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Friday, 01 February 2013 05:34

Macatawa Bank grew loans and deposits, shed consent agreement in 2012

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HOLLAND — Macatawa Bank Corp. ended 2012 doing something it hadn’t done for some time: growing loans and deposits.

The Holland-based Macatawa Bank late Thursday reported improved earnings for the fourth quarter that included the first lending growth since 2008.

In what Chairman Richard Postma called a “significant development,” Macatawa Bank grew total loans by $33.2 million in the fourth quarter to $1.05 billion. Commercial lending grew by $28.4 million to $762.6 million.

Deposits grew as well for the third straight quarter to $1.28 billion and the bank during the quarter saw the termination of a consent agreement with the Federal Reserve Bank enacted a few years ago to improve operations. The order came as Macatawa suffered deep quarterly losses during the recession that significantly drove up loan losses, resulting in the increased regulatory scrutiny.

“We believe that the growth we are experiencing in loans and deposits and the termination of our consent order and written agreement during 2012 are a reflection of increased confidence in the company and its performance by our customers, the marketplace, and our regulators,” Postma said in a statement.

Macatawa Bank recorded net income of $21.2 million for the quarter, which compares to $1.1 million a year earlier. That growth was substantially aided by an $18.9 million reversal of a deferred tax asset valuation. Minus the reversal, net income was $2.4 million.

For the full year, net income totaled $35.5 million, versus net income of $5.8 million in 2011. Minus the reversal of the deferred tax asset valuation, full-year net income was $16.9 million.

Macatawa’s results reflect a general improvement in the performance of Michigan-based banks during 2012.

Through September, 95 percent of the 104 FDIC-insured banks based in the state were operating at a profit, according to data presented Thursday by the Michigan Office of Financial and Insurance Services to the Senate Banking Committee. That compares to 83 percent at the end of 2011 and a low of 56.1 percent in 2009.

The return on assets and return on equity of Michigan-based banks continued to improve in 2012 after turning upward in 2011, according to OFIR.

“We’ve definitely seen a trend in improvement,” Karen Lawson, head of OFIR’s Bank and Trust Division, said during testimony to the Senate Banking Committee. “Generally speaking, we do expect the health of the industry … to continue to improve.”

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