Independent Banker - December 2017 - 58

Lender Life
companies and downstream banks,
including 320 community banks,
mainly in the southeast.
" That money has gone to work
in two places: the loan or bond
portfolio, " Rushing says. " In general,
the improved construction and housing
market, and general business
economy has [stimulated] bank loan
demand, and consumer loans have
clearly picked up. "
Even the Texas Ratio-a measurement
of a bank's overall health-has
improved. The ratio has since fallen
from 19.95 percent in June 2016 to
15.84 percent 12 months later, better
positioning community banks
to make loans,
expand and
fi nance diverse
commercial
developments
ranging from
hospitals to
historical
properties.
Other trends
include community
banks getting
involved in more
commercial loans
or commercial real estate (CRE) lending.
Rushing says changing banking
regulations-and the diffi culties they
present-such as those affecting home
mortgages are behind the shift. " It's
been diffi cult, " he says.
However, it seems many superregional
banks have also pulled back
on CRE lending, paving the way
for community
banks to snatch
the leftovers,
adds Henry
Abbott, chief
credit offi cer,
correspondent banking division of
ServisFirst Bank. (See the November
2017 issue of Independent Banker for
more on this topic.)
" In 2018, I think we'll see [community
banks] continue to focus on
commercial and industrial [C&I]
lending and getting aggressive to land
C&I deals and not just CRE loans, "
Abbott says. " A C&I loan has a longer
sales cycle but is more profi table for
[banks] because you've got a core
relationship that will be with you for
a long time. "
" A C&I loan has a longer
sales cycle but is more
profi table for [banks]
because you've got a
core relationship that
will be with you for a
long time. "
-HENRY ABBOTT,
SERVISFIRST BANK
A political effect?
Bob Jones, CEO of $600 million-asset
United Bank in Atmore, Ala., credits a
Republican-controlled White House
and Congress for building consumer
confi dence during the fi rst half of
2017. " Coming out of the election last
November, there was a noticeable and
immediate uptick
in activities across
almost all of our
lines of business
from consumers, "
says Jones. " The
election gave them
some reason to
feel optimistic,
that fi nally things
were going to be
resolved. "
However, Jones
says that optimism
has waned, largely due to political
uncertainties surrounding issues like
health care, and a shortage of skilled
tradespeople that has slowed commercial
development in some areas of
the country, such as California.
Overall, demand for loans has
dropped, he says, causing banks to be
on the lookout for niche consumer
products. When consumer buying
picked up for pickup trucks, recreational
vehicles and boats, United
Bank introduced loans with more
fl exible pricing and terms.
" There was enthusiasm among
consumers, " Jones says. " We've been
more successful in the consumer
space than we've been in prior years. "
Since United Bank is a Community
Development Financial Institution
and a Community Development
54 ICBA Independent Banker December 2017
$12.7
trillion
The record-high amount
of US consumer borrowing
in the fi rst three months
of 2017
Entity, Jones says 60 percent of its
loans are given to those in low- or
moderate-income communities. In
2017, his bank began using $65 million
in new market tax credits, making
loans for a range of
building projects that
include new hospitals
and schools.
Throughout this
year, community banks
nationwide continued
to adapt to the micro-markets they
serve. Consider another Alabama
bank, the $535 million-asset First
Bank of Alabama in Talladega. Two
years ago, it introduced a new type
of consumer equity loan, says Chad
Jones, the community bank's president
and CEO.
" We brought on a product suite for
our home equity lines of credit that
allows us to go up to 100 percent of
the equity in the home, " he explains,
adding that the bank buys a private
insurance policy on the loan that
secures its equity position. " It also
allows us to do home improvement
loans up to 133 percent of a home's
appraised value. "
Of the bank's $200 million loan
portfolio, these lines of credit
represent roughly 10 percent or
$20 million. " It's a small percentage,
but it allows us to service local communities
that aren't being serviced in
other ways, " Jones says. " It gives the
opportunity for our clients to utilize
their home equity and really put it
to work even after depressed prices
occurred throughout the credit cycle. "
Independent Banker - December 2017

Table of Contents for the Digital Edition of Independent Banker - December 2017
