Commercial Banking: Lock Down or Reposition for Growth?

Commercial lenders now have their own serious problems to think about as the nation’s credit crisis deepens. Along with slowing growth and weakening credit fundamentals, commercial divisions also are dealing with the capital and funding constraints of their battered parent companies. Underscoring the changing fortunes of this important line of business, the Federal Deposit Insurance Corp. recently reported that commercial and industrial loan growth during 2008’s second quarter was down 80%, or $40 billion, from the prior-year period. Meanwhile, bankers are realizing that the commercial underwriting standards used in more favorable times have fallen badly out of date. Booked credit ...