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Banks focus on small business to grow loans

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By Chris Cox
Published Nov. 13, 2015

From the Oct. 26 – Nov. 8 issue of the Columbia Regional Business Report

Mike Brenan has a pretty big myth to debunk.

Despite what some may think, South Carolina’s banks are open for business to the little guy, BB&T’s state president said recently during the Columbia Regional Business Report’s quarterly “Power Breakfast” networking event. If they weren’t, he and his colleagues agreed, they wouldn’t be around.

brenan chetwood power breakfast pic by kathy allen for focus story
BB&T’s South Carolina President Mike Brenan, left, says the state’s commercial real estate industry is thriving. Seated next to him is Holt Chetwood of Wells Fargo. (Photo/Kathy Allen)
“Let me put to bed an old wives tale about banking: we only lend if you don’t need the money,” Brenan said. “If that were the case we would be out of business. We’re actively looking for opportunities to be lenders across our entire community.”

In fact, that piece of business is growing better than BB&T’s higher lending now, he said. The same is true at Wells Fargo, Midlands Market President Holt Chetwood said, where more deals were done in the $500,000 range than they were in the $5 million range.

Banks want to put loans on the books. And though they may operate in the environment of 2% GDP growth, their loan goals may be the 7% to 8% range for the year, Chetwood said.

“Certainly the lending environment today is very, very competitive,” he said. “All of us have a great deal of interest in a $500,000 loan or a $5 million loan. We look at them the same way from a credit underwriting fundamental standpoint.”

That is part of a cultural belief at First Community Bank, president and CEO Mike Crapps said. All customers matter, regardless of how big or small the loan may be.

Like his colleagues, Crapps’ bank is clearly open for business.

“Five-hundred thousand, that’s a significant transaction for us,” he said. “We want to make that happen. Five million, we want to make that happen. Our bank’s lending limit is $12-to-$13 million. Our best work is done sitting with a client, listening to their goals and figuring out their opportunities.”

Of course, not all lending remains at the top priority for these area businesses. Lending for speculative projects still remains a very sensitive topic, particularly after most banks did too much of it leading up to the recession, expecting a growing economy to take care of it over time.

Most of Brenan’s projects come when developers already have an extensive piece already leased out. Chetwood agreed, noting that the deals need to have enough cash flow to pay the debt service, along with some equity in the transaction.

“Every banker experienced losses in that space,” Brenan said. “But I will tell you that our commercial real estate business in South Carolina is thriving. But we’re underwriting it differently. It’s a rare case when you’re going to do something speculative unless you can find some other way to mitigate that risk.”

The industry is showing signs of strong health not only in their competitive lending environment but at the rate in which they grow. The banks which have closed often got reabsorbed quickly, and the bigger companies are expanding their footprints like never before.

Last year, BB&T acquired 41 Citibank branches in Texas and in August acquired National Penn Bancshares in a $1.8 billion cash-and-stock deal, giving the North Carolina-based company its first presence in Pennsylvania.

“We are keenly interested in expanding our footprint and presence both in new markets and expanding prospects,” Brenan said.

First Community Bank is also active in its growth process. It went through “a big year” in 2014, as Crapps called it, when it acquired banks in the Augusta and Aiken market before opening its Lady Street office in June. It followed that up later by purchasing deposits from CertusBank, which was exiting the market.

Growth remains the goal for all Midlands banks, both with brick-and-mortar locations and the customers they see. And that’s the case no matter how big or small their loans may be.

“Most of our growth is one client at a time,” Crapps said. “Trying to do good work listening to our clients and offering solutions to whatever’s on their minds.”

Reach Chris Cox at 803-726-7545 or on Twitter @chrisbcox.

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