WASHINGTON — Smaller banks have sharply stepped up lending for commercial real estate development and business expansion, an important sign that the economy is shedding the last vestiges of the Great Recession.

These loans underwritten by smaller banks – regional banks with assets below $50 billion and community banks with assets below $10 billion – are growing almost twice as fast as those underwritten by the biggest banks.

The growth “is proof positive that the economy is off and running,” said Mark Zandi, chief economist for forecaster Moody’s Analytics. “The fact loan growth is strong at small banks indicates that small businesses are kicking into gear.”

Over the last three quarters for which data is available, regional banks boast double-digit growth in the broad category that regulators call commercial and industrial loans. From last April through December, regional banks averaged 24.55 percent growth in these loans.

That’s about twice the growth rate for the nation’s big banks, whose lending in these categories has tapered off since 2012.

Regional banks are also seeing strong growth in the category of commercial real estate, which encompasses malls, stores, warehouses and development projects. They saw 22.54 percent growth for commercial real estate loans over the final months of 2014.


Community banks, by definition smaller, are also seeing the best loan growth since the recession’s end. For the final nine months of last year, they averaged 6.07 percent growth in loans for business expansion and 5.48 percent growth in commercial real estate loans.

“Most of what we are seeing being put on the books now is good quality,” said Bryan Kennedy, president of Park Sterling Bank in Charlotte, N.C. “We’ve seen many companies whose sales levels might not be back to pre-recession levels, but they are now more profitable and more efficient, making more money on less business.”

In California, for example, Fresno First Bank has seen its commercial lending increase by more than 20 percent since 2009.

Unlike with mortgage lending, most commercial loans stay on the banks’ books. That means the banks have skin in the game and a finger on the economy’s pulse.

“Once we close a loan, commercial loan borrowers are constantly required to give us their financial information into the future, at least on an annual basis,” said Lee Reed, Fresno First’s executive vice president and chief credit officer.

The flip side of improved lending is more borrowing, especially by companies that are more creditworthy.

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