While banks are reporting steady declines in deferrals, hard-hit borrowers such as airlines, commercial real estate developers and hotel operators will almost certainly struggle to regain their footing.
The emergence of vaccines has boosted travel forecasts — and crude prices. The expected bump at the pump could help oil and gas companies get back on track with loan payments.
Some lenders are poring over commercial portfolios more frequently than normal — perhaps as often as once a month — to uncover problems hidden by payment deferrals and government stimulus before it's too late.
Hospitality sector credits are coming out of forebearance just as coronavirus cases surge. Restructurings and charge-offs could mount unless vaccine distribution happens quickly enough to jump-start travel by mid-2021.
Lending opportunities have become scarce, especially with commercial borrowers, and banks are resisting the temptation to relax standards to boost volume.
A prosperous decade leading up to the pandemic had left lenders in good shape, but they're worried the economic shock to the state's most vital industry could linger into 2022.
