Area banks report steady commercial lending in Rochester

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From equipment financing and healthcare expansion to industrial development and adaptive reuse projects, commercial lending activity in Rochester continues to reflect both economic caution and long-term investment priorities.

We spoke with local banking leaders about where demand is strongest, the economic pressures shaping borrowing decisions, and how financial institutions are supporting commercial clients in today’s market.

Bank of America

“In Rochester, lending activity is strongest in core sectors like healthcare and manufacturing, among others,” said James Marini, market executive, global commercial banking, Bank of America Rochester. “Demand is being driven by both day-to-day operational needs and long-term growth.”

Marini says clients are continuing to invest in equipment, technology and talent while also maintaining sufficient working capital to manage rising operating costs, particularly in fuel and transportation.

“Rochester tends to benefit from a stable, diversified economic base, so we are continuing to see consistent and steady client investments in growing their businesses,” Marini said.

James Jednak, market executive, business banking, Bank of America, Upstate New York, also points to manufacturing tied to technology buildouts, particularly among contractors and suppliers supporting data centers, as a strong sector locally.

“At the same time, manufacturers serving the energy space are also driving growth by supporting grid infrastructure,” Jednak adds.

When it comes to areas of moderation, Marini notes that projects relying on aggressive growth assumptions are taking longer to move forward as both lenders and borrowers adopt a more disciplined approach.

“Overall, it’s less about seeing a slowdown in a specific industry, as the economy continues to demonstrate resiliency,” he said. “It is more about a shift in focus to targeting short and long-term growth opportunities where we can provide capital that is well-structured, flexible and supported by strong cash flow.”

Marini says higher interest rates, ongoing cost pressures, macro-economic trends and geopolitical uncertainty continue to shape demand for capital. Even so, many Rochester-area businesses are still moving ahead with investments tied to operations and future growth.

“In a market like Rochester, where businesses tend to take a long-term view, we see clients focus more on balance sheet strength, liquidity and thoughtful timing of investment decisions,” Marini said. “Borrowing costs, such as interest rates, are always a consideration for our clients. Many are still moving forward with investments that are critical to their day-to-day operations and growth objectives.”

When it comes to supporting commercial clients, the Bank of America team says its approach centers on long-term partnerships that combine local decision-making with global market knowledge.

Community Bank N.A.

Dan Kennell, senior vice president and commercial group manager at Community Bank N.A., a subsidiary of Community Financial System, says commercial lending activity remains steady in sectors tied to modernization, operational investment and redevelopment.

One of the strongest areas currently, Kennell notes, is equipment financing within the commercial and industrial sector, as businesses move forward with capital expenditures that had been delayed over the past several years.

“Many companies have taken a more conservative approach to capital expenditures over the past few years, and we’re now seeing significant investment as businesses modernize operations and address deferred equipment needs,” he said. “This includes vehicle fleets, manufacturing equipment, and automation technology aimed at improving efficiency and productivity.”

Healthcare-related lending activity has also remained active, driven by continued demand for medical services and facilities throughout the region. Kennell says Community Bank continues to see opportunities involving medical office buildings, outpatient rehabilitation facilities and acquisitions involving medical practices.

On the commercial real estate side, Kennell points to continued redevelopment activity involving office properties being converted into mixed-use or multifamily spaces, particularly as communities work to address housing shortages. Industrial properties also remain a strong segment locally.

“We’re seeing continued activity around the redevelopment of office properties into mixed-use or multifamily projects,” he said. “Industrial properties, including manufacturing, distribution, and cold storage facilities, also continue to perform well.”

At the same time, Kennell says some sectors have moderated, including life sciences and biotech lending, due to softer venture capital markets and rising vacancies in some laboratory spaces. Traditional office financing also continues to face pressure, particularly among Class B and Class C properties.

“Several broader economic factors continue to influence commercial lending activity, including persistent construction cost inflation, labor shortages across multiple industries, and geopolitical instability that has contributed to higher energy costs and ongoing market uncertainty,” Kennell adds.

Kennell says Community Bank emphasizes a consultative, relationship-based approach centered on understanding each client’s business goals and operating environment.

“We focus on tailoring financing solutions to the unique needs of each client and their industry,” he said. “Many of our customers value having a banking partner they can call not only for financing, but also for strategic insight and perspective as they evaluate growth and expansion opportunities.”

NBT Bank

Tim Brown, Rochester regional president at NBT Bank, says commercial lending activity continues to be driven by sectors investing in modernization, automation and expansion, particularly within advanced manufacturing, logistics and healthcare.

“In manufacturing and logistics, demand is largely driven by equipment financing, as businesses look to replace aging machinery and invest in automation,” Brown said. “These investments are being accelerated by ongoing labor shortages and the need to improve efficiency and productivity.”

Brown says even traditionally conservative companies are increasingly modernizing operations to remain competitive, while healthcare lending activity continues to benefit from an aging population and expanding demand for care delivery.

On the commercial real estate side, Brown points to multifamily, industrial and healthcare properties as the strongest sectors currently. Multifamily activity continues to be fueled by persistent housing shortages, while industrial users are seeking flexible spaces that can support future growth.

“In the industrial space, manufacturers are seeking flexible facilities that can accommodate future growth, allowing them to scale alongside their evolving business needs,” he said.

At the same time, Brown says some traditional, labor-intensive manufacturing sectors have slowed over the past year, particularly commodity-based production businesses facing higher operating costs and labor pressures.

“We have seen a noticeable slowdown in traditional, labor-intensive manufacturing sectors, particularly those focused on commodity-based production,” he said. “This decline is largely driven by rising input costs, ongoing labor challenges, and the increasing operational complexity required to remain competitive and profitable.”

Brown says elevated interest rates, inflation and geopolitical uncertainty continue to create a more cautious borrowing environment, even as overall lending activity remains steady.

“Interest rates continue to be elevated compared to the past five years, which has tempered borrowing demand, even though these levels are more consistent with longer-term historical norms,” he said. “As conditions begin to stabilize, particularly around rates and costs, we would expect to see increased confidence and a corresponding uptick in loan demand.”

Brown says NBT Bank differentiates itself through a relationship-focused approach and local credit decision-making.

“NBT Bank differentiates itself through a relationship-driven approach, rather than a product-driven one,” Brown said. “Credit decisions are made locally within each market, ensuring they are informed by a deep understanding of the client and the unique dynamics of the communities we serve.”

NexTier Bank

John Klatte, senior vice president and commercial loan officer at NexTier Bank, says Rochester’s commercial lending market continues to show strength across industrial, multifamily, healthcare and retail sectors, particularly through redevelopment and repositioning projects.

“Much of the activity is driven by acquisitions and the repurposing or repositioning of existing properties, as many developers and businesses find it more cost-effective than ground-up construction in today’s environment,” Klatte said.

Higher construction costs and borrowing expenses have pushed many investors toward adaptive reuse projects that offer opportunities for long-term value creation.

“These repositioning opportunities can also create significant value-add potential for investors through property improvements, lease-up strategies, and adapting assets to meet current market demand,” he adds.

While activity remains steady in several sectors, Klatte says office-related projects continue to face the greatest challenges locally, while broader market volatility has created hesitation across multiple asset classes over the past year.

“Fluctuating rates and market uncertainty have made acquisitions more challenging for investors, especially when a typical transaction timeline can span 30 to 60 days and market conditions may shift significantly during that period,” he said. “Borrowers are still pursuing opportunities, but there is a greater focus on projects with strong metrics, proven demand and clear long-term viability.”

Klatte says higher interest rates, labor expenses, insurance costs and construction inflation continue to shape lending activity. Even so, many businesses are still moving ahead with projects tied to long-term growth strategies.

“At the same time, businesses are adapting well, and many are continuing to invest strategically despite the higher cost environment,” he said. “We are also seeing more emphasis on relationship banking and creative deal structuring to help projects move forward.”

That relationship-driven approach, Klatte says, is central to how NexTier supports commercial clients.

“We focus on understanding the client’s objectives and long-term goals and build customized solutions rather than taking a one-size-fits-all approach,” he said. “Being a community-focused bank allows us to make decisions quickly and remain flexible in structuring solutions that help our clients grow while still maintaining strong credit fundamentals.”

Caurie Putnam is a Rochester-area freelance writer.