As larger financial institutions struggle with fancy financial instruments and rescue packages, there are many smaller banks in the US that continue to loan and make money as they can. The local bank, where the loan officer actually remembers your name, is doing well and looking to capitalize when and where it can. As with any business in difficult financial times, there are losses to be had, but these types of banks have stepped up to lessen them.
Macatawa Bank Corp., a Michigan Chartered Bank, operates 26 FDIC insured retail branch offices throughout western Michigan. The company has been experiencing solid growth and expects to open additional retail outlets in its Grand Rapids and Zeeland/Grand Haven markets as conditions warrant.
In most respects, Macatawa Bank is the local bank that a community can depend upon for all its banking needs. It was there for a consumer’s first home or business loan and will most likely be there for the same customers children’s first home or business loan. The company is very much rooted in its community and manages its assets as such. Fancy investment vehicles are fine for other banks, but not this one. This is not to suggest that the company does not keep up with the financial times, but if it feels the product is unnecessary or too costly.
Macatawa takes full advantage where it feels prudent for the value of its customers and shareholders. It does not, however, feel that Fannie Mae, Freddie Mac or some of the other investment vehicles that got the world into its current state are of any use to its mission. The company has NO exposure to current problem financial vehicle issues. As a result of this methodology, the company is in solid shape past the expected mortgage issues one might see from a souring economy in general.
Although it might be a bit higher, the company is considered well capitalized by the Fed at 10.2%. In recent weeks, the company has worked to increase this level by raising $26.2 million in preferred stock to bolster liquidity and lending potential. The capital raised, however, was not generally needed but rather a sign that this particular bank takes its role in the community very seriously and will not expose itself to any undue risk.
Macatawa’s loan losses were up slightly to 4.9% of total loans, but well balanced with solid residential land development collateral that has been conservatively valued in times where valuations are difficult to determine. Dividends are a staple for Macatawa Bank when appropriate and offer investors a stable and safe way to invest in the financial markets. The rates of return for the bank’s recent offering were solid and in-line with the bank’s general management philosophy. If an investor is interested in a conservative bank where standing up straight and not having any creases is important, Macatawa Bank Corp. is a good opportunity.
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