SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, DC 20549
_________________
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION
15(d) OF THE
SECURITIES EXCHANGE ACT
OF 1934
| (Mark One): | |
| [x] | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. [NO FEE REQUIRED] |
For the fiscal year ended December 31, 2004
OR
| [_] | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]. |
| For the transition period from ______________ to _______________ |
Commission file number 000-25927
| A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: Macatawa Bank 401(k) Plan |
| B. | Name of the issuer of the securities held pursuant to the plan and the address of its principal executive office: |
MACATAWA BANK
CORPORATION
10753 Macatawa Drive
Holland, Michigan 49424
MACATAWA BANK
401(k) PLAN
TABLE OF CONTENTS
| PAGE | |
Report of Independent Registered Public Accounting Firm |
1 |
Financial Statements for the Years Ended December 31, 2004 and 2003 | |
Statements of Net Assets Available for Benefits |
2 |
Statements of Changes in Net Assets Available for Benefits |
3 |
Notes to Financial Statements |
4-7 |
Supplementary Information for the Year Ended December 31, 2004 | |
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) |
8 |
REPORT OF INDEPENDENT
REGISTERED PUBLIC
ACCOUNTING FIRM
May 25, 2005
Plan Administrator
Macatawa
Bank 401(k) Plan
Holland, Michigan
We have audited the accompanying statement of net assets available for benefits of the Macatawa Bank 401(k) Plan (the “Plan”) as of December 31, 2004, and the related statement of changes in net assets available for benefits for the year then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Macatawa Bank 401(k) Plan as of December 31, 2003, and for the year then ended, were audited by other auditors whose report dated May 4, 2004, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 2004 financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2004, and the changes in net assets available for benefits for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The December 31, 2004 supplemental schedule of assets (held at end of year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic 2004 financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic 2004 financial statements as a whole.
/s/ Rehmann Robson
5800 Gratiot • Suite 201 • P.O. Box 2025 • Saginaw, MI 48605 • 989.799.9580 • Fax 989.799.0227 • www.rehmann.com
MACATAWA BANK
401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
| December 31 | ||||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | 2004 | 2003 | ||||||
| Investments, at fair value | ||||||||
| Mutual funds | $ | 9,094,990 | $ | 6,791,622 | ||||
| Common stock | 689,747 | 201,633 | ||||||
| Participant loans | 6,910 | 10,682 | ||||||
| Total investments | 9,791,647 | 7,003,937 | ||||||
| Cash | 11,735 | 11,294 | ||||||
| Receivables | ||||||||
| Employer contribution | 7,271 | 6,907 | ||||||
| Dividend receivable | 2,698 | 24,544 | ||||||
| Total receivables | 9,969 | 31,451 | ||||||
| Total assets (equal to net assets available for benefits) | $ | 9,813,351 | $ | 7,046,682 | ||||
The accompanying notes are an integral part of these financial statements.
-2-
MACATAWA BANK
401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
| Year Ended December 31 | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2004 | 2003 | |||||||
| Additions to net assets attributed to | ||||||||
| Investment income | ||||||||
| Net appreciation in fair value of mutual funds | $ | 740,549 | $ | 1,121,824 | ||||
| Net appreciation in fair value of common stock | 100,576 | 23,534 | ||||||
| Dividends and interest | 230,823 | 85,518 | ||||||
| Total investment income | 1,071,948 | 1,230,876 | ||||||
| Contributions | ||||||||
| Employer's | 560,613 | 440,424 | ||||||
| Participants' | 1,062,090 | 800,764 | ||||||
| Rollovers | 454,092 | 1,155,511 | ||||||
| Total contributions | 2,076,795 | 2,396,699 | ||||||
| Total additions | 3,148,743 | 3,627,575 | ||||||
| Deductions from net assets attributed to | ||||||||
| Benefits paid to participants | 382,074 | 480,914 | ||||||
| Net increase | 2,766,669 | 3,146,661 | ||||||
| Net assets available for benefits | ||||||||
| Beginning of year | 7,046,682 | 3,900,021 | ||||||
| End of year | $ | 9,813,351 | $ | 7,046,682 | ||||
The accompanying notes are an integral part of these financial statements.
-3-
MACATAWA BANK
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
| 1. | DESCRIPTION OF THE PLAN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| The following description of the Macatawa Bank 401(k) Plan (“Plan”) provides only general information. Participants should refer to the Plan agreement, or Summary Plan Description for a more complete description of the Plan’s provisions. Macatawa Bank is a 100% owned subsidiary of Macatawa Bank Corporation. |
| Description of the Plan |
| General |
| The Plan is a defined contribution plan covering all full-time employees of the Macatawa Bank Corporation (“Plan Sponsor”) who have attained the age of 21, or older. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). |
| Contributions |
| Each year participants may contribute from pretax annual compensation, as defined in the Plan, up to the maximum amount permissible under Internal Revenue Code Section 402(g). Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans. The Plan’s Sponsor contributes an amount equal to 100% of the first 3% and 50% of the second 3% of base compensation that a participant contributes to the Plan. Participants direct the investment of contributions into various investment options offered by the Plan. The Plan currently offers mutual funds as investment options for participants, plus Macatawa Bank Corporation common stock which was added as an investment option to the Plan in 2003. |
| Participant Accounts |
| Each participant’s account is credited with the participant’s contribution, the Plan Sponsor match, and an allocation of Plan earnings. Plan earnings are allocated based on the ratio of each participant’s account balance to the total account balance. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account. |
| Vesting |
| A participant is immediately vested in employee and employer matching contributions, plus actual earnings thereon. |
-4-
MACATAWA BANK
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
| Participant Loans |
| Participant loans, although not permitted by the Plan, result from participant rollovers from predecessor plans. Loan balances are secured by the balance in the participant’s account, have interest rates ranging from 5.75% to 10.50%, and expected maturities through March 2007. Principal and interest is paid ratably through payroll deductions. |
| Payment of Benefits |
| On termination of service due to death, disability or retirement, a participant may elect to receive a lump-sum amount equal to the value of his or her vested account as defined by the Plan agreement. For termination of service for other reasons, a participant may receive the value of the vested interest in his or her account as a lump-sum distribution. |
| Summary of Significant Accounting Policies |
| Use of Estimates |
| The preparation of financial statements in conformity with generally accepted accounting principles requires the plan administrator to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. |
| Basis of Accounting |
| The financial statements of the Plan are prepared under the accrual method of accounting. |
| Investment Valuation and Income Recognition |
| The Plan’s investments are stated at fair value. Quoted market prices are used to value investments. Shares of registered investment companies are valued at the net asset value of shares held by the Plan at year-end. Money market fund investments and participant loans are reported at cost, which approximates fair value. |
| Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. |
| Administrative Expenses |
| The Plan Sponsor pays substantially all administrative expenses. |
| Payment of Benefits |
| Benefits are recorded when paid. |
-5-
MACATAWA BANK
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
| Reclassification |
| Certain amounts as reported in the 2003 financial statements have been reclassified to conform with the 2004 presentation. |
| 2. | INVESTMENTS |
| Investments representing 5% or more of the Plan’s net assets available for benefits are as follows at December 31: |
| 2004 | 2003 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Investments at fair value as determined by quoted market price | |||||||||
| Mutual Funds | |||||||||
| Fidelity Spartan U.S. Equity Index Fund | $ | 1,659,911 | $ | 1,473,457 | |||||
| Fidelity Dividend Growth Fund | 1,260,238 | 1,110,486 | |||||||
| Dodge and Cox Stock Fund | 863,171 | 366,651 | |||||||
| Neuberger Berman Genesis Fund | 789,574 | 455,288 | |||||||
| Fidelity Diversified International Fund | 784,480 | 477,856 | |||||||
| Columbia Acorn Fund | 732,722 | 414,107 | |||||||
| Fidelity Government Income Fund | 641,656 | 354,746 | |||||||
| Fidelity Aggressive Growth Fund | 556,769 | 441,274 | |||||||
| Common Stock | |||||||||
| Macatawa Bank Corporation | 689,747 | - | |||||||
| 3. | PARTY-IN-INTEREST TRANSACTIONS |
| Parties-in-interest are defined under Department of Labor (DOL) regulations as any fiduciary of the Plan, any party rendering service to the Plan, the employer, and certain others. The Plan’s investment in participant loans as of December 31, 2004 and 2003 represent party-in-interest investments. |
| Macatawa Bank, through its trust department, serves as trustee, custodian and recordkeeper for the Plan. Therefore, all transactions between the Plan and Macatawa Bank constitute party-in-interest transactions. |
| The 21,361 and 7,103 shares of Macatawa Bank Corporation common stock held by the Plan as of December 31, 2004 and 2003 represents approximately 0.24% and .08% of the Corporation’s outstanding shares as of December 31, 2004 and 2003, respectively. |
| Cash dividends of $7,618 and $1,211 were paid to the Plan by Macatawa Bank Corporation during 2004 and 2003, respectively. The Plan held the following party-in-interest investments (at fair value) as of December 31: |
| 2004 | 2003 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Macatawa Bank Corporation common stock | $ | 689,747 | $ | 201,633 | |||||||
-6-
MACATAWA BANK
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
| 4. | INCOME TAX STATUS |
| The Macatawa Bank 401(k) Plan is a prototype plan, and uses a standardized Plan document. The Internal Revenue Service has determined and informed the Plan by letter dated January 12, 2004, that the prototype plan is designed in accordance with the applicable sections of the Internal Revenue Code (IRC) for tax exempt status. The Plan Administrator believes the Plan is being operated in accordance with the terms of the Plan document and continues to qualify for tax-exempt status. |
| 5. | PLAN TERMINATION |
| Although it has not expressed any intent to do so, Macatawa Bank Corporation has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. |
| 6. | RISKS AND UNCERTAINTIES |
| The Plan provides for investment options in various mutual funds and Macatawa Bank Corporation common stock. Investment securities are exposed to various risks, such as, interest rate, market and credit risks. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statement of net assets available for benefits and participants’ individual account balances. |
* * * * *
-7-
SUPPLEMENTARY INFORMATION
MACATAWA BANK
401(k) PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2004
PLAN #001
EIN 38-3378283
| (a) | (b) Identity of Issue, Borrower, Lessor, or Similar Party |
(c) Description of Investment Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value |
(e) Current Value | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Mutual funds | |||||||||||
| Fidelity Investments | Spartan U.S. Equity Index Fund 38,729 shares | $ | 1,659,911 | ||||||||
| Fidelity Investments | Dividend Growth Fund, 44,234 shares | 1,260,238 | |||||||||
| Dodge and Cox Funds | Dodge and Cox Stock Fund, 6,629 shares | 863,171 | |||||||||
| Neuberger Berman | Neuberger Berman Genesis Fund, 26,460 shares | 789,574 | |||||||||
| Fidelity Investments | Diversified International Fund, 27,391 shares | 784,480 | |||||||||
| Columbia | Columbia Acorn Fund, 27,702 shares | 732,722 | |||||||||
| Fidelity Investments | Government Income Fund, 62,662 shares | 641,656 | |||||||||
| Fidelity Investments | Aggressive Growth Fund, 33,540 shares | 556,769 | |||||||||
| Vanguard | Vanguard Mid-Cap Index Fund, 27,149 shares | 424,608 | |||||||||
| T. Rowe Price International | T. Rowe Price PS Balanced Fund, 22,036 shares | 400,842 | |||||||||
| Value Line Mutual Funds | Value Line Income Growth Fund, 46,130 shares | 385,183 | |||||||||
| Northern Trust | Money Market Fund, 233,735 shares | 233,735 | |||||||||
| T. Rowe Price International | T. Rowe Price PS Growth Fund, 9,034 shares | 197,940 | |||||||||
| Strong | Strong Opportunity Fund, 2,853 shares | 132,366 | |||||||||
| T. Rowe Price International | T. Rowe Price PS Income Fund, 2,143 shares | 31,795 | |||||||||
| 9,094,990 | |||||||||||
| Common stock | |||||||||||
| * | Macatawa Bank Corporation | Common stock, 21,361 shares | 689,747 | ||||||||
| Cash | |||||||||||
| Dreyfus | Cash Management Fund, 11,735 shares | 11,735 | |||||||||
| Loans | |||||||||||
| * | Participant loans | Maturing through March 2007 | |||||||||
| with interest rates ranging from | |||||||||||
| 5.75% to 10.50% | 6,910 | ||||||||||
| Total | $ | 9,803,382 | |||||||||
(a) An asterisk in this column identifies a person known to be a party-in-interest.
9
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees of the Macatawa Bank Corporation 401(k) Plan have caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| MACATAWA BANK 401(K) PLAN By: /s/ Thomas DeWitt —————————————— Thomas DeWitt |
Date: June 17, 2005
EXHIBIT INDEX
| Exhibit No. | Description |
| 23.1 | Consent of Independent Registered Public Accounting Firm |