HOLLAND – Macatawa Bank Corp. announced a decline in its profits for the second quarter of 2020.
On Thursday, July 23, the company reported net income of $ 7.6 million, up from $ 8 million in the second quarter of 2019.
Despite the drop in profits, company executives remain positive about quarterly results.
“We are delighted to report strong profitability for the second quarter of 2020,” President and CEO Ronald L. Haan said in a statement. “The COVID-19 pandemic has had a significant impact on our community, but [we] have proven to be resilient and consistent in meeting the financial needs of our clients and our community.
Macatawa Bank announced in April that it had received approval from the Small Business Administration to fund government-guaranteed loans to businesses in western Michigan.
During the second quarter, the bank made 1,635 loans under the Paycheck Protection Program – which is part of the CARES Act – for a total of $ 336 million.
“The loans have been distributed to many local small businesses in order to protect jobs and allow employees of these businesses to continue paying their wages,” Haan said.
Haan also noted a substantial increase in mortgage applications.
“Mortgage earnings in the second quarter of 2020 were three times higher than a year ago,” he said. “[It] more than made up for the reduction in net interest income caused by the significant drop in market interest rates in 2020. ”
Haan added that the main cause of the reduction in net income was an increase in the allowance for loan losses. The company suffered a $ 4.1 million write-down in the second quarter on a single loan relationship.
“This was a compulsory liquidation, and the COVID-19 environment had a significant impact on the level of offers on the borrower’s properties, which were primarily theaters,” Haan said. “He was our only borrower in this particular industry, so we think this is an isolated loss incident.”