Big Banks Lend Less in 2Q

NEW YORK (TheStreet) -- Large-cap banks as a group saw their loan portfolios shrink in the second quarter, while small- and mid-sized banks both stepped up lending, according to a report published Tuesday by Keefe, Bruyette & Woods (KBW).

Large cap banks saw loans shrink in every loan category except for commercial and industrial loans -- essentially loans to non-real estate companies. The overall decline in all categories for big banks was 0.2% in the second quarter compared to the first quarter, dragging down the total number for industry loan balances, though that still rose by 0.2%.

Large cap banks account for 90% of loans in the banking industry, according to KBW's report.

Commercial and industrial loans were also a big driver of the growth in mid-cap loans, according to KBW. Hancock Holding Company (HBHC), saw loans in that category soar by 630% following its acquisition of Whitney Holding Corp.. However, loan growth going forward could be challenging for the combined entity, according to a report from Jefferies & Co., which cited the weak economy in the southeastern U.S., and the fact that Hancock will be running off loans from the acquisition and an earlier one of People's First Community Bank in Panama City, Fla.

The biggest loan growth in the second quarter came from banks that made acquisitions during the period, including Hancock, First Niagara Financial Group (FNFG), IBERIABANK Corp. (IBKC) and Community Bank System, Inc. (CBU). Bank that saw substantial loan growth without the benefit of an acquisition included Texas Capital Bancshares (TCBI)and ViewPoint Financial Group (VPFG).

-- Written by Dan Freed in New York.

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