Magazine article American Banker

Business Loans Surged in 4Q, Total Loan Growth Eased

Magazine article American Banker

Business Loans Surged in 4Q, Total Loan Growth Eased

Article excerpt

Byline: Harry Terris

Business boomed in the fourth quarter.

Growth in commercial and industrial borrowing accelerated for the fourth consecutive period to a torrid 18% annual rate, rescuing bank loan volumes from an otherwise lackluster showing, according to preliminary data.

Total loan growth slowed 1.1 percentage points from the third quarter to a 3.5% annual pace, seasonally adjusted estimates published by the Federal Reserve indicate.

Commercial mortgages, which account for about one-fifth of loans, fell at a 1.5% annual rate to about $1.4 trillion, though that was slower than the roughly 5% to 9% rate of decline that had prevailed since the second quarter of 2009.

Meanwhile, growth in single-family home loans slowed by 2.8 percentage points to about a 1% annual rate.

The estimates are based on information provided by a sample of domestically chartered commercial banks calibrated to quarterly regulatory reports.

Businesses have set the pace for the recovery in borrowing as real estate markets continue to languish. At about $1.1 trillion at yearend, however, total commercial and industrial loans were still about 15% below their late-2008 peak.

Consumer borrowing remains constrained by the weakened state of household finances. Nevertheless, credit card debt posted a surprise jump late last year, and total consumer loans increased at a 4.1% annual rate in the fourth quarter, the Fed estimates indicate. …

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