FDI data confirms robust C&I loan growth among U.S. banks

Most of the leading U.S. banks highlighted continued robust C&I loan growth in their most recent financials.  Recently-published data from FDIC provides C&I loan data for all of the 7,200 U.S. banks, enabling us to develop a more comprehensive picture of overall changes in C&I lending, as well as making comparison between different bank-size categories.

The following are some topline takeaways from an EMI Strategic Marketing, Inc. analysis of the FDIC C&I loan data:

  • C&I loan portfolios for all FDIC-insured banks rose 18% year-over-year, to more than $1.4 trillion at the end of 2Q12
  • Looking at different C&I loan-size categories, the portfolio of loans of more than $1 million jumped 23% y/y.  However, the portfolio of loans of less than $1 million grew by only 2%.
    • Within the C&I loans of <1MM category, strongest growth was for <$100K loans (mainly business credit card loans), which rose 5% y/y
  • Continuing a trend seen in recent quarters, the larger banks (>$50  billion in assets) had the strongest y/y rise in overall C&I loans.

  • Reflecting the trend in overall C&I loans, the largest banks had the strongest growth in small business loans (of <$100K).

Huntington on track to meet small business lending commitment

At the start of 2010, Huntington Bank committed to lend $4 billion over three years to small businesses in its footprint, joining leading banks like Chase, Bank of America and Wells Fargo in making specific small business lending commitments.

Huntington reported yesterday in a press release that it lent $1.1 billion to small businesses in 2010, with an acceleration in this lending in the second half of the year, which the bank attributed to an improving economy as well as the completion of its hiring of 150 additional business bankers.  Huntington claims to be on track to meet its three-year goal.

This press release follows news in recent weeks that Chase and Bank of America both met their 2010 small business lending commitments.  Wells Fargo fell short of its target, although it still grew small business lending by 15% in 2010, and reported strong growth in loan demand from small businesses in the second half of the year.

It should be noted that small business loan balances for many large banks continue to decline year-over-year, as charge-offs and paydowns outstrip origination.  However, we may be on the cusp of an inflection point , with declining charge-offs and increasing originations leading to overall growth in small business loan portfolios in the coming quarters.

The sales and marketing challenges for banks aiming to capture a share of the small business market include:

  • Positioning themselves as a financial partner to small businesses, providing both financial products and advice
  • Revisiting the small business product portfolio to ensure that it addresses the changing financial needs of small businesses
  • Developing offers and bundles to reflect banks’ renewed focus on relationship optimization
  • Ensuring that all service channels (branch, call center, Internet, mobile, social media, etc.) deliver a consistent customer experience
  • Recruiting, training and developing support tools for dedicated business bankers
  • Implementing programs and process for other branch personnel to sell to small businesses and/or refer them to business bankers