MCBC - Macatawa Bank: Loan Dip Asset Sensitivity Likely To Hurt Earnings
Macatawa Bank Corporation's (MCBC) balance sheet positioning makes the average yield more responsive than the average cost to interest rate movement. As a result, the net interest margin will face substantial pressure following the recent federal funds rate cuts. The margin compression will be the major contributor to an earnings decline this year. Furthermore, loans are likely to fall again this year, which will exacerbate the pressure on earnings. Consequently, I'm expecting net income to plunge by 14% year-over-year in 2020. The December 2020 target price suggests a high upside from the current market price.