Bankers see industry bouncing back
Last Updated: 15:53 February 25, 2014
Commercial and residential real estate lending has picked up - both bread-and-butter businesses of many community banks in the region, according to several bankers. The bankers spoke Feb. 25 at the Boulder County Business Report's CEO Roundtable on Banking held at the offices of Berg Hill Greenleaf & Ruscitti LLP in Boulder.
The bankers' general optimism follows economic stagnation in the region the last couple of years that was brought on by a national recession that started in 2008.
High Plains Bank is helping drive the resurgence in the residential housing construction market in Northern Colorado. Chris McVay, vice president and Longmont market manager of the Flagler, Colorado,-based bank, said High Plains bankers have "really ramped up on the loan side of things."
In addition, more executives of small companies in the region seem ready to "follow the courage of their convictions" and take out loans to buy new equipment and hire new people, said Blake Peterson, Boulder market president of Citywide Banks, which is based in Denver.
"It's refreshing after the hunker-down of the last couple of years," Peterson said. "People get nervous when they read the headlines of what's going on elsewhere in the world, but their businesses are doing well."
More wealthy individual clients also appear interested in pursuing more risk to grow their wealth, said Matt Gorr, president of First Western Trust Bank in Boulder, a wealth-management firm. As the stock market has rebounded, so has the firm's client outlook, he said. First Western Trust manages about $5 billion in client assets.
But while the economy continues to improve, increased federal regulations and tight margins continue to keep pressure on area bankers, said Mark Driscoll, Colorado market president of First National Bank of Omaha (Nebraska), which has eight branches in Boulder and Broomfield counties.
"It's a challenging time. Our business is good ... but our revenue sources are less robust than they have been in certain areas," Driscoll said.
Tightened-up, anti-money-laundering regulations are one example of an increased cost for banks and customers of JP Morgan Chase Bank, said Joe Coleman, senior vice president of the Colorado market of Chase's business banking division. Federal rules require banks to gather significantly more information about where a company's money goes and who it's going to, which costs the bank more money, he said. As a result, Chase is "streamlining" the types of companies it wants to work with, which can have a negative effect on the companies, Coleman said. Chase has 17 branches in Boulder and Broomfield counties.
"Millennials," people born between 1983 and 2000, are expected to have an impact on the housing market, especially apartment housing projects in the region, and baby boomers, people born between 1946 and 1964, are expected to have an impact on future health-care company strategies, bankers said.
Across the country, the "millennial" generation is seen as a demographic of people who want to live closer to where they work and go shopping, but may not be able to afford to buy a home, said Ceyl Prinster, president and chief executive of the nonprofit Colorado Enterprise Fund, a Denver-based nonprofit group that makes loans of up to $250,000 to small businesses.
General mortgage lending business is increasing, said Sam Inman, Boulder market president of Wells Fargo Bank (NYSE: WFC) which is based in San Francisco, California. But do "millennials" want a traditional white picket fence around a home in a neighborhood, as their parents did? Inman asked, rhetorically.
On the other side of the coin, with so many developers building apartment projects along the U.S. 36 corridor between Boulder and Denver to cater to young workers, "is the bubble going to burst?" asked Tom Chesney president of the commercial bank division of AMG National Trust Bank in Boulder, with parent AMG National Corp.
As baby boomers age, more health-care industry services are being planned to serve them, said Brad Lesch, vice president of business banking for First Citizens Bank & Trust Co.'s Boulder market. The bank is a subsidiary of First Citizens Bancshares Inc. in Raleigh, North Carolina. Provisions of the federal Affordable Care Act also have changed how doctors, dentists, hospitals and other health-care provider companies operate in the region, he said.
For example, Boulder Community Hospital's new Foothills campus (on the northeast corner of Foothills Parkway and Arapahoe Avenue in Boulder is driving economic activity of doctor offices in the neighborhood, Lesch said. Doctors and dentists oftentimes come to Lesch and other bankers for loan approval on new buildings, he said.
Banking Roundtable participants
Tom Chesney, president, Commercial Bank Division, AMG National Trust Bank
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