Page 36 - Flathead Beacon // 2.24.16

BUSINESS MONTHLY
Local Banks See Sustainable Lending in 2015
With interest rates remaining low and consumer con dence growing, local nancial institutions project increased lending in 2016
BY MOLLY PRIDDY OF THE BEACON
Just a few years ago, not having enough money for a new house or remodeling project or getting a new car meant for many people that those wants or needs would have to wait.
As the country continued to su er in the nancial winter of the recession, institutions tightened up the lending process, making credit di cult to come by.
But now, in what could be considered the spring awak- ening after a long winter, nancial institutions in the Flathead Valley are largely back on track with lending, ranging from personal loans to real estate nancing.
“Credit’s getting a little easier,” said Patrick Barkey of the Bureau of Business and Economic Research at the University of Montana. “My sense is that things are not as tight as they were even a year ago.”
The country’s economy continues to see gains in employment and other major industries, such as hous- ing, as the icy grip of recession continues to fade. U.S. housing starts reached an eight-year high last July at 1.21 million units, the highest since October 2007.
According to a Bankrate survey, an estimated 24 mil- lion American adults plan on taking out a personal loan in the next year. Credit reporting companies estimate that the average personal loan will grow 5 percent, on top of the 7.1 percent growth from last year.
In the Flathead, the real estate market held steady through 2015 with consistent growth, but lacking the all- out chaos that dominated the market in the early 2000s.
“We’ve had a major uptick in real estate loans, but I think a lot of that’s driven by the current rate environ- ment,” Jim Kenyon, president and CEO at White sh Credit Union, said. “Anything consumer is doing really well.”
Those consumer loans are helping pay for all sorts of projects, Kenyon said, especially with interest rates staying near zero since the Great Recession. While con- sumers are getting back into the game, smaller busi- nesses remain a bit wary, he said.
“The mom-and-pop business is probably a little more conservative,” Kenyon said. “They’re not as con dent in borrowing or wanting to take more money out as an indi- vidual consumer.”
At Valley Bank, president Ron Rosenberg said 2015 was a “de nite improvement” over 2014 when it came to loans, especially in real estate lending.
“There was signi cant growth on what I would imag- ine is considered entry-level houses,” Rosenberg said.
While smaller businesses might be leery of going
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gangbusters just yet, Rosenberg said the upward trend in commercial loans shows a competitive market and the potential for more growth.
“The commercial side of that has shown improve- ment as well,” Rosenberg said. “I think it’s obvious to everyone what’s going on in town, but that’s encourag- ing that people have the con dence, that they’ve seen the improvement.”
Randall Chesler, president at Glacier Bancorp, Inc., said the bank saw growth in 2014 and 2015, with com- mercial loans accounting for 60 percent of its business, ending last year with a total increase of 8 percent.
“This year we’re projecting another solid year of growth,” Chesler said. “January and February are look- ing steady.”
Challenges in the coming year include the Bakken slowdown, which won’t have many primary e ects in the Flathead, but there will likely be ripple e ects, Ches- ler said. Agriculture also faces a tough economy, and the Canadian dollar’s weakness could continue limiting
tourists from the north.
Worldwide, the American economy continues to per-
form well. Other major markets – Europe and Japan – have taken on negative interest rates in an attempt to jumpstart their economies.
Meanwhile, the Federal Reserve continues its near- zero interest rates, though there has been discussion about negative rates here as well. Barkey said all growth comes to an end eventually, but Montana banks are “by and large not involved in the big, Wall Street-type stu , it’s much more retail banking.”
Rosenberg and Chesler said they expect interest rates to stay just about where they are for the foreseeable future, and that sustainable growth with sensible lending should allow for stable, predictable market landscape.
“Some of the people who had gotten hurt through the recession and got conservative in the recovery are now con dent enough that they’re not going crazy,” Rosen- berg said.
mpriddy@ atheadbeacon.com
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FEBRUARY 24, 2016 // FLATHEADBEACON.COM