San Francisco North Bay banking executives expect growth, increasing competition in 2020
Will it be a happy new year for the North Bay banking and lending markets?
We asked North Bay financial leaders to speak out on the headwinds and tailwinds they see going into 2020 and to comment on everything from their appetite for expansion to the changing competitive marketplace in banking north of San Francisco.
Executives said they saw a strong local economy but voiced some concern over changing interest rates in the new year. While much of the financial landscape is dominated by larger institutions, executives at mid-sized area companies are looking to consolidate their customer base and better serve their customers. They voiced little concern about newcomers moving into the area in a bid to gain market share.
Here is some of what they had to say:
What are the overall trends you expect in your business next year?
A healthy Bay Area economy overall is contributing to cautious optimism on the part of Bank of Marin President & CEO Russell Colombo.
“The economy in the Bay Area is healthy, with commercial real estate strong in San Francisco, Oakland and the Peninsula in particular,” Colombo said. “In addition there is ongoing job creation, and solid business expansion. Against that backdrop, we’ve seen steady loan demand and strong deposit growth. We expect these positive trends to continue in 2020.”
Exchange Bank Executive Vice President and Chief Banking Officer Troy Sanderson said he expects steady growth in core deposits and loans in the coming year as well as increasing focus on digital and mobile banking for consumer and business lines.
President and CEO of Redwood Credit Union Brett Martinez said continued growth and expansion are some of the main trends he is expecting. “I don’t see a big recession next year,” Martinez said, noting his company is hiring in the Napa area and is building out an additional suite of offices near the airport there.
What overall challenges do you expect to have to deal with?
Summit State Bank President and CEO Jim Brush said he expects increased competition for fewer opportunities in the North Bay market.
“The general economy is still doing well but there’s less activity,” said Brush, whose bank focuses on business loans and banking. He added extremely low interest rates offered by other banks narrowed the field for the kinds of loans his bank competes for.
Colombo of Bank of Marin said getting and holding the best people would continue to be a challenge.
“Attracting and retaining employees has been a continuing challenge and this likely will continue to be the case in 2020” Colombo said. He added that he is confident about the bank’s ability to recruit the best bankers in the market, pointing to increased third-quarter loan originations which jumped from $77 million from $53 million a year ago.
Martinez said he does not see fluctuations in interest rates as a challenge necessarily; however, “uncertainty around the interest rate environment is really the challenge as opposed to (rates) going up or down.”
Generally speaking, what are the characteristics of the North Bay marketplace and competition and do you expect that to change in the near future with more competitors setting up shop in the North Bay?
Executives polled said the North Bay market would continue to be a difficult one to break into for newcomers, both because of established relationships with customers and the clout of larger organizations.