Macatawa Bank Corp. reported lower earnings for the second quarter after raising a reserve to cover potential future loan losses.
The Holland-based Macatawa Bank (Nasdaq: MCBC) reported Thursday quarterly net income of $7.6 million, or 22 cents per diluted share. That’s down 5 percent from the $8.0 million, or 24 cents per diluted share, in the second quarter of 2019.
The bank attributed the year-to-year earnings decline to a $1 million loan-loss provision in the second quarter, versus a negative $200,000 a year earlier.
“We will continue to experience challenges relating to the impact of COVID-19 on our customers and our business,” President and CEO Ron Haan said. “Our capital levels significantly exceed regulatory requirements, and our strong balance sheet should ensure the strength and stability to weather these difficult times.”
Macatawa did record a single loan charge off of $4.1 million during the quarter that involved the bankruptcy of a movie theater. While Macatawa did not name the theater chain in its earnings release, Goodrich Quality Theaters Inc. in bankruptcy proceedings listed a loan with the bank that it had defaulted on.
Goodrich last week sold a majority of assets to a partnership of Mason Asset Management and Namdar Realty Group, both based in Great Neck, N.Y., for $12 million, as MiBiz previously reported.
The bank said the COVID-19 pandemic “significantly impacted the level of bids on the borrower’s properties.”
“This was our only borrower in that particular industry, so we believe this to be an isolated loss incident,” Haan said.
Midway through 2020, Macatawa Bank had $14.0 million in net income, or 41 cents per diluted share, which compares with $15.6 million, or 46 cents per diluted share, in the first six months of 2019.