Community bankers are reacting to Donald Trump's victory in the presidential election with crossed fingers.
Many are hopeful that, with a pro-business Republican in the White House, Congress will move swiftly to roll back regulations that they say have dramatically increased banks' cost of doing business and stymied economic growth.
Trump's promise of lowering taxes and repealing the Affordable Care Act is also music to the ears of small-business owners and could encourage many of them to invest in new facilities or business lines, creating more jobs, bankers said Wednesday.
"I've gotten a lot of texts and emails from people since last night, and … everybody's excited," said Dennis Nixon, the chairman of the $11.7 billion-asset International Bancshares in Laredo, Texas. "Capitalism is a dynamic economic model, and when you free it [you get] great opportunities. Business people in general are excited about the prospects of" a Trump presidency.
Others, though, say they are not counting on Trump and Congress to push through any meaningful regulatory relief for small banks because animosity toward the industry overall is still running high.
Some are also wary of Trump's protectionist rhetoric and his promise to bring back manufacturing jobs that have likely disappeared for good. Chris Murphy, the chairman and chief executive at the $5 billion-asset 1st Source Bank in South Bend, Ind., said investing in job training should be a key priority of the new administration.
"Technology has been the biggest change in how we do business, [and] people need to be educated to deal in a world that's technology-oriented," Murphy said. "We owe it to those people who have been displaced."
While community bankers openly shared a range of opinions, officials at their larger rivals were mum. Several big and regional banks contacted by American Banker either declined to comment or did not respond. JPMorgan Chase CEO Jamie Dimon issued a letter to employees that said the election results reflect "a deep desire for change" and broader economic opportunity; the letter did not discuss what the direct impact on JPMorgan might be.
For now, Trump's sweeping victory over Democrat Hillary Clinton, combined with Republicans' retaining control of both the House and the Senate, seem to bode well for the industry. Bank stocks were up sharply on Wednesday as investors viewed Trump's win as a net positive for loan growth and margins.
"Mr. Trump's plan to reduce government regulation, implement aggressive infrastructure spending and lower corporate tax rates … could spur increased business investment spending by both large and small firms and lead to stronger loan growth," Wedbush analysts Peter Winter and David Chiaverini wrote in a research note to clients Wednesday. "Loan demand, particularly for middle-market and small businesses has been soft due to uncertainty."
Bankers said that the government regulation has been the single-biggest drag on loan demand. Dan Blanton, the president and CEO at the $1.9 billion-asset Southeastern Bank Financial in Augusta, Ga., said that his company's loan-to-deposit ratio has been stuck at historic lows over the last several years because businesses have been reluctant to borrow "for fear of more regulations, more costs being piled on them."
"For the last seven or eight years, we have been hearing that we are out of this recession, but I can tell you my small-business customers are not seeing that," Blanton said. "Even those that are doing well have been very reluctant to borrow to expand their businesses."
Blanton said Trump's election is giving business customers reason for optimism. He's also hopeful that with Republicans firmly in control in Washington, "a window will begin to open to provide some meaningful regulatory relief for community banks."
Patti Husic, the CEO of the $464 million-asset Centric Bank in Harrisburg, Pa., agreed that Trump's policies could spur more borrowing and job creation. She is particularly hopeful that a Trump administration would relax restrictions on how privately held banks raise capital so that banks like hers could increase lending in their communities.
McCall Wilson, the president and CEO of the $443 million-asset Bank of Fayette County in Piperton, Tenn., said the best thing Trump can do for community banks is make regulation simpler. That starts, he said, with appointing pro-business regulators and pro-business men and women — both Democrats and Republicans — to his cabinet.
"He has an opportunity to do something great, to get this country back on its feet, but he needs to be bipartisan," Wilson said. 'He's not going to do that by taking sides."
Other bankers agreed that they expect regulators to be less aggressive under Trump, but they stopped short of predicting meaningful regulatory relief, even for small banks.
"The person who says there will be less regulation in the future is dreaming," said 1st Source's Murphy. "Government will just change regulations."
Regulatory relief "would be my hope, but I'm a realistic person and I don't know that's going to happen," Nixon said. Politicians "generally never completely follow through on the things that they need to do."
Murphy also said he has not heard "much more than platitudes" from Trump on how, exactly, his policies would create jobs. He and others are particularly troubled by his stance on trade.
"If he ends the trade agreements, that will be good for some and bad for others," Murphy said.
"Trade has led to lower costs of goods and services here, and if [Trump] goes about erecting a [trade] barrier, we'll end up creating a recession," he added. "I hope he understands that there are certain benefits and some costs with regard to trade."
Bob Steen, CEO of the $85 million-asset Bridge Community Bank, in Mechanicsville, Iowa, agreed.
"Our efforts, as flawed as they are for free trade, have served our agricultural market well, whether our producers agree or not," he said. "That concerns me."
Andy Peters, Allison Prang and Kevin Wack contributed to this story.