HONOLULU Community bankers have used some of their time in Hawaii to reflect on the traction they have gained in the past year.
Challenges abound, they admit. Still, aggregate loan portfolios have increased compared to a year earlier. Profitability has improved. And smaller institutions have gotten some regulatory relief in areas such as Basel III and the Volcker Rule.
"I think the mood is much better than it has been in the past," Rusty Cloutier, the chief executive of MidSouth Bancorp (MSL) in Lafayette, La., said in an interview at the Independent Community Bankers of America's annual conference here this week. "It seems more upbeat. People overall feel that business is better than it has been the last couple of years."
MidSouth, which has been an active consolidator in the Southeast, increased the size of its loan portfolio by 9% last year, to $1.1 billion. The $1.9 billion-asset company's earnings rose 59% from a year earlier, to $12.8 million.
Overall, key metrics are improving at community banks. Total loans at banks with $15 billion or less in assets edged up 1.1% at Dec. 31 compared to a year earlier, to $2.03 trillion, according to Federal Deposit Insurance Corp. data. Total profit among those banks rose 7% last year compared to 2012, to $32.4 billion.
Competition for those loans remains fierce, especially from larger banks that are willing to cut pricing or offer more generous terms. Still, for many bankers, they are relieved that there are finally quality borrowers to fight over.
"We feel better now compared to a year ago," says Barry Ham, the chief executive at Bank of Clarendon in Manning, S.C. The $218 million-asset bank's loan portfolio increased about 2% last year compared to 2012, to $133 million. The bank's net income in 2012 rose 4% from a year earlier, to $2.1 million.
"Things are still sluggish but you can still see some glimmers of hope," Ham adds. "We're cautiously optimistic."
HomeTown Bank in Redwood Falls, Minn., also reported an improvement in its loan portfolio after expanding closer to Minneapolis, says Dean Toft, the $223 million-asset bank's chief executive. Total loans at HomeTown jumped 11% last year compared to 2012, to $153 million. Its profit dipped slightly from 2012, to $2.5 million.
"We've diversified and seen pretty good loan demand," Toft says, noting that growth in commercial lending has offset some slowdown in its traditional agricultural business. "From a commercial perspective things are getting better."
Overall, the tone of the annual conference was more positive than in years past. "We're finally emerging from the crisis years that have lasted way too long," says Cam Fine, the ICBA's chief executive.
"The future is bright for community banking," Fine said, noting the industry's ability to obtain relief from Volcker and Basel III. "I think we're getting stronger than ever and our bankers' efforts are making a difference. At the end of the day, community banking is going to endure some the headwinds and thrive in the new financial world that is emerging."