Bankers’ Roundtable: The Lending Environment

Four bankers active in their communities discuss what they’re seeing in the marketplace as it relates to commercial lending activity.  Plus, our bankers’ roundtable from this week’s “Talk Business & Politics” offers extra commentary.  See the video at the bottom of this post.

Paula Gean
Arvest Bank, Little Rock
Private banking advisor/Commercial lending

We are seeing very favorable conditions for commercial lending. While conditions in Arkansas over the past years were never as tight as they were nationally, commercial loan growth has been slower than normal – more from lower demand than from tightened credit standards.

Now businesses seem to be more interested in seeking loans while, at the same time, the number of banks positioned to make intelligent loans has increased.

And, with rates at historically low levels, it is hard to imagine a better environment for businesses to seek financing.

At Arvest, we are seeing increased loan demand specifically for new commercial construction and renovations as well as single-family residential developments. With competition for good loans resulting in favorable terms, it’s a great time for businesses to work with their bank partners to finance growth. Overall, local lending continues to improve and gain traction along with national trends.

Mark Roberts
Malvern National Bank, Malvern
CEO

We are beginning to see a slight uptick in loan demand, but I would still categorize demand to be weak.

Banks remain extremely liquid and attractive investment alternatives are hard to come by. Therefore, increasing loan balances generally requires that a loan be moved from another institution. This environment results in some extreme rate and term competition as banks compete for the available loans.

It is a delicate balance to maintain satisfactory earnings without taking on excessive risk when rates start to rise. Being able to make a quick decision and provide great service to our customers is imperative given the current situation.

Deana Osment
Division President, Northeast Arkansas
Centennial Bank, Jonesboro

Northeast Arkansas has always been a competitive area and the market is better than it has been a few years ago during the downturn. There is a real diversity of restaurant, manufacturing, agriculture, and certainly health care right now.

It used to be tough to even find a deal, but I think that has broken wide open, especially late last year and this year. We have a lot of new banks coming into town and that’s created competition.

Everybody has been cautiously optimistic in recent years that the overall economy would get better. It wasn’t as bad here in Jonesboro and northeast Arkansas, but now that everything else is starting to level off and people are starting to gain a little faith, they’re going on with those projects that they had on hold that they were going to do any way.

Frank Scott
Commercial lender
First Security Bank, Little Rock

In the face of a challenging regulatory environment, because of the overreaching Dodd-Frank Wall Street Reform and Consumer Protection Act, we’re experiencing a steady stream of commercial lending activity.

This stream of deal flow represents a wide range of businesses and industries. First quarter 2014, presented commercial real estate and commercial financing opportunities consisting of multi-family developments, restaurants, grocery stores, owner-occupied projects, healthcare facilities, residential construction, condos and churches.

All of these commercial projects are with Arkansans we know and see every day. They’re truly creating jobs and opportunities for their fellow Arkansans.

Despite what one may hear the media report, banks are lending money; we stand ready to help Arkansas businesses grow! As we enter into the second quarter of this year, we’re looking forward to continuing to build relationships in the market and provide quality service and capital to our customers in our state’s growing marketplace.

Watch our bankers’ roundtable from “Talk Business & Politics,” which airs on KATV Channel 7.