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Macatawa’s Earnings Jump Sharply
HOLLAND — Improved margins enabled Macatawa Bank Corp. to double earnings during the third quarter, despite a tough economic environment and record-low interest rates.
The Holland-based Macatawa Bank last week reported quarterly earnings of $2.73 million, up 102 percent from the $1.35 million in the same period a year earlier. Earnings per diluted share rose from 24 cents to 34 cents, beating by 2 cents estimates of brokerage analysts who follow the company.
Year-to-date, Macatawa’s net income totaled $6.59 million, or 91 cents per diluted share, up 82 percent from the $3.64 million, or 80 cents per share, through the first nine months of 2001.
The corporation entered the fourth quarter anticipating it will meet or exceed financial goals for 2002, even with an economy “that’s a lot tougher environment than we’ve seen in past recessions” and a highly competitive market that’s driven by low lending rates, Chairman and Chief Executive Officer Ben Smith III said.
“So far, the numbers have come in pretty much as expected or better,” Smith said during an Oct. 15 conference call with analysts to discuss the third quarter results. “I still believe we’ll be able to produce what we expected to do.”
While Macatawa does not offer earnings guidance, analysts anticipate the corporation will earn 36 cents per share in the fourth quarter. If it does, that would bring 2002 earnings to $1.28 per share.
Helping to improve both interest and non-interest margins, and in the process significantly boosting earnings, was a repositioning of certain assets and liabilities, Chief Financial Officer Jan Swets said. Non-interest income was up 124 percent over the previous year, with much of the improvement coming through the sale of mortgage loans and revenues from trust services.
Total assets, deposits and loans all grew from the previous quarter. The biggest gain was in loans, which increased 3.5 percent during the period from $892.4 million to $924.3 million.
Ray Tooker, Macatawa’s senior vice president for loan administration, anticipates lending growth to continue at a similar rate through the fourth quarter and into 2003. Macatawa traditionally has enjoyed 15 percent to 18 percent annual increases in lending volumes and Tooker believes 2003 will bring the same kind of growth.
“I see no reason why, even though there is some clouds yet on the economy, that isn’t realistic for next year,” he said.
About 20 percent of the increased lending volumes stem from new customers, Tooker said.
“That’s kind of what we see week in and week out,” he said.
Macatawa Bank, fresh off its acquisition of Grand Bank last April, plans to continue expanding its branch network with the opening this month of a new office in eastern Kent County and three more offices in Holland and Grand Rapids within the next two years. The bank presently has 15 offices in West Michigan.
The bank plans to change the name of Grand Bank to Macatawa Bank in order to have a common brand identity for all offices.