dollars lighter

When COVID-19 hit the U.S. economy, borrowers and lenders of all stripes were forced to sit down and come up with a combination of payment deferrals, extra collateral commitments, PPP stopgap loans and other accommodations to work through the shock of the pandemic’s effects. More than a year later, that cocktail of cooperation appears to have largely been a success. FirstBank parent FB Financial, for instance, had to charge off a mere 5 basis points of its loans in the first quarter and finished the period with just 0.77 percent of its assets classified as nonperforming. The books of many other banks also are about as clean as their stewards could have wished for a year ago.

But while traditional bad-loan metrics aren’t flashing red, one could argue demand for future loans is flickering orange and suggesting relatively slower growth ahead.

“If you just look at the loan demand in our footprint, it’s still very low,” Pinnacle Financial Partners CEO Terry Turner told analysts and investors in April. “We expect it’ll pick up later in the year but it’ll be muted by all the liquidity in the system.”

Some of the sluggish demand — the FDIC says total U.S. bank lending fell 0.4 percent in Q1 — is because many organizations and individuals took advantage of the extra cash coming to them to pay down or altogether pay off their debts. At FirstBank, CEO Chris Holmes pointed out recently that a February that had him “a little concerned” about loan growth was followed by a “really strong” March and then a weaker April. The back end of the second quarter, he added, again looked to be stronger.

In short, there doesn’t yet appear to be sustained momentum to turn a recovery into a true boom. But come fall — presumably a season featuring fully reopened schools, far more repopulated offices and properly revived leisure and hospitality companies — Turner, Holmes, their peers and the rest of us should have a decent idea if 2022 will produce that next leg of growth.

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