Macatawa Seems On A Fast Track

August 2, 2004
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HOLLAND — Macatawa Bank Corp. is on track for a record year with improved earnings and strong year-to-year gains in assets, loans and deposits.

In the most recent quarter, the Holland-based Macatawa Bank surpassed a milestone of $1.5 billion in assets while recording a 14 percent gain in net income en route to its most profitable quarter ever.

“The year is shaking out pretty much as we anticipated,” Macatawa Bank Chairman and CEO Ben Smith told brokerage analysts recently during a conference call to discuss second quarter results. “We’re very pleased with where we’re at.”

Macatawa reported net income of $3.3 million, or 38 cents per share, for the quarter that ended June 30. That compares with net income of $2.9 million, or 33 cents per share, for the same period a year earlier.

The company attributed the improved earnings largely to strong growth in net interest income, which grew 22 percent to $12.6 million during the quarter over the same period a year earlier.

The second quarter financial results exceeded the expectations of brokerage analysts who expected Macatawa Bank to report net income of 35 cents per share, according to analysts polled by First Call/Thomson Financial.

Macatawa Bank has made higher profitability a top priority for the year and expects the progress made in the second quarter to continue. The 6-year-old bank presently has 21 branches in Ottawa, Kent and Allegan counties and is planning to open its 22nd office, at 68th Street and Kalamazoo Avenue in Kent County’s Gaines Township, this September.

“As our branch network matures, our focus on enhancing cross-sell opportunities will ultimately allow us to improve the profitability of our customer relationships. With continued growth prospects, an improving economy and a rising interest rate environment, we feel we are well-positioned for improved profitability in the future,” Smith said.

Analysts expect the bank to report improved earnings of 37 cents per share for the present third quarter, according to First Call/Thomson Financial.

Macatawa Bank’s mid-year net income totaled $6.2 million, or 71 cents per share, up 8.1 percent from the $5.7 million, or 65 cents per share, recorded during the first six months of 2003.

Total assets as of June 30 were $1.52 billion, up 21.3 percent from a year earlier, and total deposits from mid-year 2003 grew 18 percent to $1.51 billion.

Deposits within Macatawa’s Kent County branches are up about 50 percent from a year ago, bank President Phil Koning said. Deposits in the better-established Ottawa County market are growing at a rate in the teens, Koning said.

Total loans grew 24 percent, or by $250 million, to $1.28 billion from year-ago levels and sequentially by 5.2 percent, or by $64.2 million, from the previous first quarter.

The second quarter marked the third straight period that Macatawa Bank has grown loans by at least $60 million, Chief Financial Officer Jan Swets said. Loans are in an annualized pace to grow 21 percent this year.

Loan growth has been “pretty evenly split” between Macatawa Bank’s existing clientele and new market share, said Ray Tooker, senior vice president of lending administration.

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