Independent Banker - January 2021 - 20

PORTFOLIO
mortgage so many times to get a
better rate. " The big piece for us
is that, at least in our market, new
housing sales have continued to
be exceptionally strong, " he says.
" Those home sales will help to
maintain some of the volume in
residential mortgages that banks
saw in 2020. "
According to the September
Fannie Mae Housing Forecast,
single-family mortgage originations
were expected to jump 17% in 2020
to $3.9 trillion. The forecast calls
for mortgage originations to drop
back to $2.6 trillion in 2021, which
is more on par with the $2.5 trillion
in mortgage originations generated
in 2019. Another trend that looks
promising for steady mortgage
activity is that single-family
home constructions are expected
to increase in the coming year
by 17.5% to total 1.1 million,
" [Community banks] are looking for ways
to find new customers, take care of the
customers they have and really manage
risk in the best way they can. "
-TRAVIS ROUSE, M&F BANK
according to Fannie Mae.
Another key task for community
banks in the coming year is keeping
a close eye on exposure risk in
what remains a very fluid economic
downturn. Part of the ongoing job for
banks is reviewing and stress testing
existing loan portfolios, while credit
officers and lending teams are working
to better understand potential risks
for new loan applicants.
As Rouse says, " I think all of
the community banks out there
are looking for ways to find new
customers, take care of the customers
they have and really manage risk in
the best way they can. " 
Beth Mattson-Teig is a writer
in Minnesota.
An opportunity to gain market share
The 2020 economic crisis has pushed a number
of banks into defense mode. For community
banks with strong balance sheets, the current
environment creates an opportunity to challenge
big banks.
" What we're not seeing is what I would call
organic growth from our existing customers, " says
Robert Kunisch, president and chief operating
officer at Howard Bank in Baltimore, " but what we
are seeing is a real opportunity to take away market
share from other banks in our market. "
Howard Bank had good lending momentum at
the end of 2020 that it hopes to carry over into
2021. As of mid-October, the community bank's
pipeline of loans was larger than it was prior to
COVID-19. A key part of that growth is coming from
new customers.
Larger banks tend to be more internally focused
during times of uncertainty. Some of the big
national and even large regional banks are busy
trying to get their arms around risk assessments
for potential distressed loans. " For us, we just have
to know what's going on within our 89-square-mile
footprint, " Kunisch says.
The surge in PPP loans also has opened the
door wide to new relationships and potential new
customers. Small businesses that banked with a big
national brand frequently voiced frustrations with
not being able to find someone to help guide them
through the PPP loan process, says Daniel M. Epstein,
executive vice president and chief credit officer at
Mission Valley Bank in Sun Valley, Calif. " They weren't
getting that from a 1-800 number, " he adds, " and I
think there was a real shift that is going to stick for
community banks. "
 Hear from small businesses that leaned on
community banks at banklocally.org
20 Q ICBA Independent Banker Q January 2021
http://www.banklocally.org
Independent Banker - January 2021

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