Magazine article American Banker

Loan Growth Cools in First Quarter

Magazine article American Banker

Loan Growth Cools in First Quarter

Article excerpt

Byline: Harry Terris

Growth in commercial and industrial borrowing, which has powered overall gains in bank loan portfolios in recent periods, appears to have decelerated in the first quarter.

If balance sheet levels at March 21, the most recent date available, held through the final 10 days of the month, business loan growth would have fallen from an annual rate of 17% in the fourth quarter to 9% in the first quarter a the first slowdown in a year and a half.

In March, some banks told investors they had continued to significantly expand their books. These banks said they did so by signing up new clients, taking share from competitors, and making winning bids in the fire sale being held by struggling European lenders.

aThe economy itself is just not growing that fast,a said BB&T (BBT) Chief Executive Kelly King. Front-line officers at the company told him that aabout 80% of our loan growth is takeaways.a

Total loan growth at domestically chartered commercial banks fell from an annual rate of 4.1% in the fourth quarter to 1.3% in the first quarter, according to the Fed data, which is based on information provided by a sample of banks calibrated to quarterly regulatory reports. (The data is seasonally adjusted, and has been modified here to back out additions of about $96 billion of assets and liabilities in February and March resulting from thrift-to-bank conversions.)

At an annual rate of 5.2%, deposit growth in the first quarter was about on par with the preceding three months, but down from the surge during the second and third quarters last year, when market turmoil catalyzed a flight to cash. …

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