Lower rates are pinching net interest margins and loan growth is slowing. Competition, from banks and nonbanks, is intensifying, and some lenders reported higher loan-loss provisions that reflected their exposure in certain loan categories.
Columbia Banking System is paying close attention to one of its markets after the closure of a Boeing plant. Cadence Bancorp. and Texas Capital Bancshares, for instance, are looking at ways to reduce their exposure to leveraged loans, while Umpqua Holdings is continuing to shutter branches in an effort to become more efficient. The energy sector also remains an area to watch in coming months.
Other banks discussed their plans to expand in 2020. Sterling Bancorp touted the progress it is making with its digital bank, while New York Community Bancorp said it is still committed to finding the perfect bank acquisition. More bankers across the Southeast are talking about their interest in hiring lenders in the wake of several large mergers.
Here’s what leaders of several banks with $10 billion to $30 billion of assets had to say about the year ahead.
Executives at Columbia Banking System in Tacoma, Wash., said they are watching for any fallout after the closure of a Boeing factory in nearby Renton.
The plant was shut down after the airplane manufacturer grounded all of its 737 Max jets following two fatal crashes. Boeing has estimated that the costs of grounding the jet would exceed $18 billion.
Boeing continues to buy parts from local suppliers, Andrew McDonald, Columbia’s chief credit officer, said during the $14 billion-asset company’s quarterly earnings.
Still, the closure could have a domino effect in the local market. Boeing moved many employees to other facilities, and McDonald said it is likely local businesses such as restaurants and dry cleaners will feel the pain.
That is causing some anxiety at a number of banks that operate in the region. Columbia’s total exposure to the Boeing plant and its surrounding market is $75 million to $80 million, McDonald estimated.