Even as federal officials remain concerned that European fiscal woes could revive tight lending by U.S. banks, commercial loans appeared to continue on a revival heading as the second quarter neared a close.
Connecticut banks added more than 250 employees in the first quarter, according to data published by the Federal Deposit Insurance Corp., pushing their combined work force to the highest level since the third quarter of 2008 when the collapse of Lehman Brothers precipitated the recession.
Loans and leases outstanding in Connecticut rose by more than $1 billion from the fourth quarter last year, a 2 percent increase, though loans were still $460 million below their levels of a year ago.
Still, loans generating late payments from borrowers continued to creep upward in Connecticut in the first quarter, to 2.4 percent of all loans outstanding from 2.2 percent in the fourth quarter last year, and 1.7 percent a year ago. Nationally, however, the increase in noncurrent loans was the smallest in three years, the FDIC stated
Since January, commercial and industrial loan demand has picked up considerably for JPMorgan Chase & Co., both among small businesses and for larger loans required by middle market companies, according to Nicole Holzapfel, who leads the bank”™s middle market lending group with offices in Shelton and White Plains, N.Y.
“Through April, we”™ve gotten 18 new relationships ”¦ In all of 2009, we got just 16 new relationships,” Holzapfel said. “We are seeing really good demand ”“ companies are coming back to health.”
It is not just JPMorgan Chase, according to Pete Garrison, a consultant with Stamford-based Greenwich Associates. Some middle-market companies are experiencing what Garrison describes as a sudden end to the credit crunch, as earnings pressure drives banks to compete for new loan business from middle-market companies.
“The turning point was August last year ”“ that was when we started to sense glimmers of hope,” Holzapfel said. “Companies were saying, ”˜You know, I think we are going to turn a profit this month.”™”
Although credit conditions remain difficult for many U.S. companies following a deep recession and a painful banking crisis, according to Garrison, now might be the time to act for middle market companies in need of bank financing. He adds that “prices” on credit are falling dramatically, and longer loan durations are being offered due to the intense competition among banks.
At the same time, economists warn that interest rates could begin an upward hike as the year progresses, possibly dampening any recovery.
“I wouldn”™t say the financing is as robust as it was in period prior to credit crunch,” said Jonathan Davis, owners of The Davis Cos., a major commercial landlord in Fairfield County that has been raising both debt and equity financing for new property purchases. “It”™s really been an evolution, but we are definitely seeing more interest from lenders.”
Despite the punishing headlines banks have absorbed throughout the recession, a new survey released by J.D. Power & Associates showed that overall retail customer satisfaction declined only slightly in the past year, though a far larger percentage of customers cited willingness to switch banks.
Among banks doing business in Fairfield County, scoring highest in retail customer satisfaction were Bridgeport-based People”™s United Financial Inc., TD Bank, Waterbury-based Webster Financial Group Inc., and the Wachovia operations of Wells Fargo.
