Need quick finance? Try Payday loans Less paperwork, fast moneyHOLLAND TOWNSHIP -- Macatawa Bank Corp. saw its profits plunge during the third quarter as it continues being hampered by the state's economic woes, problem loans and tightening margins.
The Holland Township-based bank on Monday reported net income of $1.9 million, or 11 cents per share. That was down 24 percent from the $2.5 million, or 14 cents per share, it earned in the third quarter of 2007.
"Since the prior quarter, a lot has changed," Chairman Ben Smith said in a statement.
"The national and world economies and the financial and credit markets have come under extreme stress."
On Sept. 29, the bank suspended its dividend and revised its second-quarter earnings from a $2.2 million profit to an $8.1 million loss.
The change reflected a $15 million increase in loan loss provisions and losses on foreclosed properties.
Macatawa also announced plans to raise $30 million to $50 million in capital through a private offering.
While the company has avoided problems associated with subprime mortgages and Fannie Mae and Freddie Mac, "we are, however, not immune to the impact of these trying times," Smith said.
The bulk of the company's problem loans are concentrated in residential housing projects that stalled after initial investments were made.
Falling property values and slow sales across the region have exacerbated the problem.
Net interest income, primarily derived from the firm's loan portfolio, declined by $1 million from the third quarter of 2007 to $14.8 million in the quarter ended Sept. 30.
A higher balance of non-performing loans was the biggest reason for the decline in interest margins.
Nonperforming loans increased $7.6 million to $86.4 million during the quarter, representing 4.9 percent of the commercial loan portfolio.
Macatawa stock closed at $5.73, down 9 cents, on the Nasdaq on Monday.
The stock has traded between $3.90 and $14.49 over the past 52 weeks.
Source:http://www.mlive.com/grpress/business