rss icon

Monday, 28 May 2012 18:38

Macatawa Bank not for sale, chairman says

Written by 
Rate this item
(0 votes)
HOLLAND — After improving profitability during 2011 and in the first quarter of 2012, Macatawa Bank Corp. is in far better shape financially and positioned to eventually begin growing again in the future. 

And just in case anybody is wondering — the Holland-based Macatawa Bank has no interest in being anything other than an independent, community bank.

"The bank is not for sale," Chairman Richard Postma told shareholders during Macatawa Bank's recent annual meeting.

"We're happy to be a community bank. We believe in this model. We believe that communities should have strong community banks and we intend to keep it so," Postma said. "We are not positioning this bank for anything other than being a strong community bank, and that's where we are. We want to grow this bank. We want to grow shareholder value. We will look at opportunities as they arise, but we fully intend to stay a community bank."

Postma's remarks came as he presided over his third shareholder meeting where he detailed Macatawa's improved performance that follows deep annual losses that resulted from soaring loan losses during the recession.

Macatawa Bank recorded net income of $5.8 million for 2011, the first full year of profitability following combined losses of $124.0 million from 2008 to 2010. The year compares with a $17.8 million net loss in 2010, all of which came in the first quarter. Macatawa returned to profitability in the second quarter of 2010.

The bank followed up the full-year results in 2011 with $4.8 million in net income for the first quarter, or 17 cents per diluted share.

The results since 2010's second quarter has Macatawa "on the right track" and back to a strong position financially, although the bank needs to further improve its balance sheet, Postma said.

"We are profitable but we must improve," he said.

What Postma called "a number of good things" occurred in 2011 for Macatawa. They include raising $23.0 million in a stock offering and an improved operating performance. He also noted the cancelation this past March of a 2010 consent order with federal and state regulators to improve operations, which will generate $1.2 million in annualized savings on an FDIC insurance assessment.

Reductions in loan charge-offs, non-performing loans and non-performing assets drove the improved performance.

Non-performing loans, after peaking at $102.5 million in the first quarter of 2010, totaled $23.5 million as of March 31, 2012. Non-performing assets totaled $89.7 million at the end of the first quarter, compared to $148.4 million two years earlier.

As non-performing assets further decline and eventually get to an acceptable level, the corresponding expense should "go away almost completely," said CFO Jan Swets. NPA expenses totaled $15.5 million in all of 2011 and $3.1 million in the first quarter of 2012.

The bank actually recorded a $1.9 million net recovery in first-quarter loan charge-offs, which peaked at $58.0 million in 2009, then declined to $29.7 million in 2010 and $11.1 million for 2011, Swets said.

The bank's asset base also stabilized during 2011, Swets said. Assets ended the first quarter at $1.50 billion, which is virtually unchanged from the prior quarter and compares to $1.55 billion a year ago. Prior to the recession, Macatawa Bank had assets of about $2.1 billion.

Macatawa Bank today is "very diligent" about how it approaches lending decisions, Postma said.

"Where in the past we might have taken a certain risk, those risks are no longer taken," he said.

Despite the improved performance, Postma told shareholders not to expect a return of dividends in 2012. The corporation in unable to resume paying dividends, although "there's going to be a time when we can," he said.

Macatawa Bank remains focused on its three core markets of Kent, Ottawa and Allegan counties. It views Kent County as the market with the most growth potential, said Jill Walcott, a senior vice president and senior retail banking officer.

In the last few years, marketing staff "have spent a lot of our efforts on retaining the clients that we had," Walcott said. Now that the bank is in a stronger position, it's beginning to put more emphasis on "not only keeping our good customers, but also acquiring new customers," she said.

Read 2041 times Last modified on Wednesday, 22 August 2012 14:11

Breaking News

September 2018
S M T W T F S
26 27 28 29 30 31 1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 1 2 3 4 5 6

Follow MiBiz