Macatawa Bank Corp. in Holland, Mich., said its banking subsidiary has entered into a formal agreement with regulators that requires higher-than-typical capital ratios and orders the bank to clean up its asset portfolio.

The $1.8 billion-asset Macatawa said the Feb. 22 agreement with the Federal Deposit Insurance Corp. and the Michigan Office of Financial and Insurance Regulation requires an 8% leverage ratio and an 11% total risk-based capital ratio. The bank is also required to charge off all classified assets identified in its last exam by the Federal Deposit Insurance Corp.

The order prohibits the bank from extending credit to customers who have had loans that resulted in chargeoffs or losses for the bank. It also requires permission from regulators before dividends can be paid.

At Dec. 31, Macatawa's subsidiary bank reported a total risk-based capital ratio of 9.06%, a Tier 1 risk-based capital ratio of 7.79% and a leverage ratio of 6.57%.

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