HOLLAND — Macatawa Bank Corp. achieved a record $20.89 million in net income for 2005, an increase of 64 percent over net income of $12.78 million posted in 2004. Earnings per diluted share were $2 for the full year.
The company pointed out that 2004’s annual results reflected a $2.3 million charge to earnings related to a commercial borrower. Had it not been for that loss, 2005 earnings would have shown a 46 percent increase over the year before, rather than a 64 percent increase.
Net income from the fourth quarter of 2005 was $5.54 million, up 25 percent from net income of $4.45 million for fourth quarter 2004. Earnings per share for the quarter were 53 cents compared with 43 cents for the prior year’s fourth quarter.
Total loans for the quarter were up $36.4 million and total deposits were up $50.3 million. For the year, total loans increased $151.5 million to $1.55 billion, and total deposits increased $156.3 million to $1.52 billion. The bank indicated that the deposit growth was led by a 27 percent increase in non-interest checking accounts.
Total assets, which were up $45.5 million in the quarter and up $200 million for the year, totaled $1.87 billion by year’s end. CFO Jon Swets said most of the growth in assets for the quarter came through loan growth, nearly all of which was in commercial loans.
Swets said both the company’s quarterly and annual increases were due to expanded service offerings and better penetration with existing service offerings.
Chairman and CEO Ben Smith said 2005 was an “exceptional” year for Macatawa.
“We’re extremely pleased with the profitability increases we’ve made. Our return on equity now exceeds 15 percent, and we earned over $20 million for the first time ever. We’ve increased our lead as the No. 1 bank in Ottawa County, and we think everything is running on all four cylinders at this time.”
Swets said Macatawa increased its deposit market share lead in Ottawa County last year, moving up from a market share of 21 percent to nearly 26 percent. In terms of market share, the bank also made good progress in Kent County, he said.
“We now stand in fifth place in Kent County behind really only the super regionals and the large banks — Fifth Third, JP Morgan, Huntington, LaSalle — when considering true in-market deposits, excluding brokered deposits.”
Swets further noted that Macatawa’s marketing efforts in the deposit area have really helped the bank’s growth and said those efforts are building momentum moving into fiscal 2006. The marketing efforts, he explained, focus on meeting and exceeding the needs of existing customers and continued pursuit of increased market share.
President and CEO Philip Koning said the bank committed a year ago to improve its profitability.
“2006 will be a year we continue to lay the groundwork for a larger and stronger organization,” Koning said. He said Macatawa intends to add three new offices this year in the Grand Rapids area, one of which is under construction. With the three new bank branches, as well as the banking office it opened on the north side of Grand Rapids last year, Macatawa will have a total of 13 offices in the Grand Rapids market.
“One area we are also exploring is free-standing ATMs to fill in between full-service branch locations,” Koning said. “In a recent marketing study, 35 percent of our customers mentioned ATMs as their most often used method of accessing the bank. Expanding our ATM locations will give us both increased exposure and more convenience for our customers in the Grand Rapids market.
“We intend to leverage our reputation, increased exposure and expanding branch system to achieve our goal of becoming the dominant bank in West Michigan.”
Koning said the bank also plans to introduce expanded and upgraded product offerings this year.