During quarterly earnings calls Tuesday, bank CEOs were peppered with questions about the industrywide slowdown in commercial lending, reflecting a growing concern that the post-election jump in business confidence may not translate into stronger demand for credit. Executives put a positive spin on the issue, telling analysts that, even without pro-business changes in Washington — such as tax reform — they expect their books to soon grow at a faster clip.

But the hand-wringing over business lending has overshadowed the fact that consumer lending — particularly for regional banks — has become a strong and steady engine of growth.

For instance, consumer loan growth was broad-based at Regions Financial in Birmingham, Ala., where increases in credit card and other indirect loans helped to slightly offset a decline in commercial credits. That growth has been aided in part by partnerships with the marketplace consumer lender Avant and GreenSky, an Atlanta firm that makes home improvement loans at the point of sale at Home Depot Stores and other retailers.

At Synovus Financial, similar fintech partnerships helped power growth in the retail side of the business. Consumer loans grew by nearly 17% at the $30 billion-asset company, thanks to agreements with GreenSky and SoFi, a digital lender that caters to well-heeled millennials.

“We’ve been wanting to grow our consumer book, and we knew we would want to get into some consumer partnerships to do that,” said Kevin Blair, the chief financial officer at Synovus.

The Columbus, Ga., company is primarily a commercial lender but has recently made expanding its retail division a priority as it looks to diversify its loan book. Relationships with fintechs have accelerated the push, as originations with online lenders increased by nearly 90% from a year earlier, to $922 million.

“Consumer is just a smaller piece, so it can grow faster,” said Kevin Fitzsimmons, an analyst at Hovde Group. “I get the impression that it will continue.”

An uptick in retail lending also helped to offset ongoing efforts to slash oil and gas portfolios at other regionals. Comerica and Regions increased consumer loans by 3% and 2%, respectively.

Overall, though, total loans at Regions declined 2%, to $80.2 billion, due primarily to a conscious decision to scale back in energy and multifamily lending. On a conference call with analysts, executives said intense competition, as well as a strong desire to minimize risk in the portfolio, were the key drivers in the decision to reduce its energy and multifamily exposure.

Weak demand from business clients was also a drag on the quarterly results. Overall, commercial loans dipped 4%.

“We’re seeing a lot of optimism on the part of our business customers,” said CEO Grayson Hall. “It’s encouraging but it’s not yet resulted in the kind of demand for bank credit that we’d like to see.”

Hall also expressed a tempered optimism about the remainder of 2017, though he noted that demand has been “softer than expected” during the first part of the year.

Total loans for the rest of 2017 are expected to grow by 2%, Brian Klock, an analyst with Keefe, Bruyette & Woods, wrote in a research note to clients. Net interest income is also expected to rebound, boosted in part by an expectation for a steady increase in the net interest margin.

Other analysts were less sanguine.

“That’s a little hard for people to swallow, that net interest income is going to move higher, even though you’re going to shrink loans year over year,” said Stephen Scouten, an analyst with Sandler O’Neill.

Investors are likely going to be “a lot less willing” to expect future loan growth, until they see more details about policy changes in Washington that will help small to midsize businesses, Scouten added.

Regions’ shares fell 4.6% Tuesday, closing at $13.34. Synovus’ shares climbed 2.6%, to $40.93, and Comerica’s stock jumped 1.2%, to close at $67.73.

A year after almost buckling under the weight of bad oil loans, Comerica has moved swiftly to improve credit quality and slash its exposure to the energy industry. Oil and gas loans at the $73 billion-asset company declined nearly $1 billion, or over 30%, compared with a year earlier.

But the decision to reduce exposure to energy was a drag on the company’s total portfolio. Total loans dipped 1% from a year earlier, to $47.9 billion. Meanwhile, middle-market lending, a category that includes energy, entertainment and life-sciences businesses, declined 3%, to $26 billion.

“I think you’re seeing [commercial lending] stable to slightly up when the need is there,” said Ralph Babb, Comerica's CEO and chairman.

Businesses are borrowing to “take care of current demands, but not investing in the future, because of the uncertainty” about policy changes in Washington, Babb said.

Comerica executives — like many of their peers — sounded upbeat about the months ahead, despite the weak demand for credit from major business clients. Comerica President Curtis Farmer noted that so-called “commitments to commit”— a metric that indicates the strength of a loan pipeline — increased sharply at the end of the first quarter.

“There is definitely a lot more optimism than we saw in the third quarter or fourth quarter of last year, even though some of that may have [slowed down] a bit,” Farmer said.

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Kristin Broughton

Kristin Broughton

Kristin Broughton is a reporter for American Banker, where she writes about the business of national and regional banking.