Independent Banker - January 2024 - 19

Adding customer services
and increasing non-interest
income should be easy.
" For us, we don't go in
and out of businesses;
we try to stay consistent
in how we lend. "
-DAVE SEILER, FIRST BUSINESS
FINANCIAL SERVICES INC.
Lincoln Financial
Network can help.
the doors are blown off with demand
for those loans, but we are aware that
the larger banks have pulled back
a little bit, " he says. " So, as we go
forward ... I do think that could off er
us some opportunities in areas where
we are actively lending. "
Cautiously optimistic
On a positive note, the strength of
existing loan portfolios appears to be
holding up very well.
Although there are concerns
about pockets of distressed loans
emerging among the bigger banks,
particularly those holding maturing
CRE loans on offi ce properties, that
distress has yet to show up in the
numbers. According to the FDIC, the
percentage of loans and leases that
were more than 90 days past due
was 0.76% as of the second quarter
of 2023.
" We have not really seen a
deterioration in the creditworthiness
of our borrowers at this point. Our
metrics for problem loans and past
dues are lower than ever, " says Gore.
However, the higher interest rates
have really gotten the attention of
the borrowers and their decisions
as to whether they want to take on a
new project, whether it's buying new
equipment or building a new facility,
he adds.
Lenders are still cautious on credit
risk, with lingering uncertainty on
the direction of the economy. If
there ends up being a recession,
it will likely hit consumers fi rst,
and the impact will be uneven with
certain geographies and industries
that are more or less aff ected. ANB
Bank's approach is to build a loan
policy that works in both good and
challenging times.
Many community banks remain
" open for business " on the lending
front because they have good
diversifi cation and don't have heavy
concentration risk in a particular
market segment. Consistent lending
strategies allow them to provide
needed capital to consumers and
businesses within their communities.
" During 2020 and 2021,
community banks were champions
in that PPP arena, " says Gore. " They
assisted businesses in areas that
would have otherwise been left
out, and that exemplifi es what the
community banks do every day.
" Community banks in urban
and suburban areas also reach a
segment of the population in the
economy that seems to be in need
of banking services in which there's
still a personal touch. So, I think the
future's bright for community bank
lending activity once the interest
rate stabilizes. "
Beth Mattson-Teig is a writer
in Minnesota.
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Independent Banker - January 2024

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