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Sunday, 04 August 2013 22:00

Local banks grow lending, shed foreclosed real estate

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Banks based in West Michigan reported further operating improvements for the second quarter, with higher earnings and solid growth in lending.

Grand Rapids-based Mercantile Bank Corp., for instance, said it originated $76 million in new loans during the period. $58 million of that amount went to new borrowers and $18 million was for existing clients.
Mercantile Bank expects the strength in new loan originations to continue through 2013.

The bank’s lending pipeline “still stands at a very, very healthy number that we’re very encouraged to see as it relates to the rest of the year,” President and COO Robert Kaminski said. “So again, with all the funding, we still stand with a very healthy pipeline.”

Driving loan originations has been growth in Mercantile Bank’s local market share, plus “there are some new projects that are on the drawing board and are getting going with some existing clients and some new client opportunities that (are) encouraging from an overall economic marketplace standpoint,” Kaminski said.

Overall, and despite the new loan originations, Mercantile Bank’s total commercial loans dipped slightly to $985.6 million from $987.4 million. Commercial and industrial loans inched up to $279.3 million from $277.4 million.

Mercantile Bank reported net income for the second quarter of $4.0 million, or 46 cents per share. That compares with net income of $3.3 million, or 36 cents per share, for the second quarter of 2012.

“Despite economic and regulatory headwinds that continue to face our industry and the economy, we continue to believe (that) we are very well positioned to succeed as a strong community bank and to take advantage of lending and market opportunities as they may arise,” CFO Charles Christmas said.

At Chemical Financial Corp., strong loan growth is credited with driving quarterly earnings higher.

The Midland-based Chemical Financial’s total loans increased 9.4 percent to $4.33 billion from a year earlier. Commercial loans grew 19 percent to $1.09 billion at the end of the second quarter and commercial real estate loans, an area that has been slow for many banks since the recession, showed growth as well, increasing 4.4 percent to $1.17 billion.

As with Mercantile Bank, Chemical Financial attributed the loan growth to “a combination of improving economic conditions and increased market share.”

Chemical Financial for the quarter reported net income of $14.2 million, or 51 cents per share, which compares with $13.2 million, or 48 cents per share, in the same period a year earlier.

Holland-based Macatawa Bank improved operations as well, although net income declined for the quarter because the bank at the end of 2012 reversed a deferred tax credit.

Macatawa Bank reported net income of $2.6 million, or 10 cents per diluted share, for the second quarter. That compares with net income of $3.2 million, or 12 cents per diluted share, in the same period a year ago. Macatawa’s quarterly pre-tax earnings grew to $3.7 million from $3.1 million and were helped by a 30-percent reduction in non-performing assets from a year earlier and a reduced loan-loss provision.

“Considering these items, the second quarter of 2013 shows a strong improvement over the second quarter 2012 results,” Chairman Richard Postma said in a news release.

Total commercial loans for Macatawa Bank were down about 4 percent from year earlier to $722.4 million, although the commercial and industrial lending category increased 9.5 percent from the second quarter of 2012 to $242.7 million.

As with other banks, Macatawa also reported a further reduction in what’s known as OREO, or “other real estate owned,” which is real estate acquired through repossession or foreclosure. Macatawa Bank’s OREO declined to $45.8 million at the end of the second quarter from $51.6 million in the prior three months and $62.0 million at the end of the second quarter of 2012.

Banks saw their OREO balloon during the recession. An improved economy and improving real estate market enabled banks over the last year to begin selling off those holdings.

Mercantile Bank reported OREO of $3.9 million at the end of the second quarter, versus $6.9 million six months earlier and $11.5 million in the second quarter of 2012.

Ionia-based Independent Bank Corp. lowered its OREO at the end of the second quarter to $17.7 million from $26.1 million at the end of 2012.

Independent Bank’s commercial loans were flat year-to-year, at $617.0 million.

Net income, boosted by a $56.4 million tax benefit, totalled $63.8 million for the second quarter, compared to $4.3 million a year earlier. Excluding the tax benefit, Independent Bank’s operating income was $6.8 million.

In reporting quarterly results, Independent Bank also said it plans to repay by this fall the money it received in 2009 under the U.S. Department of Treasury’s Troubled Asset Relief Program, or TARP.

Independent Bank said it has an agreement to purchase $81.0 million in securities from the Treasury Department that includes 74,426 shares of preferred stock and up to 346,154 shares of common stock. The corporation also agreed to a common equity offering that provides a minimum of $86.0 million in gross cash proceeds.

Read 48309 times Last modified on Sunday, 04 August 2013 14:09

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