BNC Financial Group Inc. has had the second best performance in the country under the Small Business Lending Fund, a key component of President Obama”™s ballyhooed 2010 jobs bill.
BNC owns Bank of New Canaan, Bank of Fairfield and Stamford First Bank, and is based in New Canaan.
Since becoming one of some 280 banks nationally to accept funding under the Small Business Lending Fund ”“ in its case $11 million ”“ BNC has tripled small business lending from an average baseline formula used in a U.S. Department of the Treasury study published in January.
Only Colorado-based CIC Bancshares fared better by boosting small-business lending better than 400 percent. Two other tristate area banks placed in the top five ”“ Alma Bank in New York City and Harmony Bank in Jackson Township, N.J.
The study includes loans executed in the period between when Obama”™s Small Business Jobs Act became law in August 2010 and when banks received their actual SBLF tranches ”“ in BNC”™s case, an interval stretching about a year.
Nevertheless, community banks may have been emboldened to increase lending on the expectation of receiving funding, though after the program concluded some industry analysts complained that the Treasury Department did not accept enough applicants.
In Connecticut, just three other banks besides BNC participated, none in Fairfield County, and none posting an increase of more than 15 percent in small business lending in the initial SBLF period delineated in the study.
Perhaps incredibly, about one in five community banks nationally approved for SBLF funding did not immediately boost small business lending, and a large number achieved just single-digit increases. In a blog, a Treasury Department official nevertheless termed the program a success.
“Institutions participating in the Small Business Lending Fund have significantly increased lending to small businesses, to the tune of $3.5 billion,” stated Don Graves, the Treasury Department”™s deputy assistant secretary for small business, community development and housing policy, in a January blog. “These increases have a huge impact in their communities where small businesses have more access to lending.”
BNC CEO Jay Forgotson said the biggest deal SBLF money has helped his bank complete is a loan for a Fairfield company focused on upgrades to commercial facilities. He declined to provide additional details.
Tristate area bankers reported increased demand for all forms of business loans, in informal queries conducted the past six weeks by the Federal Reserve Bank of New York, even as loan delinquencies fell amid suggestions of continued tightening of credit standards. The increase was most prevalent for commercial mortgages, the Fed added, where four times as many bankers reported rising than falling demand. Respondents also indicate widespread increases in demand for refinancing.
“We probably started to see a pickup at the end of October or November,” said Robert Kettenman, president of Darien Rowayton Bank. “I suspect a lot of high-quality businesses have been trying to downsize or scale back ”“ there may be slightly more optimism in their outlook. The fact of the matter is there haven”™t been that many loan opportunities related to expansion. A lot of it is refinancings.”
Many businesses are taking a wait-and-see approach as the early weeks of 2012 unfold before taking on new commitments, according to David Rothstein, CEO of RTi Research, a market research and brand strategy company in Stamford.
“From an optimism standpoint, generally larger companies are doing well,” Rothstein said. “Our client base are Fortune 500 companies ”“ those companies are doing well, but on the other side of things is uncertainty on the economy and the political front. There is a lot of money on the sidelines.”
