The economy is gaining steam, the stock market continues to rally and there is an overall sense of optimism ”“ cautious, yes ”“ among consumers and businesses alike.
The recent holiday season ushered in some of the biggest retail sales gains in a decade. The housing market is improving and there are even positive signs in the commercial sector, with some market observers actually calling for a very good year.
In the Hudson Valley, there”™s evidence of growing confidence within the business community. But do people really feel better about the economy or is it a case of “Hey, we have to get back to business at some point”?
“What I”™m seeing is a community that”™s cautiously optimistic about 2011, which is great. I would prefer us to be there than the alternative,” said Ruth Mahoney, president of Key Bank”™s Hudson Valley and metro New York district.
“And I think a lot of the indicators that we see nationally apply here, too. So I feel good about it. I see from our perspective here at Key that we have more activity in our business banking, in our commercial banking groups, where clients are being not as cautious as they were this time last year, as it relates to their businesses. So that”™s a great sign. Last year, people were very cautious and very afraid to leverage themselves and their businesses.”
John Tolomer, president and CEO of The Westchester Bank, is “bullish” on the economy as well as on the two-year-old bank itself.
“I do think people have a bit more optimism, certainly more than they had a year ago ”¦ (but) it”™s still a mixed bag. There”™s still a great deal of cynicism in the market about sustainability of any turnaround. People want the economy to turn around, they”™re hopeful it will turn around, but we still haven”™t seen a lot of business growth.
“We”™re seeing more refinance opportunity (on the commercial side) and not as much growth or expansion in the market.”
At TD Bank, Senior Vice President and Regional Manager Mark Sicinski is also cautiously optimistic, but confident “we”™re out of the woods and heading to better times.”
“There”™s a growing sense of confidence in the macro economy and also the local economy as well,” he said. “That is really predicated on recent financial results. Many of our clients are seeing much improved financial results in the last 12 months and ”¦ are growing confident in the ultimate economic recovery. So it”™s giving them more confidence to make investments and add people to try to continue to grow their business as opposed to just survive.”
Show them the money
Despite all the optimism and increasing activity, one of the main complaints from businesses, particularly smaller ones, is difficulty getting financing.
The money is there, said Tolomer, but the rules have changed a bit ”“ or at least are being enforced
“It”™s interesting. When I grew up in the business, there was equity contributions, there was debt financing and it was very clear on many deals which part would be equity and which part would be debt,” he said. “And over the years because of the increasing value of real estate, there was a lot of home equity loans that were taken individually and used as equity. But really when you look at it, it was debt on debt.
“So what is happening today is there is almost a throwback to the days of credit quality and underwriting and credit criteria. Money is very much available for small and medium-size businesses.”
At Key, Mahoney said there”™s been little change in terms of lending criteria. “Credit standards have been talked about a lot in terms of changes and it wasn”™t necessary here at Key. We felt we had minimized our standards over the past couple of years and made any changes, so I think we”™ve been pretty consistent with our clients where we have strong relationships.”
Sicinski said TD Bank has recorded a sharp increase in loan applications for the first fiscal quarter, which ends Jan. 31.
“Speaking specifically to the small-business banking market, I would say that we are up in application and new business volume probably 15 to 20 percent over the same period last year,” he said.
Overall, he said, the bank has been “consistent” throughout the recession in terms of business lending.
“Our financial strength and our lack of problem assets that many of our competitors had allowed us to continue to take market share and grow our business during the last two years when many businesses were cutting back.
“We”™ve absolutely continued to lend and make loans available. Quite honestly, the competition is back as well and that is a great opportunity for many businesses.”
Ending on a positive note
While actual financial results were not released at press time, all three banks were expecting strong reports.
“We”™ve really been very blessed,” Tolomer said. “We are two full years ahead of our business plan. We”™ve just absolutely been thrilled with the reception of the Westchester market and the business climate.
“We have outpaced our most aggressive growth projections ”“ by a long shot ”“ for assets, loans, deposits and profitability.”
The Westchester Bank, which was founded in June 2008, reported some $190 million in assets as of November 2010, with more than $111 million in loans and $172 million in deposits.
TD Bank, which has 16 branches in Westchester, is “shooting for 12 percent growth in our loan book,” Sicinski said. “And we are going to continue to focus on what”™s made the bank successful in the past.”
And Key, which opened three branches in the past two years and is “always looking for opportunities for new locations,” also ended 2010 on a positive note, Mahoney said.
“We were very happy to report we had a very strong 2010 and we fully expect 2011 to be another great year for us.”
As for the economy in general, Tolomer expects it to continue to flourish.
“I think we”™ll see toward the latter part of this year some momentum building toward a recovery. I would put that on a third-quarter basis, where we”™ll start to see more evidence and a greater sense of optimism on the part of the market that in fact we will be experiencing a turnaround.”
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