By Lisa Allen
For The Herald Bulletin
ANDERSON, Ind. —
Sam Pellegrino, vice president of commercial lending at MainSource Bank’s Anderson branches, says the economic recovery has restored mortgage and commercial lending, but left consumer loans in the dust.
MainSource weathered the recession well, partly because it wasn’t a big investor in the loans that caused the most problems: commercial real estate and investment property. These were projects Pellegrino described as “the boxes built in the hope that someone will lease them.”
Of course, banking is different now, in part because of a more prudent approach to loans, in part because of new federal regulations. Banks now demand homeowners invest more in their own properties, requiring larger down payments. Individuals aren’t going to walk away from their own money. Houses are selling again.
However, consumer loans for cars, boats, vacations, etc., are scant, Pellegrino said. “People are afraid to spend,“ he said.
Those without jobs aren’t spending, of course, but Pellegrino points out that’s only 10 percent of the working population. Those who do have jobs are still afraid they could lose them and are hoarding their money. “That is not helping our economy,” he said.
As for commercial loans, businesses are cautious too, worried about the weak recovery and the uncertainty over federal and state regulations and laws. “Businesses are skeptical to expand,” he said.
Pellegrino moved to MainSource in 2008 after a long career at Old National Bank. MainSource’s advantage, he said, is its local lending authority, which vastly speeds up approvals. Businesses don’t have to wait for a stranger in a home office to approve their loan. But loan standards remain the same.
“We still look for how we are going to be paid back. Collateral doesn’t repay loans, cash flow does,” Pellegrino said.
Ending up with a commercial building, inventory or equipment doesn’t do much for the bank. “We aren’t in their line of business and we don’t want to be.”
For 2011, Pellegrino sees “continued, cautious growth.” He’s also confident Anderson will attract more business. “This is a great community,” he said. “There is a diverse group of people working together to make things happen,” he said.