Assets holding steady; loans still available
Wall Street credit woes have not yet filtered down to Riverside Avenue in Spokane or Sherman Avenue in Coeur d’Alene, Inland Northwest financial leaders said last week.
Loans for restaurants, income properties or construction may be problematic, but money is readily available for other business purposes. Demand remains solid.
Consumers, meanwhile, are looking at rising mortgage rates, and perhaps less bank willingness to raise their credit card limits.
At Numerica Credit Union, President Dennis Cutter said a few members are turning in the keys to their gas guzzlers. In one unfortunate case, a member behind one payment who lost her job brought in the keys to her home.
“We probably could have kept her in that house,” he said. “Members are kind of on the edge of their seats.”
Numerica, unlike most credit unions, is an extremely active business lender, ranking second only to Mountain West Bank of Idaho so far this year in the number of loans guaranteed by the U.S. Small Business Administration.
Business owners are being cautious, Cutter said, but interest rates – 6.25 percent to 7.25 percent – remain attractive.
Demand for SBA guarantees usually increases as the business climate softens. This year has been no different.
Branch Manager Ted Schinzel said the Spokane office is on track to guarantee 636 loans worth a total $125 million in the fiscal year that ends Sept. 30. In the 2007 fiscal year, his office did 654 loans for $94.9 million.
“The Spokane region is doing much better than the rest of the U.S.,” Schinzel said, crediting business diversification, real estate values that so far have held up better than those in other regions, and traditionally conservative lending practices.
Bob Beck, who heads the Mountain West Bank SBA lending program, said the Spokane office could do even more loans had its staff not been pared to three as the federal agency centralized loan processing and other functions.
Although Mountain West wants more documentation and equity for its business loans, Beck said the Spokane Valley office that opened last year has exceeded bank objectives.
State Bank Northwest Chairman Greg Deckard said his small bank – $110 million in assets – has prospered as business owners look for the kind of relationships they cannot find with large institutions.
Capital ratios have reached record levels, he said, giving State Bank the resources to respond to new loan demand. In the last two months in particular, loan demand has been excellent, he said.
Deckard said examiners poring over industry books have been wary of construction and commercial real estate loans.
“All the banks are taking a good look at credit quality,” he added.
Officials at Inland Northwest Bank and Sterling Financial Corp. said they are proceeding cautiously.
Inland President Randy Fewel said loan volume exploded by 30 percent over the past 12 months. The bank will limit further growth while profitability catches up.
Fewel was among several officials who said deposits have increased as consumers look for safe harbors.
“I’ve never seen so many people so concerned about FDIC insurance,” he said.
Sterling Executive Vice President Dan Byrne said loan applicants may not receive the full amount they want, and they may pay higher fees.
Still, he said, “We’re actively lending.”
Washington Trust Bank President Jack Heath said loan growth already has exceeded the 7 percent budgeted for 2008.
Farmers with cash generated by higher commodity prices have been in the bank less, he said, but otherwise demand has been up across the board.
Heath said sinking values on lots purchased for later development have been the only sore spot in the loan portfolio, and most of those are in Boise, where national homebuilders dumped their inventory when they left the market.
Compared with the problems plaguing banks in other markets, and notwithstanding Thursday’s takeover by regulators of Washington Mutual Bank, “It’s a pretty good time to be a banker based in the Northwest,” Heath said.
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