Provisions at community banks in 2003 were roughly 50 basis points of average loans, the lowest level seen at community banks since 1998 and a figure that would probably be considered “normal” and prudent over the longer term.
This leveling of loan-loss provisions accompanied by the cooling of fees from mortgage refinancings and originations will heighten attention on new opportunities for asset growth and higher-margin assets. Most observers expect that business borrowers will soon resume more normal levels of borrowing activity.