Many banks add business lenders as demand rises for borrowing
Perhaps indicating better days are ahead, many local banks have added commercial lenders in recent months to serve businesses' growing need for credit.
Industry experts say the trend shows that to some degree, banks are returning to their roots.
“Commercial loan generation is a key strategy, not only for us, but for all banks,” said David Antolik, senior executive vice president of commercial lending at S&T Bank, Indiana, Pa.
“To generate revenue, you've got to put (loans) on the books. And to grow loans, you need to add people who can generate loans,” said Antolik, whose bank added three senior commercial lenders at the end of August.
Fifth Third Bank, the large Cincinnati-based bank with 15 branches here, added four commercial lenders to serve the Western Pennsylvania and northeast Ohio market this year, including two senior executives in September, said Bill Dickson, senior vice president in charge of Fifth Third's middle market group for Western Pennsylvania.
NexTier Bank, a Butler-based community bank, hired four commercial lenders in August, including a new chief lending officer.
“Our commercial loan pipelines are fuller than we've seen in about two years,” NexTier President Margaret Irvine said. With $202 million in commercial loans on the books, the bank is projecting a 16 percent increase in 2013, she said.
The nation's business loan volumes have risen steadily for at least a year, according to data from the Federal Reserve. The level of commercial and industrial loans has increased nearly 13 percent to about $1.48 trillion at the end of October from about $1.32 trillion last November. Companies use such loans for equipment, expansion or working capital to operate their businesses.
Several bankers said the region's boom in natural-gas-related activity is helping drive business loan demand.
“Deals we've looked at are all over the board,” said Antolik, citing loan demand from manufacturers and wholesalers. “But a lot of it has centered on Marcellus shale-related business, including drilling over in Ohio.”
Bank of America, the nation's second-largest bank, had one business banker in Western Pennsylvania in 2010. But the Charlotte-based bank now has seven based in Pittsburgh, which it dubbed a “strategic market” in mid-2011, said James Neese, middle market banking executive for this region.
“Companies can only go so long putting off capital expenditures,” said Neese, adding that commercial loans were relatively flat in 2012. “We look at 2013 as having a little more robust activity, probably beginning toward the end of the first quarter.”
His colleague, Carlos Carter, senior vice president and senior client manager for this region, said Western Pennsylvania businesses have long been interested in cash-management and other services but nowadays also want credit, especially manufacturers.
“I have seen equipment financing activity perk up since the beginning of the year,” Carter said.
“We've seen particularly strong loan demand” from energy, health care and manufacturing companies, said Susan Shipley, Western Pennsylvania /Ohio Valley regional president of Huntington National Bank.
Area banks also have added seasoned commercial lenders because of the loan underwriting experience they bring to a bank, as well as the business clients, say industry experts.
“One way to grow a bank's loan book is to pick bankers that have client relationships,” said David Lazar, managing director of Stifel Nicolaus Weisel, an investment banking firm in Philadelphia.
For instance, S&T Bank hired three experienced commercial lenders away from FirstMerit Bank, Akron, in order to penetrate the Akron/Cleveland market, Antolik said.
Some banks also might hire seasoned business bankers to gain expertise, said Lazar. On Jan. 1, the Office of the Comptroller of the Currency will no longer allow banks to rely on credit-rating agencies to evaluate investments.
“It's going to mean a big increase in costs and a huge headache for community banks,” Lazar said.
Thomas Olson is a staff writer for Trib Total Media. He can be reached a 412-320-7854 or at email@example.com.