Community Banks to Lend More to Small Business in 2011

By Reuters  |  Print this article Print

Small, community-focused banks are planning to lend more to businesses this year than they did in 2010.

(Reuters) - A majority of small, community-focused U.S. banks plan to lend more to businesses in 2011 than 2010, according to a recent study by industry consulting firm Sageworks Inc.

According to the study, 58 percent of lenders at community banks plans to make significantly more commercial loans this year than last.

Roughly 38 percent of lenders said they plan to make the same number of commercial loans, while 11 percent said their commercial loan portfolios would shrink.

The survey polled lenders at 159 community banks nationwide.

The results indicate some of the smaller U.S. lenders are recovering from the housing market's collapse and financial crisis in 2008.

Unlike the largest national banks, community banks typically have less than $1 billion in total assets, and operate in a limited geographic area.

Community banks typically rely on real estate-related or small business lending for income, which evaporated as home sales sunk, foreclosures skyrocketed and the worst recession since the Great Depression began.

Since 2007, 340 U.S. banks have failed, according to Federal Deposit Insurance Corp data. The vast majority of those are classified as community banks.

(Reporting by Joe Rauch; Editing by Tim Dobbyn)