Regional banks are working to expand their portfolios through commercial lending, according to a recent report from Reuters.
 
In a piece published in July, the international news outlet stated, “U.S. regional banks are ramping up commercial lending to compete more aggressively with their national rivals … Most of the big regional lenders reported double-digit percentage growth in commercial lending for the second quarter as businesses across the United States become more confident about borrowing.”
 
Jim Hansen can attest to the truth of that statement. Hansen, PNC’s Eastern North Carolina regional president, says his bank has experienced a 15 percent growth in revenue.
 
“We’ve added another commercial banker in Wilmington about eight months ago to support the growth we’re seeing in that market,” he said. “Commercial loans are up 12 percent, year over year, in Eastern North Carolina. These are loan dollars, not increased revenues because of increased interest rates.”
 
Some of those are real estate loans. One major example: PNC’s financing of River Place, the city of Wilmington’s public-private redevelopment of the former city parking deck on Water Street.
 
Hansen, who said he has spent a good amount of time in Wilmington talking with business people, said he sees a “good and confident” market.
 
That holds true throughout Eastern North Carolina, he said.
 
“Companies are looking to invest in capital expenditures, buildings and equipment,” he said. “We are seeing a lot of that discussion and activity going on. As the year goes on, we expect this trend to continue.”
 
Hansen attributes part of the confidence to the North Carolina business community’s endorsement of the “significant change” represented by the new tax reform package. Add to that the influx of new residents and businesses to the Wilmington market, and there is lending opportunity aplenty.
 
While it might not be a surprise to see a large, multi-state regional bank like PNC expanding its commercial loan portfolio, the uptick in commercial lending is benefiting smaller players as well.
 
South State Bank’s commercial lending increased more than 150 percent in the first six months of 2018 compared with the same period in 2017, said Mark Tyler, the bank’s senior commercial banker and senior vice president.
 
That increase has come both in numbers of loans and in loan amounts, and is partly a result of the Columbia, South Carolina-based bank’s merger in December with Park Sterling Bank.
 
“Now, we are at about $14.5 billion in assets, so South State is able to serve larger customers and make significantly larger loans,” Tyler said. “Before the merger, $5 million to $10 million was our largest commercial loan. Now we can lend $50 million, or as much as $100 million if we need to.”
 
Tyler emphasized, however, that South State’s heft as a commercial lender in this market and others is not just a result of the bank's larger financial pool. It's due, partly, to the relationships it builds with its customers.
 
“We’ve actually engaged our existing customer base as well as prospective customers, and we’re seeing the fruits of our labors and taking advantage of the growth in the market,” he said.
 
The Park Sterling merger brought significant financial technology under the South State banner. Tyler said that the bank plans to roll out two products to help commercial clients manage and streamline their financial operations. It also has what it calls a “micro biz” product with non-real estate loans of $100,000 or less, and aims to speed both loan approval and loan funding.
 
One key to its lending growth, according to Tyler, is South State’s continued policy of making lending decisions locally. The bank has six offices in the Wilmington market.
 
Another financial institution that has grown its commercial lending muscle is Morehead City-based Sound Bank, with one office in Wilmington.
 
Since its merger with West Town Bancorp a year ago, Sound Bank has been able to offer more services and more funding for commercial customers’ needs, including major real estate projects.
 
“There’s no question the West Town Bank merger provided more capital so that we could be more active in lending,” said Mark Johnson, Sound Bank’s market executive for New Hanover County. “[It] has given us much more room to play from a volume and loan size perspective. We can certainly accommodate the majority [of commercial loan requests] although we are primarily a small business bank. Our sweet spot is anything up to $5 million, but that’s not our limit.”
 
Like Tyler, Johnson emphasized that his bank wants to be more to commercial customers than a lender.
 
“Our bank strives to be a full-service, relationship bank. We can add the most value to our clients by [providing] deposits as well as loans,” he said. “The deposit side is a very important piece; it’s how we acquire our capital that we can lend out.”