Economy bouys bankers' spirits

The outlook of bankers closely mirrors that of many of their business customers as 2007 arrives:

They're bullish on the northern Nevada economy and expect good growth for their business. But they're feeling just a wisp of worry about whether the housing market's landing will be hard or soft.

"We're blessed to work in a vibrant, resilient market," says Chad Osorno, Wells Fargo's northern Nevada president.

That translates into strong loan demand, especially from small businesses, he says, and the continued strength of the loan business is an indication that the region's economy remains strong.

The lending business could gain a little more momentum this year if interest rates decline as many bankers expect, says John Guedry, the chairman of the Nevada Bankers Association.

And declining rates also could help shore up some segments of the economy such as housing that are rate-sensitive, says Guedry, who's also the president and chief executive officer of Business Bank of Nevada.

As rates have stabilized in recent months, more business owners have been visiting their bankers for loans for productivity improvements such as upgraded computer systems, says Mike Hicks, senior vice president and branch administrator with Reno-based First Independent Bank.

Finding the deposits to create loans, however, has grown increasingly competitive as interest rates have risen to a point where consumers once again are paying attention and they're willing to move their money to chase a better yield, says Hicks.

The competition will grow all the more spirited as banks continue a wave of branch construction throughout the Reno market. Spanish Springs is shaping up as a particularly competitive market with numerous bank offices planned for openings during 2007.

Topping bankers' worries: A hard landing for the housing market an outcome they doubt that spills to the rest of the economy.

And don't forget, Guedry says, that the State Legislature is in session in 2007 a gathering that bankers always watch carefully for possible impact on their industry.