Shares of Macatawa Bank Corp. plunged in heavy trading Wednesday after the Holland, Mich., company disclosed that more than one-third of its residential land development loans have been classified "impaired."
The $2.1 billion-asset company announced late Tuesday that it would increase its loan-loss provision in the fourth quarter by $9.5 million to address risks in its loan portfolio and that, as a result, third-quarter earnings would be trimmed by about $6.2 million, or 36 cents a share.
The added provision is likely to wipe out profits this quarter. By late Wednesday, the shares had fallen 18% from Tuesday's closing price, to $8. They have fallen roughly 60% so far this year. Macatawa said that $44 million of its $120 million in land development loans is impaired. Macatawa said it remains well-capitalized under federal regulatory capital requirements.
