A lower federal corporate tax rate contributed to higher earnings for West Michigan community banks that reported quarterly results this week.
Passed by Congress and signed into law by President Trump in December, the tax reform bill lowered the corporate tax rate from 35 percent to 21 percent. Here’s a summary of first quarter earnings reports for publicly held banks based in West Michigan and the effects of the lower tax rate.
Independent Bank Corp.
The Grand Rapids-based Independent Bank Corp. (Nasdaq: IBCP) reported $9.1 million in first quarter net income, or 42 cents per diluted share, versus $5.9 million, or 28 cents per diluted share, a year earlier.
The results included one-time gains and losses that equated to a net $900,000 in higher earnings, or 4 cents per share. Lower loan losses also aided earnings.
Independent Bank said total loans for the quarter recorded net growth of $52.6 million to $2.06 billion, for an annualized growth rate of 10.6 percent.
The bank’s federal tax obligation for the quarter declined to $2 million from $2.6 million, adding another 7 cents per share to earnings.
Independent Bank has 68 offices across the Lower Peninsula, plus 12 loans centers in Michigan and two in Ohio. The bank had $2.79 billion in total assets as of March 31. On April 1, Independent closed on the acquisition of TCSB Bancorp Inc. in Traverse City that added five offices to Independent’s footprint and a presence in the northwestern Lower Peninsula market.
In a conference call to discuss quarterly results, President and CEO Brad Kessel told analysts that Independent Bank remains focused on driving organic growth, but would consider anther acquisition if the right opportunity arose.
“Where we look at other deals, we’re open to that (although) the game plan going forward is not predicated that we have to do another deal,” Kessel said. “And then I think you can look at sort of the metrics on the deal we did, and I think that Traverse City gives you an idea of sort of what some of our parameters are and in terms of size: 10 percent of our size and either adjacent to or filling in some of our markets. Those are some of the things that we looked at.”
Macatawa Bank Corp.
Quarterly net income at Holland-based Macatawa Bank Corp. (Nasdaq: MCBC) grew to $5.7 million, or 17 cents per diluted share, compared to $4.4 million, or 13 cents per diluted share, in the first quarter of 2017.
“Our commitment to operating a well-disciplined company that delivers superior financial services to the communities of Western Michigan has again produced strong and consistent financial performance for our shareholders,” President and CEO Ronald Haan said in Macatawa’s earnings statement.
As a result of tax reform, Macatawa Bank’s federal tax expenses declined to $1.2 million for the quarter, compared to $1.9 million a year earlier.
The bank has 26 offices in Ottawa, Kent and Allegan counties with $1.86 billion in assets at the end of the first quarter.
Choice One Bank
ChoiceOne Financial Services Inc., the Sparta-based parent company of ChoiceOne Bank, reported higher net income of $1.6 million, or 48 cents per diluted share, which compares to $1.4 million, or 42 cents per diluted share, a year earlier.
The corporation’s federal tax expense for the quarter declined from $472,000 last year to $298,000.
Choice One has 12 offices in Kent, Ottawa, Muskegon and Newaygo counties with $622.7 million in assets. The bank plans to open new locations in downtown Grand Rapids and Rockford later this year.
Sturgis Bancorp Inc.
Sturgis Bancorp Inc. (OTCQX:STBI), the parent company for Sturgis Bank & Trust Co., reported $756,000 in first quarter net income, or 36 cents per share. That compares with $662,000, or 32 cents per share, in the first quarter last year.
The bank’s quarterly federal taxes declined year-to-year to $82,000 from $142,000.
Sturgis Bank & Trust has 12 offices in St. Joseph, Branch, Van Buren and Kalamazoo counties with total assets of $444.6 million.
Southern Michigan Bank & Trust
Southern Michigan Bancorp Inc. (OTC Pink: SOMC), the Coldwater-based parent company of Southern Michigan Bank & Trust, increased quarterly net income by 24.6 percent to $1.8 million, or 78 cents per share. The first quarter result compares to net income of $1.4 million, or 59 cents per share, in the same period a year ago.
The bank grew loans by $83.1 million year-to-year and ended the quarter with net loans of $531.6 million. The bank’s quarterly tax expense declined from $479,000 in the fourth quarter of 2017 to $325,000 in the first quarter.
Southern Michigan Bank & Trust has 14 offices in Branch, Calhoun, Hillsdale, Kalamazoo and St. Joseph counties with total assets of $719.2 million.