Macatawa Sets Record

January 22, 2007
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HOLLAND — Despite the slow West Michigan economy and a difficult interest rate environment, Macatawa Bank Corp. reported a 10 percent increase in net income for fiscal 2006. Net income hit a record $22.89 million, or $1.38 per diluted share, compared with 2005 net income of $20.89 million, or $1.27 per diluted share.

Net income for the fourth quarter of 2006 was $5.9 million, or 36 cents per diluted share, versus net income of $5.54 million, or 34 cents per diluted share, for 2005's fourth quarter. Chairman and CEO Ben Smith said the company's progress at growing other revenue sources and disciplined expense controls were "important accomplishments" in the fourth quarter.

CFO Jon Swets said 2006 was all around a good year despite the shape of the yield curve and local market conditions.

"We've had very strong success last year in bringing in new relationships," Swets pointed out. "In fact, in 2006 we brought in nearly $700,000 in new annualized fee income out of the trust (and investment services) area, so we are building some good momentum in the trust area."

He underscored the fact that Smith & Associates was successfully integrated into the bank's trust department on Jan. 1 and that the staff that transferred to the bank was able to retain 100 percent of its customers.

Rick Wierenga, senior vice president of the commercial loans department, noted that delinquencies are up as the region continues to struggle with a lackluster economy. He said Macatawa experienced a dramatic increase in nonperforming assets from the end of the third quarter to the end of the fourth quarter, and that it was driven primarily by one large commercial account consisting of loans with a balance of approximately $15.2 million, which came due in September.

"We do feel we've come to a resolution with this, but because of the size and complexity, it will take a little longer to close on this relationship."

Total loans increased $168 million, or 11 percent, and total deposits increased $160 million, or 11 percent, for the year. Assets increased $210 million to $2.08 billion at year's end.

Swets noted that Macatawa will open two new offices in Grand Rapids this year. The bank will open a branch at

Burton Street
and
Breton Road
in the first quarter and a branch on
28th Street SE
near
Cascade Road
, which will open in the second quarter.

"Big picture? We're relatively happy with our performance in 2006, and while we see a challenging 2007, we also see a lot of opportunities. Our bank has an excellent reputation, an excellent team, and we're very focused on meeting our goals in 2007."    

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