Level One expects 3Q profit boost from nonperforming loan payment

Register now

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.

For reprint and licensing requests for this article, click here.
Community banking Commercial lending Credit quality Michigan
MORE FROM AMERICAN BANKER