As I watched last night's presidential address to Congress, I couldn't help raising an eyebrow when President Obama made the statement, "Banks are afraid to lend right now, even to each other. Banks are afraid to do even a car loan." Our Commander-in-Chief should have qualified that statement by putting "Mega" in front of "Banks". As recently acknowledged by almost everyone, community banks participated very little (if at all) in the house of cards that was the securitized mortgage market.
Though there's plenty of uncertainty & thinly-disguised fear among myself and my friends who are community bankers, we're still in business and we're making no plans to stop making prudent lending decisions. A few examples:
- Last week I closed a residential spec construction loan. Have I lost my mind? On the contrary, the borrower is highly creditworthy, is continuing to sell homes, and is an excellent customer. And no, I'm not a "rogue lender" who did this under my own authority. Loan Committee approved the transaction based on its merits (i.e. business as usual).
- Yesterday I received committee approval of three separate requests for loans to fund various types of business expansion, which represents Crescent Bank's commitment to continue to do business with entrepreneurs who are the lifeblood of ANY U.S. economy.
- One of those loans funded the purchase of a truck for use in the borrower's business. Yes, wonder of wonders, Crescent Bank is NOT afraid to make a car loan.
- Yesterday I said "no" to a request from a long-time customer, a seasoned real estate investor who was seeking financing to roll 1031 Starker funds into an established commercial property with a bond-rated NNN tenant. The good news? My only reason for saying no was that the real estate was outside Crescent Bank's market area. Had it been in our market, I have no doubt that we would have been happy to make the loan. I referred my customer to a community banker in that market and I have little doubt that the transaction will close.
- Today I'm meeting with a Certified Development Company (CDC) to discuss details of a proposed SBA 504 loan to fund construction of a new office for a local dentist. Since Crescent Bank is on SBA's Preferred Lender Program, there is a high chance that we will approve that transaction.
Am I nervous about the market? Yes. Do I hope and pray for a turnaround as soon as possible? You bet. Out of business? Nope. Remember, we're a community bank.