29,014 |
Unrealized gains (losses): | ||
Net change in unrealized losses on debt securities available for sale | (39,686) | (5,710) |
Net unrealized gain at time of transfer on securities transferred to held-to-maturity | 113 | 0 |
Amortization of net unrealized gains on securities transferred to held-to-maturity | (21) | 0 |
Tax effect | 8,315 | 1,199 |
Net change in unrealized gains (losses) on securities available for sale, net of tax | (31,279) | (4,511) |
Other comprehensive loss, net of tax | (31,279) | (4,511) |
Comprehensive income | $ 3,452 | $ 24,503 |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Cash dividend (in dollars per share) | $ 0.32 | $ 0.32 |
Common Stock [Member] | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Number of shares repurchased for taxes withheld on vested restricted stock (in shares) | 19,061 | 14,787 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Principles of Consolidation: The accompanying consolidated financial statements include the accounts of Macatawa Bank Corporation
(“Macatawa” or the “Company”) and its wholly-owned subsidiary, Macatawa Bank (the “Bank”). All significant intercompany accounts and transactions have been eliminated in consolidation.
Macatawa Bank is a Michigan chartered bank with depository accounts insured by the Federal Deposit Insurance Corporation. The Bank operates 26 full service branch offices providing a full range of commercial and consumer banking and trust services in Kent County, Ottawa County, and
northern Allegan County, Michigan.
The Company previously owned all of the common securities of Macatawa Statutory Trust II. This was a grantor trust that issued trust preferred securities and is
discussed in Note 11. Under generally accepted accounting principles, this trust is not consolidated into the financial statements of the Company. On July 7, 2021, the Company redeemed the $20.0 million outstanding trust preferred securities and $619,000
common securities associated with Macatawa Statutory Trust II.
Recent Events: In response to the COVID-19 pandemic, federal state and local governments have taken and continue to take actions designed to mitigate
the effect on public health and to address the economic impact from the virus. The effects of COVID-19 and its related variants, such as Omicron and Delta, could, among other risks, have a material adverse impact on the financial condition
of the Company’s customers, potentially impacting their ability to make payments to the Company as scheduled driving an increase in delinquencies and loan losses.
The Bank was a participating lender in the Small
Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”). PPP loans were forgivable, in whole or in part, if the proceeds were used for payroll and other permitted purposes in accordance with the requirements of the PPP. Upon SBA
forgiveness, unamortized fees were then recognized into interest income.
In 2021:
In 2022:
As of December 31, 2022, no PPP loans remain outstanding
NOTE 1 –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management
makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ. The allowance for loan
losses, valuation of deferred tax assets, loss contingencies, fair value of other real estate owned, determination of other-than-temporary impairment and fair values of financial instruments are particularly subject to change.
Concentration of Credit Risk: Loans are granted to, and deposits are obtained from, customers primarily in the western Michigan area as described above.
Substantially all loans are secured by specific items of collateral, including residential real estate, commercial real estate, commercial assets and consumer assets. Commercial real estate loans are the largest concentration, comprising 46% of total loans at December 31, 2022. Commercial and industrial loans total 37%, while residential real estate and consumer loans make up the remaining 17%.
Other financial instruments, which potentially subject the Company to concentrations of credit risk, include deposit accounts in other financial institutions.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, demand deposits with other financial institutions and short-term securities
(securities with maturities equal to or less than 90 days and federal funds sold).
Cash Flow Reporting: Cash flows are reported net for customer loan and deposit transactions, interest-bearing time deposits with other financial
institutions and short-term borrowings with maturities of 90 days or less.
Restrictions on Cash: Cash on hand or on deposit with the Federal Reserve Bank of $0 and $0 at December 31, 2022 and 2021, respectively, was
required to meet regulatory reserve and clearing requirements.
Securities: Securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them
to maturity. Securities available for sale consist of those securities which might be sold prior to maturity due to changes in interest rates, prepayment risks, yield and availability of alternative investments, liquidity needs or other
factors. Securities classified as available for sale are reported at their fair value and the related unrealized gain or loss is reported in other comprehensive income, net of tax.
Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level yield method without
anticipating prepayments. Gains and losses on sales are based on the amortized cost of the security sold.
Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market
conditions warrant such an evaluation. Investment securities classified as available for sale or held-to-maturity are generally evaluated for OTTI under ASC Topic 320, Investments — Debt and Equity
Instruments.
In determining OTTI, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the
financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required
to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point
in time. Management has determined that no OTTI charges were necessary during 2022 and 2021.
Federal Home Loan Bank (FHLB) Stock: The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level
of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment. Because this stock is viewed as a long term investment,
impairment is based on ultimate recovery of par value. Management has determined that there was no impairment of FHLB stock
during 2022 and 2021. Both cash and stock dividends are reported as income.
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loans Held for Sale: Mortgage loans originated and intended for sale in the secondary market are carried at fair value, as determined by outstanding
commitments from investors. As of December 31, 2022 and 2021, these loans had a net unrealized gain of $4,000 and $51,000, respectively, which are reflected in their carrying value. Changes in fair value of loans held for sale are included in net gains on
mortgage loans. Loans are sold servicing released; therefore no mortgage servicing right assets are established.
Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal
balance outstanding, net of unearned interest, deferred loan fees and costs and an allowance for loan losses.
Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in
interest income over the respective term of the loan using the level-yield method without anticipating prepayments.
Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer loans are typically charged off no later than 120 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at
an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and
individually classified impaired loans.
All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on
the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably
assured.
Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable incurred credit losses, increased by the provision for
loan losses and recoveries, and decreased by charge-offs of loans. Management believes the estimated allowance for loan losses to be adequate based on known and inherent risks in the portfolio, past loan loss experience, information about
specific borrower situations and estimated collateral values, economic conditions and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s
judgment, should be charged-off. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.
The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general
component covers non-classified loans and is based on historical loss experience adjusted for current qualitative environmental factors. The Company maintains a loss migration analysis that tracks loan losses and recoveries based on loan
class as well as the loan risk grade assignment for commercial loans. At December 31, 2022 and 2021, an 18 month (six quarter)
annualized historical loss experience was used for commercial loans and a 12 month (four quarter) historical loss experience
period was applied to residential mortgage and consumer loan portfolios. These historical loss percentages are adjusted (both upwards and downwards) for certain qualitative environmental factors, including economic trends, credit quality
trends, valuation trends, concentration risk, quality of loan review, changes in personnel, competition, increasing interest rates, external factors and other considerations.
A loan is impaired when, based on current information and events, it is believed to be probable that the Company will be unable to collect all amounts due
according to the contractual terms of the loan agreement. Loans for which the terms have been modified and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.
Commercial and commercial real estate loans with relationship balances exceeding $500,000 and an internal risk grading of 6 or worse are evaluated for impairment. If a
loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing interest rate or at the fair value of collateral, less estimated costs
to sell, if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans are collectively evaluated for impairment and, accordingly, they are not
separately identified for impairment disclosures.
Troubled debt restructurings are also considered impaired with impairment generally measured at the present value of estimated future cash flows using the loan’s
effective rate at inception or using the fair value of collateral, less estimated costs to sell, if repayment is expected solely from the collateral.
Transfers of Financial Assets: Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control
over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the
transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Foreclosed Assets : Assets acquired through or instead of loan foreclosure, primarily other real estate owned, are initially recorded at fair value less
estimated costs to sell when acquired, establishing a new cost basis. If fair value declines, a valuation allowance is recorded through expense. Costs after acquisition are expensed unless they add value to the property.
Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Buildings and related
components are depreciated using the straight-line method with useful lives ranging from 5 to 40 years. Furniture, fixtures and equipment are depreciated using the straight-line method with useful lives ranging from 3 to 15 years. Maintenance,
repairs and minor alterations are charged to current operations as expenditures occur and major improvements are capitalized.
Bank-Owned Life Insurance (BOLI): The Bank has purchased life insurance policies on certain officers. BOLI is recorded at its currently realizable cash
surrender value. Changes in cash surrender value are recorded in other income.
Long-term Assets: Premises and equipment and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be
recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value. The Company had no
impairment of long term assets in 2022 or 2021.
Loan Commitments and Related Financial Instruments: Financial instruments include off-balance sheet credit instruments, such as commitments to make loans
and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded
when they are funded.
Mortgage Banking Derivatives : Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for
the future delivery of these mortgage loans are accounted for as derivatives not qualifying for hedge accounting. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates from the date the interest
on the loan is locked. The Bank enters into commitments to sell mortgage backed securities, which it later buys back in order to hedge its exposure to interest rate risk in its mortgage pipeline. At times, the Company also enters into
forward commitments for the future delivery of mortgage loans when interest rate locks are entered into, in order to hedge the change in interest rates resulting from its commitments to fund the loans.
Changes in the fair values of these interest rate lock and mortgage backed security and forward commitment derivatives are included in net gains on mortgage
loans. The fair value of interest rate lock commitments was $0 and $25,000 at December 31, 2022 and 2021, respectively. The net fair value of mortgage backed security derivatives was approximately $0 and $(13,000) at December 31,
2022 and 2021, respectively.
Revenue From Contracts With Customers: The Company records revenue from contracts with customers in accordance with Accounting Standards Codification
Topic 606, “Revenue from Contracts with Customers” (“Topic 606”). Under Topic 606, the Company must identify the contract with a customer, identify the performance obligations in the contract,
determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) it satisfies a performance obligation. No revenue has been recognized in the current reporting
period that results from performance obligations satisfied in previous periods.
The Company’s primary sources of revenue are derived
from interest and dividends earned on loans, securities and other financial instruments that are not within the scope of Topic 606. The Company has evaluated the nature of its contracts with customers and determined that further
disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was not necessary.
The Company generally satisfies its performance
obligations on contracts with customers as services are rendered, and the transaction prices are typically fixed and charged either on a periodic basis (generally monthly) or based on activity. Because performance obligations are satisfied
as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers.
Interest Income: The Company’s largest source of revenue is interest income which is primarily recognized on an accrual basis based on contractual terms written
into loans and investment contracts.
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Noninterest Revenue: The Company derives the majority of its noninterest revenue from: (1) service charges for deposit related services, (2) gains related to
mortgage loan sales, (3) trust fees and (4) debit and credit card interchange income. Most of these services are transaction based and revenue is recognized as the related service is provided.
Derivatives: Certain of the Bank’s commercial loan customers have entered into interest rate swap agreements directly with the Bank. At the same time
the Bank enters into a swap agreement with its customer, the Bank enters into a corresponding interest rate swap agreement with a correspondent bank at terms mirroring the Bank’s interest rate swap with its commercial loan customer. This is
known as a back-to-back swap agreement. Under this arrangement the Bank has two freestanding interest rate swaps, both of which
are carried at fair value. As the terms mirror each other, there is no income statement impact to the Bank. At December 31, 2022, the total notional amount of such agreements was $125.3 million and resulted in a derivative asset with a fair value of $6.5
million which was included in other assets and a derivative liability of $6.5 million which was included in other liabilities. At
December 31, 2021, the total notional amount of such agreements was $140.7 million and resulted in a derivative asset with a fair
value of $3.3 million which was included in other assets and a derivative liability of $3.3 million which was included in other liabilities.
Income Taxes: Income tax expense is the sum of the current year income tax due or refundable and the change in deferred tax assets and liabilities.
Deferred tax assets and liabilities are the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces deferred tax assets to the amount expected to be realized.
The Company recognizes a tax position as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax
examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit
is recorded.
The Company recognizes interest and/or penalties related to income tax matters in income tax expense.
Earnings Per Common Share: Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the
period. All outstanding unvested restricted stock awards that contain rights to nonforfeitable dividends are considered participating securities for this calculation and are included in both basic and diluted earnings per share. Diluted
earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options. In the event of a net loss, our unvested restricted stock awards are excluded from both basic and diluted earnings per
share.
Comprehensive Income: Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes
unrealized gains and losses on securities available for sale and amortization of unrealized gain upon transfer of securities from available for sale to held to maturity.
Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when
the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.
Stock Splits and Dividends: Stock dividends in excess of 20%
are reported as stock splits, resulting in no adjustment to the Company’s equity accounts. Stock dividends for 20% or less are
reported by transferring the fair value, as of the ex-dividend date, of the stock issued from retained earnings to common stock. Fractional share amounts are paid in cash with a reduction in retained earnings. All share and per share amounts
are retroactively adjusted for stock splits and dividends.
Dividend Restriction: Banking regulations require maintaining certain capital levels and impose limitations on dividends paid by the Bank to the Company
and by the Company to shareholders.
Fair Values of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more
fully disclosed separately. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular
items. Changes in assumptions or in market conditions could significantly affect the estimates. The fair value estimates of existing on-and off-balance sheet financial instruments do not include the value of anticipated future business or
the values of assets and liabilities not considered financial instruments.
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Segment Reporting: The Company, through the branch network of the Bank, provides a broad range of financial services to individuals and companies in
western Michigan. These services include demand, time and savings deposits; lending; ATM and debit card processing; cash management; and trust and brokerage services. While the Company’s management team monitors the revenue streams of the
various Company products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one operating segment – commercial banking.
Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation.
Accounting Standards Updates:
FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments. This ASU provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and
other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a
broader range of reasonable and supportable information to inform credit loss estimates. The new guidance eliminates the probable initial recognition threshold and, instead, reflects an entity’s current estimate of all expected credit
losses. The new guidance broadens the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually to include forecasted information, as well as past events
and current conditions. There is no specified method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate. Although an entity may still use its
current systems and methods for recording the allowance for credit losses, under the new rules, the inputs used to record the allowance for credit losses generally will need to change to appropriately reflect an estimate of all expected
credit losses and the use of reasonable and supportable forecasts. Additionally, credit losses on available-for-sale debt securities will now have to be presented as an allowance rather than as a write-down.
This ASU expands the disclosure requirements regarding an entity’s assumptions, models and methods for estimating the allowance for credit losses. In addition,
entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by year of origination. The Company selected a software vendor for applying this new ASU for Current
Expected Credit Losses (“CECL”), began implementation of the software in the second quarter of 2018, completed integration during the third quarter of 2018 and ran parallel computations with both systems using the current GAAP incurred loss
model in the fourth quarter of 2018. The Company went live with this software beginning in January 2019 for its monthly incurred loss computations and began modeling the new current expected credit loss model assumptions to the allowance for
loan losses computation. In the periods since, the Company modeled the various methods prescribed in the ASU against the Company’s identified loan segments, ultimately determining that the weighted average remaining life method was the
appropriate method for the Company to use. The Company adopted the standard effective January 1, 2023 and estimates that the impact of adoption will result in an allowance increase of $1.2 million to $2.2 million, due primarily to the forward-looking
economic forecast, which presents the most variability within this range. The required liability for unfunded commitments at January 1, 2023 is estimated at approximately $60,000. The resulting impact will be a decrease to the retained earnings account on the Company’s Consolidated Balance Sheet equal to the after-tax impact of the increase in allowance
balances, with the tax impact portion being recorded as a deferred tax asset on the Company’s Consolidated Balance Sheet. The Company did not identify any available-for-sale debt securities requiring allowances to be established upon
adoption of the standard on January 1, 2023. In addition, the Company evaluated its municipal bond securities and U.S.
Treasury securities held to maturity on a pooled basis, determining that the securities in each pool share similar risks. The Company determined that on January 1, 2023, the municipal bond securities have a remote risk of loss and the
government backed U.S. Treasury securities have a zero risk of loss. As such, the allowance for debt securities held to maturity established upon adoption of the standard on January 1, 2023 was immaterial.
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting
provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to
alternative reference rates. Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. Entities that make such elections would not have to
remeasure contracts at the modification date or reassess a previous accounting determination. Entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by
reference rate reform, if certain criteria are met. We are utilizing the timeline guidance published by the Alternative Reference Rates Committee to develop and achieve internal milestones during this transitional period. We have
discontinued the use of new LIBOR-based loans and interest rate derivatives, according to regulatory guidelines. ASU 2022-06 Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848
deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. The amended guidance under Topic 848 and our ability to elect its temporary optional expedients and exceptions are effective for us through December 31,
2024. The Company has adopted the LIBOR transition relief allowed under this standard.
ASU No. 2022-01 Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method. This ASU expands
the current last-of-layer method of hedge accounting that permits only one hedged layer to allow multiple hedged layers of a single closed portfolio. To reflect this expansion, the last-of-layer method is renamed the portfolio layer
method. This ASU expands the scope of the portfolio layer method to include nonprepayable assets, specifies eligible hedging instruments in a single-layer hedge, provides additional guidance on the accounting for and disclosure of hedge
basis adjustments and specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. This ASU is effective for public business entities for fiscal years beginning
after December 15, 2022, and interim periods within those fiscal years. As the Company does not engage in this type of hedging activity, adoption of this ASU on January 1, 2023 did not have any impact on its financial results or
disclosures.
ASU No. 2022-02 Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.
This ASU eliminates the accounting guidance for troubled debt restructurings (TDRs) by creditors in Subtopic 310-40, Receivables - Troubled Debt Restructurings by Creditors, while adding disclosures for certain loan restructurings by
creditors when a borrower is experiencing financial difficulty. This guidance requires an entity to determine whether the modification results in a new loan or a continuation of an existing loan. Additionally, the ASU requires disclosure
of current period gross writeoffs by year of origination for financing receivables. The ASU also requires disclosure of current period gross writeoffs by year of origination for financing receivables and disclosure of certain modifications
of receivables made to borrowers experiencing financial difficulty. This ASU is effective for the Company for fiscal years beginning after December 15, 2022. Adoption of this ASU on January 1, 2023 did not have a material impact on the
Company’s financial results and the additional required disclosures for gross writeoffs will be included in the footnotes to the Company’s March 31, 2023 consolidated financial statements.
|
SECURITIES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES |
NOTE 2 – SECURITIES
The amortized cost and fair value of securities were as follows (dollars in thousands):
There were no sales of securities available
for sale during the years ended December 31, 2022 and 2021.
Contractual maturities of debt securities at December 31, 2022 were as follows (dollars in thousands):
NOTE 2 – SECURITIES (Continued)
Securities with unrealized losses at December 31, 2022 and 2021, aggregated by investment category and length of time that individual securities have been in a
continuous unrealized loss position, are as follows (dollars in thousands):
Other-Than-Temporary-Impairment
Management evaluates securities for OTTI at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. At
December 31, 2022, 444 securities available for sale with fair values totaling $464.4 million had unrealized losses totaling $40.1 million.
At December 31, 2021, 127 securities available for sale with fair values totaling $191.4 million had unrealized losses totaling $3.1 million.
At December 31, 2022, 76 securities held to maturity with fair values totaling $317.0 million had unrealized losses totaling $16.5 million.
At December 31, 2021, 9 securities held to maturity with fair values totaling $61.2 million had unrealized losses totaling $215,000.
Management has the ability and intent to hold the securities classified as held to maturity until they mature, at which time the Company will receive full value for the securities. In addition, management believes it is more likely than not
that the Company will not be required to sell any of its investment securities before a recovery of cost. Management determined that the unrealized losses for each period were attributable to changes in interest rates and not due to credit
quality. As such, no OTTI charges were necessary during 2022 and 2021.
On January 1, 2022, the Company transferred all of its US Treasury securities held at that time from available for sale to held to maturity. These securities had an amortized cost of $123.5 million and an unrealized gain of $113,000
at the date of transfer. The transfer was made at fair value, with the unrealized gain becoming part of purchase premium which will be amortized over the remaining life of the securities. The other comprehensive income component is
separated from the remaining available for sale securities and is amortized over the remaining life of the securities transferred. Management has the ability and intent to hold these securities until they mature, at which time the Company
will receive full value for the securities.
NOTE 2 – SECURITIES (Continued)
Securities with a carrying value of approximately $3.5
million and $4.9 million were pledged as security for public deposits, letters of credit and for other purposes required or
permitted by law at December 31, 2022 and 2021, respectively.
The Company also has an investment in a fund that invests in projects qualifying for Community Reinvestment Act credit. As an equity investment, accounting standards require this $1.5 million investment be carried at fair value and reported in other assets at December 31, 2022 and 2021.
|
LOANS |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS |
NOTE 3 – LOANS
Portfolio loans were as follows at year end (dollars in thousands):
The totals above are shown net of deferred fees and costs. Deferred
fees on loans totaled $1.3 million and $2.6 million at December 31, 2022 and 2021, respectively. Deferred costs on loans totaled $1.4
million and $1.3 million at December 31, 2022 and 2021, respectively.
NOTE 3 – LOANS (Continued)
The following tables present the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2022 and 2021 (dollars in
thousands):
The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment
method (dollars in thousands):
NOTE 3 – LOANS
(Continued)
The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2022 (dollars in thousands):
NOTE 3 – LOANS (Continued)
The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2021 (dollars in thousands):
NOTE 3 – LOANS (Continued)
The following table presents information regarding average balances of impaired loans and interest recognized on impaired loans for the years ended December 31,
2022 and 2021 (dollars in thousands):
NOTE 3 – LOANS (Continued)
Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. The
following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of December 31, 2022 and 2021 (dollars in thousands):
NOTE 3 – LOANS (Continued)
The following table presents the aging of the recorded investment in past due loans as of December 31, 2022 by class of loans (dollars in thousands):
The following table presents the aging of the recorded investment in past due loans as of December 31, 2021 by class of loans (dollars in thousands):
NOTE 3 – LOANS (Continued)
The Company had allocated $295,000 and $565,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings (“TDRs”) as of December 31, 2022 and
2021, respectively. These loans may have involved the restructuring of terms to allow customers to mitigate the risk of foreclosure by meeting a lower loan payment requirement based upon their current cash flow. These may also include loans
that renewed at existing contractual rates, but below market rates for comparable credit. The Company has been active at utilizing these programs and working with its customers to reduce the risk of foreclosure. For commercial loans, these
modifications typically include an interest only period and, in some cases, a lowering of the interest rate on the loan. In some cases, the modification will include separating the note into two notes with the first note structured to be supported by current cash flows and collateral, and the second note made for the remaining unsecured debt. The second note
is charged off immediately and collected only after the first note is paid in full. This modification type is commonly referred to as an A-B note structure. For consumer mortgage loans, the restructuring typically includes a lowering of the
interest rate to provide payment and cash flow relief. For each restructuring, a comprehensive credit underwriting analysis of the borrower’s financial condition and prospects of repayment under the revised terms is performed to assess
whether the structure can be successful and that cash flows will be sufficient to support the restructured debt. An analysis is also performed to determine whether the restructured loan should be on accrual status. Generally, if the loan is
on accrual at the time of restructure, it will remain on accrual after the restructuring. In some cases, a nonaccrual loan may be placed on accrual at restructuring if the loan’s actual payment history demonstrates it would have cash flowed
under the restructured terms. After six consecutive payments under the restructured terms, a nonaccrual restructured loan is
reviewed for possible upgrade to accruing status.
Based upon regulatory guidance issued in 2014, the Company has determined that in situations where there is a subsequent modification or renewal and the loan is
brought to market terms, including a contractual interest rate not less than a market interest rate for new debt with similar credit risk characteristics, the TDR and impaired loan designations may be removed. In addition, the TDR
designation may also be removed from loans modified under an A-B note structure. If the remaining “A” note is at a market rate at the time of restructuring (taking into account the borrower’s credit risk and prevailing market conditions),
the loan can be removed from TDR designation in a subsequent calendar year after six months of performance in accordance with the
new terms. The market rate relative to the borrower’s credit risk is determined through analysis of market pricing information gathered from peers and use of a loan pricing model. The general objective of the model is to achieve a
consistent return on equity from one credit to the next, taking into consideration differences in credit risk. In the model, credits with higher risk receive a higher potential loss allocation, and therefore require a higher interest rate to
achieve the target return on equity.
As with other impaired loans, an allowance for loan loss is estimated for each TDR based on the most likely source of repayment for each loan. For impaired
commercial real estate loans that are collateral dependent, the allowance is computed based on the fair value of the underlying collateral, less estimated costs to sell. For impaired commercial loans where repayment is expected from cash
flows from business operations, the allowance is computed based on a discounted cash flow computation. Certain groups of TDRs, such as residential mortgages, have common characteristics and for them the allowance is computed based on a
discounted cash flow computation on the change in weighted rate for the pool. The allowance allocations for commercial TDRs where we have reduced the contractual interest rate are computed by measuring cash flows using the new payment terms
discounted at the original contractual rate.
The following table presents information regarding TDRs as of December 31, 2022 and 2021 (dollars in thousands):
NOTE 3 – LOANS (Continued)
The following table presents information related to accruing TDRs as of December 31, 2022 and 2021. The table presents the amount of accruing TDRs that were on
nonaccrual status prior to the restructuring, accruing at the time of restructuring and those that were upgraded to accruing status after receiving six consecutive monthly payments in accordance with the restructured terms as of December 31,
2022 and 2021 (dollars in thousands):
The following tables present information regarding troubled debt restructurings executed during the years ended December 31, 2022 and 2021 (dollars in
thousands):
According to the accounting standards, not all loan
modifications are TDRs. TDRs are modifications or renewals where the Company has granted a concession to a borrower in financial distress. The Company reviews all modifications and renewals for determination of TDR status. In some
situations a borrower may be experiencing financial distress, but the Company does not provide a concession. These modifications are not considered TDRs. In other cases, the Company might provide a concession, such as a reduction in
interest rate, but the borrower is not experiencing financial distress. This could be the case if the Company is matching a competitor’s interest rate. These modifications would also not be considered TDRs. Finally, any renewals at
existing terms for borrowers not experiencing financial distress would not be considered TDRs. As with other loans not considered TDR or impaired, allowance allocations are based on the historical based allocation for the applicable loan
grade and loan class.
Payment defaults on TDRs have been minimal and during
the twelve months ended December 31, 2022 and 2021 the balance of loans that became delinquent by more than 90 days past due or that were transferred to nonaccrual within 12 months of restructuring were not material.
NOTE 3 – LOANS (Continued)
Credit Quality Indicators: The Company categorizes loans into risk
categories based on relevant information about the ability of the borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends,
among other factors. The Company analyzes commercial loans individually and classifies these relationships by credit risk grading. The Company uses an eight point grading system, with grades 5 through 8 being considered classified, or watch, credits. All commercial loans are assigned a grade at origination, at each renewal or any
amendment. When a credit is first downgraded to a watch credit (either through renewal, amendment, loan officer identification or the loan review process), an Administrative Loan Review (“ALR”) is generated by the credit department and the
loan officer. All watch credits have an ALR completed monthly which analyzes the collateral position and cash flow of the borrower and its guarantors. The loan officer is required to complete both a short term and long term plan to
rehabilitate or exit the credit and to give monthly comments on the progress to these plans. Management meets quarterly with loan officers to discuss each of these credits in detail and to help formulate solutions where progress has
stalled. When necessary, the loan officer proposes changes to the assigned loan grade as part of the ALR. Additionally, Loan Review reviews all loan grades upon origination, renewal or amendment and again as loans are selected though the
loan review process. The credit will stay on the ALR until either its grade has improved to a 4 or the credit relationship is at a zero balance. The Company uses the following definitions for the risk grades:
1. Excellent - Loans supported by extremely strong financial condition or secured by the Bank’s own deposits. Minimal risk to the Bank
and the probability of serious rapid financial deterioration is extremely small.
2. Above Average - Loans supported by sound financial statements that indicate the ability to repay or borrowings secured (and margined
properly) with marketable securities. Nominal risk to the Bank and probability of serious financial deterioration is highly unlikely. The overall quality of these credits is very high.
3. Good Quality - Loans supported by satisfactory asset quality and liquidity, good debt capacity coverage, and good management in all
critical positions. Loans are secured by acceptable collateral with adequate margins. There is a slight risk of deterioration if adverse market conditions prevail.
4. Acceptable Risk - Loans carrying an acceptable risk to the Bank, which may be slightly below average quality. The borrower has
limited financial strength with considerable leverage. There is some probability of deterioration if adverse market conditions prevail. These credits should be monitored closely by the Relationship Manager.
5. Marginally Acceptable - Loans are of marginal quality with above normal risk to the Bank. The borrower shows acceptable asset
quality but very little liquidity with high leverage. There is inconsistent earning performance without the ability to sustain adverse market conditions. The primary source of repayment is questionable, but the secondary source of repayment
still remains an option. Very close attention by the Relationship Manager and management is needed.
6. Substandard - Loans are inadequately protected by the net worth and paying capacity of the borrower or the collateral pledged. The
primary and secondary sources of repayment are questionable. Heavy debt condition may be evident and volume and earnings deterioration may be underway. It is possible that the Bank will sustain some loss if the deficiencies are not
immediately addressed and corrected.
7. Doubtful - Loans supported by weak or no financial statements, as well as the ability to repay the entire loan, are questionable.
Loans in this category are normally characterized less than adequate collateral, insolvent, or extremely weak financial condition. A loan classified doubtful has all the weaknesses inherent in one classified substandard with the added
characteristic that the weaknesses makes collection or liquidation in full highly questionable. The possibility of loss is extremely high, however, activity may be underway to minimize the loss or maximize the recovery.
8. Loss - Loans are considered uncollectible and of little or no value as a bank asset.
NOTE 3 – LOANS (Continued)
At year end, the risk grade category of commercial loans by class of loans was as follows (dollars in thousands):
Commercial loans rated a 6, 7 or 8 per the Company’s internal
risk rating system are considered substandard, doubtful or loss, respectively.
Commercial loans classified as substandard or worse were as follows at year-end (dollars in thousands):
The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For consumer loan classes, the Company also
evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following tables present the recorded investment in consumer loans based on payment activity as of December 31, 2022
and 2021 (dollars in thousands):
|
OTHER REAL ESTATE OWNED |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER REAL ESTATE OWNED [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER REAL ESTATE OWNED |
NOTE 4 – OTHER REAL ESTATE OWNED
Other real estate owned was as follows (dollars in thousands):
Activity in the valuation allowance was as follows (dollars in thousands):
At December 31, 2022, the balance of other real estate owned included no foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property. At December 31, 2022, the recorded investment of consumer
mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $0. On
January 30, 2023, the Company sold the remaining real estate owned property at a small gain, bringing the balance of other real estate owned to $0.
|
FAIR VALUE |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE |
NOTE 5 – FAIR VALUE
ASC Topic 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy which requires an entity to
maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value include:
Level 1 : Quoted prices (unadjusted) for
identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2 : Significant other observable inputs
other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 : Significant unobservable inputs that
reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability.
Investment Securities: The fair values of investment securities are determined by matrix pricing, which is a mathematical technique widely used in the
industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The fair values of
certain securities held to maturity are determined by computing discounted cash flows using observable and unobservable market inputs (Level 3 inputs).
Loans Held for Sale: The fair value of loans held for sale is based upon binding quotes from third party investors (Level 2 inputs).
Impaired Loans: Loans identified as impaired are measured using one of three methods: the loan’s observable market price, the fair value of collateral or
the present value of expected future cash flows. For each period presented, no impaired loans were measured using the loan’s observable market price. If an impaired loan has had a charge-off or if the fair value of the collateral is less
than the recorded investment in the loan, we establish a specific reserve and report the loan as nonrecurring Level 3. The fair value of collateral of impaired loans is generally based on recent real estate appraisals, less costs to sell.
These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences
between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.
NOTE 5 – FAIR VALUE (Continued)
Interest
Rate Swaps: For interest rate swap agreements, we measure fair value utilizing pricing provided by a third-party pricing source that that uses market observable inputs, such as forecasted yield curves, and other observable inputs and
accordingly, interest rate swap agreements are classified as Level 2.
Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):
NOTE 5 – FAIR VALUE
(Continued)
Assets measured at fair value on a non-recurring basis are summarized below (in thousands):
Quantitative information about Level 3 fair value measurements measured on a non-recurring basis were as follows at year end (dollars in thousands).
NOTE 5 – FAIR VALUE
(Continued)
The carrying amounts and estimated fair values of financial instruments, not previously presented, were as follows at year end (dollars in thousands).
The methods and assumptions used to estimate fair value are described as follows.
Carrying amount is the estimated fair value for cash and cash equivalents, bank owned life insurance, accrued interest receivable and payable, demand deposits,
short-term borrowings and variable rate loans or deposits that reprice frequently and fully. Security fair values are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities as
discussed above. For fixed rate loans, interest-bearing time deposits in other financial institutions and deposits, and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash
flows using current market rates applied to the estimated life and credit risk (including consideration of widening credit spreads). Fair value of debt is based on current rates for similar financing. It was not practicable to determine the
fair value of FHLB stock due to restrictions placed on its transferability, so fair value approximates its cost. The fair value of off-balance sheet credit-related items is not significant.
The estimated fair values of financial instruments disclosed above as of December 31, 2022 and 2021 follow the guidance in ASU 2016-01 which prescribes an “exit
price” approach in estimating and disclosing fair value of financial instruments incorporating discounts for credit, liquidity and marketability factors.
|
DERIVATIVES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVES |
NOTE 6 – DERIVATIVES
Derivatives
not designated as hedges are not speculative and result from a service provided to certain commercial loan borrowers. The Company executes interest rate swaps with commercial banking customers desiring longer-term fixed rate loans, while
simultaneously entering into interest rate swaps with a correspondent bank to offset the impact of the interest rate swaps with the commercial banking customers. The net result is the desired floating rate loans and a minimization of the risk
exposure of the interest rate swap transactions. As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the commercial banking customer interest rate swaps
and the offsetting interest rate swaps with the correspondent bank are recognized directly to earnings. Since they offset perfectly, there is no net impact to earnings.
The fair value of derivative instruments as of December 31, 2022 and 2021 are reflected in the following table (dollars in thousands):
The
fair value of interest rate swaps in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk related to these agreements, was $6.5 million and $3.3 million as of December 31, 2022 and 2021, respectively.
The Bank has a master netting arrangement with the correspondent bank and has the right to offset, however it has elected to present the assets and liabilities gross. The Bank is required to pledge collateral to the correspondent bank equal to or
in excess of the net liability position. The Bank’s derivative liability with the correspondent bank was $0 and $1.0 milllion at December 31, 2022 and 2021, respectively. Securities pledged as collateral totaling $1.7 million and $3.0 million was provided to the counterparty
correspondent bank as of December 31, 2022 and 2021, respectively.
Interest
rate swaps entered into with commercial loan customers had notional amounts aggregating $62.7 million as of December 31, 2022 and $70.4 million at December 31, 2021. Associated credit exposure is generally mitigated by securing the interest rate swaps with the underlying collateral
of the loan instrument that has been hedged.
|
PREMISES AND EQUIPMENT - NET |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PREMISES AND EQUIPMENT - NET [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PREMISES AND EQUIPMENT - NET |
NOTE 7 – PREMISES AND EQUIPMENT – NET
Year-end premises and equipment were as follows (dollars in thousands):
Depreciation expense was $2.3 million and $2.5 million for 2022 and 2021, respectively.
|
LEASES |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
LEASES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
LEASES |
NOTE 8 – LEASES
The Company enters into leases in the normal course of business. As of December 31, 2022, the Company operated four offices for which the land and
buildings are leased. All of the Company’s leases are operating leases under applicable accounting standards and the lease agreements have maturity dates ranging from March 2023 through January 2026, some of which include extension
options. The weighted average remaining life of the lease term for these leases was 2 years as of December 31, 2022. As
permitted by applicable accounting standards, the Company has elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on the Company’s Consolidated Balance Sheets.
Leases are classified as either operating or finance leases at the lease commencement date, and as previously noted, all of the Company’s leases have been
determined to be operating leases. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent the Company’s right to use an underlying asset for the
lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease
term.
The Company
uses its incremental borrowing rate, on a collateralized basis, at lease commencement to calculate the present value of lease payments when the rate implicit in the lease is not known. The weighted average discount rate for leases was 0.58% as of December 31, 2022.
The right-of-use assets and lease liabilities were $625,000
and $627,000, respectively, as of December 31, 2022, and were $866,000 and $861,000, respectively at December 31, 2021.
Right-of-use assets are included in and lease
liabilities are included in on the Company’s Consolidated Balance Sheets.
Total operating lease expense charged to operations under all operating lease agreements was $451,000 in 2022 and $431,000 in 2021.
Future undiscounted lease payments for operating leases
with initial terms of one year or more as of December 31, 2022 are as follows (dollars in thousands):
|
DEPOSITS |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEPOSITS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEPOSITS |
NOTE 9 – DEPOSITS
Deposits at year-end were as follows (dollars in thousands):
The following table depicts the maturity distribution of certificates of deposit at December 31, 2022 (dollars in thousands):
Time deposits that exceed the FDIC insurance limit of $250,000
at December 31, 2022 and 2021
were approximately $29.7 million and $28.2
million, respectively.
|
OTHER BORROWED FUNDS |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER BORROWED FUNDS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER BORROWED FUNDS |
NOTE 10 - OTHER BORROWED FUNDS
Other borrowed funds include advances from the Federal Home Loan Bank and borrowings from the Federal Reserve Bank.
Federal Home Loan Bank Advances
At year-end, advances from the Federal Home Loan Bank were as follows (dollars in thousands):
Each advance is subject to a prepayment fee if paid prior to its maturity date. Fixed rate advances are payable at maturity. Amortizable mortgage advances are
fixed rate advances with scheduled repayments based upon amortization to maturity. Advances were collateralized by residential and commercial real estate loans totaling $446.1 million and $361.9 million under a blanket lien
arrangement at December 31, 2022 and 2021, respectively. The remaining $20.0 million putable advance at December 31, 2022 had a
one time put option on November 13, 2020. The FHLB did not exercise this option.
NOTE
10 - OTHER BORROWED FUNDS (Continued)
Scheduled repayments of FHLB advances as of December 31, 2022 were as
follows (in thousands):
On January 21,
2022, the FHLB exercised its option to put an advance totaling $25.0 million to the Company. This advance carried an
interest rate of 0.01% and had a maturity date of July 21, 2031 . The Company paid off this advance as
required on January 21, 2022. On
January 21, 2022, the Company executed a new $25.0 million advance with the FHLB with similar terms. This advance carried
an interest rate of 0.05% and a maturity date of January 21, 2032. The first put date for this advance was April 21, 2022. The FHLB exercised its put option on this advance and it was paid off by the Company as
required on April 21, 2022. on May 27, 2022, the FHLB exercised its put option on a $10.0 million advance that carried an
interest rate of 0.45% and the Company paid the advance off as required on May 27, 2022. In addition, on May 27, 2022, the
Company prepaid $20.0 million in FHLB advances, with interest rates ranging from 2.91% to 3.05%. Prepayment fees of $87,000 were incurred and are included in interest expense.
Federal Reserve Bank Borrowings
The Company has a financing arrangement with the Federal Reserve Bank. There were no borrowings outstanding at December 31, 2022 and 2021, and the Company had approximately $5.5 million and $4.0 million in unused borrowing capacity
based on commercial and mortgage loans pledged to the Federal Reserve Bank totaling $5.8 million and $4.4 million at December 31, 2022 and 2021, respectively.
|
LONG TERM DEBT |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
LONG TERM DEBT [Abstract] | |
LONG TERM DEBT |
NOTE 11 – LONG TERM DEBT
Macatawa Statutory Trust II issued $619,000 of common securities and $20.0
million aggregate liquidation amount of trust preferred securities with a floating interest rate of three-month plus 2.75%, maturing on March 18, 2034.
On July 7, 2021, the Company redeemed all of the $20.0 million of outstanding trust preferred securities and $619,000 of common securities associated
with Macatawa Statutory Trust II.
|
RELATED PARTY TRANSACTIONS |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS |
NOTE 12 – RELATED PARTY TRANSACTIONS
Loans to principal officers, directors, and their affiliates were as follows (dollars in thousands).
Deposits from principal officers, directors, and affiliates at December 31, 2022 and 2021 were $153.3 million and $205.4 million, respectively. The
majority of the deposit balances for each year are associated with institutional accounts of affiliated organizations.
During 2015, the Bank entered into a back-to-back swap agreement (see Note 1 – Derivatives) with a company affiliated with one of the Company’s directors. The
total notional amount of the agreement was $10.7 million and $12.0 million at December 31, 2022 and 2021, respectively.
|
STOCK-BASED COMPENSATION |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION |
NOTE 13 – STOCK-BASED COMPENSATION
On May 5, 2015, the Company’s shareholders approved the Macatawa Bank Corporation Stock Incentive Plan of 2015 (the 2015 Plan). The 2015 Plan provides for grant
of up to 1,500,000 shares of Macatawa common stock in the form of stock options or restricted stock awards to employees and
directors. There were 973,550 shares under the “2015 Plan” available for future issuance as of December 31, 2022. The Company
issues new shares under the 2015 Plan from its authorized but unissued shares.
Restricted Stock Awards
Restricted stock awards have vesting periods of three years
with vesting at the rate of A
summary of changes in the Company’s nonvested restricted stock awards for the year follows:
each year. Restricted stock awards have no other performance conditions required for
vesting.
Compensation cost related to restricted stock awards totaled $703,000
and $684,000 for 2022 and 2021, respectively.
As of December 31, 2022, there was $1.4 million of
total remaining unrecognized compensation cost related to nonvested restricted stock awards granted under the Company’s stock-based compensation plans. The cost is expected to be recognized over a weighted-average period of 1.42 years. The total grant date fair value of restricted stock awards vested during 2022 was $732,000. The total grant date fair value of restricted stock awards vested during 2021 was $660,000.
|
EMPLOYEE BENEFITS |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
EMPLOYEE BENEFITS [Abstract] | |
EMPLOYEE BENEFITS |
NOTE 14 – EMPLOYEE BENEFITS
The Company sponsors a 401(k) plan which covers substantially all employees. Employees may elect to contribute to the plan up to the maximum percentage of
compensation and dollar amount subject to statutory limitations. Beginning January 1, 2013, the Company’s contribution was set using a matching formula of 100% of the first 3% of employee contributions and 50% of employee contributions in excess of 3%, up to 5%. The Company suspended its matching contributions in the second quarter of 2020 and resumed contributions in the third quarter of 2020. For
2021, the Company reduced its matching formula to 100% of the first 2% of employee contributions. For 2022, the Company has reimplemented its normal matching formula of 100% of the first 3% of employee contributions and 50% of employee contributions in excess of 3%, up to 5%. The Company’s contributions were approximately $755,000
and $412,000 for 2022 and 2021, respectively.
|
EARNINGS PER COMMON SHARE |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER COMMON SHARE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER COMMON SHARE |
NOTE 15 - EARNINGS PER COMMON SHARE
A reconciliation of the numerators and denominators of basic and diluted earnings per common share are as follows (dollars in thousands, except per share data):
|
FEDERAL INCOME TAXES |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FEDERAL INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FEDERAL INCOME TAXES |
NOTE 16 - FEDERAL INCOME TAXES
Income tax expense was as follows (dollars in thousands):
The difference between the financial statement tax expense and amount computed by applying the statutory federal tax rate to pretax income was reconciled as
follows (dollars in thousands):
The realization
of deferred tax assets (net of a recorded valuation allowance) is largely dependent upon future taxable income, future reversals of existing taxable temporary differences and the ability to carryback losses to available tax years. In
assessing the need for a valuation allowance, we consider positive and negative evidence, including taxable income in carry-back years, scheduled reversals of deferred tax liabilities, expected future taxable income and tax planning
strategies. Management believes it is more likely than not that all of the deferred tax assets will be realized against deferred tax liabilities and projected future taxable income.
The net deferred tax asset recorded included the following amounts of deferred tax assets and liabilities (dollars in thousands):
NOTE 16 - FEDERAL INCOME TAXES (Continued)
There were no unrecognized tax benefits at
December 31, 2022 and 2021 and the Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months. The Company is no longer subject to examination by the Internal Revenue Service for years before 2019.
|
COMMITMENTS AND OFF BALANCE-SHEET RISK |
12 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||
COMMITMENTS AND OFF BALANCE-SHEET RISK [Abstract] | |||||||||||||||||||||||||||||||||||||
COMMITMENTS AND OFF BALANCE-SHEET RISK |
NOTE 17 – COMMITMENTS AND OFF BALANCE-SHEET RISK
Some financial instruments are used to meet customer financing needs and to reduce exposure to interest rate changes. These financial instruments include
commitments to extend credit and standby letters of credit. These involve, to varying degrees, credit and interest rate risk in excess of the amount reported in the financial statements.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the commitment, and generally
have fixed expiration dates. Standby letters of credit are conditional commitments to guarantee a customer’s performance to a third party. Exposure to credit loss if the other party does not perform is represented by the contractual amount
for commitments to extend credit and standby letters of credit. Collateral or other security is normally not obtained for these financial instruments prior to their use and many of the commitments are expected to expire without being used.
A summary of the contractual amounts of financial instruments with off-balance-sheet risk was as follows at year-end (dollars in thousands):
The notional
amount of commitments to fund mortgage loans to be sold into the secondary market was $0 and approximately $1.3 million at December 31, 2022 and 2021, respectively.
The Bank enters into commitments to sell mortgage backed securities, which it later buys back in order to hedge its exposure to interest rate risk in its
mortgage pipeline. These commitments were $0 and approximately $9.5 million at December 31, 2022 and 2021, respectively.
At year-end 2022 approximately 72.0% of the
Bank’s commitments to make loans were at fixed rates, offered at current market rates. The remainder of the commitments to make loans were at variable rates tied to SOFR and the prime rate and generally expire within 30 days. The majority of the unused lines of credit were at variable rates tied to SOFR and the prime rate.
|
CONTINGENCIES |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
CONTINGENCIES [Abstract] | |
CONTINGENCIES |
NOTE 18 – CONTINGENCIES
The Company and its subsidiaries periodically become defendants in certain claims and legal actions arising in the ordinary course of business. As of December
31, 2022, there were no material pending legal proceedings to which we or any of our subsidiaries are a party or which any of our properties are the subject.
|
SHAREHOLDERS' EQUITY |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY |
NOTE 19 – SHAREHOLDERS’ EQUITY
Regulatory Capital
The Company and the Bank are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt
corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative
judgments by regulators about components, risk weightings, and other factors and the regulators can lower classifications in certain cases. Failure to meet various capital requirements can initiate regulatory action that could have a direct
material effect on the financial statements.
The prompt corrective action regulations provide five
categories, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If a bank is only
adequately capitalized, regulatory approval is required to, among other things, accept, renew or roll-over brokered deposits. If a bank is undercapitalized, capital distributions and growth and expansion are limited, and plans for capital
restoration are required.
The regulatory capital requirements include a common equity Tier 1 capital to risk-weighted assets ratio (CET1 ratio) of 4.5% and a capital conservation buffer
of 2.5% of risk-weighted assets, which effectively results in a minimum CET1 ratio of 7.0%. The minimum ratio of Tier 1 capital to risk-weighted assets is 6.0% (which, with the capital conservation buffer, effectively results in a minimum
Tier 1 capital ratio of 8.5%), which effectively results in a minimum total capital to risk-weighted assets ratio of 10.5% (with the capital conservation buffer). The minimum leverage ratio is 4.0%.
Actual capital levels (dollars in thousands) and minimum required levels were as follows at year-end:
The Bank was categorized as “well capitalized” at December 31, 2022 and 2021.
|
CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY) |
NOTE 20 – CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY)
Following are condensed parent company only financial statements (dollars in thousands):
CONDENSED BALANCE SHEETS
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
NOTE 20 – CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY)
(Continued)
CONDENSED STATEMENTS OF CASH FLOWS
|
QUARTERLY FINANCIAL DATA (Unaudited) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
QUARTERLY FINANCIAL DATA (Unaudited) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
QUARTERLY FINANCIAL DATA (Unaudited) |
NOTE 21 – QUARTERLY FINANCIAL DATA (Unaudited)
(Dollars in thousands except per share data)
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
12 Months Ended | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||
Nature of Operations and Principles of Consolidation |
Nature of Operations and Principles of Consolidation: The accompanying consolidated financial statements include the accounts of Macatawa Bank Corporation
(“Macatawa” or the “Company”) and its wholly-owned subsidiary, Macatawa Bank (the “Bank”). All significant intercompany accounts and transactions have been eliminated in consolidation.
Macatawa Bank is a Michigan chartered bank with depository accounts insured by the Federal Deposit Insurance Corporation. The Bank operates 26 full service branch offices providing a full range of commercial and consumer banking and trust services in Kent County, Ottawa County, and
northern Allegan County, Michigan.
The Company previously owned all of the common securities of Macatawa Statutory Trust II. This was a grantor trust that issued trust preferred securities and is
discussed in Note 11. Under generally accepted accounting principles, this trust is not consolidated into the financial statements of the Company. On July 7, 2021, the Company redeemed the $20.0 million outstanding trust preferred securities and $619,000
common securities associated with Macatawa Statutory Trust II.
|
||||||||||||||||||
Recent Events |
Recent Events: In response to the COVID-19 pandemic, federal state and local governments have taken and continue to take actions designed to mitigate
the effect on public health and to address the economic impact from the virus. The effects of COVID-19 and its related variants, such as Omicron and Delta, could, among other risks, have a material adverse impact on the financial condition
of the Company’s customers, potentially impacting their ability to make payments to the Company as scheduled driving an increase in delinquencies and loan losses.
The Bank was a participating lender in the Small
Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”). PPP loans were forgivable, in whole or in part, if the proceeds were used for payroll and other permitted purposes in accordance with the requirements of the PPP. Upon SBA
forgiveness, unamortized fees were then recognized into interest income.
In 2021:
In 2022:
As of December 31, 2022, no PPP loans remain outstanding
|
||||||||||||||||||
Use of Estimates |
Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management
makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ. The allowance for loan
losses, valuation of deferred tax assets, loss contingencies, fair value of other real estate owned, determination of other-than-temporary impairment and fair values of financial instruments are particularly subject to change.
|
||||||||||||||||||
Concentration of Credit Risk |
Concentration of Credit Risk: Loans are granted to, and deposits are obtained from, customers primarily in the western Michigan area as described above.
Substantially all loans are secured by specific items of collateral, including residential real estate, commercial real estate, commercial assets and consumer assets. Commercial real estate loans are the largest concentration, comprising 46% of total loans at December 31, 2022. Commercial and industrial loans total 37%, while residential real estate and consumer loans make up the remaining 17%.
Other financial instruments, which potentially subject the Company to concentrations of credit risk, include deposit accounts in other financial institutions.
|
||||||||||||||||||
Cash and Cash Equivalents |
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, demand deposits with other financial institutions and short-term securities
(securities with maturities equal to or less than 90 days and federal funds sold).
|
||||||||||||||||||
Cash Flow Reporting |
Cash Flow Reporting: Cash flows are reported net for customer loan and deposit transactions, interest-bearing time deposits with other financial
institutions and short-term borrowings with maturities of 90 days or less.
|
||||||||||||||||||
Restrictions on Cash |
Restrictions on Cash: Cash on hand or on deposit with the Federal Reserve Bank of $0 and $0 at December 31, 2022 and 2021, respectively, was
required to meet regulatory reserve and clearing requirements.
|
||||||||||||||||||
Securities |
Securities: Securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them
to maturity. Securities available for sale consist of those securities which might be sold prior to maturity due to changes in interest rates, prepayment risks, yield and availability of alternative investments, liquidity needs or other
factors. Securities classified as available for sale are reported at their fair value and the related unrealized gain or loss is reported in other comprehensive income, net of tax.
Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level yield method without
anticipating prepayments. Gains and losses on sales are based on the amortized cost of the security sold.
Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market
conditions warrant such an evaluation. Investment securities classified as available for sale or held-to-maturity are generally evaluated for OTTI under ASC Topic 320, Investments — Debt and Equity
Instruments.
In determining OTTI, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the
financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required
to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point
in time. Management has determined that no OTTI charges were necessary during 2022 and 2021.
|
||||||||||||||||||
Federal Home Loan Bank (FHLB) Stock |
Federal Home Loan Bank (FHLB) Stock: The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level
of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment. Because this stock is viewed as a long term investment,
impairment is based on ultimate recovery of par value. Management has determined that there was no impairment of FHLB stock
during 2022 and 2021. Both cash and stock dividends are reported as income.
|
||||||||||||||||||
Loans Held for Sale |
Loans Held for Sale: Mortgage loans originated and intended for sale in the secondary market are carried at fair value, as determined by outstanding
commitments from investors. As of December 31, 2022 and 2021, these loans had a net unrealized gain of $4,000 and $51,000, respectively, which are reflected in their carrying value. Changes in fair value of loans held for sale are included in net gains on
mortgage loans. Loans are sold servicing released; therefore no mortgage servicing right assets are established.
|
||||||||||||||||||
Loans |
Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal
balance outstanding, net of unearned interest, deferred loan fees and costs and an allowance for loan losses.
Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in
interest income over the respective term of the loan using the level-yield method without anticipating prepayments.
Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer loans are typically charged off no later than 120 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at
an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and
individually classified impaired loans.
All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on
the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably
assured.
|
||||||||||||||||||
Allowance for Loan Losses |
Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable incurred credit losses, increased by the provision for
loan losses and recoveries, and decreased by charge-offs of loans. Management believes the estimated allowance for loan losses to be adequate based on known and inherent risks in the portfolio, past loan loss experience, information about
specific borrower situations and estimated collateral values, economic conditions and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s
judgment, should be charged-off. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.
The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general
component covers non-classified loans and is based on historical loss experience adjusted for current qualitative environmental factors. The Company maintains a loss migration analysis that tracks loan losses and recoveries based on loan
class as well as the loan risk grade assignment for commercial loans. At December 31, 2022 and 2021, an 18 month (six quarter)
annualized historical loss experience was used for commercial loans and a 12 month (four quarter) historical loss experience
period was applied to residential mortgage and consumer loan portfolios. These historical loss percentages are adjusted (both upwards and downwards) for certain qualitative environmental factors, including economic trends, credit quality
trends, valuation trends, concentration risk, quality of loan review, changes in personnel, competition, increasing interest rates, external factors and other considerations.
A loan is impaired when, based on current information and events, it is believed to be probable that the Company will be unable to collect all amounts due
according to the contractual terms of the loan agreement. Loans for which the terms have been modified and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.
Commercial and commercial real estate loans with relationship balances exceeding $500,000 and an internal risk grading of 6 or worse are evaluated for impairment. If a
loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing interest rate or at the fair value of collateral, less estimated costs
to sell, if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans are collectively evaluated for impairment and, accordingly, they are not
separately identified for impairment disclosures.
Troubled debt restructurings are also considered impaired with impairment generally measured at the present value of estimated future cash flows using the loan’s
effective rate at inception or using the fair value of collateral, less estimated costs to sell, if repayment is expected solely from the collateral.
|
||||||||||||||||||
Transfers of Financial Assets |
Transfers of Financial Assets: Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control
over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the
transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
|
||||||||||||||||||
Foreclosed Assets |
Foreclosed Assets : Assets acquired through or instead of loan foreclosure, primarily other real estate owned, are initially recorded at fair value less
estimated costs to sell when acquired, establishing a new cost basis. If fair value declines, a valuation allowance is recorded through expense. Costs after acquisition are expensed unless they add value to the property.
|
||||||||||||||||||
Premises and Equipment |
Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Buildings and related
components are depreciated using the straight-line method with useful lives ranging from 5 to 40 years. Furniture, fixtures and equipment are depreciated using the straight-line method with useful lives ranging from 3 to 15 years. Maintenance,
repairs and minor alterations are charged to current operations as expenditures occur and major improvements are capitalized.
|
||||||||||||||||||
Bank-Owned Life Insurance (BOLI) |
Bank-Owned Life Insurance (BOLI): The Bank has purchased life insurance policies on certain officers. BOLI is recorded at its currently realizable cash
surrender value. Changes in cash surrender value are recorded in other income.
|
||||||||||||||||||
Long-term Assets |
Long-term Assets: Premises and equipment and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be
recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value. The Company had no
impairment of long term assets in 2022 or 2021.
|
||||||||||||||||||
Loan Commitments and Related Financial Instruments |
Loan Commitments and Related Financial Instruments: Financial instruments include off-balance sheet credit instruments, such as commitments to make loans
and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded
when they are funded.
|
||||||||||||||||||
Mortgage Banking Derivatives |
Mortgage Banking Derivatives : Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for
the future delivery of these mortgage loans are accounted for as derivatives not qualifying for hedge accounting. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates from the date the interest
on the loan is locked. The Bank enters into commitments to sell mortgage backed securities, which it later buys back in order to hedge its exposure to interest rate risk in its mortgage pipeline. At times, the Company also enters into
forward commitments for the future delivery of mortgage loans when interest rate locks are entered into, in order to hedge the change in interest rates resulting from its commitments to fund the loans.
Changes in the fair values of these interest rate lock and mortgage backed security and forward commitment derivatives are included in net gains on mortgage
loans. The fair value of interest rate lock commitments was $0 and $25,000 at December 31, 2022 and 2021, respectively. The net fair value of mortgage backed security derivatives was approximately $0 and $(13,000) at December 31,
2022 and 2021, respectively.
|
||||||||||||||||||
Revenue From Contracts With Customers |
Revenue From Contracts With Customers: The Company records revenue from contracts with customers in accordance with Accounting Standards Codification
Topic 606, “Revenue from Contracts with Customers” (“Topic 606”). Under Topic 606, the Company must identify the contract with a customer, identify the performance obligations in the contract,
determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) it satisfies a performance obligation. No revenue has been recognized in the current reporting
period that results from performance obligations satisfied in previous periods.
The Company’s primary sources of revenue are derived
from interest and dividends earned on loans, securities and other financial instruments that are not within the scope of Topic 606. The Company has evaluated the nature of its contracts with customers and determined that further
disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was not necessary.
The Company generally satisfies its performance
obligations on contracts with customers as services are rendered, and the transaction prices are typically fixed and charged either on a periodic basis (generally monthly) or based on activity. Because performance obligations are satisfied
as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers.
Interest Income: The Company’s largest source of revenue is interest income which is primarily recognized on an accrual basis based on contractual terms written
into loans and investment contracts.
Noninterest Revenue: The Company derives the majority of its noninterest revenue from: (1) service charges for deposit related services, (2) gains related to
mortgage loan sales, (3) trust fees and (4) debit and credit card interchange income. Most of these services are transaction based and revenue is recognized as the related service is provided.
|
||||||||||||||||||
Derivatives |
Derivatives: Certain of the Bank’s commercial loan customers have entered into interest rate swap agreements directly with the Bank. At the same time
the Bank enters into a swap agreement with its customer, the Bank enters into a corresponding interest rate swap agreement with a correspondent bank at terms mirroring the Bank’s interest rate swap with its commercial loan customer. This is
known as a back-to-back swap agreement. Under this arrangement the Bank has two freestanding interest rate swaps, both of which
are carried at fair value. As the terms mirror each other, there is no income statement impact to the Bank. At December 31, 2022, the total notional amount of such agreements was $125.3 million and resulted in a derivative asset with a fair value of $6.5
million which was included in other assets and a derivative liability of $6.5 million which was included in other liabilities. At
December 31, 2021, the total notional amount of such agreements was $140.7 million and resulted in a derivative asset with a fair
value of $3.3 million which was included in other assets and a derivative liability of $3.3 million which was included in other liabilities.
|
||||||||||||||||||
Income Taxes |
Income Taxes: Income tax expense is the sum of the current year income tax due or refundable and the change in deferred tax assets and liabilities.
Deferred tax assets and liabilities are the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces deferred tax assets to the amount expected to be realized.
The Company recognizes a tax position as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax
examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit
is recorded.
The Company recognizes interest and/or penalties related to income tax matters in income tax expense.
|
||||||||||||||||||
Earnings Per Common Share |
Earnings Per Common Share: Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the
period. All outstanding unvested restricted stock awards that contain rights to nonforfeitable dividends are considered participating securities for this calculation and are included in both basic and diluted earnings per share. Diluted
earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options. In the event of a net loss, our unvested restricted stock awards are excluded from both basic and diluted earnings per
share.
|
||||||||||||||||||
Comprehensive Income |
Comprehensive Income: Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes
unrealized gains and losses on securities available for sale and amortization of unrealized gain upon transfer of securities from available for sale to held to maturity.
|
||||||||||||||||||
Loss Contingencies |
Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when
the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.
|
||||||||||||||||||
Stock Splits and Dividends |
Stock Splits and Dividends: Stock dividends in excess of 20%
are reported as stock splits, resulting in no adjustment to the Company’s equity accounts. Stock dividends for 20% or less are
reported by transferring the fair value, as of the ex-dividend date, of the stock issued from retained earnings to common stock. Fractional share amounts are paid in cash with a reduction in retained earnings. All share and per share amounts
are retroactively adjusted for stock splits and dividends.
|
||||||||||||||||||
Dividend Restriction |
Dividend Restriction: Banking regulations require maintaining certain capital levels and impose limitations on dividends paid by the Bank to the Company
and by the Company to shareholders.
|
||||||||||||||||||
Fair Values of Financial Instruments |
Fair Values of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more
fully disclosed separately. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular
items. Changes in assumptions or in market conditions could significantly affect the estimates. The fair value estimates of existing on-and off-balance sheet financial instruments do not include the value of anticipated future business or
the values of assets and liabilities not considered financial instruments.
|
||||||||||||||||||
Segment Reporting |
Segment Reporting: The Company, through the branch network of the Bank, provides a broad range of financial services to individuals and companies in
western Michigan. These services include demand, time and savings deposits; lending; ATM and debit card processing; cash management; and trust and brokerage services. While the Company’s management team monitors the revenue streams of the
various Company products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one operating segment – commercial banking.
|
||||||||||||||||||
Reclassifications |
Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation.
|
||||||||||||||||||
Accounting Standards Updates |
Accounting Standards Updates:
FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments. This ASU provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and
other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a
broader range of reasonable and supportable information to inform credit loss estimates. The new guidance eliminates the probable initial recognition threshold and, instead, reflects an entity’s current estimate of all expected credit
losses. The new guidance broadens the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually to include forecasted information, as well as past events
and current conditions. There is no specified method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate. Although an entity may still use its
current systems and methods for recording the allowance for credit losses, under the new rules, the inputs used to record the allowance for credit losses generally will need to change to appropriately reflect an estimate of all expected
credit losses and the use of reasonable and supportable forecasts. Additionally, credit losses on available-for-sale debt securities will now have to be presented as an allowance rather than as a write-down.
This ASU expands the disclosure requirements regarding an entity’s assumptions, models and methods for estimating the allowance for credit losses. In addition,
entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by year of origination. The Company selected a software vendor for applying this new ASU for Current
Expected Credit Losses (“CECL”), began implementation of the software in the second quarter of 2018, completed integration during the third quarter of 2018 and ran parallel computations with both systems using the current GAAP incurred loss
model in the fourth quarter of 2018. The Company went live with this software beginning in January 2019 for its monthly incurred loss computations and began modeling the new current expected credit loss model assumptions to the allowance for
loan losses computation. In the periods since, the Company modeled the various methods prescribed in the ASU against the Company’s identified loan segments, ultimately determining that the weighted average remaining life method was the
appropriate method for the Company to use. The Company adopted the standard effective January 1, 2023 and estimates that the impact of adoption will result in an allowance increase of $1.2 million to $2.2 million, due primarily to the forward-looking
economic forecast, which presents the most variability within this range. The required liability for unfunded commitments at January 1, 2023 is estimated at approximately $60,000. The resulting impact will be a decrease to the retained earnings account on the Company’s Consolidated Balance Sheet equal to the after-tax impact of the increase in allowance
balances, with the tax impact portion being recorded as a deferred tax asset on the Company’s Consolidated Balance Sheet. The Company did not identify any available-for-sale debt securities requiring allowances to be established upon
adoption of the standard on January 1, 2023. In addition, the Company evaluated its municipal bond securities and U.S.
Treasury securities held to maturity on a pooled basis, determining that the securities in each pool share similar risks. The Company determined that on January 1, 2023, the municipal bond securities have a remote risk of loss and the
government backed U.S. Treasury securities have a zero risk of loss. As such, the allowance for debt securities held to maturity established upon adoption of the standard on January 1, 2023 was immaterial.
ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting
provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to
alternative reference rates. Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. Entities that make such elections would not have to
remeasure contracts at the modification date or reassess a previous accounting determination. Entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by
reference rate reform, if certain criteria are met. We are utilizing the timeline guidance published by the Alternative Reference Rates Committee to develop and achieve internal milestones during this transitional period. We have
discontinued the use of new LIBOR-based loans and interest rate derivatives, according to regulatory guidelines. ASU 2022-06 Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848
deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. The amended guidance under Topic 848 and our ability to elect its temporary optional expedients and exceptions are effective for us through December 31,
2024. The Company has adopted the LIBOR transition relief allowed under this standard.
ASU No. 2022-01 Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method. This ASU expands
the current last-of-layer method of hedge accounting that permits only one hedged layer to allow multiple hedged layers of a single closed portfolio. To reflect this expansion, the last-of-layer method is renamed the portfolio layer
method. This ASU expands the scope of the portfolio layer method to include nonprepayable assets, specifies eligible hedging instruments in a single-layer hedge, provides additional guidance on the accounting for and disclosure of hedge
basis adjustments and specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. This ASU is effective for public business entities for fiscal years beginning
after December 15, 2022, and interim periods within those fiscal years. As the Company does not engage in this type of hedging activity, adoption of this ASU on January 1, 2023 did not have any impact on its financial results or
disclosures.
ASU No. 2022-02 Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.
This ASU eliminates the accounting guidance for troubled debt restructurings (TDRs) by creditors in Subtopic 310-40, Receivables - Troubled Debt Restructurings by Creditors, while adding disclosures for certain loan restructurings by
creditors when a borrower is experiencing financial difficulty. This guidance requires an entity to determine whether the modification results in a new loan or a continuation of an existing loan. Additionally, the ASU requires disclosure
of current period gross writeoffs by year of origination for financing receivables. The ASU also requires disclosure of current period gross writeoffs by year of origination for financing receivables and disclosure of certain modifications
of receivables made to borrowers experiencing financial difficulty. This ASU is effective for the Company for fiscal years beginning after December 15, 2022. Adoption of this ASU on January 1, 2023 did not have a material impact on the
Company’s financial results and the additional required disclosures for gross writeoffs will be included in the footnotes to the Company’s March 31, 2023 consolidated financial statements.
|
SECURITIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost and Estimated Fair Value of Securities |
The amortized cost and fair value of securities were as follows (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Maturities of Debt Securities |
Contractual maturities of debt securities at December 31, 2022 were as follows (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities in Continuous Unrealized Loss Position |
Securities with unrealized losses at December 31, 2022 and 2021, aggregated by investment category and length of time that individual securities have been in a
continuous unrealized loss position, are as follows (dollars in thousands):
|
LOANS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio Loans |
Portfolio loans were as follows at year end (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity in Allowance for Loan Losses by Portfolio Segment |
The following tables present the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2022 and 2021 (dollars in
thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment Based on Impairment Method |
The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment
method (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Individually Evaluated for Impairment by Class of Loans |
The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2022 (dollars in thousands):
The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2021 (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average Balances of Impaired Loans and Interest Recognized on Impaired Loans |
The following table presents information regarding average balances of impaired loans and interest recognized on impaired loans for the years ended December 31,
2022 and 2021 (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans |
Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. The
following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of December 31, 2022 and 2021 (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aging of Recorded Investment in Past Due Loans by Class of Loans |
The following table presents the aging of the recorded investment in past due loans as of December 31, 2022 by class of loans (dollars in thousands):
The following table presents the aging of the recorded investment in past due loans as of December 31, 2021 by class of loans (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Troubled Debt Restructurings |
The following table presents information regarding TDRs as of December 31, 2022 and 2021 (dollars in thousands):
The following table presents information related to accruing TDRs as of December 31, 2022 and 2021. The table presents the amount of accruing TDRs that were on
nonaccrual status prior to the restructuring, accruing at the time of restructuring and those that were upgraded to accruing status after receiving six consecutive monthly payments in accordance with the restructured terms as of December 31,
2022 and 2021 (dollars in thousands):
The following tables present information regarding troubled debt restructurings executed during the years ended December 31, 2022 and 2021 (dollars in
thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Grade Category of Loans by Class of Loans |
At year end, the risk grade category of commercial loans by class of loans was as follows (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Loans Classified as Substandard or Worse |
Commercial loans classified as substandard or worse were as follows at year-end (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recorded Investment in Consumer Loans Based on Payment Activity |
The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For consumer loan classes, the Company also
evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following tables present the recorded investment in consumer loans based on payment activity as of December 31, 2022
and 2021 (dollars in thousands):
|
OTHER REAL ESTATE OWNED (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER REAL ESTATE OWNED [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period-End Other Real Estate Owned |
Other real estate owned was as follows (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity in Valuation Allowance |
Activity in the valuation allowance was as follows (dollars in thousands):
|
FAIR VALUE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis |
Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Measured at Fair Value on a Non-Recurring Basis |
Assets measured at fair value on a non-recurring basis are summarized below (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quantitative Information about Level 3 Fair Value Measurements Measured on a Non-Recurring Basis |
Quantitative information about Level 3 fair value measurements measured on a non-recurring basis were as follows at year end (dollars in thousands).
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amounts and Estimated Fair Values of Financial Instruments, Not Previously Presented |
The carrying amounts and estimated fair values of financial instruments, not previously presented, were as follows at year end (dollars in thousands).
|
DERIVATIVES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Derivative Instruments |
The fair value of derivative instruments as of December 31, 2022 and 2021 are reflected in the following table (dollars in thousands):
|
PREMISES AND EQUIPMENT - NET (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PREMISES AND EQUIPMENT - NET [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premises and Equipment |
Year-end premises and equipment were as follows (dollars in thousands):
|
LEASES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
LEASES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Future Undiscounted Lease Payments for Operating Leases |
Future undiscounted lease payments for operating leases
with initial terms of one year or more as of December 31, 2022 are as follows (dollars in thousands):
|
DEPOSITS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEPOSITS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits at Period-End |
Deposits at year-end were as follows (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturity Distribution of Certificates of Deposit |
The following table depicts the maturity distribution of certificates of deposit at December 31, 2022 (dollars in thousands):
|
OTHER BORROWED FUNDS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER BORROWED FUNDS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advances from Federal Home Loan Bank |
At year-end, advances from the Federal Home Loan Bank were as follows (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Scheduled Repayments of FHLB Advances |
Scheduled repayments of FHLB advances as of December 31, 2022 were as
follows (in thousands):
|
RELATED PARTY TRANSACTIONS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans to Principal Officers, Directors, and Their Affiliates |
Loans to principal officers, directors, and their affiliates were as follows (dollars in thousands).
|
STOCK-BASED COMPENSATION (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Nonvested Stock Awards | A
summary of changes in the Company’s nonvested restricted stock awards for the year follows:
|
EARNINGS PER COMMON SHARE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER COMMON SHARE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Numerators and Denominators of Basic and Diluted Earnings per Common Share |
A reconciliation of the numerators and denominators of basic and diluted earnings per common share are as follows (dollars in thousands, except per share data):
|
FEDERAL INCOME TAXES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FEDERAL INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Expense |
Income tax expense was as follows (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Difference between Financial Statement Tax Expense and Amount Computed by Applying Statutory Federal Tax Rate to Pretax Income |
The difference between the financial statement tax expense and amount computed by applying the statutory federal tax rate to pretax income was reconciled as
follows (dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Tax Assets and Liabilities |
The net deferred tax asset recorded included the following amounts of deferred tax assets and liabilities (dollars in thousands):
|
COMMITMENTS AND OFF BALANCE-SHEET RISK (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||
COMMITMENTS AND OFF BALANCE-SHEET RISK [Abstract] | |||||||||||||||||||||||||||||||||||||
Contractual Amounts of Financial Instruments with Off-Balance-Sheet Risk |
A summary of the contractual amounts of financial instruments with off-balance-sheet risk was as follows at year-end (dollars in thousands):
|
SHAREHOLDERS' EQUITY (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Actual Capital Levels and Minimum Required Levels |
Actual capital levels (dollars in thousands) and minimum required levels were as follows at year-end:
|
CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Balance Sheets |
CONDENSED BALANCE SHEETS
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Statements of Income and Comprehensive Income |
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Statements of Cash Flows |
CONDENSED STATEMENTS OF CASH FLOWS
|
QUARTERLY FINANCIAL DATA (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
QUARTERLY FINANCIAL DATA (Unaudited) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Data |
(Dollars in thousands except per share data)
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Principles of Consolidation and Recent Events (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jul. 07, 2021
USD ($)
|
Dec. 31, 2022
USD ($)
Loan
Branch
|
Dec. 31, 2021
USD ($)
Loan
|
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||
Number of full service branch offices | Branch | 26 | ||
PPP Loans [Member] | |||
Recent Events [Abstract] | |||
Number of loans originated | Loan | 1,000 | ||
Loans originated | $ 128,100 | ||
Fees generated for loans originated | $ 5,600 | ||
Number of loans forgiven | Loan | 251 | 1,722 | |
Loans forgiven | $ 43,200 | $ 318,400 | |
Net fees recognized for loans forgiven | 1,300 | $ 8,300 | |
Loans outstanding | $ 0 | ||
Macatawa Statutory Trust II [Member] | Common Securities [Member] | |||
Recent Events [Abstract] | |||
Trust securities redeemed | $ 619 | ||
Common securities repurchased | 619 | ||
Trusted Preferred Securities [Member] | Macatawa Statutory Trust II [Member] | |||
Recent Events [Abstract] | |||
Trust securities redeemed | $ 20,000 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Concentration of Credit Risk (Details) - Loans [Member] - Credit Concentration Risk [Member] |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Commercial Real Estate [Member] | |
Concentration of Credit Risk [Abstract] | |
Concentration of credit risk | 46.00% |
Commercial and Industrial [Member] | |
Concentration of Credit Risk [Abstract] | |
Concentration of credit risk | 37.00% |
Residential Real Estate and Consumer Loans [Member] | |
Concentration of Credit Risk [Abstract] | |
Concentration of credit risk | 17.00% |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Restrictions on Cash (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Restrictions on Cash [Abstract] | ||
Cash on hand or on deposit with the Federal Reserve Bank required to meet regulatory reserve and clearing requirements | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Securities (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Securities [Abstract] | ||
OTTI charges | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Federal Home Loan Bank (FHLB) Stock (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Federal Home Loan Bank (FHLB) Stock [Abstract] | ||
FHLB stock impaired | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Loans Held for Sale (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Loans Held-for-sale [Abstract] | ||
Net unrealized gains (losses) on loans held for sale | $ 4 | $ 51 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Loans (Details) |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Mortgages [Member] | |
Loans [Abstract] | |
Period after which interest income on delinquent loans is discontinued | 90 days |
Commercial [Member] | |
Loans [Abstract] | |
Period after which interest income on delinquent loans is discontinued | 90 days |
Consumer [Member] | Minimum [Member] | |
Loans [Abstract] | |
Past due period after which loans are charged off | 120 days |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Premises and Equipment (Details) |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Building and Related Components [Member] | Minimum [Member] | |
Premises and Equipment [Abstract] | |
Useful lives | 5 years |
Building and Related Components [Member] | Maximum [Member] | |
Premises and Equipment [Abstract] | |
Useful lives | 40 years |
Furniture Fixture and Equipment [Member] | Minimum [Member] | |
Premises and Equipment [Abstract] | |
Useful lives | 3 years |
Furniture Fixture and Equipment [Member] | Maximum [Member] | |
Premises and Equipment [Abstract] | |
Useful lives | 15 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Long-term Assets (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Long-term Assets [Abstract] | ||
Impairment of long term assets | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Mortgage Banking Derivatives (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Mortgage Backed Securities [Member] | ||
Mortgage Banking Derivatives [Abstract] | ||
Fair value of derivatives | $ 0 | $ (13) |
Interest Rate Lock Commitments [Member] | ||
Mortgage Banking Derivatives [Abstract] | ||
Fair value of derivatives | $ 0 | $ 25 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Derivatives (Details) - Swap [Member] - Interest Rate Swap [Member] $ in Millions |
Dec. 31, 2022
USD ($)
InterestRateSwap
|
Dec. 31, 2021
USD ($)
|
---|---|---|
Derivatives [Abstract] | ||
Number of freestanding interest rate swaps | InterestRateSwap | 2 | |
Notional amount of agreements | $ 125.3 | $ 140.7 |
Derivative asset fair value | 6.5 | 3.3 |
Derivative liability fair value | $ 6.5 | $ 3.3 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Stock Splits and Dividends (Details) |
Dec. 31, 2022 |
---|---|
Stock Splits and Dividends [Abstract] | |
Stock dividends, excess of threshold | 20.00% |
Stock dividend threshold or less | 20.00% |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Segment Reporting (Details) |
12 Months Ended |
---|---|
Dec. 31, 2022
Segment
| |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Accounting Standards Updates (Details) - ASU No. 2016-13 [Member] $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2022
USD ($)
| |
Accounting Standards Updates [Abstract] | |
Estimated liability for unfunded commitments | $ 60 |
Minimum [Member] | |
Accounting Standards Updates [Abstract] | |
Increase in allowance for credit losses | 1,200 |
Maximum [Member] | |
Accounting Standards Updates [Abstract] | |
Increase in allowance for credit losses | $ 2,200 |
SECURITIES, Held-to-maturity Securities (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Held to Maturity [Abstract] | ||
Amortized cost | $ 348,765 | $ 137,003 |
Gross unrealized gains | 415 | |
Gross unrealized losses | (16,530) | |
Fair value | 332,650 | 139,272 |
U.S. Treasury [Member] | ||
Held to Maturity [Abstract] | ||
Amortized cost | 251,307 | |
Gross unrealized gains | 0 | |
Gross unrealized losses | (13,677) | |
Fair value | 237,630 | |
Tax-Exempt State and Municipal Bonds [Member] | ||
Held to Maturity [Abstract] | ||
Amortized cost | 97,458 | 137,003 |
Gross unrealized gains | 415 | 2,484 |
Gross unrealized losses | (2,853) | (215) |
Fair value | $ 95,020 | $ 139,272 |
SECURITIES, Sales of Securities (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
SECURITIES [Abstract] | ||
Proceeds from sale of available-for-sale securities | $ 0 | $ 0 |
SECURITIES, Contractual Maturities of Debt Securities (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Held-to-Maturity Securities, Amortized Cost [Abstract] | ||
Due in one year or less | $ 29,311 | |
Due from one to five years | 298,700 | |
Due from five to ten years | 20,754 | |
Due after ten years | 0 | |
Amortized cost | 348,765 | $ 137,003 |
Held-to-Maturity Securities, Fair Value [Abstract] | ||
Due in one year or less | 28,935 | |
Due from one to five years | 283,518 | |
Due from five to ten years | 20,197 | |
Due after ten years | 0 | |
Fair value | 332,650 | 139,272 |
Available-for-Sale Securities, Amortized Cost [Abstract] | ||
Due in one year or less | 11,372 | |
Due from one to five years | 359,411 | |
Due from five to ten years | 41,780 | |
Due after ten years | 126,755 | |
Amortized cost | 539,318 | 416,439 |
Available-for-Sale Securities, Fair Value [Abstract] | ||
Due in one year or less | 11,293 | |
Due from one to five years | 339,059 | |
Due from five to ten years | 36,424 | |
Due after ten years | 112,481 | |
Fair value | $ 499,257 | $ 416,063 |
SECURITIES, Other-Than-Temporary-Impairment (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022
USD ($)
Security
|
Dec. 31, 2021
USD ($)
Security
|
Jan. 02, 2022
USD ($)
|
|
Other-Than-Temporary-Impairment [Abstract] | |||
Number of securities available for sale with unrealized losses | Security | 444 | 127 | |
Total fair value of securities available for sale with unrealized losses | $ 464,449,000 | $ 191,440,000 | |
Total unrealized losses of securities available for sale with unrealized losses | $ (40,143,000) | $ (3,140,000) | |
Number of securities held to maturity with unrealized losses | Security | 76 | 9 | |
Total fair value of securities held to maturity with unrealized losses | $ 317,022,000 | $ 61,200,000 | |
Total unrealized losses of securities held to maturity with unrealized losses | (16,530,000) | (215,000) | |
OTTI charges | $ 0 | $ 0 | |
Amortized cost of securities transferred from available for sale to held to maturity | $ 123,500,000 | ||
Unrealized gain on securities transferred from available for sale to held to maturity | $ 113,000 |
SECURITIES, Pledged Securities and Equity Investments (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Pledged Securities and Equity Investments [Abstract] | ||
Equity investment carried at fair value | $ 1.5 | $ 1.5 |
Asset Pledged as Collateral [Member] | Public Deposits, Letters of Credit and for Other Purposes [Member] | ||
Pledged Securities and Equity Investments [Abstract] | ||
Debt securities | $ 3.5 | $ 4.9 |
LOANS, Commercial Loans Classified as Substandard or Worse (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Commercial loans classified as substandard or worse [Abstract] | ||
Classified as impaired | $ 7,007 | $ 7,526 |
Total ending loans balance | 1,177,748 | 1,108,993 |
Commercial Loans [Member] | ||
Commercial loans classified as substandard or worse [Abstract] | ||
Total ending loans balance | 979,319 | 936,358 |
Commercial Loans [Member] | Substandard or Worse [Member] | ||
Commercial loans classified as substandard or worse [Abstract] | ||
Not classified as impaired | 2,422 | 233 |
Classified as impaired | 365 | 3,404 |
Total ending loans balance | $ 2,787 | $ 3,637 |
OTHER REAL ESTATE OWNED (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Jan. 30, 2023 |
|
Other real estate owned [Roll Forward] | |||
Beginning balance | $ 2,369 | $ 2,731 | |
Additions, transfers from loans | 0 | 0 | |
Proceeds from sales of other real estate owned and repossessed assets | (47) | (170) | |
Valuation allowance reversal upon sale | (26) | (172) | |
Gain (loss) on sales of other real estate owned and repossessed assets | 47 | (20) | |
Ending balance, gross | 2,343 | 2,369 | |
Less: valuation allowance | 0 | (26) | |
Ending balance | 2,343 | 2,343 | |
Activity in valuation allowance [Roll Forward] | |||
Beginning balance | 26 | 194 | |
Additions charged to expense | 0 | 4 | |
Reversals upon sale | (26) | (172) | |
Ending balance | 0 | $ 26 | |
Foreclosed residential real estate properties included in other real estate owned | 0 | ||
Consumer mortgage loans in process of foreclosure | $ 0 | ||
Subsequent Event [Member] | |||
Other real estate owned [Roll Forward] | |||
Ending balance | $ 0 |
FAIR VALUE, Off-balance Sheet (Details) - Loan Commitments [Member] - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Financial instruments with off-balance sheet credit risk [Abstract] | ||
Off-balance sheet credit-related items | $ 77,384 | $ 128,648 |
Carrying Amount [Member] | ||
Financial instruments with off-balance sheet credit risk [Abstract] | ||
Off-balance sheet credit-related items | 0 | 0 |
Fair Value [Member] | ||
Financial instruments with off-balance sheet credit risk [Abstract] | ||
Off-balance sheet credit-related items | $ 0 | $ 0 |
DERIVATIVES (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Fair value of derivative instruments [Abstract] | ||
Derivative liability | $ 0 | $ 1,000 |
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Accrued expenses and other liabilities | Accrued expenses and other liabilities |
Securities pledged as collateral | $ 1,700 | $ 3,000 |
Interest Rate Swap [Member] | Other Assets [Member] | ||
Fair value of derivative instruments [Abstract] | ||
Notional amount | 62,661 | 70,356 |
Fair value | 6,463 | 3,277 |
Interest Rate Swap [Member] | Other Liabilities [Member] | ||
Fair value of derivative instruments [Abstract] | ||
Notional amount | 62,661 | 70,356 |
Fair value | $ 6,463 | $ 3,277 |
PREMISES AND EQUIPMENT - NET (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Premises and equipment [Abstract] | ||
Premises and equipment, gross | $ 79,093 | $ 82,547 |
Less accumulated depreciation | (38,787) | (40,774) |
Premises and equipment, net | 40,306 | 41,773 |
Depreciation expense | 2,300 | 2,500 |
Land [Member] | ||
Premises and equipment [Abstract] | ||
Premises and equipment, gross | 15,861 | 15,861 |
Building [Member] | ||
Premises and equipment [Abstract] | ||
Premises and equipment, gross | 44,879 | 44,701 |
Leasehold Improvements [Member] | ||
Premises and equipment [Abstract] | ||
Premises and equipment, gross | 248 | 253 |
Furniture and Equipment [Member] | ||
Premises and equipment [Abstract] | ||
Premises and equipment, gross | 18,055 | 21,732 |
Construction in Progress [Member] | ||
Premises and equipment [Abstract] | ||
Premises and equipment, gross | $ 50 | $ 0 |
LEASES (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2022
USD ($)
Office
|
Dec. 31, 2021
USD ($)
|
|
Lease description [Abstract] | ||
Number of offices leased | Office | 4 | |
weighted average remaining life of the lease term | 2 years | |
Weighted average discount rate for leases | 0.58% | |
Right-of-use assets | $ 625,000 | $ 866,000 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other assets | Other assets |
Lease liabilities | $ 627,000 | $ 861,000 |
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Accrued expenses and other liabilities | Accrued expenses and other liabilities |
Operating lease expense | $ 451,000 | $ 431,000 |
Future undiscounted lease payments for operating leases [Abstract] | ||
2023 | 360,000 | |
2024 | 155,000 | |
2025 | 114,000 | |
2026 | 0 | |
2027 | 0 | |
Thereafter | 0 | |
Total undiscounted lease payments | 629,000 | |
Less effect of discounting | (2,000) | |
Present value of estimated lease payments (lease liability) | $ 627,000 | $ 861,000 |
DEPOSITS (Details) - USD ($) |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Summary of deposit [Abstract] | ||
Noninterest-bearing demand | $ 834,879,000 | $ 886,115,000 |
Interest bearing demand | 760,889,000 | 736,573,000 |
Savings and money market accounts | 922,418,000 | 865,528,000 |
Certificates of deposit | 96,956,000 | 89,742,000 |
Total deposits | 2,615,142,000 | 2,577,958,000 |
Maturities distribution of time deposits [Abstract] | ||
2023 | 59,326,000 | |
2024 | 35,756,000 | |
2025 | 1,067,000 | |
2026 | 489,000 | |
2027 | 259,000 | |
Thereafter | 59,000 | |
Total certificate of deposit | 96,956,000 | |
FDIC insurance limit on deposit accounts | 250,000 | 250,000 |
Time deposits that exceeded FDIC insurance limit | $ 29,700,000 | $ 28,200,000 |
OTHER BORROWED FUNDS, Federal Reserve Bank Borrowings (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt instruments [Abstract] | ||
Loans | $ 1,162,463 | $ 1,093,104 |
Federal Reserve Bank Borrowings [Member] | ||
Debt instruments [Abstract] | ||
Borrowings outstanding | 0 | 0 |
Unused borrowing capacity | 5,500 | 4,000 |
Federal Reserve Bank Borrowings [Member] | Asset Pledged as Collateral [Member] | ||
Debt instruments [Abstract] | ||
Loans | $ 5,800 | $ 4,400 |
LONG TERM DEBT (Details) - Macatawa Statutory Trust II [Member] - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jul. 07, 2021 |
Dec. 31, 2022 |
|
Debt Instruments [Abstract] | ||
Description of variable rate basis | three-month LIBOR | |
Maturity date | Mar. 18, 2034 | |
LIBOR [Member] | ||
Debt Instruments [Abstract] | ||
Basis spread on three-month LIBOR | 2.75% | |
Term of variable rate | 3 months | |
Common Securities [Member] | ||
Debt Instruments [Abstract] | ||
Aggregate liquidation amount of pooled trust preferred securities | $ 619 | |
Amount of securities associated with trust preferred securities redeemed | $ 619 | |
Preferred Securities [Member] | ||
Debt Instruments [Abstract] | ||
Aggregate liquidation amount of pooled trust preferred securities | $ 20,000 | |
Amount of securities associated with trust preferred securities redeemed | $ 20,000 |
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Loans to principal officers, directors, and their affiliates [Roll Forward] | ||
Beginning balance | $ 25,779 | $ 26,815 |
New loans and renewals | 14,535 | 9,450 |
Repayments and renewals | (14,407) | (10,486) |
Effect of changes in related parties | 0 | 0 |
Ending balance | 25,907 | 25,779 |
Principal Officers, Directors, and Affiliates [Member] | ||
Loans to principal officers, directors, and their affiliates [Roll Forward] | ||
Deposits from principal officers, directors, and affiliates | 153,300 | 205,400 |
Director [Member] | Back-to-Back Swap Agreement [Member] | ||
Loans to principal officers, directors, and their affiliates [Roll Forward] | ||
Notional amount of agreement | $ 10,700 | $ 12,000 |
EMPLOYEE BENEFITS (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Employee Benefits [Abstract] | ||
Employer matching contribution up to first 3% | 100.00% | 100.00% |
Employee contribution threshold for matching percentage | 3.00% | 2.00% |
Employer matching contribution in excess of first 3% | 50.00% | |
Maximum employer matching contribution | 5.00% | |
Employer contributions | $ 755,000 | $ 412,000 |
EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
Sep. 30, 2021 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Reconciliation of numerators and denominators of basic and diluted earnings per common share [Abstract] | ||||||||||
Net income | $ 12,118 | $ 10,045 | $ 6,568 | $ 6,000 | $ 6,216 | $ 7,202 | $ 7,818 | $ 7,778 | $ 34,731 | $ 29,014 |
Weighted average shares outstanding, including participating stock awards - Basic (in shares) | 34,259,604 | 34,202,179 | ||||||||
Dilutive potential common shares [Abstract] | ||||||||||
Stock options (in shares) | 0 | 0 | ||||||||
Weighted average shares outstanding - Diluted (in shares) | 34,259,604 | 34,202,179 | ||||||||
Basic earnings per common share (in dollars per share) | $ 0.35 | $ 0.29 | $ 0.19 | $ 0.18 | $ 0.18 | $ 0.21 | $ 0.23 | $ 0.23 | $ 1.01 | $ 0.85 |
Diluted earnings per common share (in dollars per share) | $ 0.35 | $ 0.29 | $ 0.19 | $ 0.18 | $ 0.18 | $ 0.21 | $ 0.23 | $ 0.23 | $ 1.01 | $ 0.85 |
CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY), Condensed Balance Sheets (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|---|
ASSETS [Abstract] | |||
Cash and cash equivalents | $ 755,170 | $ 1,151,788 | |
Other assets | 17,526 | 14,993 | |
Total assets | 2,906,919 | 2,928,751 | |
LIABILITIES AND SHAREHOLDERS' EQUITY [Abstract] | |||
Long-term debt | 0 | 0 | |
Total liabilities | 2,659,881 | 2,674,746 | |
Total shareholders' equity | 247,038 | 254,005 | $ 239,843 |
Total liabilities and shareholders' equity | 2,906,919 | 2,928,751 | |
Parent Company [Member] | |||
ASSETS [Abstract] | |||
Cash and cash equivalents | 8,092 | 7,831 | |
Investments in Bank subsidiary | 238,697 | 245,942 | |
Investment in other subsidiaries | 0 | 0 | |
Other assets | 249 | 249 | |
Total assets | 247,038 | 254,022 | |
LIABILITIES AND SHAREHOLDERS' EQUITY [Abstract] | |||
Long-term debt | 0 | 0 | |
Other liabilities | 0 | 17 | |
Total liabilities | 0 | 17 | |
Total shareholders' equity | 247,038 | 254,005 | |
Total liabilities and shareholders' equity | $ 247,038 | $ 254,022 |
CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY), Condensed Statements of Income and Comprehensive Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
Sep. 30, 2021 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
EXPENSE [Abstract] | ||||||||||
Interest expense | $ 4,760 | $ 2,565 | ||||||||
Income before income tax | 43,064 | 35,724 | ||||||||
Income tax benefit | 8,333 | 6,710 | ||||||||
Net income | $ 12,118 | $ 10,045 | $ 6,568 | $ 6,000 | $ 6,216 | $ 7,202 | $ 7,818 | $ 7,778 | 34,731 | 29,014 |
Comprehensive income | 3,452 | 24,503 | ||||||||
Parent Company [Member] | ||||||||||
INCOME [Abstract] | ||||||||||
Dividends from subsidiaries | 11,913 | 33,118 | ||||||||
Other | 0 | 0 | ||||||||
Total income | 11,913 | 33,118 | ||||||||
EXPENSE [Abstract] | ||||||||||
Interest expense | 0 | 319 | ||||||||
Other expense | 801 | 822 | ||||||||
Total expense | 801 | 1,141 | ||||||||
Income before income tax and equity in undistributed earnings of subsidiaries | 11,112 | 31,977 | ||||||||
Equity in undistributed earnings of subsidiaries | 23,445 | (3,211) | ||||||||
Income before income tax | 34,557 | 28,766 | ||||||||
Income tax benefit | (174) | (248) | ||||||||
Net income | 34,731 | 29,014 | ||||||||
Comprehensive income | $ 3,452 | $ 24,503 |
QUARTERLY FINANCIAL DATA (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
Sep. 30, 2021 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
QUARTERLY FINANCIAL DATA (Unaudited) [Abstract] | ||||||||||
Interest income | $ 25,454 | $ 20,875 | $ 15,435 | $ 13,143 | $ 13,334 | $ 14,842 | $ 15,184 | $ 15,274 | $ 74,906 | $ 58,634 |
Net interest income | 22,867 | 19,771 | 14,843 | 12,665 | 12,826 | 14,296 | 14,457 | 14,490 | 70,146 | 56,069 |
Provision for loan losses | 375 | 0 | 0 | (1,500) | (750) | (550) | (750) | 0 | (1,125) | (2,050) |
Net income | $ 12,118 | $ 10,045 | $ 6,568 | $ 6,000 | $ 6,216 | $ 7,202 | $ 7,818 | $ 7,778 | $ 34,731 | $ 29,014 |
Earnings per common share, basic (in dollars per share) | $ 0.35 | $ 0.29 | $ 0.19 | $ 0.18 | $ 0.18 | $ 0.21 | $ 0.23 | $ 0.23 | $ 1.01 | $ 0.85 |
Earnings per common share, diluted (in dollars per share) | $ 0.35 | $ 0.29 | $ 0.19 | $ 0.18 | $ 0.18 | $ 0.21 | $ 0.23 | $ 0.23 | $ 1.01 | $ 0.85 |
Z?Q6
MS\)FH'LQDP_2]TRL] >6P!)-.M IX^]-IY/AF:KA[O6V]T^=\]*91]+2
M&U[^9(587D[225#0.5F7X@=__DPW#D6JOYR7;? N\OF-\T&H0'?JU8MWR>)F+
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M3)A]V'8!(<2U4TL.O4=H[T-C"X NG(SQYDU![ODTASXM1--^ 3\QN910[HVMTY9H;%GZS69;Y93(9X/ " F$9)<,'E]B:F=<
M(:WH?=X[03JCZ=H66X6/$5VR%.5!'(%B;/:@"P59V#N@"2;BM=JLO+(&YD(*3O=,QFM9PY\]PVF@-4S)LCA:(KUT?7
ME-,RZ5ORU+C.(J NT#5W6A?8K
"MA [Y\7Y1M3*0-:(9B7JN6D<
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M!+/&5-Y]+P;FTEZ[(T19116(73]K
MC43SXZ>;ON(5_02:DB2#ZMBV0LB@A(*9;)J*KL5 T@7H/?*V\4(A 0M8#H\"
M,('=%[1@>1BT18/B&N5;+.ZKO6O;)&5+4.T*_/-MJ[N,6<0.W[B\B%T37C4/-!A
MK>6Y@>4EW@"L;@;/\YUDYN$AUW&3 4[=,WXT<_S4XZ,+.GV?E;L[,'.\
M,,74B9.")AT5:5'+]USK[]5&V.+W7=X^6E'L!+@<>8X?SZP?V[6 15#/^TX*
M/ (GB.(.0+6R-TN=T)^!8KX3!Y&ZS8QL>8Z7)$Y"( ##HK%P+L
M7?-S^&@:T5C/O ADBZRO^2Q-9SB[I)&Q[X1QP.?N+,!,H?WS6H 5L!*D8PZB
MVQE$IEE7#Z5=PCY6=Z3O14T<
([26/0CL&]&8"
MC5O=\!&32G:3\ @%5C8:=DVT6Q4$5_5%@"CJ4+8A84WH(BR1$Q-**J;DFU"N
M'(8S8BT+9-U='\>/6_]59+RX,__(D!-QA/W;HIEM_O29V?\ZMMOM/T:X/=Y!
M;I;R!4B]_GC8 SS,OS!VH.7*_/,QEUK+S+PN@05>T :L+R2NI=6 #FC^"CO_
M U!+ P04 " !!@%!6\ J!-,% #V#@ &0 'AL+W=O
F'(/GX,6[YS.M9 =Q5.HW"\DON>
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M5/D?SQ.[QJ%N8TBBS^%N\
6>2]AH-X\R/\_Q/"JZ/5>X$E_II&A\1
M7!^GW D.BY/XF>"0O# GP;GGA7M-6G$Z W<'S=]=<-R+6!2\>7[0=,-X/T.W
M_Z9!NL<%Z79XZ+5RM//F7PL]=]\W#'/O(MU'@.WH]A/*5??EX&EY]_WE ]=S
MB7-4)68P#899,D!VW3>-[L:JI?N.,%76JMI=+@0.EIH68'ZFE-W
;H'>K4C6<'DMDJG95*?1*4%U?@+UH'M-30=0
MPB #C.!X52ZJQ"5'STRO8Q@*N._HN8JP@OV^HDQ7G?;S#2JP/&([=M<-3XL"
M!)70W@F-#MVH6K5+