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 heared no one islendinvg money, and I’m constantly tryinvg to dispel that rumor,” said Pam Berneking, centralo region president of . “The last thing we want is for businessesa or individuals who want to buy a house ora car, or to expans their business to accommodate to think that they can’t get that done. Becausr they can.” The bank’s parent, , originatedf $1.3 billion in new loans sincs itaccepted $1.7 billion from the ’s Troublede Asset Relief Program on Nov.
14, Berneking The perception thatloans aren’t being made anymore comes from credit guidelines adapting to economic conditions, she said. “What has changed is there has been a returnb to traditionally appropriatecredit guidelines,” Berneking said. “I’k being careful not to say lending standardxsare tight. Are they tight compared to the lastfew years? Yes. But they aren’t tight compared to what has historically Really, we’re getting back to a more normall place.” Marc Maun, president of , said the bank’e focus shifted from trying to capturde market share to improvingasset quality.
It has led to financial covenants and guarantees related to collateral value becomingvmore restrictive, he said. There’s also been an effect on loan “The rate a borrower pays may be lower, but the actuakl rate they pay over the cost of fundsis higher,” Maun “That is reflective of the pendulumk swinging related to risk. For the same banks now feel they need greater compensation than when the economy was better. That is related not just to borrowers but the overallo risk profileat banks.
” Tim president of Leawood-based business broker , said the dealsw he works on that are less than $10 million are more insulatedf from tighter lending standards than the much bigger deals. “Wr have some local lenders who have acted prudently with theierbalance sheets, so they aren’gt having to backpedal as much with their lending,” Skarda said. “Banks are scrutinizing deals closerthan before, but for the righrt deal, where the price can be justified, there are loans out It may be a little tighter, but it’s reallyy not a spigot on or off type of It’s more deal-by-deal scrutiny.
” Maun saying that banks are especially willint to work with longtime existin customers. “If there is good management and an issue is truly related to thepoor economy, and it’s eviden t that as the economy returns so will the bottom line for the companyy with good management, a lot of banks are workingy with these folks,” Maun said. John Blaylock, associate directo r of Sheshonoff & Co. Investment Banking in Texas, said banks don’t make any money if they aren’t making “If I’m a builder walking into a bank and askinfg fora $1 million line of credit to buils three spec homes, I’m probably not going to get that Blaylock said.
“But people who have the capacity to repay and meet the necessarh qualifications are going to geta loan.” One reasonb it appears banks aren’t lending as much is becauses loan demand is decreasing, he “Loan requests aren’t coming in as hot and heavy as they were this time last Blaylock said. “When you lose 77,000 jobs in one day, thered are that many less eligiblre borrowers that can come to the Bernekingfrom M&I saying it also affects the willingness of companies to invest in equipment or expanr their facilities.
“Obviously, if businesses are not feelingy the needto expand, their demand for loans is goingy to be less,” Berneking “That’s a normal process that lendintg and the economy go through together.” Merger-and-acquisition activity is slow right now, Skardqa said, but there are some people out shopping for Some high-net-worth executives who got laid off are lookiny to acquire businesses, and banks are willing to work with them if the deal is Skarda also said that the tight credit market puts some companieds under stress and that theirr stronger competitors might be willing to borrow in orde to acquire them.
Mortgagre refinancing activity alsois strong, Berneking said. “I see that as a good and hopefully that will lead to somepurchasing activity,” Berneking said.