If the financial market was a baseball game and bankers were the umpires, there may be some debate among officials about when to sing about Cracker Jacks.
"I think it's going to be challenging through 2008," said Wells Fargo Regional President John Sotoodeh. "The debate is really whether we're in the third inning or the seventh inning. I would say, we're in the seventh."
At a roundtable discussion hosted by The Daily Transcript, bank leaders from San Diego met Thursday to discuss their industry -- and the discussion was full of baseball analogies about the market and when the growth slump would end.
With first-quarter earnings reports still making their way to lenders -- Jim Wening, San Diego regional president of US Bank, said it is hard to predict just how slow growth really was. He said those reports could show that there’s a lot more time before the bottom of the game and the industry is likely in the third inning.
The banking industry has seen numerous changes in the past six months -- with foreclosure rates skyrocketing and interest rates and home values falling. Don Starkey, city president of Wachovia Bank (NYSE: WB), said banks are re-aligning and giving money to the highest-performing sectors.
Slowly, homes are selling and one person’s tragedy is becoming another’s blessing and bringing buyers to banks for financing.
“What we’re financing now is foreclosures,” Pacific Trust Bank President Hans Ganz said.
The banks who have lost money due to foreclosures wish their clients would have talked to them before defaulting.
“If we hear about it sooner, we can hopefully do something about it,” said Joseph Benoit, president of Union Bank of California (NYSE: UB).
A nice idea, but Ganz said he didn’t see it happening with too many clients.
“They know bankers,” he said. “They know that if they come in and say ‘Hey, I’m in trouble,’ what’s the first thing banks will do -- they shut down your line of credit.”
It comes down to what sectors are affected. Those who are not mortgage lenders or who didn’t offer subprime loans aren’t feeling the crunch of lost money.
“It’s a good time for all of us,” said Sandy Redman, senior vice president of California Bank & Trust. Her bank is busy finding new clients, formerly with other lending institutions.
Vibra Bank is a new bank -- with no history of bad loans.
“For us as a new bank starting out, it’s a good time for us,” said President Scott Parker, noting that starting from a clean slate is helping them make a name for themselves.
While the real estate industry has taken a hit, one sector that is growing rapidly are small businesses that are taking advantage of loan rates.
Ganz said there are signs of struggling in that market, however. He picked up the baseball analogy and said the game of real estate lending is in the fifth inning and retail and small business sectors are back in the third.
The bankers said they are analyzing risks, waiting for growth to pick up and hoping the cost of living goes down. While competitors, they all are on the same side of waiting out the slump and they remain optimistic.
“I think most of us are doing better than the Padres,” Ganz joked.
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