Lump together the financial data for every bank in the Springfield Metropolitan Statistical Area, and an analysis shows that lending is down by $55 million between first-quarter 2009 and first-quarter 2010.
A closer look, however, shows that some Ozarks banks are actually ramping up lending.
A Springfield Business Journal examination of 2009 and 2010 first-quarter financial statements from the Federal Deposit Insurance Corp. found first-quarter total loans by banks based within the Springfield MSA dropped roughly 1 percent from first-quarter 2009 to the same quarter this year.
That puts the local market more in line with national lending levels, which were relatively flat between the two quarters, than with statewide lending, which has dropped 6.1 percent in the same time period.
Banks based in the Springfield MSA are almost evenly split on lending, with 13 banks showing an increase in total loans from first-quarter 2009 to first-quarter 2010 and 12 registering a decrease for the same period.
Among the banks increasing lending is OakStar Bank, which grew its total loans by $19.6 million between first quarters 2009 and 2010. OakStar’s assets have grown along with its loans. Total assets in first-quarter 2010 were $159 million, compared to $130 million for the same quarter of 2009.
The jumps aren’t a fluke. In 2009, OakStar raised an additional $15 million in investor capital, and Chief Lending Officer Mike Lawson said most of that money was used to support the bank’s growth.
“We have intentionally grown the bank even though it is a very difficult market,” he said. “We feel like this is the ideal time to try to grow.”
Springfield First Community Bank holds a similar view, though as a fairly new bank – it opened for business in October 2008 – it’s in a unique position, said Bank President and CEO Brian Straughan. Springfield First’s total loans shot up to $118.6 million in the first quarter of 2010, compared to $48.4 million in the first quarter of 2009. Total assets took a similar jump during the same time period, increasing by $85.2 million to $164.3 million for the same quarter.
“We raised about $22 million that was initial capitalization,” Straughan said. “Now, we’re at that point where we’re growing from earnings.”
Both Straughan and Lawson note the economy hasn’t made it easy on lenders. Many of the banks that show reductions in total loans have similar decreases in total assets, and loan-to-asset ratios don’t reflect much of a difference between the first quarters of 2009 and 2010.
In the first quarter of 2009, Springfield MSA-based banks’ total loans were roughly 82 percent of total assets; in the first quarter of 2010, that percentage was 81.
“Some of the reason we’re seeing some loans are down is not necessarily a function of banks pulling in the reins on lending,” Straughan said. “Quite frankly, there’s a lot of uncertainty in the market right now, in regards to the economy … businesses are focused on building their cash reserves and reducing the debt on balance sheets.”
State Bank of Southwest Missouri’s total loans dropped to $68.6 million during the first quarter of 2010, from $77.1 million in first-quarter 2009, but bank President Thomas Fowler said it would lend more if it had more qualified borrowers.
“We’re actively seeking loans,” he said. “We’ll do personal loans, business loans, real estate loans.”
The economy has, however, taken its toll on the amount of good loans available, Fowler notes. Even previously good borrowers may not be viable candidates for loans today, he said.
“Take a person that comes in for a loan, and they have a house that was worth $200,000 two years ago, and now it’s worth maybe $120,000. Maybe their loan is for $140,000,” he said. “It’s the same person who walked in your door two years ago, but he’s a different borrower.”
Real estate developers are facing similar problems, Lawson said, adding that OakStar continues to make very selective loans for construction.
“I think that our bank would certainly work through the due diligence part with a developer, but we’d expect that developer to justify that project would work,” he said. Despite the increased stress placed on lenders, the local bank pulse is healthier than that of banks statewide, based FDIC data.
In addition to a lower local lending drop, total assets of banks based in the Springfield MSA have basically held steady at $8.29 billion for first-quarter 2010, compared to $8.27 billion for the same quarter a year ago.
By comparison, total assets for all banks in Missouri dropped 3.1 percent between the two quarters.
“Springfield is a resilient community,” Straughan said. “I think we tend to weather the downturns as well as, if not better, than most.”[[In-content Ad]]
