Executive Summary

Q3 2023 delivered solid profitability: net income $11.4M and diluted EPS $0.33, up 13.6% YoY and 10.7% QoQ; net interest income rose to $22.2M as asset yields benefited from higher rates .
Net interest margin was stable at 3.35% (down 1bp QoQ, +49bps YoY) while total interest expense continued to rise with deposit repricing; efficiency ratio improved to 47.61% from 49.20% in Q2 .
Deposits increased $124.0M QoQ to $2.45B, driven by seasonal municipal inflows; liquidity remained strong with $469.8M in short-term investments and ~$964.5M of additional borrowing capacity .
Asset quality remained exceptional: nonperforming assets near zero and no loan delinquencies; allowance for credit losses (ACL) at 1.32% of loans and coverage of nonperforming loans at ~17,001x .
Dividend raised 12% to $0.09 per share, offering a tangible shareholder return and near-term stock reaction catalyst .

What Went Well and What Went Wrong

Strong earnings momentum: net income $11.4M and net interest income $22.2M, supported by higher rates and loan growth; “Net interest income… was up $2.5M from third quarter 2022,” per incoming CEO Jon Swets .
Core deposit strength and seasonal inflows drove $124.0M QoQ deposit growth; core deposits represented 100% of total deposits and balances remain well above pre-pandemic levels .
Credit metrics best-in-class: nonperforming loans $1K (0.00008% of loans), no OREO, ACL 1.32% of loans; management emphasized balance sheet positioning with “high levels of liquidity, capital, and excellent asset quality” .

Deposit cost pressure elevated interest expense to $7.543M (vs. $5.974M in Q2 and $1.104M in Q3 2022), compressing NIM slightly QoQ .
Non-interest income declined YoY by $273K; mortgage gains were minimal ($5K) as higher rates continued to suppress mortgage sales volume ($0.284M originations vs. $6.5M in Q3 2022) .
Non-interest expense rose YoY to $12.8M, driven by salaries/benefits (+$310K YoY) and higher FDIC assessments (+$129K YoY), with legal/professional fees higher due to outsourcing of audit activities .

Metric	Q3 2022	Q2 2023	Q3 2023
Total Interest Income ($USD Millions)	$20.875	$27.120	$29.787
Total Interest Expense ($USD Millions)	$1.104	$5.974	$7.543
Net Interest Income ($USD Millions)	$19.771	$21.146	$22.244
Total Non-Interest Income ($USD Millions)	$4.889	$4.613	$4.616
Total Non-Interest Expense ($USD Millions)	$12.127	$12.673	$12.789
Pre-Tax Income ($USD Millions)	$12.533	$12.786	$14.221
Net Income ($USD Millions)	$10.045	$10.312	$11.413
Diluted EPS ($USD)	$0.29	$0.30	$0.33
Net Interest Margin (%)	2.86%	3.36%	3.35%
Efficiency Ratio (%)	49.18%	49.20%	47.61%

Metric	Q3 2022	Q2 2023	Q3 2023
Total Assets ($USD Billions)	$2.835	$2.630	$2.760
Total Deposits ($USD Billions)	$2.556	$2.322	$2.446
Noninterest-Bearing Deposits ($USD Millions)	$855.744	$704.409	$653.052
Interest-Bearing Deposits ($USD Millions)	$1,700.453	$1,617.136	$1,792.534
Loans ($USD Billions)	$1.139	$1.272	$1.291
Federal Funds & Short-Term Investments ($USD Millions)	$733.347	$343.676	$469.786
Additional Borrowing Capacity ($USD Millions)	n/a	~$964.2	~$964.5

Metric	Q3 2022	Q2 2023	Q3 2023
Nonperforming Loans ($USD Thousands)	$85	$72	$1
NPL / Total Loans (%)	0.01%	0.01%	0.00%
Nonperforming Assets ($USD Thousands)	$2,428	$72	$1
ACL ($USD Millions)	$14.821	$17.109	$17.001
ACL / Loans (%)	1.30%	1.35%	1.32%
Coverage (ACL / NPL) (x)	17,436x	23,763x	1,700,100x

Category ($USD Millions)	Q3 2022	Q2 2023	Q3 2023
Construction & Development	$111.624	$116.124	$120.892
Other Commercial Real Estate	$410.600	$443.489	$446.393
Commercial Loans Secured by Real Estate	$522.224	$559.613	$567.285
Commercial & Industrial	$427.034	$489.273	$488.224
Total Commercial Loans	$949.290	$1,048.886	$1,055.509

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Dividend per Share	Q4 2023 payout (declared 10/26/23)	$0.08	$0.09	Raised 12%

No formal quantitative guidance for revenue, margins, OpEx, tax rate, or segment metrics was provided in Q3 materials .

Topic	Previous Mentions (Q1 & Q2 2023)	Current Period (Q3 2023)	Trend
Deposit mix and repricing	Shift to interest-bearing and CDs; deposit balances stable post-March events; core deposits 100%	Deposits +$124.0M QoQ; continued shift to interest-bearing; core deposits 100%	Mix shift continuing; balances rising QoQ
NIM trajectory	NIM improved to 3.44% (Q1) but deposit costs rising	NIM 3.35% (down 1bp QoQ); higher deposit costs suppress further expansion	Stabilizing near mid-3s
Asset quality	Low delinquencies; NPLs ~$75–$72K; CECL adopted	NPLs $1K; no delinquencies; ACL 1.32%	Further improvement
Mortgage activity	Gains minimal due to rates; originations $0.179M (Q1) and $2.4M (Q2)	Gains $5K; originations $0.284M	Continued weakness
Liquidity & brokered deposits	No brokered deposits; high overnight funds; borrowing capacity ~$951M	No brokered deposits; overnight funds $469.8M; borrowing capacity ~$964.5M	Strong liquidity intact
Loan growth	Loans +$43M (Q1), +$50.6M (Q2), driven by CRE/C&I	Loans +$19.7M QoQ; +$152.6M YoY	Moderating QoQ, strong YoY

“We are pleased to report strong profitability and good balance sheet results for the third quarter 2023… Net interest income… up $2.5 million from third quarter 2022… Solid loan origination activity continued… we maintained excellent asset quality.” — Jon Swets, incoming President & CEO .
“We believe our balance sheet is well positioned in the current environment. High levels of liquidity, capital, and excellent asset quality put us in a good position to weather softer economic conditions… and to seize loan growth opportunities in our markets.” — Jon Swets .
“We are pleased to provide an increase in the amount of the dividend payment to our shareholders. Both the continued growth in Company earnings performance and our strong capital position make this increase possible.” — Jon Swets on dividend raise .

No Q3 2023 earnings call transcript was available in the document set; therefore, Q&A highlights are not provided.

Wall Street consensus via S&P Global was unavailable for MCBC due to missing CIQ mapping; as a result, beat/miss versus consensus cannot be quantified in this recap. Values retrieved from S&P Global are unavailable for this period.

Earnings quality strong: EPS $0.33 with NIM stable at 3.35% despite rising deposit costs; efficiency improved QoQ, signaling disciplined expense control .
Deposit base resilience: $124.0M QoQ increase and 100% core deposits underscore funding stability; noninterest-bearing balances are migrating to interest-bearing, impacting interest expense .
Exceptional credit profile: de minimis NPLs ($1K), no delinquencies, ACL at 1.32% of loans; risk posture remains conservative .
Liquidity optionality: $469.8M in short-term investments and ~$964.5M borrowing capacity provide ample flexibility in a higher-rate environment .
Dividend increase (+12% to $0.09) adds a clear capital return lever and potential near-term stock catalyst .
Loan growth continues (+$19.7M QoQ; +$152.6M YoY), led by CRE/C&I, though pace moderated QoQ as rates rose; watch trajectory into Q4 .
Focus areas: monitor deposit mix and pricing pressure on NIM, mortgage banking softness, and any changes in FDIC assessments or professional fees affecting OpEx .