January 27, 2017
Georgia-based Synovus cut its exposure to commercial real estate (CRE) and construction loans after the financial crisis of 2008-2009. Synovus turned to C&I lending to health care and doing equipment financing.
In its most recent quarter, that pattern continued. C&I loans grew 7% for the year. CRE lending dropped 0.4%. For all of 2017, Synovus forecasts loan growth of 5%-7%.
The shift in the loan mix has boosted yields, by roughly 30 basis points for the quarter.
Bank of the Ozarks
A very different strategy worked for Bank of the Ozarks. The company recently gave guidance that it expects 57% of overall loan growth to stem from CRE. As of the end of September, the bank registered a ratio of CRE-to-total risk-based capital of 391%, above the 300% established by regulators.
Chief executive officer and chair George Gleason, however, maintained that the bank was comfortable with the existing ratio, and in fact expected it to rise. Gleason said that Bank of the Ozarks was "the lowest-risk CRE lender in the country," according to American Banker.
ComericaSeasoned Loan Sale Advisers Can Help
Dallas-based Comerica, however, expressed confidence not so much in any particular type of loan as in the overall environment for rising interest rates.
Comerica's overall loan portfolio fell roughly 1% on the year, largely as a result of its pursuing fewer loans to the energy sector.
The bank does expect growth in mortgages and auto lending in the coming year, and is forecasting loan growth in line with GDP, at about 2%.
However, bank officials expressed confidence that net interest income would rise as a result of climbing interest rates. The Federal Open Market Committee has indicated it expects to hike rates several times over the next year. David Duprey, Comerica's chief financial officer, noted "over 90% of our loans are floating-rate. Therefore, as rates move, our loan portfolio reprices relatively quickly." The bank expects net interest income to climb by roughly $70 million over the next year.