News Column

Need money? Shore banks hand out more loans

August 8, 2014

By Michael L. Diamond, Asbury Park Press, N.J.



Aug. 08--The Shore's community banks made more business loans during the second quarter, a sign that they are pouncing on an opening left by their bigger counterparts that are busy keeping up with government regulations and lawsuits.

Their focus on making more commercial loans could pay off both for the local economy and their bottom lines.

Big, commercial banks' "time is being taken up dealing with regulatory issues and these lawsuits," said Matthew Breese, an analyst with Sterne Agee in Portland, Maine, who follows banks such as Ocean­First Fi­nan­cial Corp. "People like Ocean­First can come in and out-service them."

The shift is part of the fallout from the housing bubble's collapse in 2008. Giant banks have been settling lawsuits in which the U.S. government charged them with fraudulently marketing mortgage-backed securities.

By comparison, Ocean­First, Two Ri­ver Com­mu­ni­ty Bank and Shore Com­mu­ni­ty Bank during the second quarter posted better earnings and reported that they had more commercial loans in the pipeline.

Housing still sluggish

The new focus on commercial business rather than residential business makes sense, analysts said. The housing market remains sluggish. And most homeowners eligible for refinancing already have done so, said Keith Gumbinger, vice president of HSH Associates, a Riverdale company that tracks mortgage rates.

Meanwhile, Jersey Shore businesses battered by superstorm Sandy need money to get back on their feet. The economy might be picking up. And commercial loans often are more profitable, Gumbinger said.

Second-quarter earnings

--Toms River-based Ocean­First said its net income of $5.1 million, or 30 cents a share, rose 2 percent from net income of about $5 million, or 29 cents a share, the same quarter a year ago. It was fueled by the fourth consecutive quarter of double-digit growth in commercial loans, Chairman and CEO John Garbarino said.

--Tinton Falls-based Two River Bancorp said its net income of $1.4 million, or 17 cents a share, rose 17.8 percent from net income of $1.1 million, or 14 cents a share, the same quarter a year ago. Its total loans have increased 1.6 percent since the beginning of the year. And it recently announced it is opening a commercial loan production office this month in Toms River, expanding its reach into Ocean County.

--Shore Community Bank, based in Toms River, said its net income of $209,443, or 9 cents a share, grew 5.2 percent from net income of $199,176, or 9 cents a share, the same quarter last year. After five consecutive years of contraction, its loan portfolio for the first six months of the year increased 13 percent, President and CEO Robert English said.

--Harmony Bank, based in Jackson, said its net income of $110,500, or 7 cents a share, declined 37.4 percent from net income of $176,515, or 11 cents a share, the same quarter a year ago. It set aside more money during the quarter to cover bad loans. The amount of income from loan interest, however, rose nearly 26 percent the first six months of the year.

Michael L. Diamond: 732-643-4038; mdiamond@app.com

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(c)2014 the Asbury Park Press (Neptune, N.J.)

Visit the Asbury Park Press (Neptune, N.J.) at www.app.com

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Source: Asbury Park Press (NJ)


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