Grant Thornton Finds Banks Pessimistic

A majority of bankers in the West anticipate an increase in loan delinquencies in 2009. In fact, bankers expect 80 percent more foreclosures before the end of the year; 50 percent more losses from consumer loans; and 63 percent from commercial loans. The data come from accounting giant Grant Thornton LLP’s 16th Bank Executive Survey, which was conducted in conjunction with Bank Direct magazine. Furthermore, nearly half of the bankers surveyed said they anticipate a decrease in demand for consumer loans as well as residential mortgage loans. “These survey results point to the backlash against the lax underwriting standards that contributed to the credit crisis,” says Jim Pulsipher, Grant Thornton’s West Region Financial Institutions practice leader. “To avoid repeating history, financial institutions will have to strike the balance between practicing prudent lending and jump-starting the lending that will help spur economic recovery.” Bankers cited core deposits as the most frequently anticipated means of funding bank growth in 2009, rather than loan-generated revenue. Nearly nine in ten anticipate using Federal Home Loan Bank advances to fund bank growth in 2009, the same number that did so in 2008. Only 5 percent of West Region bankers issued common equity as a means to fund growth in 2008, and only 5 percent issued preferred stock. To fund growth for 2009, 24 percent anticipate issuing preferred stock, while 15 percent anticipate issuing common equity. Thom Senzee