More than 100 people – the largest attendance in recent memory – attended the Southern District monthly membership dinner on Feb. 3 to hear Heritage Bank President and CEO Brian Vance shed some light on where the financial industry is and where it’s going.
Vance touted the value of community banks in the financial system (“Wall Street doesn’t lend to Main Street; community banks lend to Main Street”) and described Heritage Bank’s role in stabilizing the system. Heritage is one of only a handful of banks in the Northwest deemed strong enough in terms of capital and expertise to acquire troubled institutions; it received TARP funds not because Heritage itself needed help but because the FDIC wanted to facilitate Heritage’s acquisition of troubled banks.
The Puget Sound region should recover sooner than the rest of the country according to Vance but a key to an economic rebound is improved real estate valuations. The commercial real estate market remains wobbly with high vacancy rates and more product coming on the market. Plus failing banks can create a ripple effect throughout the community as they generally put more real estate on the market with downward pressure on valuations.
Vance noted that the financial system has money to lend but there is not a lot of cash equity out there and it’s hard to qualify without solid tenants.
On the bright side he expects interest rates to remain steady and inflation to remain low.