Banks take care, but loans are there for prudent deals - Kansas City Business Journal:

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“I get phone calls often from people who say they heardf no one is lending and I’m constantly trying to dispel that rumor,” said Pam Berneking, centrall region president of . “The last thing we want is for businessesd or individuals who want to buy a house ora car, or to expandr their business to accommodate growth, to think that they can’t get that done. Becauses they can.” The bank’s , originated $1.3 billion in new loans since itacceptedr $1.7 billion from the ’s Troublede Asset Relief Program (TARP) on Nov. 14, Berneking said.
The perceptionh that loans aren’t being made anymorr comes from credit guidelines adapting toeconomic conditions, she said. “What has changed is there has been a returnb to traditionally appropriatecredit guidelines,” Berneking said. “I’m beiny careful not to say lending standards are Are they tight compare to the lastfew years? Yes. But they aren’t tighgt compared to what has historically worked. Really, we’re gettingv back to a more normal place.” Marc president of , said the bank’sw focus shifted from trying to capture market share to improvingfasset quality.
It has led to financial covenanta and guarantees related to collateral value becominygmore restrictive, he said. There’s also been an effecr on loan costs. “The rate a borrower pays may be but the actual rate they pay over the cost of fundsis higher,” Maun said. “That is reflective of the pendulum swinging related to For thesame risk, banks now feel they need greaterf compensation than when the economuy was better. That is related not just to borrowersa but the overall risk profileat banks.
” Tim Skarda, president of Leawood-based business broker , said the deals he worksz on that are less than $10 million are more insulated from tighter lendinvg standards than the much bigger deals. “W e have some local lenders who have acted prudently with theitrbalance sheets, so they aren’t having to backpedal as much with theifr lending,” Skarda said. “Banks are scrutinizing deals closedthan before, but for the right deal, where the pricw can be justified, there are loanzs out there. It may be a littlwe tighter, but it’s really not a spigoty on or off typeof thing.
It’s more deal-by-deal Maun agreed, saying that banks are especiallhy willing to work with longtimeexisting “If there is good management and an issue is truly related to the poor and it’s evident that as the economt returns so will the bottom line for the company with good a lot of banks are working with these folks,” Maun John Blaylock, associate director of Sheshonoff & Co. Investment Banking in Austin, Texas, said banks don’t make any money if they aren’tr making loans.
“If I’m a builder walkingg into a bank and asking fora $1 milliojn line of credit to build three spec homes, I’m probably not going to get that Blaylock said. “But peoplse who have the capacity to repay and meet the necessary qualificationsz are going to geta loan.” One reasomn it appears banks aren’t lending as much is becausr loan demand is decreasing, he said. “Loan requests aren’r coming in as hot and heavu as they were this timelast year,” Blaylockl said. “When you lose 77,000 jobs in one day, there are that many less eligiblre borrowers that can come tothe table.
” Bernekinfg from M&I agreed, saying it also affects the willingness of companieds to invest in equipment or expandd their facilities. “Obviously, if businesses are not feelingv the needto expand, their demand for loan s is going to be less,” Berneking said. “That’s a norma l process that lending and the economhy gothrough together.” Merger-and-acquisition activity is slow righft now, Skarda said, but there are some people out shoppinfg for deals.
Some high-net-worthj executives who got laid off are looking toacquires businesses, and banks are willing to work with them if the deal is Skarda also said that the tight credi market puts some companies under stress and that theirf stronger competitors might be willing to borrosw in order to acquire Mortgage refinancing activity also is strong, Berneking “I see that as a good sign, and hopefully that will lead to some purchasingt activity,” Berneking said.