Tuesday Topic: C&I Lending

​We are C&I lenders, but we have seen our portfolio run off slowly over the last year. We have seen some lenders (not all of them banks) offering liberal terms. We have resisted lowering our underwriting standards. We believe we are in the late stages of our credit cycle, and pigeons may come home to roost soon.

We are also seeing some community banks eager for C&I loans to dilute their concentrations in commercial real estate lending. A little bit of thought makes it obvious that making riskier C&! loans doesn't really make commercial real estate lending any better, but regulatory guidance has got some banks fixated on the 300% CRE loan to capital threshold.

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Dwayne Kolly
Chief Financial Officer
Business Bank of Texas, N.A.
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Original Message:
Sent: 07-10-2018 09:46
From: Barb Rehm
Subject: Tuesday Topic: C&I Lending

Reversing a prolonged slump, business borrowing jumped 5.5% over the year ending in June, The Wall Street Journal reported Monday. Are you seeing this pickup in your markets? What is driving your business borrowers to pull the trigger? More confidence in the economy? Desire to lock in loans before rates rise further? Other reasons? The OCC recently warned that some banks are loosening terms on commercial loans, taking on too much risk. Are you seeing evidence of that in your markets?

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Barb Rehm
Senior Managing Director
Promontory Interfinancial Network
Arlington VA
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