The popular picture of bankers finds them hunkered down in their vaults, still smarting from the Great Recession, weighed down by a raft of regulations — and certainly not making loans.
In truth, U.S. banks are lending more than ever, the Federal Deposit Insurance Corp. said this week. The cash spigot is officially turned on full blast, according to the banking industry’s largest trade group.
“Lending rose to an all-time high, with total lending reaching more than $9 trillion in the third quarter,” said James Chessen, chief economist of the American Bankers Association.
Reflecting that robust lending picture, the loan portfolios at most Palm Beach County banks have reached record levels. For the nine banks headquartered in Palm Beach County plus Seacoast National Bank of Stuart, loans outstanding as of Sept. 30 totaled $3.96 billion, up from $2.05 billion in 2012, according to a Palm Beach Post analysis of FDIC data.
Palm Beach Community Bank of West Palm Beach, for instance, has nearly $269 million in loans on its books, an all-time high. President Jim Springer said he has noticed that his bank suddenly faces more competition for loans.
“Three years ago, there were very few competitors,” Springer said. “Today, every bank is lending.”
So why the widespread perception that banks aren’t lending? Springer said that’s largely a result of post-crash mortgage rules, mostly stemming from the Dodd-Frank financial reforms. Borrowers who once breezed through the approval process now must provide reams of documents.
“It’s not that the loan isn’t available,” Springer said. “It’s just that you have to jump through more hoops.”
Palm Beach Community Bank makes relatively few home loans. It focuses on commercial real estate and construction loans, which aren’t subjected to the same rigorous regulations and borrower protections as consumer loans.
While banks in Palm Beach County and the Treasure Coast generally are opening their purse strings, some have seen their loan portfolios shrink below 2007 levels. Anchor Commercial Bank of Juno Beach, for instance, had $72.9 million in loans as of Sept. 30, below its loan level of $84.2 million on Sept. 30, 2007. Anchor Commercial Bank launched during the bubble and long was saddled with problem loans.
Another example is Mackinac Savings Bank of Boynton Beach. Its $71.5 million in loans this year were below the 2007 mark of $75.6 million.
Nationally, big banks are lending more while small banks and credit unions face a heavier burden from new regulations and stricter capital requirements, said economist Mike Moebs of Moebs Services in Lake Forest, Ill.
Record loan activity is driven mainly by such huge banks as Wells Fargo, Bank of America and JPMorgan Chase. Small banks are lending less now than they did before the financial crash, he said.
“If you ask Joe the Plumber or Jane the Retailer where they get money, banks and credit unions over $10 billion are not mentioned,” Moebs said. “They have a problem getting credit, and they’ve had it for eight years.”
As a result, Moebs said, many entrepreneurs are turning to credit cards — which charge rates of 18 percent to 24 percent — to finance their operations.
“If they can get money, the price is steep,” Moebs said.