While lending fell nearly 10 percent in New York during the Great Recession of 2009, total loans outstanding in Connecticut were down just 2.5 percent, despite ongoing carping from businesses of restricted credit terms.
New Jersey fared even better according to data released in late February by the Federal Deposit Insurance Corp. ”“ loans outstanding jumped 4 percent to $100 billion.
FDIC”™s aggregate data on loans, deposits and other banking metrics are notoriously imperfect ”“ for instance, the agency”™s figures purport that Rhode Island has double the loans outstanding of Connecticut, whose gross state product dwarfs that of its Ocean State neighbor. And according to FDIC, lending in Pennsylvania popped upward 30 percent last year. In both instances, the skewed numbers are almost certainly the result of large loans assigned to branches in those states that do not reflect actual disbursements filtering out to Main Street buildings.
Still, taken in the aggregate the data would appear to support what both bankers and businesses agree on ”“ if the recession was rough sledding in Connecticut, it was a softer slide than in other parts of the nation. First County Bank, for instance, maintained an average portfolio of more than $900 million in loans outstanding in the fourth quarter, $7 million more than a year earlier at the dawn of the credit crisis.
The Stamford-based bank has been attempting to take advantage of opportunities to land business from mid-sized companies on the assumption large banks have curtailed lending, according to Rey Giallongo, executive vice president of First County Bank.
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David Ring, head of commercial lending in Fairfield County for the Wachovia operations of Wells Fargo Bank, countered that his company has held onto every mid-sized account it has in the market, noting he just closed a large loan to an auto-parts dealer in Connecticut he declined to identify by name.
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To Gov. M. Jodi Rell, however, banks have not done enough to keep up business lending. Rell spoke at “Connecticut Business Day” in late February in Hartford, sponsored by the Connecticut Business & Industry Association, and touted her plan to create a $500 million fund to provide microloans of up to $20,000 to small companies that are struggling.
“These companies live and die by cash flow, and access to credit has been drying up,” Rell said. “A small flower shop (owner) recently said, ”˜I can”™t even compete for Valentine”™s Day. I don”™t even have the money to buy the stock.”™”
Mike Alberts, a representative in the Connecticut General Assembly who is a commercial loan officer at Simsbury Bank, said that the proposal is interesting but that the state government must remain mindful of loose credit standards of the past creating the recent crisis, and how that should factor into overall loan availability.
“It really is a function of the banks that you are using; it”™s also a function of your profits,” Alberts said. “Banks typically don”™t like to lend to businesses that are struggling ”¦ I don”™t want to endorse wholeheartedly the revolving loan fund without some more work on it.”
Connecticut banks in fact added a small number of employees during the year, according to figures they reported to FDIC. The state”™s 55 banks recorded $199 million in net income in the fourth quarter, up from $144 million in the third quarter and just $18 million a year ago. Fifteen banks were unprofitable, two fewer than in the third quarter and 25 a year ago.
What”™s more, loans deemed non-performing crept up only slightly by just 0.03 percent, essentially stuck 2.2 percent. While loss provisions remain high nationally, banks registered their first year-over-year decline in the category in more than three years.
Still, total loans and leases continued to march downward in inverse relation to deposits, which continued to climb. Statewide, $51.1 billion in loans were outstanding in the fourth quarter, down from $51.6 billion in the third quarter and $52.5 billion in the fourth quarter of 2008 as the credit crisis rocked the foundations of the financial world.
