Improved asset quality and upticks in its commercial and mortgage lending helped Taylor Capital Group Inc. in Chicago narrow its loss in the second quarter.

The $4.4 billion-asset company said Thursday that it lost $3.9 million in the quarter, or 19 cents per diluted share, compared to a loss of $48.3 million, or $3.35 per share, in the second quarter of 2010.

The improvement was largely result of a decrease in its provision for loan losses. Taylor, the parent of Cole Taylor Bank, set aside $11.8 million for loan losses in the quarter, down from nearly $44 million in the same period last year. In all, its total nonperforming loans declined from $168.2 million and 5.93% of assets to $143 million and 4.91% of assets.

The company also said that commercial lending picked up somewhat in the quarter. At June 30, its total loans minus the allowance for loan losses was $2.7 billion, up from $2.6 billion three months earlier.

The growth was driven in part by its national asset-based lending arm, Cole Taylor Business capital, which opened three new offices in April. The company also reported a 19% increase in mortgage origination revenue, to $2.2 million, as it continued to expand its mortgage lending into additional states. Cole Taylor now originates mortgages in 26 states.

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