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Macatawa Growth Strong, Profit Off
HOLLAND — Macatawa Bank Corp. would have posted a record quarterly profit had it not been for a large charge taken for impaired loans to a commercial borrower.
Macatawa Bank on Monday afternoon reported net income of $2.12 million, or 24 cents per share, for the third quarter that ended Sept. 30. The quarter included a charge against earnings of $2.3 million, or 17 cents per share, for the impaired loans that totaled $5.9 billion to the one borrower.
Without the charge, Macatawa Bank would have posted record net income of 41 cents per share, exceeding the previous record of 34 cents per share in the second quarter of 2004.
Commenting on the report, Ben Smith, chairman and CEO said, “While we are disappointed with this loan loss, we remain confident in our business model and we continue to experience great success in both our growth and core earnings performance.”
Macatawa Bank’s core deposits and loans grew by record rates during the quarter.
Core deposits increased $164 million in the July-to-September period. Loans were up $72.5 million to $1.36 billion, for an annualized growth rate of 23 percent.
The addition to the loan loss provision stemming from the impaired loan pushed Macatawa Bank’s non-performing loans, as a percentage of total loans, to 0.56 percent, which compares to 0.2 percent a year earlier.
“Despite the impact of this unusual commercial loan situation, our asset quality remains solid. We remain confident in the strength of our credit culture and our ability to maintain high asset quality in the future,” Smith said.
Macatawa Bank told investors Oct 8, in a securities filing with federal regulators, of the charge and the effect on quarterly net income. In the filing, Macatawa Bank stated the borrower had misrepresented its financial condition when applying for the loan and in subsequent financial reports.
Through the first nine months of the year, Macatawa Bank reported net income of $8.33 million, or 93 cents per share, which compares with $8.81 million, or 99 cents per share.