Local commercial loan pipeline on slow-flow

If the loan pipeline in Northern Colorado is indicative of economic trends, then this much can be said: The economic recovery is still on super slow-mo speed. Money is available, bankers say. All that’s needed are businesses ready to sign on the dotted line.

“Loans are very slow,´ said Byron Bateman, president, CEO and chairman of the board at Cache Bank & Trust in Greeley. “I sense the economy is leading people to kind of watch their cash. There’s not a lot of expansion right now.”

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Bateman said he had hopes that the economy would bounce back in the second quarter of 2010. “Now I’m thinking maybe next year at this time. Businesses are keeping it pretty close to the vest.”

Leroy Leavitt, chairman and CEO of New West Bank in Greeley, agreed that the loan pipeline is somewhat flat, with his bank seeing “maybe 5 percent growth.”

Leavitt said loan demand is coming from current customers growing their businesses as well as from customers moving their business to New West from other banks “unable to take care of their good customers’ needs.”

“That’s not new, that’s always been around,” he added. “It’s just a little more prevalent.”

Mark Driscoll, president of First National Bank, said he too sees loan demand as “still weak generally” but that there is light at the end of the tunnel. His bank has seen the number of applications for business and SBA loans double from the previous year, albeit 2009 was a very slow year as well. Nonetheless, Driscoll calls it “meaningful improvement.”

Dollar amount of loans applied for, he said, are smaller compared to years past when the economy was robust. “Businesses that are doing well are growing and expanding. They need working capital, equipment and money to expand facilities.”

Cache’s Bateman noted that bankers are experiencing a “double dip.”

“In addition to not having a lot of loan proposals, we also have a fair number of lines of credits available,” he explained. “Businesses are not using seasonal lines of credit like they have in the past.”

What this means is that bankers at Cache, including Bateman, are spending more time calling on prospective and current customers. “We’re moving that time to service loans into calling efforts,” he said.

Although Cache is not expanding geographically to drum up business, it is calling on a wider variety of industry sectors, including oil and gas. And it is going after all loans, big and small.

Faster flow

The loan pipeline, however, seems to be flowing faster at FirstBank, where Patrick Brady, president, boasts of being on pace to surpass his bank’s 2009 record-breaking loan volume of $125 million.

“The health of our balance sheet allows us to be a consistent lender,” he said. The bank’s largest loan of $10 million helped finance OtterBox’s expansion of its distribution facility at Interstate 25 and Mulberry Street and its corporate headquarters in Old Town Fort Collins.

Brady said several other loan packages – some for as much as $2 million – include “a little bit of everything,” from owner-occupied projects, retrofitting existing buildings and acquiring office/retail buildings. FirstBank has also signed off on several loans through the SBA 504 program.

But borrowers, he added, continue to be wary about taking out loans when the economy remains shaky. “Just because you’re wary doesn’t mean you don’t have to move forward,” Brady said.

Steve Lovas, regional president of US Bank, said the recession has “been dragging out longer than all of us hoped.” It hasn’t changed the way the bank goes about business. Loans are being made, including large ones, but he’s not seeing as much expansion by small businesses as he did two or three years ago. “It is more difficult to find projects that qualify because of the economy,” he said.

But there are signs of hope. “I would say a majority of us, regardless of what business you’re in, be it banking or restaurants or home building, all of us expected to be further along today than we are,” according to Lovas. “Northern Colorado is a market area that has a bright future. The million-dollar question is: When do we get back to stable times?”