Status Report: Local bank branches tell us where they stand today.

REGION – The TCBN rang up the 18 banks with local branches in Grand Traverse, Benzie, Leelanau and Kalkaska counties for a mid-year status report. We asked them to fill us in on how they've fared the last two quarters, what's ahead for the rest of the fiscal year, where they're putting their focus, and the best deals they've got going now. Here's who responded and what they told us:

The Bank of Northern Michigan has beefed up its lending staff to handle loans guaranteed by the Small Business Administration and U.S. Department of Agriculture. After a few tough years of meager cash flow and profitability, CEO John Paul says businesses are relying on the loans to help them gear up for new business. His bank is lending to manufacturers who have taken over work that struggling companies couldn't handle. In coming months, he foresees growing numbers of property owners benefiting from gas and other energy leases on their property and turning to banks to help them manage the income.

Doug Wolf, greater Michigan market manager, J.P. Morgan Chase, says his bank has increased its commitment to small business lending from $6 billion to $10 billion nationally – and the Traverse City market is going to get its share. "We have been seeing double-digit increases in loan production locally," he says. We have also instituted a second party review for loans originally turned down. And through the Chase's new "Loans for Hire" program, the bank is offering half-point interest rate reductions on its lines of credit for each new employee a client hires, up to three employees.

Fifth Third is emphasizing its "treasury management" products – tools that help businesses maximize their cash flow and cut their need for loans. They make it possible to collect on receivables as early as possible and make outgoing payments on time – but at the last possible second. Looking ahead, the Traverse City's Fifth Third branch expects to be able to increase the flow of loans to small businesses after hiring five additional specialists. They are handling all the "small companies cottage industries, and the fledgling entrepreneurs that seem to be popping up," says Mark Eckhoff, president of Fifth Third Bank of Northern Michigan.

Northwestern Bank has been offering new tools for wealth and cash management on its website, says spokesman Doug Zernow. "They allow people to use online banking not just to keep track of their checking and savings account balances, but also manage their finances." Soon, Northwestern expects to offer access to its website via mobile browsers and special smart phone apps. "We regard this as an extension of Internet banking," he says.

The international financial crisis hasn't made a dent in West Michigan Bank & Trust, since it hasn't had much exposure to residential lending. (But it will make shortterm mortgage loans for home improvement and building projects). A department handling personal trusts for estates and other purposes accounts for a large portion of its business. "We pride ourselves on doing that job very well, carving out a niche business for ourselves," CEO Doug Cook says. Otherwise, it has been business as usual – "the same small town banking model we have used in the 27 years of our existence."

James Dunlap, Huntington's Grand Rapids-based senior executive vice president, says his institution is poised to name a new market president for the Traverse City office in coming weeks, filling a vacancy and continuing a 15-year tradition having a local leader in the market. "I have kept our companies organized in a way that involves local decision-making and local executives," he says. He also says the office is dispelling the notion that major banks are neglecting businesses in Michigan despite the state's continued dependence on the auto industry. "If there is demand out there, we are going to write to it, satisfy it and try to do our best to drive the solutions."

Honor Bank President Michael Worden sees community banks continuing to bask in the afterglow of their generally strong performance in the financial crisis. "There is a lot of empathy – people want to deal with someone they know." The good will has brought new customers to the bank's doorstep. In the current economic conditions, however, it may have a tough time translating into hard figures such as loan volume. The relatively low value of real estate and other collateral is constraining the number and size of loans.

Central State Bank and State Savings Bank Frankfort, under the same holding company and affiliated through their ownership with Northwestern Bank, haven't taken a back seat to larger banks on the Web. They adopted a balance query feature based on text messaging, Zernow says. "Like Northwestern, they have updated their ATMs to a really user friendly interface." They are likely to follow suit with Northwestern's new Web-related offerings as well. Both banks are regarded as extremely stable. "People who knew what numbers to look at certainly saw them as real safe havens."

As it recovers from losses in 2008 and 2009, Traverse City State Bank is enjoying loan and deposit growth while showing improved performance: After cost-cutting, the institution was profitable for the first six months of the year, and CEO Connie Deneweth now expects "sustaining profitability." New customers were one of the factors in its improved performance, she says. "Customers have realized the importance of selecting a banker who knows them personally and understands their business."

PNC completed its absorption of its old National City branches in northern Michigan and the rest of the state this year earlier this year, after acquiring the Kalamazoo-based bank at the end of 2008 with the help of funds from the Troubled Asset Relief Program (TARP). Earlier this year, the bank also agreed to pay back the roughly $7.6 billion in TARP money that the bank received at the start of the financial crisis – the last major U.S. bank to do so, according to the Wall Street Journal. The bank recently announced it has fully integrated its wealth management tools into its banking website. BN

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