West Michigan Community Bank: Overview of the bank
West Michigan Community Bank was first established in the year 1976. The bank’s main office is located in the state of Michigan and in the city of Hudsonville. The bank first got insured by the Federal Deposit Insurance Corporation in the year 1976 and has remained insured by the independent agency ever since. Mainly because of its relative size, geographic reach and presence, the bank is considered to be a community bank, instead of a national bank. Based on our estimates, we believe its asset base of $798 million ranks it in the 80th percentile of banks in the United States. West Michigan Community Bank is essentially a purely domestic bank from an operational standpoint. This is because the bank does not have offices outside of the United States. Within the U.S. the bank currently has 8 offices, all of which are located in the state of Michigan. In terms of headcount, the bank currently has 90 employees.
Overview of the Bank’s Assets and Liabilities
As previously indicated, the bank currently has total assets of $798 million, which makes it a mid-sized bank in the United States. The bank also has net loans outstanding to customers of $605 million and a deposit base of $686 million. Domestic deposits currently represent (in terms of total size), 86% of the bank’s total assets, and 100% of the bank’s total deposits outstanding. Within these deposits 59% are insured based on the latest available information. Moving on to the components of the bank’s assets we can see that loans provided to customers represent 77% of the banks total assets. Of this amount, loans related to real estate activities comprised 72% of gross loans outstanding. West Michigan Community Bank has $77 million of outstanding 1-4 family residential loans (mortgages), which in total represents 12% of its loans outstanding. Loans to individuals and loans to commercial and industrial interests represent 1% and 24% of loans outstanding, respectively. Loans to farmland and farms represents 6% of loans outstanding.
Contact Information For West Michigan Community Bank
- Main Office Address: 3467 Kelly St., Hudsonville, MI 49426
- Website: www.wmcb.com
- Total Number of Branches: 8
- Total Number of International Branches: None
- Number of Employees: 90
- FDIC Certificate Number: 22308
- FDIC Community Bank: Yes
- FDIC Field Office: Grand Rapids
- Independent or Subsidiary Bank: Independent
- Federal Reserve ID Number: 715340
- Bank Charter Class: SM
- Primary Regulator: FED
West Michigan Community Bank has total assets of $798 million and over the past year its asset base has increased substantially, reporting an increase of 13.0%. Moving to the bank’s loan portfolio, the bank has net loans outstanding of $605 million based on the latest available information. Its net loans outstanding have increased slightly over the past year, with an increase of 1.9%. Taking a closer look at the bank’s loan portfolio, we see that residential mortgages comprise 12% of the bank’s loan book. The bank has $77 million of residential mortgages outstanding, which compares with $73 million in the prior year. This implies an increase of 4.5% over the past year. In addition, the bank provides loans to commercial and industrial businesses, which represents 24.4% of its total lending and stood at $150 million based on the latest available information. The bank also provides loans for farm-related activities, which currently amounts to 6.1% of its total loan portfolio. Finally, the bank also engages in the provision of auto loans. These are loans provided to customers to help finance vehicle purchases. Auto loans represent 0.2% of the bank’s total lending.
Bank Liquidity and Funding
While most banks are insured by the FDIC, the insurance coverage does not always provide full protection. Therefore, understanding a banks liquidity and funding is important to help assess the riskiness of a bank’s balance sheet. Customer deposits is usually one of the cheapest ways to finance a bank. This is especially the case for accounts that don’t pay interest, such as checking accounts. West Michigan Community Bank has total customer deposits of $686 million. Looking over the past year, its deposit base has increased substantially with a growth rate of 14.5%. Furthermore, the bank has a loan to deposit ratio of 88% which is above the national average. Banks in the United States have a loan to deposit ratio of approximately 82%. A lower ratio is better since it means that a bank’s lending activities are more comfortably covered by its deposit base. Effectively all of the bank’s deposit base is funded by domestic sources.
Bank Performance and Capital Metrics
The above chart provides a brief summary of some of the key performance metrics for West Michigan Community Bank. Next to these metrics are the equivalent for the average U.S. bank. Starting with its return on assets, over the past year it has improved. Importantly, on this metric we can also see that the bank is above the average bank. Return on assets tells us how productive a bank is being with its asset base. Moving on to the bank’s return on equity, which tells us how much of a return the bank has generated for its owners, over the past year it has improved. In addition, we can also see that the bank is above the average bank on this metric. Another metric that is helpful in contextualizing a bank’s return on equity is its leverage ratio. A lower ratio means that the bank has a higher reliance on borrowing to deliver its return on equity. In this case, the total leverage ratio is currently below the average U.S. bank, and has been relatively stable over the past year. Finally, we could not find West Michigan Community Bank’s risk-weighted asset information for this period and therefore had to make some assumptions and estimates. We estimate that the bank had a tier 1 capital ratio of 14.9% which is below the average U.S. bank.
Conclusion: West Michigan Community Bank
In conclusion, when we look at all the various factors and data we give West Michigan Community Bank a 3.6 out of 5.0 rating, which we consider to be very good. Specifically, an area of strength for the bank would be its cost of funds which is above the national average. On the contrary, the bank’s total leverage is one of the primary drawbacks on its rating as on this metric, the bank is below average. Importantly, please be aware that none of the information presented is meant to be investment advice or advice of any form. All of the information and views expressed in this note and on this site are purely for informational purposes.