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West Michigan banks eye steady business loan growth for 2024

Banks in West Michigan usually ended 2023 with stable business mortgage progress, even with greater rates of interest and lingering considerations from a difficult financial surroundings. 

Because the U.S. financial system continues to carry up, albeit with gradual progress nonetheless anticipated all through the 2024, executives at a number of West Michigan-based banks that reported quarterly and full-year outcomes throughout January mentioned they anticipate regular mortgage progress within the 12 months forward. 

Amongst them is Unbiased Financial institution Corp.

“Wanting ahead, primarily based on a robust pipeline and a stable liquidity place, we see continued progress alternative whereas sustaining our disciplined credit score requirements,” mentioned Joel Rahn, government vp for business banking at Grand Rapids-based Unbiased Financial institution. 

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Joel Rahn, Unbiased Financial institution. Credit score: Courtesy picture

The financial institution grew business loans by $54 million within the fourth quarter to $1.67 billion at 12 months’s finish. Industrial loans grew by $213 million for the entire 12 months. Unbiased Financial institution started 2024 with “fairly steady” mortgage demand that will profit when rates of interest, as predicted, start to say no by midyear, Rahn mentioned. 

“As I talked to our prospects, particularly our vital prospects, … I might characterize their outlook for ’24 as a lot the identical as ’23. Most companies are doing properly. I wouldn’t say nice however doing properly,” he informed traders in a January convention name to debate outcomes. “The automotive strike luckily was resolved earlier than it actually inflicted a variety of ache on the provision base. So, I feel the outlook is fairly steady, and I do suppose that if we get to the second half of the 12 months and charges do begin to come down, that might present some raise to issues like business building and future mission planning.” 

Unbiased Financial institution targets 6% to eight% complete mortgage progress this 12 months and expects a complete of 4 quarter-point cuts to rates of interest starting in Could, based on Rahn. 

Huntington Financial institution expects three or 4 rate of interest cuts in 2024 and anticipates accelerated mortgage progress through the 12 months. 

Lauren Davis, Huntington Financial institution. Credit score: Courtesy picture

In West Michigan, Huntington Financial institution started the brand new 12 months with robust mortgage pipelines, notably amongst business shoppers desirous to spend money on automation to offset labor shortages, mentioned Regional President Lauren Davis. 

“As I’m speaking to our market leaders, we have now a variety of prospects who’re very focused on nonetheless wanting to buy tools. (They’re asking,) ‘How can I automate? What sort of robotics do I must be occupied with?’ Any of that sort of kit, they’re trying to make investments,” Davis informed Crain’s Grand Rapids Enterprise. 

Given the financial uncertainty throughout 2023 that lingered into 2024, potential debtors have been extra selective in searching for credit score, Davis mentioned. Nonetheless, companies normally haven’t “essentially taken their foot off the gasoline,” she mentioned. 

“They might have thought of strategically, ‘Which ought to I spend money on? Ought to I spend money on tools? Ought to I spend money on increasing my constructing and possibly not each?’ However they’re nonetheless saying, we have now to look out to the long run and see what’s progress going to seem like for this area,” Davis mentioned. 

Most enterprise shoppers “are performing properly,” and a few are starting to weigh whether or not to proceed with a credit score request now or wait till charges begin to come down, she mentioned. Many enterprise homeowners that Davis talks to “are very optimistic about our future in our area.” 

Grand Rapids-based Mercantile Financial institution recorded “extraordinarily robust business mortgage progress” within the fourth quarter and continued “to construct sturdy pipelines bearing some significant fruit as we ended 2023,” mentioned President and CEO Robert Kaminski Jr. 

Mercantile Financial institution’s business loans in 2023 grew $260 million by about 8.5% to $3.41 billion. Industrial loans elevated $178 million within the fourth quarter alone, or a 22% annualized progress fee, based on financial institution President Ray Reitsma. 

The robust business mortgage progress charges got here regardless of excessive ranges of mortgage payoffs and paydowns, mentioned CFO Chuck Christmas. 

Ray Reitsma, Mercantile Financial institution. Credit score: Courtesy picture

Economically, the financial institution’s business shoppers “proceed to report robust outcomes so far and haven’t begun to expertise the impacts of a possible recessionary surroundings in any systemic vogue,” Reitsma mentioned. 

On the finish of 2023, Mercantile Financial institution had $311 million in business building and improvement loans that it expects to fund over the subsequent 12 to 18 months, he mentioned. 

The most important progress prospects for Mercantile Financial institution are tied to possession transitions, together with acquisitions and corporations changing to an worker inventory possession program, or ESOP, Reitsma mentioned. 

“That’s been an space that we’ve achieved properly in over the past 12 months or two,” he mentioned. 

At Holland-based Macatawa Financial institution, business loans grew final 12 months by $112.7 million, or 11.5%, to complete at $1.09 billion. The business mortgage progress got here by means of a $47.5 million enhance in business actual property loans, and $65.3 million spike in business and industrial loans. 

“The mortgage progress skilled on this time interval was the direct results of each new mortgage prospecting efforts and present prospects starting to attract extra on present traces and borrow extra for enlargement of their companies,” Macatawa Financial institution mentioned in its fourth quarter earnings report. 

Sparta-based ChoiceOne Financial institution final 12 months recorded 18.5% progress in loans to finish 2024 at $1.41 billion. That features practically 25% progress in business actual property loans, which ended the 12 months at $786.9 million, and 9.3% progress within the business and industrial phase to $229.9 million as of Dec. 31. 

Extra from Crain’s Grand Rapids Enterprise:

Push for brand spanking new financial improvement incentives faces unsure legislative future

Key investments enhance Meijer Gardens’ stature as native financial driver, report finds

Muskegon-area restaurant operator brings brunch idea to Grand Rapids

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