Slow but steady: Local banks see limited growth, low interest rates and a wait-and-see attitude among businesses’ outlook for 2012

             As local business owners and managers look forward to 2012, many are seeing a repeat of 2011 according to a panel of local banking professionals. Although this year there is indeed one additional concern—the presidential election coming in November. 

            “Sitting on the sidelines”  and uncertainty were the most oft-mentioned terms used in the surveys The Business Times sent out to banking advertisers when it came to how business activity for the year could best be described. “We just see businesses facing a lot of uncertainty, and with 2012 being a very important election year to the businesses we talk to, it is something that is clouding that crystal ball,” says Steve Irion, community banking president for Wells Fargo. 

            “Businesses and investors are sitting on the sideline to see how the election outcome will affect them,” adds Jeff Franklin, branch president at Bank of Colorado, who also adds that businesses waiting on the results of the election will continue to slow lending in the first part of the year.

            Growth will also continue at a modest pace according to the panel as it foresees the slow, steady pace of the Grand Valley economy from 2011 extending into 2012. “The Fed has indicated that it will keep interest rates low through the coming year,” says Vance Wagner, regional president of ANB Bank,” And we are seeing and hearing some positive signs that local businesses are looking to take advantage of these rates heading into 2012.”

            “Our local business community is showing signs of growing confidence over the past year as they are expanding their operations,” says Trevor Johnson, vice president at Alpine Bank, “And we see that as a sign of economic improvement in the coming year.”

            Overall, the bankers do see an increase in loan volume for the year, with possibly greater growth toward the end of the year as businesses gain an understanding of where the election and the country are headed what those hold for the future along with an urgency to take advantage of the low interest rates that cannot last forever. “Rates are indeed favorable,” says Mell Taets, vice president at Timberline Bank, “And that is one of the main reason we foresee gradual growth as the Grand Valley’s economy improves.”

            Another point the panel agrees on is the timing of the Grand Valley’s economy. “We seem to be still bumping along at the bottom for the time being,” adds Franklin, who also states that growth signs are indeed beginning to show such as real estate sales improving in the area.  “People sometimes forget that we went into our slump as much as a year, or more, after the national recession began. We had businesses hiring while the national economy was fledgling,” says Irion, “And our cycle coming out of this will have the same kind of timing.”

            Additionally, the Grand Valley economy is indeed simmering with better real estate sales, property prices increasing, sales tax collections improving at the city and county levels, consumer spending increasing and local businesses procuring orders and contracts as positive signs toward a steady growth for the year.

            That doesn’t mean there will not be some obstacles in the economic recovery. Panelists point to regulation and the unknown as the two most important factors in affecting consumer and business confidence. The most oft-pointed to regulations on the panel’s minds is the affect of the Dodd/Frank bill passed by Congress last year, the continued effect of Obamacare as it is implemented and the ongoing and ever-changing regulations in the energy sector as it affects the Grand Valley in particular.

            “The banking industry is already heavily regulated, and that has only increased that last couple of years,” says Taets, “And the regulations certainly challenge our lending ability.” But regulation is not only for the banks, it also affects consumers and businesses in the same way as it relates to confidence and their ability to grow and prosper in the economy.          “Many business people today report that the uncertainty of the specifics of government regulation has caused the inability to properly plan and react for growth,” adds Wagner.

            A final key to growth in the economy is confidence. “The majority of businesses, like consumers, have felt the pressure of the sluggish economy,” says Johnson, “The biggest obstacle is to get consumers to regain confidence and start to invest and spend their money which will help grow our local economy.”

            And when businesses see that confidence grow while coupled with more certainty in their future, the investments will be made to hire more staff, invest in infrastructure and take the risk involved to grow. “We constantly hear that banks don’t want to lend, but the fact is that with very few exceptions, our lending policies are the same as they were five or ten years ago,” says Irion.

            And the panel agrees there is money to lend, and at very aggressive rates. All the Grand Valley needs is the confidence and timing to take advantage of its unique resources and placement in the national economy to grow out of the current economic times.