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Spotlight on lending: Commercial loan growth geographically

November 21, 2014
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Now that banks have filed their third quarter financial reports, what did the lending picture look like last quarter? Specifically for businesses, are commercial loans on the rise?

Nationally, the picture is a fine one. Total commercial and industrial (C&I) loans across all 6,600+ U.S. banks is up $157 billion from the same period in 2013. However, Q3 commercial lending is down from the beginning of 2014 (quarter ending 3/31/2014) by about $67 billion.

Locally, the picture shifts. For entrepreneurs eager to get their first (or maybe their fifth) business off the ground, there is perhaps no better place to look for funding than the southern United States. A recent data report culled from Sageworks Bank Information, a web-based data platform that includes financial and regulatory information on every U.S. bank and credit union, named the “Top 15 community banks by commercial loan growth.” The data pointed to states south of the Mason-Dixon Line as host to an increase in C&I loans in the third quarter. The list identified a significant uptick in commercial and industrial lending in the South, as 7 of the 15 community banks included are located in the region.

The data was evaluated to include community banks with between $100 million and $1 billion in assets. From that subset of all U.S. banks, the list was determined by reviewing a bank’s Q3 2013 C&I loan total alongside its Q3 2014 figure and calculating the percentage increase. Banks that were a part of a merger or acquisition transaction during this time frame were also removed from the list.

While many of the banks included on the list represent a small piece of commercial lending across community banks (for example, three of the 15 banks included had less than $1 million in C&I lending, which could indicate only one or two actual commercial loans), it’s significant that all have grown this area of their portfolios by more than 200 percent in just one year. Sageworks Senior Risk Management Consultant Garrett Morris explained, “Based on market trends and the statistics below, its clear community and regional banks are looking to compete with national institutions to grow their loan portfolios given today’s good credit quality.”

For example, the top players on the list — Citizens Community Federal National Association in Altoona, Wisconsin and Sandhills Bank in North Myrtle Beach, South Carolina – each upped their commercial lending by more than 1,000 percent, with C&I growth of 2,726 percent and 1,127 percent respectively. Both of these institutions had small C&I portfolios in Q3 of 2013, hovering around $150,000, and grew their C&I portfolios into the millions in Q3 of 2014. Despite their relatively small mark nationally, this jump in one year can bolster a local economy by serving small businesses.

Also of note is that there are three Florida-based financial institutions on the list – Transcapital Bank in Sunrise, Citizens Bank in Perry and Banco Do Brasil Americas of Miami. Geographically, Sunrise and Miami are less than an hour from one another by car, and Perry is in the panhandle of the state, about an hour southeast of Tallahassee. Three banks with increased commercial lending doesn’t necessarily indicate a statewide trend, but the rise may be promising for business owners in those areas looking to take on a loan from their community bank to start or improve their businesses.

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