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The HQ Conundrum
From increased regulation to continued global economic insecurity, execs from both large and small banks say there’s still much uncertainty in the industry. Yet they believe that there is hope ahead and are moving cautiously forward.
We’d like to thank Hal Heaton, Brigham Young University professor, for moderating the roundtable.
Participants: Steve Sala, TAB Bank; George Sutton, Jones Waldo; Roger Shumway, Bank of Utah; Alan Peterson, Zions Bank; Mark Howell, AmericanWest Bank; Hal Heaton, BYU; Curtis Taylor, Heber Valley Bank; Edward Leary, Utah Department of Financial Institutions; Frank Pignanelli, National Association of Industrial Bankers; Wendy Holloway, Utah Bankers Association; Greg Winegardner, Wells Fargo; Sheila Camarella, Key Bank; Scott Irwin, Holland and Hart; and Richard Beard, Bank of American Fork.
Where do you see the U.S. global economy going in the future? What worries you and what gives you hope?
PETERSON: It seems like since the election, someone pushed the pause button to see what’s going to happen, and in what form. A lot of people feel something will happen but they don’t know what form it will take. The real issue is what the fix is going to be.
I think they will come to some agreement to push it down the road, and hopefully there will be some triggers that will force the real issues to be decided, whether it is taxes or entitlements.
SALA: I probably take a minority view of the fiscal cliff issue—I think it will be a fiscal speed bump. Politicians are so fragile after this election that I don’t anticipate another bloody event like the election was. There’s going to be a willingness to either find common ground or kick the can on issues that they can’t find common ground on. So I don’t think it’s going to be as bad as predicted.
You are going to see a lot of industry on hold, not hiring people, waiting to see what happens. We work in the transportation space, and with our customers, everyone is just kind of moving along. No one sees anything great on the horizon. The trucking space should be an indication of commerce, and there’s nothing overwhelmingly encouraging going on right now. So I’m not overly optimistic about the economy.
Things that make me lie awake at night are our political environment, our administration. We get four more years of bureaucrats trying to figure out the details of Dodd Frank, which scares the living daylights out of me.
HOWELL: Right now the president is in the strongest position he is going to be in. He’s going to try and use his muscle to see if he can get something accomplished. Something will happen, but I don’t think it’s going to be any sort of final solution. Some of it is going to be kicked down the road.
The economy is fragile still, and we have got to get this settled. If we do get this settled, we will see some slow progress. I don’t see it going ahead full speed. It’s a very uncertain time right now.
So slow and steady growth. Does this mean that you are being cautious, or is this pedal-to-the-metal time?
WINEGARDNER: We are aggressive in terms of trying to grow the business, but it’s never been more challenging than it is today.
But to the fiscal cliff issue, I’m not sure I can add anything other than a reminder that the present administration was reelected and the House and Senate are still split. There are just some general policies or beliefs that neither side seems to be willing to give on. So I don’t see a quick resolution or compromise, because we don’t have an administration that has shown the ability to reach out and bring the parties to compromise.
HOLLOWAY: Because I’m an optimist, I would like to think there’s a resolution. But there are credible sources who say there are parties in Congress who will say, “Let’s go over the cliff and see what happens,” pointing fingers all the way. Speaker Boehner has indicated some willingness to compromise in some areas and absolute lack of willingness in other areas, as has the president.
CAMARELLA: What I see here locally, and what I have seen for Key Bank both nationally and here in Utah, is that we are growing. We have had 10 straight quarters of profitability, predominantly fostered by loan growth. So that, coupled with an improvement in our asset quality, would say we have kind of gotten through. It was not fun in the 2009, 2010 roundtables when we were all right in the middle of it. So I am very cautiously optimistic.
I see the business community still wanting to grow, still coming to banks for loans. And yes, lending today is back to basics, but there are still very good companies. I have seen our loan growth, and that tells me that the business community, at least in our own state, is optimistic about moving forward.