Growth in commercial and industrial borrowing, which has powered
If balance sheet levels at March 21, the most recent date available, held through the final 10 days of the month, business loan growth would have fallen from an annual rate of 17% in the fourth quarter to 9% in the first quarter — the first slowdown in a year and a half.
In March, some banks told investors they had continued to significantly expand their books. These banks said they did so by signing up new clients, taking share from competitors, and making winning bids in the
“The economy itself is just not growing that fast,” said BB&T (BBT) Chief Executive Kelly King. Front-line officers at the company told him that “about 80% of our loan growth is takeaways.”
Total loan growth at domestically chartered commercial banks fell from an annual rate of 4.1% in the fourth quarter to 1.3% in the first quarter, according to the Fed data, which is based on information provided by a sample of banks calibrated to quarterly regulatory reports. (The data is seasonally adjusted, and has been modified here to back out additions of about $96 billion of assets and liabilities in February and March resulting from thrift-to-bank conversions.)
At an annual rate of 5.2%, deposit growth in the first quarter was about on par with the preceding three months, but down from the surge during the second and third quarters last year, when
Growth in total assets accelerated as commercial banks added to holdings of securities and cash.
PNC Financial (PNC) Senior Vice Chairman William Demchak said that strong commercial loan growth at his company “is largely due, if not entirely due, to new client growth … because we haven’t seen utilization change through time,” referring to the percentage of outstanding credit lines businesses have drawn.
Cash levels at large businesses remain at longtime record highs, reflecting abiding caution after the financial crisis and indicating an abundance of internal resources to fuel growth. Currency and deposits made up almost 6% of total assets at nonfinancial corporations in the fourth quarter, the highest percentage in more than 60 years.
Timothy Sloan, Wells Fargo’s (WFC) chief financial officer, said his company had also not seen much change in line usage. Instead, Wells Fargo has been executing deals like the purchase of about $4 billion in commercial real estate loans in the U.S. from Irish banks, and an agreement to