Chemical Financial Corp. in Midland, Mich., already intending to write off a $10.5 million loan it deemed fraudulent, says it expects to take an additional $5 million charge on loans that are not being paid back.
As a result, the $3.7 billion-asset Chemical said Friday that it expects to report a loss of 4 to 6 cents a share when it releases its third-quarter earnings this month. Chemical earned $9.6 million, or 40 cents a share, in the second quarter.
The company disclosed its intention to charge off the $10.5 million loan early last month. The loan was made to a single, longtime client that Chemical said "made inaccurate, misleading, and potentially illegal representations about its financial condition."
On Friday it attributed the $5 million charge to weakening economic conditions nationwide and in Michigan, which has been hit especially hard in recent years by the loss of manufacturing jobs.
Chemical also said it expects to add $22 million to its loan-loss provisions to account for possible further credit deterioration.