Retrenchment was the banking norm in 2010. Loan growth is typically the lifeblood of commercial banks. Yet many southeastern institutions focused instead on "cleaning up" their portfolios, not expanding them. The October–December period of 2010 marked the ninth consecutive quarter of declining loan levels for the region's community banks, according to bank call report data. Although led by persistent drops in construction and development loan levels, all major areas of banks' lending portfolios declined, according to data compiled by the Atlanta Fed.
Lending has declined for various reasons. In addition to institutions shoring up their balance sheets, credit standards have tightened since the recession. At the same time, loan demand from creditworthy borrowers has fallen as wary businesses and consumers hesitate to assume debt.