Filed by Macatawa Bank Corporation
Pursuant to Rule 425
Under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1933
Subject Company: Grand Bank Financial Corporation
Commission File No.: 000-00000
Date: November 29, 2001
MACATAWA GRAND
BANK GB
Your Community Bank BANK
Macatawa Bank Corporation
&
Grand Bank Financial Corporation
Merger Transaction
November 21, 2001
Conference Call and Webcast Information
Macatawa Bank Corporation will host a conference call at 10:30 a.m. EST on
Thursday, November 29, 2001. The number to call is (800) 309-9485. A taped
rebroadcast of the call will be available beginning at 1:00 p.m. EST, Thursday,
November 29, 2001, and conclude at 11:59 p.m. EST, Friday, November 30, 2001. To
access the replay, dial (800) 642-1687 and enter the conference ID # 2510767. A
webcast of this call can be found in the Investor Information tab at
www.macatawabank.com.
Forward Looking Statements
--------------------------------------------------------------------------------
When used in this document or other public shareholder communications, in
filings with the Securities and Exchange Commission, or in oral statements made
with the approval of an authorized executive officer, the words or phrases
"believe", "will likely result", "are expected to," "will continue," "is
anticipated", "estimate," "project," "plans", or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation reform Act of 1995. You are cautioned not to place
undue reliance on any forward-looking statements, which speak only as of the
date made. Various factors could cause actual results to differ materially from
the results anticipated or projected. These factors include, but are not limited
to, the following: (1) expected cost savings and synergies from the merger might
not be realized within the expected time frame; (2) revenues following the
merger could be lower than expected; (3) costs or difficulties related to the
integration of the businesses of Macatawa Bank Corporation and Grand Bank
Financial Corporation might be greater than expected; (4) the requisite
shareholder and/or regulatory approvals of the transaction might not be
obtained; (5) deposit attrition, operating costs, customer loss and business
disruption following the merger may be greater than expected; (6) competitive
pressures among depository institutions; (7) the credit risks of lending
activities; (8) changes in the interest rate environment and in the demand for
loans; (9) general economic conditions, either nationally or in the states in
which the combined company will be doing business, might be less favorable than
expected; (10) new legislation or regulatory changes; and (11) changes in
account principles, policies or guidelines.
We do not undertake any obligation to update any forward-looking statement to
reflect circumstances or events that occur after the date the forward-looking
statement is made.
Additional Information
A registration statement on Form S-4 will be filed with the Securities and
Exchange Commission in connection with the proposed transaction. The
registration statement will include a joint proxy statement/prospectus which
will be sent to the shareholders of both Macatawa Bank Corporation and Grand
Bank Financial Corporation seeking their approval of the proposed transaction.
Investors and security holders are advised to read the registration statement
and joint proxy statement/prospectus because they will contain important
information. When filed, these documents can be obtained free of charge from the
web site maintained by the SEC at www.sec.gov. These documents also can be
obtained free of charge upon written request to Macatawa Bank Corporation,
Investor Relations, 348 South Waverly Road, Suite 2C, Holland, MI 49423 or by
calling (616) 820-1444.
Macatawa Bank Corporation and its directors and executive officers may be deemed
to be participants in the solicitation of proxies from Macatawa Bank Corporation
shareholders to approve the merger. Information about these participants may be
obtained through the SEC's web site from the definitive proxy statements to be
filed with the SEC by Macatawa Bank Corporation. Additional information
regarding the interests of these participants, as well as information regarding
the directors and executive officers of Grand Bank Financial Corporation, may be
obtained by reading the joint proxy statement/prospectus regarding the proposed
transaction when it becomes available.
Overview of Macatawa Bank Corporation
--------------------------------------------------------------------------------
Established in 1997
Total assets of $634 million, deposits of $502 million, and loans of $507
million
Locations in Ottawa, Kent and Allegan Counties
- 10 locations in Ottawa County
- 2 locations in Kent County
- 2 locations in Allegan County
Strong retail presence in Ottawa County
Focus on small to middle market commercial lending. Commercial loans 72% of
total loans.
Outstanding asset quality
- Nine month 2001 annualized net charge-off's of only 8 basis points
- Non-performing assets to total assets at September 30, 2001 of 0.10%
- Allowance for loan loss to non-performing loans at September 30, 2001 of
1,158%
Market capitalization at November 20, 2001 of $89 million
Overview of Grand Bank Financial Corporation
--------------------------------------------------------------------------------
Established by a private investor group in 1987 with community and private bank
focus
Total assets of $252 million, deposits of $213 million, and loans of $220
million
Provides high customer service focus from single location in downtown Grand
Rapids
Most recent two year compound annual asset growth rate of 20%
Excellent net charge-off history and credit quality
- Nine months 2001 annualized net charge-offs of zero
- Non-performing assets to total assets at September 30, 2001 of 0.04%
- Allowance for loan loss to non-performing loans at September 30, 2001 of
3,132%
Financial Summary
--------------------------------------------------------------------------------
Transaction Structure: 100% Stock Swap
Surviving Holding Company Entity: Macatawa Bank Corporation
Fixed Exchange Ratio: 17.5979 Macatawa shares per Grand share
New Shares to be Issued: 2,375,000 New Shares
Market Value of Transaction: $40 million based on MCBC closing price
of $16.75 on November 20, 2001
Grand Valuation:
- Multiple of Book Value 2.4 times
- Multiple of Earnings 15.98 times trailing twelve months
Dividend: Current MCBC rate of $.08 per quarter
Accounting - Tax Treatment: Purchase Accounting - Tax-free Exchange
Corporate Summary
--------------------------------------------------------------------------------
Banking Subsidiaries*: Macatawa Bank - Philip J. Koning, President/CEO
Grand Bank - Thomas J. Wesholski, President/CEO
Board of Directors: Current MCBC directors plus additional director
added from Grand Bank Financial
Expected Closing: 2nd Quarter 2002
Required Approvals: MCBC and Grand shareholders and customary
regulatory approvals
* Grand Bank Financial Corporation will be merged into MCBC. Mr. Charles
Stoddard, current Chairman/CEO and founder of Grand Bank, will retire upon
consummation of the merger to devote more time to church and volunteer
activities.
Transaction Rationale
--------------------------------------------------------------------------------
Expands Macatawa footprint more rapidly into Grand Rapids market (largest
financial market in West Michigan)
Grand Bank provides additional management expertise and market presence in Grand
Rapids
- Excellent commercial lending and private banking groups
- Trust department leadership
- Platform for branch expansion with local bank that has been in GR market for
15 years
Grand Bank shareholders and board of directors are influential individuals in
Grand Rapids and West Michigan area
Accretive to Macatawa earnings
Increased investor visibility
- Combined entity approaching $1 billion in assets
- Market capitalization greater than $100 million
- Provides increased liquidity to shareholders
Allows MCBC to leverage expanding products and services across larger customer
base
Improved Presence in Strong Banking Market
--------------------------------------------------------------------------------
Kent County Ottawa County
----------- -------------
Market Deposit Base (1) $8.5 billion $2.6 billion
Population (2) 574,000 238,000
Median Household Income $50,000 $51,000
(1) Source - FDIC/OTS Summary of Deposits at June 30, 2000
(2) Source - Census Bureau 1999
Transaction Synergies
--------------------------------------------------------------------------------
The following amounts represent expected annual cost savings on a full year
basis for 2002.
Cost savings are expected to be 70% realized in 2002, 100% in 2003.
Estimated annual 2001 non-interest expense for Grand Bank is $7 million.
$ in 000's
----------
- Salary & Benefit plan related $ 500
- Operations expense related 70
- Other overhead related 130
--------
$ 700
--------
Projected 2002 Earnings Impact
--------------------------------------------------------------------------------
$ in 000's
----------
MCBC estimated earnings $ 7,100
Grand Bank estimated earnings 3,000
After-tax cost savings 462
Purchase accounting amortization (290) (1)
--------
Pro Forma 2002 Net Income $10,272
========
Street estimates EPS for MCBC $ 1.31
Pro Forma EPS $ 1.32 (2)
(1) Estimated core deposit amortization
(2) Full year diluted shares outstanding based on 2,375,000 new shares =
7,791,000 shares
Pro Forma Financial Review
Pro Forma Balance Sheet
September 30, 2001
--------------------------------------------------------------------------------
Macatawa Grand Adjustments Consolidated
Bank Bank ----------- ------------
---- ----
Cash 38,496 9,775 48,271
Investments 76,050 19,897 95,947
Total Loans 506,669 220,499 727,168
Less Allowance for Loan Loss 7,177 2,913 10,090
------- ------- -------
Net Loans 499,492 217,586 717,078
Goodwill & Other Intangibles - - 23,211 23,211
Other Assets 19,761 4,646 24,407
------- ------- -------
Total Assets 633,799 251,904 908,914
------- ------- -------
Demand Deposits 119,218 111,887 231,105
Time and Savings Accounts 383,270 100,798 484,068
------- ------- -------
Total Deposits 502,488 212,685 715,173
Borrowed Funds 62,588 19,293 81,881
Other Liabilities 2,895 3,356 6,251
------- ------- -------
Total Liabilities 567,971 235,334 803,305
Capital 65,828 16,570 23,211 105,609
------- ------- -------
Total Liabilities & Owners Equity 633,799 251,904 908,914
------- ------- -------
Shares Outstanding 5,307,201 134,959 7,682,201
Book Value per Share 12.40 122.78 13.75
Tangible Book Value Per Share 12.40 122.78 10.73
Equity/Assets 10.39% 6.58% 11.62%
Leverage Ratio 10.37% 6.82% 9.38%
Total Risk Based Capital Ratio 13.60% 10.20% 12.54%
DEPOSITS
Macatawa Bank
-------------
CD's < $100K
19%
Savings & MMDA
35%
CD's > $100K
19%
Brokered CD's
3%
DDA & Int. on Checking
24%
Grand Bank
----------
CD's < $100K
12%
Savings & MMDA
6%
CD's > $100K
11%
Brokered CD's
18%
DDA & Int. on Checking
53%
Combined
--------
CD's < $100K
17%
Savings & MMDA
26%
CD's > $100K
17%
Brokered CD's
8%
DDA & Int. on Checking
32%
Macatawa Bank
-------------
Mortgage
14%
Consumer
14%
Comm'l
72%
Grand Bank
----------
Mortgage
4%
Consumer
14%
Comm'l
82%
Combined
--------
Mortgage
11%
Consumer
14%
Comm'l
75%
Macatawa Bank Corporation
--------------------------------------------------------------------------------
9 months
Financial Information ($ in 000's) 1998 1999 2000 2001
--------------------- ---- ---- ---- ----
Total Assets $189,229 $344,921 $499,813 $633,799
Total Investment Securities 27,007 28,281 48,669 68,050
Total Loans 137,882 285,374 410,676 506,669
Total Deposits 166,989 279,390 398,617 502,488
Total Equity 19,611 34,526 38,128 65,828
Net Income (2,489) 693 3,349 3,644
EPS(diluted) (1.18) 0.22 0.90 0.84
Avg. Diluted Shares O/S 2,103,178 3,216,625 3,711,051 4,327,708
Ratio Analysis
ROA -2.70% 0.26% 0.80% 0.87%
ROE -15.15% 2.72% 9.31% 9.96%
Efficiency ratio 110.84% 78.02% 67.94% 61.66%
Allow. for loan loss as
% of total loans 1.47% 1.40% 1.43% 1.42%
Net charge-offs to avg. loans 0.00% 0.00% 0.02% 0.06%
Grand Bank Financial Corporation
--------------------------------------------------------------------------------
2001
Financial Information ($ in 000's) 1998 1999 2000 9 months
--------------------- ---- ---- ---- --------
Total Assets $149,022 $178,665 $223,930 $251,904
Total Investment Securities 14,938 11,834 14,433 19,897
Total Loans 123,347 149,503 180,850 217,586
Total Deposits 124,419 152,066 193,587 212,695
Total Equity 11,313 12,727 14,865 16,570
Net Income 1,564 1,777 2,251 1,871
EPS(diluted) 11.86 12.95 16.35 13.60
Avg. Diluted Shares Outstanding 131,872 137,220 137,675 137,675
Ratio Analysis
ROA 1.11% 1.06% 1.12% 1.08%
ROE 14.98% 14.75% 16.32% 15.78%
Efficiency ratio 65.05% 65.70% 61.64% 60.13%
Allow. for loan loss as
% of total loans 1.34% 1.31% 1.30% 1.32%
Net charge-offs to avg. loans 0.00% 0.00% 0.06% 0.00%
Macatawa Bank Corporation held a conference call on Monday, November 29, 2001,
at 10:30 a.m. EST.
Molly: Good morning. My name is Molly and I will be your conference
facilitator today. At this time I would like to welcome
everyone to the Macatawa Bank Corporation Merger Conference
Call. All lines have been placed on mute to prevent any
background noise. After the speaker's remarks, there will be
a question and answer session. If you would like to ask a
question during that time, simply press the number 1 on your
telephone keypad and questions will be taken in the order
they are received. If you would like to withdraw your
question, press the pound key. Macatawa and Grand Bank
Financial Corporation announce the Merger Agreement on
Wednesday, November 21, 2001. Additional copies of the press
release can be received by contacting the company at (616)
820-1435. Presentation materials were sent either as a
PowerPoint file by e-mail this morning or faxed to
respective recipients. If anyone was unable to receive and
open the e-mailed PowerPoint file, please contact Angie at
this time and (616) 820-1444 to request a fax copy sent to
you. A reminder that this call may involve certain forward
looking statements such as projections of revenue, earnings,
statements on the plans and objectives of management,
statements of future economic performance and the
assumptions underlying these statements. The results of the
company performance may differ materially from any forward
looking statements. The company incorporates by reference
various risks factors as outlined in recent Securities and
Exchange Commission filings that could materially affect the
company's financial results. The company assumes no
obligation to update any forward looking statements made in
this call. At this time, I would like to now turn the call
over to Mr. Ben Smith. Thank you Mr. Smith. You may begin
your conference.
Ben Smith: Thank you Molly. Thanks each of you for joining us for this
conference. With us today is Phil Koning who is President
and Chief Operating Officer, Steve Germond, CFO and we also
have Ray Tooker, head of the Lending functions here. What we
will be doing today is hopefully most of you have received
either by e-mail or fax the information that was sent out.
We are going to try to walk through that rather quickly to
give you a better feel of the environment both from an
operating standpoint for Macatawa Bank and Grand Bank as
well as the geographic area. We are pretty excited about
this merger. We think it gives the opportunities for our
shareholders a substantial lift because of it. So let me
first begin giving a little overview of Macatawa. You will
recall that Macatawa was formed just about 11 years ago,
almost exactly, or four years ago. It was the 11th in
November of 1997. Our first office was in Zeeland. Our
second office opened in Holland around Christmas time of
that year. Today we've grown to 14 different locations
primarily focused in the Ottawa County area which is around
the Holland/Zeeland area. Total assets are $634,000,000,
deposits $502,000,000, loans $507,000,000 and we should have
profits in excess of $5,000,000 this year. We have a strong
retail presence in Ottawa County. Our focus has been on our
communities small and middle market commercial lending. Our
loan portfolio is heavily weighted about 70 - 72% in the
commercial loan area. The loan quality has remained very
high quality. The nine months ending in September, the
annualized charge off were only .08%, nonperforming assets
to total assets were 0.10%, allowance for loan lost to
nonperforming is 1,158%, and the market cap of Macatawa at
the end of November was approaching $90,000,000.
Grand Bank Financial or Grand Bank Financial Corporation is
a holding company for Grand Bank. It was also established by
a private group of investors back in 1987. Their focus was
on their communities and on private banking. They have one
office located in downtown Grand Rapids. Their total assets
are $252,000,000, deposits $213,000,000, and loans
$220,000,000. They provide a high customer service focus
from their single location. They have had good growth as you
can see from the numbers that were sent with you and I think
we will talk a little bit about those later. The last two
years the annual growth is 20% or better. They also have an
excellent charge off history relative to credit. For the
nine months ending in September this year, they had no
chargeoffs, their nonperforming are .04% and the allowance
for loan loss to nonperforming is 3,132%.
In terms of the structuring of the transaction, this will be
100% stock transaction. The surviving holding company will
be Macatawa Bank Corporation. It was done at a fixed
exchange ratio. We will be giving 17.5979 Macatawa shares
for each outstanding share of Grand Bank. New shares issued
will be approximately 2,375,000 shares and the market value
of the transaction valued as November 20th would be
approximately $40,000,000. Based on those numbers, the
multiple book value is about 2.4 and multiple of earnings is
about 15.98 times trailing 12 months. The dividend rate that
Macatawa currently has is 8 cents per share per quarter and
that is expected to be continued. It will be a tax free
exchange and we will be using purchased accounting. In terms
of a corporate summary of what we will see once the
transaction is completed, Grand Bank Financial Corporation
will cease to exist. It will merge into Macatawa Bank
Corporation. At that time, Mr. Charles Stoddard, the current
Chairman and CEO and the founder of Grand Bank will retire
upon the consummation and devote more time to church and
volunteer duty. We wish him well and will miss his
participation. It was his vision that made Grand Bank the
success it is today. The two subsidiaries will then be
Macatawa Bank which Phil Koning is President and CEO and
Grand Bank and Tom Wesholski is President and he will assume
the title of CEO. From Macatawa Board of Directors, we
currently have five people on the Board of Directors and we
will be adding one additional person from the Grand Bank
Financial Corp. board. We expect to close the transaction
early in the second quarter of next year. They'll be the
normal regulatory approval. We will also have a shareholder
vote from both Grand Bank and Macatawa Bank shareholders.
The rationale of the transaction is probably a lot easier
for us to see knowing the locale than some of you who are
located out of the area. But this expands Macatawa's
footprint more rapidly into the Grand Rapids market and the
Grand Rapids market is the largest market in West Michigan.
I guess we've got some figures on that on the next page but
let me talk about that now.
Ottawa County's market is about $2.6 billion. The Kent
County market which is really the Grand Rapids market, is
about $8.5 billion so it is almost three times the size of
the market that we are currently operating in. Grand Bank
also provides additional management expertise and important
significant market presence in the Grand Rapids area. They
have an actual commercial loaning staff and reputation and
they also have a high quality private bank group. They have
a good trust department that is well established and been in
town for quite some time. They will provide us a platform
for branching with a local bank that has been in the Grand
Rapids market for over 15 years. Another important feature
is the cultures. The two cultures of Grand Bank and Macatawa
Bank are very similar inasmuch as they are focused on a high
level of personal services. We think that that is something
that as these Banks continue to merge often gets left by the
wayside. Grand Bank shareholders and Board of Directors are
all influential businessmen in Grand Rapids and West
Michigan. That will enhance our relation with a lot of
important people in our market area. We will talk a little
bit, Steve will talk you through some numbers and will be
accretive to our earnings. We also believe that we will get
increased investor visibility. We will hopefully have
increased liquidity as shareholders. The combined entity
should be at a billion dollars very quickly and the market
capitalization after consummation will be over $100 million.
This allows us also and we are expanding to leverage
products and service across a whole different customer base.
When we originally set up Macatawa, our primary focus was
for the mutual benefit of our customers, our employees, our
communities and our shareholders and we did so, you may
recall, as a result of FMB being taken out and no local bank
in the Holland/Zeeland area. What had happened subsequent to
that last year, Old Kent which was the horse in the Grand
Rapids market was also acquired. We believe that that market
also has the same needs that our does and by joining with
the Grand Bank people we can fill that need. We also believe
that from a shareholder standpoint, what that allows us is a
much longer path of growth that we can realize. So we look
at this as a very important strategic move. Now I will ask
Steve to share with you some of the numbers and I will add
that we normally don't share projection numbers. I mean,
we'll help you a little bit but we don't give forecasts nor
do we expect to start but because of the size of the
transaction significance we will do this time but this will
be kind of a one shot deal. Steve.
Steve Germond: Thank you Ben. I would like to speak to the next two slides
you have, the first being the transaction synergies. This
shows expected initial cost reductions. Initially we
estimate that about 10% of Grand Bank expense will fall to
the bottom line as a cost save. Primarily these are captured
in three areas that you can see on the slide. The lower
salary and benefits consist of reduction in pay for Mr.
Stoddard's retirement as well as benefit plan changes.
Initially we don't expect to have significant savings from
consolidation of operations. We will work toward improving
them down the road, so that's the smaller number. But we do
also expect to have some other savings in other overhead
areas that consist of things like insurance and audit fees
as well as contributions.
As Ben talked on the next slide, as a matter of policy we
don't customarily release internal projections of income. We
do feel it is important and relevant to do so in this
situation to demonstrate our earnings per share implication.
The pro forma 2002 net income for the combined Banks for a
full year is projected at $10.3 million. This based on a
weighted average shares outstanding, which includes the new
stock issued as well as options that would be converted to
Macatawa options, and therefore their weighted implications
would give us a pro forma earnings per share of about $1.32,
I think the consensus estimate out there is about $1.31. We
do feel that this is a good transaction from an earnings per
share standpoint. I am going to turn it over to Phil Koning.
He's going to talk about the rest of the pro formas and then
we will come back to that.
Phil Koning: Thank you Steve. I would like to very quickly review the
current financial status of each bank and what the combined
entity would look like. The pro forma balance sheet shows a
combined entity at September 30, 2001 which is over $900
million in assets. Obviously by the time the transaction is
complete we will be approaching $1 billion. The combined
entity still has a reasonably strong equity base from which
to grow and the dominant balance sheet items of deposits and
loans are expanded on in the next two pages.
The next page of the presentation shows the deposit make up
of each bank and of the combined entity. We believe it shows
a stable and well-diversified funding base for our banks to
grow from. Then the next page shows the presentation of the
loan composition of each bank and the combined entity. Our
loan portfolios are concentrated in the commercial lending
area, although those portfolios are quite diversified and we
have got Ray Tooker here who can answer some questions. He
was part of the due diligence team on the loans at Grand
Bank and obviously knows our portfolio very well.
The next two pages show the historical financial performance
of both banks. Both institutions show excellent growth,
improving financial performance and excellent credit
quality. We believe the combined entity can continue to grow
and improve its efficiency, and profitability. With that - I
think that kind of gives you a good summary and overview and
maybe a place to start if you have any specific questions
that we may address.
Molly: Any questions at this time. At this time I would like to
remind everyone in order to ask a question please press the
number 1 on your telephone keypad. Your first question comes
from John Arfstrom of RBC Capital Markets.
John Arfstrom: Good morning guys.
Several people: Good morning John.
John Arfstrom: We talked like it a little bit, but this looks like a good
deal. Ben, can you talk a little bit about how the deal came
about?
Ben Smith: I think I tried to allude to that John. What happened was
Macatawa from day 1, is we have been fortunate to take
advantage of situations that occurred in the marketplace.
And when we originally started, in 3-4 years we were
figuring we were going to be $200 million, but obviously
things went our way. We had a similar occurrence when Old
Kent, who was a very good competitor, long time stalwart in
our area, surprisingly sold out to Fifth Third. Quite a
void, significant void left in the Grand Rapids market. We
already had two branches in the Grand Rapids area and at
that point in time were trying to determine where we were
going to concentrate in the Grand Rapids market and how it
was best to attack that market, because clearly, as I
pointed out - I mean they have three times the deposit base
that we have in our current market - and one of the things
we felt had been our strength had been our culture and had
been the fact that we were basically a community bank. And
when you look at the Grand Rapids market there was one other
independent entity that had the exact same - what we thought
was the same culture or the same direction and everything
else, and so we approached them, why you know we're going to
come into the market and we know you want to expand, and
would it make more sense for us to do it together than it
would separately and, you know, one thing led to another and
I think we've arrived at a fair deal for everyone and I
think that the result will be a pretty dynamic organization
which has an awful lot of potential.
John Arfstrom: Okay, and then you talked about similar philosophies, and
maybe this is a good question for Ray. In terms of
underwriting philosophy and credit culture, or can you talk
about similarities or differences and what is the culture
that survives?
Ray Tooker: John, it's a - it is a very similar underwriting culture.
Their lead lender there, Bill Fickes, has been known to us
for a number of years, back from his days at Michigan
National. Strong mortgage background, commercial real estate
oriented, good strong cash flow lenders. They have a very
similar approach to utilizing some limited individual loan
authorities and then using a committee approach which is
very similar to ours. Their loan rating system is almost
identical to ours, so a lot of similarities there. I think
that, to be honest, the cultures right now are very similar.
I honestly don't see a lot of changes. We have done some
work with these fellows over the years or participations and
we both look at the lending world in a very similar manner.
John Arfstrom: Okay. And then a couple of more - Steve, do you have how
much of the acquisition related goodwill is going to be
attached to the deposits. How much becomes CDI?
Steve Germond: Yes. We think, John, on a preliminary estimate, that about
$3.6 million would be core deposits of $23 million that we
showed on that pro forma balance sheet.
John Arfstrom: Okay. And then last question, probably Ben. In terms of the
shareholder base can you talk a little bit about that on
terms of what the base looks like?
Ben Smith: The shareholder - their shareholder base is about 125
shareholders, primarily local residents, local business
people, and it's fairly wide held - widely held bank.
John Arfstrom: Okay. Good. Thanks a lot guys.
Molly: Our next question is from Joe Stevens, an analyst.
John Rotis: Good morning guys, this is actually John Rotis. How are you
doing?
Everyone: Good....
John Rotis: Actually, I guess most of my questions have been answered,
but I guess I would go back to the breakout of the $23
million in goodwill. If $3.6 million is core deposits, what
is the average life we are using for those, I guess as far
as how you're going to amortize them?
Steve Germond: When we looked at the estimate on that, we've got about a
12-year average life projected.
John Rotis: Okay. Okay, and are you just going to, like, use straight
line method?
Steve Germond: No, we'll use a - It'll be more up front.
John Rotis: Okay.
Steve Germond: And then declining as we go down.
John Rotis: Okay. Maybe, Ben I guess this question might be for you. I
am just kind of wondering what kind of growth rates are you
guys going to assume going forward for the Grand Rapids area
and do you think there would be any more acquisitions or
anything like that, I guess going forward?
Ben Smith: I'll speak first to the growth rate. Our growth rate -
Macatawa's growth rate has held up extremely well. We think
it will continue to hold up strong. We expect Grand Rapids
bank to actually accelerate. They have been somewhat
restrained because of their one location. We anticipate
helping them branch as soon as they're able to do so, and so
we would see their growth rate at least equaling Macatawa's,
if not being slightly greater. In terms of other
acquisitions we are not acquisition-minded. Usually when you
end up with an acquisition you end up with cultural
problems. You end up with growth rate problems because we
know what we can do and we've been pretty fortunate in
having the right formula and the right area, and we are not
anxious to go out and acquire someone who's going to make
that task any harder. I think this was a unique situation
that we tried to take advantage of because we thought it
assured us a stronger growth for a longer number of years
without having to worry about, you know, what's going to
happen five years down the road because this market will
allow us to grow for, you know, 15% to 20% a year for a long
time.
John Rotis: Okay, nice deal guys.
Everyone: Thank you.
Molly: At this time there are no further questions.
Ben Smith: If not, we certainly appreciate everyone tuning in. If you
have any questions we are around. We also apologize for the
delay in the informational meeting, but that was primarily
due to the holiday schedules, and so I hope you all
understand. Thanks again for calling in.
END OF CALL