425: Wintrust Financial to Acquire Macatawa Bank Corporation in $510.3 Million All-Stock Deal

Wintrust Financial Corporation announced its plan to acquire Macatawa Bank Corporation for approximately $510.3 million in an all-stock transaction, expanding Wintrust's presence into West Michigan.

Summary

• Wintrust Financial Corporation and Macatawa Bank Corporation have entered into a definitive merger agreement.
• Wintrust will acquire Macatawa in an all-stock transaction valued at approximately $510.3 million, or $14.85 per share.
• Macatawa Bank operates 26 full-service branches in Kent, Ottawa, and northern Allegan counties, Michigan, with approximately $2.7 billion in assets, $2.4 billion in deposits, and $1.3 billion in loans as of December 31, 2023.
• Macatawa Bank will maintain its separate bank charter and operate under the Macatawa Bank name in Michigan.
• One individual from Macatawa's board of directors will be appointed to Wintrust's board.
• The merger is subject to regulatory and shareholder approvals and is expected to close in the second half of 2024.
• The transaction is not expected to have a material effect on Wintrust's 2024 earnings per share.

Sentiment

Score: 8

Explanation: The document presents a positive outlook on the merger, highlighting the strategic benefits, financial strengths of both companies, and expected synergies. The management comments and the emphasis on maintaining Macatawa's community presence contribute to the positive sentiment.

Positives

• The merger allows Wintrust to expand into the attractive West Michigan market.
• Macatawa Bank has a strong core deposit base and exceptional asset quality.
• Macatawa Bank will maintain its separate bank charter and operate under its name in Michigan, preserving its community presence.
• The transaction is expected to be accretive to Wintrust's earnings in the first year, excluding integration expenses.
• Macatawa's shareholders will benefit from the enhanced services, products, and technology of Wintrust.

Risks

• The merger is subject to regulatory and shareholder approvals, which may not be obtained.
• The closing conditions in the merger agreement may not be satisfied.
• Expected cost savings, revenue synergies, and other financial benefits from the proposed merger may not be realized or may take longer than expected.
• There is a risk of unexpected delays in closing the merger transaction.

Future Outlook

The transaction is expected to close in the second half of 2024 and is not expected to have a material effect on Wintrust's 2024 earnings per share. The merger is expected to be accretive to Wintrust's earnings in the first year, excluding integration expenses.

Management Comments

• Timothy S. Crane, President and CEO of Wintrust, stated that Macatawa provides an ideal platform to expand into West Michigan with a very solid bank.
• Richard L. Postma, Chairman of the Board of Macatawa, said that Wintrust provides Macatawa with the ability to retain and enhance its uniquely personalized consumer and commercial community presence in the West Michigan area.
• Jon W. Swets, President and CEO of Macatawa, stated that the transaction brings together two companies that share a core community banking philosophy.

Industry Context

This announcement reflects a trend of consolidation in the banking industry, with larger institutions seeking to expand their geographic footprint and market share through acquisitions of smaller, well-performing banks.

Comparison to Industry Standards

• Macatawa's 1.60% ROAA (2023Y) is above the bank industry median of 1.06% and above the top quartile of 1.22%.
• Macatawa's 1.35% cost of deposits (Q423) is below the bank industry median of 2.10% and below the top quartile of 1.58%.
• Macatawa's 17.7% CET1 Ratio is above the bank industry median of 11.7% and above the top quartile of 13.2%.
• Macatawa's NCOs / Avg. Loans (Q423) of (0.01)% is above the bank industry median of 0.15% and above the top quartile of 0.08%.
• Macatawa's efficiency ratio of 49% is below the bank industry median of 55% and below the top quartile of 51%.

Management Changes

Stakeholder Impact

• Macatawa's customers will have access to a wider range of products, services, and resources from Wintrust.
• Macatawa's employees will become employees of Wintrust or its affiliates.
• Macatawa's communities will continue to be supported by the combined organization.
• Macatawa's shareholders will receive Wintrust common stock as merger consideration.

Next Steps

• Obtain regulatory approvals.
• Obtain Macatawa shareholder approval.
• Satisfy other customary closing conditions.
• Close the transaction in the second half of 2024.
• Integrate Macatawa Bank into Wintrust's operations.
• Appoint Richard Postma to Wintrust's board of directors.

Key Dates