Executive Summary

Q1 delivered steady core profitability: net income $9.79M ($0.29 EPS) vs $12.00M ($0.35) in Q1’23 and $9.50M ($0.28) in Q4’23; NIM held essentially flat QoQ at 3.26% (3.28% in Q4), though down YoY from 3.44% as deposit mix shifts continued .
Balance sheet remained conservative: loans grew modestly (+$3.8M QoQ; +$121.3M YoY) with pristine credit (NPLs ~$1K; ACL/loans 1.30%; no provision) and robust liquidity ($331.4M overnight funds) .
Deposits fell seasonally by $131.3M QoQ (municipal and business outflows) but remain 34% above pre-pandemic levels; core deposits are 100% locally sourced with no brokered balances .
Strategic catalyst: announced definitive merger with Wintrust on Apr 15; ~$0.3M merger-related expenses reduced Q1 earnings; management highlighted significant near-term cash inflows from ~$270M securities maturing within 12 months as potential earnings lever .
No formal guidance; management emphasized deploying cash and maturities into loans/overnight will be accretive to interest income; Street consensus from S&P Global was unavailable for Q1’24 (unable to retrieve via S&P Global mapping), so estimate comparison is not provided.

What Went Well and What Went Wrong

What Went Well
- Asset quality at best-in-class levels: nonperforming loans ~$1K (≈0.00% of loans), net charge-offs $2K, and no provision; ACL/loans steady at 1.30% .
- Liquidity and capital strength: $331.4M in overnight funds and ~$373.4M of additional borrowing capacity; ~$411.0M of bond cash flows over 24 months (≈$270M in next 12 months) provide tangible reinvestment runway .
- Management execution/tone: “We have started the year right where we left off with continued loan portfolio growth and maintained our excellent asset quality… [and] believe our balance sheet is well positioned in the current environment.” — Jon Swets, CEO .
What Went Wrong
- NIM pressure persisted YoY (3.26% vs 3.44% in Q1’23) as deposit costs rose and customers shifted from noninterest-bearing into higher-cost interest-bearing products .
- Seasonal deposit outflows (-$131.3M QoQ) from municipal and business accounts created headline contraction in total assets; certificates of deposit mix remains elevated vs prior year .
- Noninterest expense mix: legal/professional fees rose YoY and QoQ tied to executive transition and merger; ~$0.3M merger-related costs also weighed on EPS in the quarter .

Financial Results

Metric (USD or %)	Q1 2023	Q4 2023	Q1 2024
Net Interest Income ($M)	$22.616	$21.441	$20.727
Non-Interest Income ($M)	$5.035	$4.684	$4.660
Net Income ($M)	$12.004	$9.495	$9.793
Diluted EPS ($)	$0.35	$0.28	$0.29
NIM (FTE) (%)	3.44%	3.28%	3.26%
Efficiency Ratio (%)	44.82%	53.45%	52.17%

Estimates: S&P Global consensus for Q1’24 EPS and revenue was unavailable via our SPGI connection for MCBC; as a result, we cannot provide “vs. estimates” comparisons for this quarter.

KPIs and Balance Sheet

KPI	Q1 2023	Q4 2023	Q1 2024
Total Loans ($M)	$1,220.939	$1,338.386	$1,342.208
Total Deposits ($M)	$2,330.895	$2,415.730	$2,284.401
Noninterest-Bearing Deposits ($M)	$690.444	$643.035	$614.325
Interest-Bearing Deposits ($M)	$1,640.451	$1,772.695	$1,670.076
Overnight Funds/Short-Term Inv. ($M)	$391.336	$418.035	$331.400
Nonperforming Loans ($K)	$75	$1	$1
ACL to Total Loans (%)	1.38%	1.30%	1.30%
Net Charge-offs (Recoveries) ($K)	$(33)	$(41)	$2
CET1 (Consolidated) (%)	17.08%	17.70%	18.16%

Context and Drivers

NII down QoQ and YoY as higher deposit costs and mix shift offset loan yield expansion; management cites deposit repricing and shift to money market/CDs as primary headwinds .
Deposits declined seasonally QoQ due to municipal/business outflows; management underscores continued strong local core deposit base and no brokered deposits .
Liquidity and reinvestment: $270M+ maturities in next 12 months and $331.4M of overnight funds position the bank to redeploy at attractive spreads as opportunities arise .

Segment breakdown: Not applicable; the company reports on consolidated basis.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company Guidance	2024	None provided	None provided	Maintained (no quantitative guidance)

Qualitative outlook noted by management: deploying ~$270M of securities maturing over next 12 months (>$100M in Q2’24) and $331.4M of overnight funds is expected to be accretive to interest income; liquidity and capital position support selective loan growth .

Earnings Call Themes & Trends

Note: We found no Q1’24 earnings call transcript for MCBC in our documents index during Apr–May 2024. Themes below reflect quarterly press releases.

Topic	Previous Mentions (Q3’23)	Previous Mentions (Q4’23)	Current Period (Q1’24)	Trend
Deposit mix and funding costs	Shift to higher-cost deposits; core base remains strong; no brokered	Continued shift to interest-bearing; pace slowed; no brokered	Seasonal outflows; mix still tilted to interest-bearing; 100% core, no brokered	Stable challenge; seasonality evident
Net interest margin	3.35% (down 1 bp QoQ; up YoY)	3.28% (down 7 bps QoQ)	3.26% (down 2 bps QoQ; down YoY)	Mildly down QoQ; pressured YoY
Loan growth	+$19.7M QoQ; +$152.6M YoY; driven by CRE/C&I	+$47.1M QoQ; +$160.6M YoY	+$3.8M QoQ; +$121.3M YoY	Positive YoY; modest QoQ
Asset quality	NPLs ~$1K; net recoveries; strong coverage	NPLs ~$1K; provision for growth; recoveries	NPLs ~$1K; no provision; de minimis charge-offs	Best-in-class, steady
Liquidity and securities maturities	Significant on-balance liquidity; maturities over 24 months	$418M overnight; ~$472.5M maturities/24 months	$331.4M overnight; ~$411.0M maturities/24 months; ~$270M over 12 months	High, with reinvestment optionality
Capital	Well-capitalized with large excess	Well-capitalized; $143M excess	Well-capitalized; $151.3M excess	Strengthening
Strategic/M&A	—	—	Definitive merger with Wintrust; ~$0.3M merger expenses in Q1	New catalyst

Management Commentary

“We have started the year right where we left off with continued loan portfolio growth and maintained our excellent asset quality… we continue to see a slowing of the shift in our deposits to higher interest bearing types.” — Jon Swets, President & CEO .
“In addition to the $331.4 million of overnight funds… we have over $270 million of investment securities maturing over the next twelve months… Deploying those funds into loans or even additional overnight funds will be accretive to our interest income.” — Jon Swets .
On merger: “We are excited for the opportunities this combination will provide our customers, our community and our employees… We remain committed to the conservative and well-disciplined approach…” — Jon Swets .
Prior quarter setup (Q4): “We ended the year with strong loan portfolio growth… Our liquidity, high level of capital, and excellent asset quality put us in a good position…” — Jon Swets .

Q&A Highlights

No Q1’24 earnings call transcript was available in our document set for MCBC during the relevant period; consequently, there are no Q&A highlights to report for this quarter based on primary transcripts.

Estimates Context

We attempted to retrieve S&P Global (SPGI/Capital IQ) consensus for Q1’24 EPS and revenue but were unable to access estimates due to a missing SPGI mapping for MCBC; therefore, “vs. estimates” comparisons are not provided for this quarter. If desired, we can supplement with third-party consensus sources, but per instruction we anchor on S&P Global when available.

Key Takeaways for Investors

Defensive profile intact: outstanding credit quality (NPLs ~$1K; no provision) and well-above “well-capitalized” levels mitigate downside risk if macro softens .
Earnings resiliency: EPS up QoQ ($0.29 vs $0.28) despite NIM pressure and ~$0.3M merger-related costs; modest leverage to redeploy cash/maturities in 2024–25 .
Funding headwinds manageable: deposit outflows look seasonal; core/local funding remains 100% of deposits with no brokered balances, supporting stable funding costs over time .
Rate path optionality: $270M+ of near-term maturities and $331.4M of overnight funds give management flexibility to lock in spreads as opportunities emerge .
Loan growth lane: YoY loan growth remains healthy; conservative underwriting and liquidity suggest capacity to selectively add credits without wholesale funding .
Strategic overlay: the Wintrust merger is the primary stock narrative near term; regulatory/shareholder timelines and transaction terms will likely drive trading into close, while fundamentals provide support .
Watch list: NIM trajectory (deposit mix/price), municipal deposit seasonality, legal/professional expense normalization post-merger, and pace of liquidity deployment (key to 2H’24–2025 NII) .

References:

Q1’24 8-K press release and financials .
Q4’23 8-K press release and financials .
Q3’23 8-K press release and financials .

MACATAWA BANK CORP (MCBC)·Q1 2024 Earnings Summary