To combat the view that there’s no money available for small businesses, TD Bank plans to increase its commercial lending portfolio in Connecticut this year by as much as 10 percent, company officials said.
To prove its commitment, earlier this month TD Bank officials embarked on a full-scale “blitz,” visiting hundreds of small companies in the state to try to generate new commercial loan business.
Michael LaBella, the Connecticut market president for TD Bank, said its officials visited 108 different companies in Greater Hartford alone, ranging from manufacturers and nonprofits to professional service firms and restaurants.
LaBella said the company took applications for small business loans on the spot and added dozens of new prospects.
“Small business is a critical part of our growth strategy,” LaBella said. “As they grow, we want to build a relationship with them.”
TD Bank, which has 82 retail locations in Connecticut, is the fifth largest bank in the state with $4.7 billion in deposits and 5.2 percent of the market, according to the Federal Deposit Insurance Corp.
LaBella said small businesses are usually the first to come out of the recession, which is why the bank wants to expand that book of business.
TD Bank has continued to lend throughout the recession because they didn’t get bogged down with bad loans that sunk the balance sheets of larger banks, LaBella said. He also said the bank is starting to see an uptick in small business loan applications. The demand is not where it was three or four years ago, but it has come back from the worst of the recession, he said.
Small business loans, ranging up to $500,000, make up nearly 18 percent of the company’s commercial loan portfolio.
“We look at borrowers the same way we always have,” LaBella said. “Our standards never really changed.”
The lending environment in Connecticut has been a mixed bag since the onset of the financial crisis. While larger banks have pulled back on making loans, the state’s community banks have made capital available.
Bankers say, however, they have seen a decline in business loan demand because companies have been hesitant to take on more debt in the midst of economic uncertainty.
Many businesses have seen their credit quality deteriorate, making it harder for them to qualify for loans, especially as banks tighten lending standards.
As the state’s economy begins a slow recovery from the downturn, however, Connecticut’s businesses say credit conditions are starting to improve.
According to the first-quarter Connecticut Business & Industry Association/TD Bank Credit Survey, credit conditions are the best they’ve been in more than a year and businesses expect continued improvement.
About 25 percent of the 366 business executives surveyed said credit availability is a problem for their business. That’s down from 27 percent in the fourth quarter of 2009, and 31 percent in the third quarter of last year. Additionally 50 percent of survey respondents said current conditions are average, good, or excellent.
TD Bank isn’t the only bank that has announced efforts to boost lending in Connecticut this year.
Webster Bank announced in January that it plans to boost its New England business lending this year by $400 million.
The Waterbury-based subsidiary of Webster Financial Corp. said it expects to originate more than $850 million in new loans this year, specifically targeted at small-and-medium sized companies in the region.
‘Unbanked’ Rate Below Average
Bank regulators say nearly 5 percent of Connecticut households have no access to banking services, and the problem hits minority families the hardest.
Of the 1.4 million households in Connecticut, 5.3 percent, or 73,000, don’t bank at a financial institution, according to a recent report from Federal Deposit Insurance Corp. Of those, 24,000 or 15.8 percent of black households and 32.8 percent or 37,000 Hispanic households are unbanked.
That’s compared to the 1.1 percent or 11,000 white households that don’t put money into a financial institution, the FDIC report said.
Nationally, an estimated 7.7 percent of U.S. households, or about 9 million, are unbanked. These households do not have a checking or a savings account.
Greg Bordonaro writes the Financial Sense column every other week. Reach him at gbordonaro@HartfordBusiness.com.