NEW YORK ( TheStreet) -- As the new year swiftly approaches, the banking sector is facing a lot of "what if" scenarios. For many banks and their investors, the most important unknown is how, when and where they will be able to make loans in order to turn a profit.
Recently, bank executives have been expressing increasing optimism on the lending front, particularly with commercial and industrial (C&I) loans, as corporations cautiously put their toes in the water. This is positive news given the sluggish pace of economic recovery and the transformational changes making it harder for banks to earn money as a result of the financial crisis.
"Banks need to make loans; bottom line," says Michael Rose, vice president of equity research at Raymond James & Associates. But given the economic uncertainty, the big question is -- "are customers going to need to borrow? We've all read that corporations are flush with cash and they can draw down that first before they need to go out and borrow at least on the loan basis."
Rose continues: "Banks are trying to make loans, but remember particularly in the Southeast, the banks still have credit headwinds to deal with. They're not out of the woods yet. Things are getting better... but loan balances