CEO of Cadence Bank (CADE.N) Dan Rollins refers to the early-year regional banking problem as “March madness.” Even though the hysteria has subsided after six months, the industry is still grappling with the effects and remains scarred.
“We don’t want an asset that doesn’t come with a full wallet,” Rollins said in reference to the practise among banks since the financial crisis of expecting borrowers to also bring them their deposits. “We are aware that the battle for the money will continue.”
Regional bank serving the Southeast is not unique to Rollins. The March banking crisis has had a long-lasting effect on the regional banking business, according to interviews with a dozen regional bank executives and economists.
The turbulence most certainly tightened credit conditions more quickly and significantly than the Federal Reserve’s rate increases alone had up to that point. There is still a concern even though its impact hasn’t been as bad as some had feared.
Together, the crisis’ enduring repercussions make it more difficult for the U.S. Federal Reserve to balance interest rates and raise the possibility that it may overcorrect.
Additionally, as the situation stabilised in recent months, banks stocked up on other funding sources. The Bank Term Funding Programme (BTFP), the Fed’s emergency lending programme, now has borrowings totaling $108 billion.
Both Randy Chesler, CEO of Glacier Bancorp (GBCI.N), situated in Kalispell, Montana, and Cadence’s Rollins claimed that they had borrowed money under the programme because it provided better terms and rates than other options like the Federal Home Loan Banks (FHLB).
No Deals For Just A Loan
Banks are now becoming more picky about the goods they provide, moving away from just loan arrangements and towards agreements where borrowers also use the bank for savings as a result of the crisis.
“We no longer conduct loan-only transactions. According to Jeff Jackson, CEO of Wheeling, West Virginia-based WesBanco (WSBC.O), “we now want deposits or some form of ancillary business for every contract we’re conducting.
According to bankers, this has resulted in tighter credit for a variety of items, including loans to home builders and commercial real estate as well as finance for boats and recreational vehicles. This information offered new perspectives on how credit was becoming more difficult to obtain.