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Wednesday, 04 January 2012 18:48

Crystal Ball 2012: More on Finance

Written by  MiBiz Staff
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Tom Schlueter
President, Keystone Community Bank

We expect interest rates to remain low, which should be good for those homeowners refinancing and for homebuyers during the coming year, as well as any businesses that are looking to refinance or expand. However, deposit rates will also remain low, as banks remain flush with cash and don’t have many good loan opportunities.

The low level of consumer and business confidence needs to improve before businesses will have the confidence to expand by using their own cash resources or by borrowing. High unemployment and the perception of the general lack of any good news in the world on any given day certainly holds back any improvement in confidence.

Real estate values will continue to be a problem for banks and both business and consumer borrowers, as current valuations continue to be low and can hinder the ability to refinance existing debt to improve the borrowers’ ability to reduce their debt service, expand, etc.In summary, 2011 was a better year than 2010, and we think next year will also be a better year, but it’s just going to be an OK year.

Kennedy Fillar
Regional President, Comerica Bank

As a result of better U.S. data toward the end of this year, our chief economist, Robert Dye, sees the likelihood that the U.S. economy will fall into recession before the end of 2012 as being lower now, down to 40 percent. Despite the continued uncertainly in the economy, commercial loan outstandings — for us and for the banking industry — have been growing. Our loan pipeline and utilization rate continue to increase. As such, they are encouraging signs for the future. Our deposit market share grew in Michigan in 2011, according to the FDIC. Our focus on relationships is working and will continue to be a key driver of our success in 2012 and beyond.

Jim McKinley
Partner,
HNi Risk Services

Overall, we see the economy continuing to improve in 2012. We have clients in various industry segments which are all seeing varying degrees of projections. Specifically, the health care industry is continuing to grow rapidly. The manufacturing sector is seeing marginal growth; however, finding the right employees has been a challenge. Our industry, the commercial property and casualty insurance market, has experience a multi-year downward trend in pricing. We are starting to see indications that this pricing trend is starting to reverse, and, in specific areas, is starting to increase. Coupling these possible swings in market pricing with clients’ increasing exposures will ultimately put significant total cost pressures on our clients. Success in our industry will come from developing new, non-traditional methods of driving our clients’ costs down, which will continue to influence our business.

Matthew Becker
Partner,
BDO Seidman

2012 is likely to look a lot like 2011. I don’t expect to see large changes in unemployment or overall economic growth. Indicators suggest national unemployment hovering around 9 percent and GDP growth at 2.5 percent for 2012. This means 2012 will be as rough as 2011 economically. The choppy economy will make employers, especially small businesses, wary of the hiring necessary to create real job growth. Interest rates will remain low, but the availability of credit will remain tight for all but the most creditworthy borrowers, making investment by many businesses in the manufacturing sector difficult.

With slow economic growth and tight credit, many manufacturers will need to take advantage of all available incentives to remain competitive. Manufacturers can leverage tax incentives — bonus depreciation, accelerated depreciation and credits for energy efficient property — to maximize return on investment in 2012.

With many tax incentives set to expire at the end of 2012, manufacturers should approach tax planning in 2012 with a sense of urgency.

Lynn Kerber
Regional President,
Chemical Bank

Based on recent economic data and the political climate, I think we will continue to see tempered growth in 2012. West Michigan’s economic indicators show modest growth but continue to be stronger than other areas of the country. While we are experiencing growth and continue to see opportunities in West Michigan, business owners are being cautious due to the overall state of the national and world economy. Until economic stability occurs on a more widespread basis, business owners and consumers will continue to lack confidence in making significant investments. As a bank, we support and rely on growth in the economy. We have expanded our government lending capabilities to support new and expanding business. We are also deepening our relationships with community partners to collaborate in supporting the West Michigan economy. We continue to have a strong capital position and the capacity and willingness to lend. Our focus is both to help our customers be successful and to contribute to the community.

As Michigan’s largest community bank, we feel we are uniquely positioned to support our customers through our commitment to Michigan, our capabilities and our financial strength.

Tim J. Doyle
Chairman,Michigan Bankers Association
Senior Vice President of Fifth Third Bank,
Western Michigan

The economy is on the road to recovery. Michigan, in particular, is a leader in growth and stability. Michigan was the number one best state for job growth in the country, according to research done by Newsweek. With unemployment dropping 1.99 percent in the last year, 2012 is a promising year.
Banks, as they always have, will continue to partner with businesses and companies to support continued growth. Michigan’s new tax plan is the most competitive in the Midwest and one of the best in the nation. This, too, provides new business opportunities and a good economic outlook for the state, businesses and banks alike.

Kevin Hirdes
Managing Partner,
NuVescor

The economic crystal ball for 2012 should again be brighter than 2011. In particular, the Midwest economy, which had been battered in the recession, has rebounded markedly in the last 16 months. This bodes well for those of us who call Michigan home. Although not all industries and sectors experienced the same level of improvement, there is no doubt the Midwest and U.S. economy have tilted further toward prosperity. Mergers and acquisitions for 2011 were generally on par with 2010, which was up significantly over the previous year. There are indications that 2012 will again be healthier than 2011. Unemployment is edging down, GDP has stayed positive and banks are now becoming more assertive in new lending. Personal Consumption Expenditures (PCE) recorded strong gains year over year. Perhaps PCE is most telling about future economic prospects as it directly correlates to attitudes about spending.
NuVescor, typically serving companies with revenues between $5 million to $250 million, experienced higher total deal value in 2011. Transactions were largely concentrated in manufacturing. For 2012, we anticipate greater dollar and unit volume with acquisitions expected in medical equipment, industrial, technical and health care companies.

Tom Rosenbach
Managing Partner,
Beene Garter LLP

I think the economy is going to continue to grow, just not at a great clip. Especially in West Michigan, we’re confident that things will continue to grow. It will just not be as fast as people would like it to be. We’ve been pleasantly surprised at the growth rate, and we’re optimistic in that regard. Of the different sectors we serve, we see manufacturing growing. We’re cautiously optimistic that will continue, and we’ve been pleasantly surprised by what we saw over the last year. Commercial construction will be about the same. It’s down, and we will not see much new construction, but there is a decent amount of work out there. There are just not the large projects people are used to seeing, but there’s a lot of work around to keep them busy.

Read 1610 times Last modified on Monday, 13 August 2012 16:09

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