When there's a threat of loan defaults, banks start keeping an eye out for early warning signs. And Charlotte-based First Union Corp. is no exception. We have not seen an increase in defaults or late payments. As a way to head off any potential problems, Allen says the bank works very closely with its customers and will sometimes restructure a loan or take additional collateral. And having a balanced portfolio also helps.
Consumer loans tend to carry more risk during an economic slowdown.
In fact, Searle expects the volume of consumer loans to increase this year. It's the product of choice for consumers. Day says that in the last 12 to 18 months Centura has been profiling customers more aggressively before underwriting any loan. The bank's commercial loan business also is showing nominal growth, says Day. In the first three months of this year the annualized growth rate for these loans hit 6 percent, he says.