Macatawa records huge net loss
HOLLAND — Macatawa Bank Corp. reported a non-cash, after-tax impairment charge for goodwill and intangible assets of $27 million for the fourth quarter. The impairment charge, the company noted, does not impact its tangible equity or regulatory capital ratios and does not affect its liquidity position.
The impairment charge led to a net loss of $35.1 million, or $2.11 per share, for the fourth quarter, compared with a net loss of $2.6 million, or 15 cents per share, for the same period in 2007. For the full year, Macatawa incurred a net loss of $38.9 million, or $2.34 per share, compared with net income of $9.3 million for 2007.
The company indicated that quarterly results were also impacted by additional loan loss provisions of $14 million and expenses and lost interest associated with non-performing assets of approximately $4.9 million.
“We have found ourselves in a situation shared by many other financial institutions across the country,” said Chairman and CEO Ben Smith. “Continued deterioration in the economy and stock market, especially among financial institutions’ stocks, have necessitated that we take these cash and non-cash charges during the quarter.”
Smith said that while financial results for the quarter were disappointing, Macatawa’s management team has worked to strengthen the company’s capital position, improve asset quality and liquidity, reduce core expenses and improve operating efficiencies.
Initiatives to improve Macatawa’s financial condition during 2008 included:
- Completed a preferred stock offering totaling $31.3 million.
- Temporarily suspended the cash dividend on common stock.
- Improved liquidity in the fourth quarter by growing the investment security portfolio, building short-term investments and increasing borrowing capacity.
- Increased the allowance for loan losses $5 million during the quarter to 2.16 percent of total loans.
- Executed expense reduction initiatives estimated to save over $6 million annually.
Total assets were $2.15 billion at Dec. 31, 2008, an increase of $21.7 million over assets at year end 2007. Total loans increased $23.4 million since Dec. 31, 2007 to $1.77 billion at Dec. 31, 2008.