Can Wealth Sustain Banking Boom?

By Beacon Staff

Growth, Measured in Dollars
Flathead’s bank deposits eclipse Missoula’s in 2006

It’s no secret that growth is hustling in Flathead County, adding 15,000, or 20 percent more people in the last decade.

But the valley’s wealth infusion makes growth look sluggish.

In those same 10 years, the amount of money deposited annually in Flathead banks has increased 143 percent, from $572 million to $1.39 billion, according to the Federal Deposit Insurance Corporation. The tally includes money held by savings and checking accounts and certificates of deposits.

Flathead’s bank deposits surpassed Cascade County in 2000, then Missoula County in June 2006 when the most recent numbers were released. It now ranks third in the state, just behind Gallatin and well short of Yellowstone County.

The banking business here has enjoyed unprecedented growth over the last decade, said Wade Elder, branch president at Mountain West Bank, especially in the last five.

“I think overall, our growth has been bigger than in Missoula the last couple of years,” Elder said. “There’s more real estate activity here.”

In turn, the number of FDIC-insured bank offices in Flathead has grown from 14 to 30. More are under construction along the arteries that cut through Flathead County as money allows bank branches to expand and new ones to enter the market.

The cash pouring in benefits more than those who own banks. Cash deposited locally means more money can be dispersed to locals in the form of loans to buy goods. It’s a solid indicator of an economy that has enjoyed clear weather for some time.

“It’s a good climate to be in for every business,” Ron Rosenberg, president of Valley Bank, said. “Even if not in business, this place is pretty attractive to retirees. We’ve got the best of all worlds and we’re somewhat insulated from the national economy.”

Still, he acknowledged he was a bit surprised Flathead passed Missoula last year in terms of deposits. He credited the resort business for attracting an affluent clientele to the area. But more than out-of-state checkbooks are depositing cash.

“A lot of farms and ranches are, unfortunately, being cut up into subdivisions,” Rosenberg said.

That, and the overall increase in property value has resulted in a “lot of profit-taking in the private sector,” he said.

As the real estate market cools, Rosenberg foresees market adjustments in the form of a softening: “I don’t think infrastructure or inventory can sustain that type of growth.”

Larry Jochim, CEO of Flathead Bank, agreed. He lauded local banks’ ability to fund growth, but said he was concerned about the inventory of residential lots and unsold new homes, because “second-home buyers are the driving force” behind deposit growth.

Plus, the stock market is gaining steam again, which could prompt some people to roll the dice with their wealth rather than play it safe with bank deposits.

“I think that our true core deposit growth will, or has, flattened,” Jochim added.

Yet local bankers see little chance of reverting to the 1980s when deposits were hard to lure and the first question lenders asked borrowers was, “Do you bank with us?”

The FDIC releases the 2007 deposit numbers at the end of this month, and Elder predicts another record year.

“We continue to expand and continue to grow,” Elder said. “We’ll be up from June from last year and we’re not alone.”

Bank Deposits by County

1996
Yellowstone $1.253 billion
Cascade $673 million
Missoula $601 million
Flathead $572 million

Gallatin $542 million
Lewis and Clark $492 million
Silver Bow $390 million
Ravalli $287 million

2006
Yellowstone $2.055 billion
Gallatin $1.552 billion
Flathead $1.392 billion
Missoula $1.363 billion
Cascade $973 million
Lewis and Clark $754 million
Ravalli $521 million
Silver Bow $373 million
Numbers are tallied as of June of each year
Source: FDIC

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