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Macatawa Revises 2006 Results
HOLLAND — Macatawa Bank Corp. has issued revised results for the fourth quarter and fiscal year 2006 to reflect an additional loan loss provision of $4.7 million due to $5.2 million in outstanding commercial loans to one borrower.
The bank indicated there was reason to believe that the borrower won’t be able to meet the repayment terms of the loans. According to Macatawa, the loans have been secured by collateral, but the collateral may not be of a sufficient value to cover the outstanding principal on the loans.
The impairment was discovered over the past week through internal investigations relating to the collateral and the borrower relationship. The investigation “suggested the borrower may have made misrepresentations” to the bank regarding the loan collateral and its financial condition.
“The realization that this appears to be an intentional effort to defraud the bank is very distressing to all of us,” said Benjamin Smith III, chairman and CEO. “As part of our internal investigation, we have begun a review of our loan policies and procedures. As a management team, we pledge that these procedures will be tightened to prevent a recurrence.”
The after-tax impact on net income is expected to be approximately $3.1 million, or 18 cents per share. As a result of the additional provision, net income for the fourth quarter and full year 2006 is $2.8 million and $19.8 million, respectively, rather than the $5.9 million and $22.9 million previously disclosed in January. Net income for the quarter and full year is 17 cents and $1.20, respectively, instead of the 36 cents and $1.38 reported earlier in this year.