Bankers look for improved loan business in 2015, but challenges remain

Banks in Wichita and the state are expecting a slight uptick in business in 2015, but the industry as a whole probably won’t be breaking any growth records, industry officials said.

Local and state bank officials said this year should just about mirror last year in terms of activity.

“Things are just kind of status quo,” said David Harris, president and CEO of RelianzBank in Wichita, which has $52 million in assets. “I would say maybe there’s gradual steady improvement, but (in) ever-so-small increments.”

Chuck Stones, president of the Kansas Bankers Association, said the bankers he talks to are generally optimistic about the business in 2015.

“The economy for our customers seems to be improving and loan demand seems to be picking up,” Stones said. “We are also cautiously optimistic about the possibility of seeing some regulatory relief from Congress on the mortgage lending side.”

Julie Huber, executive vice president for Equity Bank, a $1.2 billion Andover-based bank, said she expects to see demand increase for both commercial loans and mortgages this year.

“Specific to us, we’ve projected strong growth in loans, and we’ve projected strong growth in income,” she said.

While Huber said loan demand should continue to increase, so will the competition for banks making them. She said that the level of competiton to make loans has risen to the point that some banks are offering below-market rates and terms.

“There’s a lot of banks back out in the market looking for loans again,” she said. Huber added that the terms and rates some competing banks are offering are not at the low levels they were before the financial crisis of 2008. “I hope we don’t ever get back there,” she said.

Still, the industry locally and statewide expects to face some challenges in 2015, not the least of which is continued low interest rates.

“Everybody’s waiting to see what happens” with the Federal Reserve decisions on interest rates, Huber said. Most expect the Fed to raise the Federal Funds Rate from near zero, where its been since late 2008, in the next few months. “The low rates really put a crunch on banks.They really squeeze our margins.”

Harris said a slow-growing economy is not helping, and he doesn’t expect the local economy’s rate of growth to jump much this year.

“For those banks wanting growth, you’ve pretty well got to slice away at the pie that’s not getting any bigger,” he said.

Several sectors of the state’s economy are also a concern to bankers in 2015.

Stones said the agriculture industry is one that bears watching for bankers.

“Bankers that make ag loans are watching that economy very closely as many are predicting a reduction in revenues this year after several years of good crops and good prices,” he said.

And Huber said falling oil and gas prices are a concern outside of Wichita.

“Oil and gas prices, while great for consumers, we have some customers in that industry,” she said. “It’s going to be a challenge for those economies southwest of (Wichita) in the Harper and Anthony area, and west of (Wichita). There’s a lot of counties that have been riding high on the oil and gas prices.”

This story was originally published February 27, 2015 at 7:00 AM with the headline "Bankers look for improved loan business in 2015, but challenges remain."