The goal for the six-year-old bank is to become the No. 1 bank in terms of market share.
“We want to be the dominant financial services provider in West Michigan,” Chief Financial Officer Jon Swets told shareholders recently at Macatawa Bank’s annual meeting. “We know that’s a lofty goal, but that’s where we’re focused.”
The annual meeting came two days after the Holland-based Macatawa Bank reported a small earnings increase and double-digit gains in assets, deposits and loans during the first three months of the year.
The corporation’s net income for the first quarter totaled $2.86 million, or 34 cents per share, up nearly 2 percent from the $2.81 million, or 34 cents per share, in the first quarter of 2003.
Net income growth was held down by low interest rates and the opening of four fully-staffed offices in the last six months: in Grand Haven and Walker, on Holland’s north side and at East Beltline Avenue and Knapp Street in Grand Rapids Township.
Profitability should improve as interest rates begin moving upward and the new offices add business and become more efficient, Swets said.
Macatawa Bank’s total assets grew 20 percent from year-ago levels, from $1.2 billion to $1.45 billion, and total deposits increased nearly 15 percent, from $965.5 million to $1.1 billion. Macatawa, with 21 bank branches in Ottawa, Kent and northern Allegan counties, opened more than 5,000 new checking accounts in the first quarter, more than double that of a year ago.
As those new accounts develop into fuller relationships, they will further contribute to deposit growth “at the heart” of Macatawa Bank’s growth strategy, Swets said.
“They represent relationships and relationships represent growth opportunities,” he said.
For 2004, Macatawa Bank plans to open an additional Kent County office at 68th Street and Kalamazoo Avenue in Gaines Township during the third quarter and an office in Rockford in 2005, said Jill Walcott, senior vice president of branch administration.
As of June 30 last year, Macatawa Bank was the No. 2 bank in Ottawa County in terms of deposits, holding a 20.95 percent market share with $664.2 million in deposits at 12 offices, according to the most recent market share data from the FDIC. That was second only to Fifth Third Bank’s 24.18 percent share through 16 offices that held a collective $766.4 million in deposits.
In Kent County, Macatawa Bank as of June 30 held a 2.81 percent share, eighth largest in the market, with $259.6 million in deposits at five offices. The bank’s base in Kent County has since grown more than 50 percent to $394 million, Walcott said.
“This is a market that represents tremendous potential,” she said.
After opening the new offices that are now planned, Macatawa Bank will slow down branch development and has begun to put more emphasis on increasing market share and profitability, Chairman and CEO Ben Smith said.
“We’ll likely (develop branches) on a much more gradual basis,” Smith told shareholders. “Now what we want to do is turn up the focus on our level of profitability.”
Macatawa Bank’s total loans as of March 31 were up more than 20 percent, from $1.01 billion to $1.22 billion, from the same period a year ago. Loans grew by $63 million alone in the first quarter from the fourth quarter of 2003, for an annualized growth rate of 23 percent.
Given the growth experienced since Macatawa Bank opened its first branch in November 1997 in downtown Zeeland, Smith believes the corporation can continue to post similar asset and deposit increases well into the future. He pointed out that strong growth in recent years has occurred during a difficult economy.
“With that, I’ve got to believe it has legs to it, so it’s going to continue for a few years,” Smith said.
The growth has pushed Macatawa Bank’s shares steadily upward over the years. A $100 investment in the bank when it was founded in 1997 is now worth $367, a return on investment of 276 percent that was driven by a rising share price and annual stock dividends awarded in recent years.
Smith announced at the annual meeting that Macatawa Bank directors recently approved another 5 percent stock dividend for shareholders.