Back To Regional Map
We are definitely more optimistic for 2013 than at the same time in 2012. Main reasons for that are:
Economy: we see signs of improvement both nationally and locally here in Iowa.
Lending: demand is picking up, particularly in mortgages and commercial categories.
Delinquencies/charge-offs: Though it can change at any time, the downward trend over the past 12 months is very encouraging.
Internal expense management and cost controls.
Michigan is seeing pockets where new jobs are being added. Lansing is benefitting from long-term excellence in GM auto production and Grand Rapids is seeing a boost from the education and medical industry. Government budget/deficit challenges are still looming and will likely persist throughout 2013 or beyond. Real estate seems to have bottomed out and some pockets of geographic and price ranges are upticking. Consumers still seem to be hesitant due to job uncertainty. The threat has been looming for several years and it will take a few prosperous years for that fear to wane. Meantime, cars are getting old and houses need repair and that's where the loans are active. Small businesses are also pitting lenders against each other in refinancing debt.
Hear Bill speak firsthand about what made Community Financial so successful in 2012.
People in our communities are looking for a local community based financial institution that is interested in serving their needs and the needs of their community. In 2012 we were able to grow checking accounts by 8.9% and saw overall loan growth slightly over 9%. Our loan to share ratio is over 100%. 2012 saw a huge increase in mortgage lending. We sold most of the $137 million we originated, but we retain the servicing on these loans so that we continue to maintain our mortgage relationship with our members.
We expect all these positive trends to continue in 2013 and we see the Michigan economy continuing to improve. We are also looking forward to building our market share within our current markets as more and more people realize the positive differences that come from doing their banking with Community Financial.
The state's unemployment, though lower than the national average is still higher than pre-2008 and the prospects for going lower are not favorable in the near term. Even though jobs are being created, they are not being created faster than new workers entering the workforce. Housing has bottomed out at the moment with a 4 - 5 month trend in rising home starts and slightly rising prices. Foreclosures have fallen from all time highs making the housing sector more stable than it was 2 years ago. Massive refinancing in the last year has given several homeowners additional monthly disposable income generating a higher savings rate while also propping up an increase in automobile purchasing in 2012.
2013 looks to be more of the same small, with steady increases in economic wellbeing as long as Washington keeps the national economy on track. Housing will build upon 2012 trends with new home starts and values continuing to inch up slightly. Automobile purchasing is expected to continue at the current pace, stronger than in recent years but not back to pre-2008 levels either. The commercial lending market space is very crowded and loan pricing is becoming very competitive for the very good deals. And in general, small businesses seem to have access to capital to expand if needed.
David Powers, CFO
Landmark CU ($2.1B, New Berlin, WI)
We are slightly optimistic for 2013 overall, but this is relative to the very sluggish past several years. 2013 is expected to produce mild indirect auto loan growth through the sacrifice of yield. Home equity lending is projected to be flat at best despite apparent stabilization of residential real estate values. First mortgage lending will be one third lower in 2013 versus 2012, but reflect a stronger purchase market and overall will still benefit from low historic rates. Other consumer lending, credit cards and miscellaneous personal loans will continue to lag. Deposit growth will continue very strong with a growing risk of unstable 'surge' balances. Interest margins will continue to be compressed. Consumer utilization of debit and checking products is a bright spot, but regulatory clouds could dampen this critical non-interest income source.
Back To Regional Map