Level One Bancorp in Farmington Hills, Mich., received some good news about one of its nonperforming loans.
The $1.5 billion-asset company disclosed in its quarterly filing with the Securities and Exchange Commission that a client paid $6.9 million on Aug. 1 for a nonaccrual loan. The loan had a net book balance of $6.5 million.
As a result, Level One will record $408,000 in loan interest and fee income and a $363,000 provision benefit in the third quarter.
Brendan Nosal, an analyst at Sandler O’Neill, wrote in an Aug. 9 note to clients that, at this point in the cycle, opportunities to reduce problem assets by such a substantial level are hard to come by.
"The reduction takes credit quality at [Level One] from solid to very strong, and cleans up a sizable problem asset late in the credit cycle with an added pop to" earnings per share, he added.
