Banking Challenge

The other day while waiting for an appointment, I bought a copy of the Orange County Business Journal – February 13, 2006 – and noted the following challenges within an article in the Outlook section.

The Question:

What are the challenges amid rising interest rates for your bank and the industry? Are you seeing a slowdown in any kinds of lending?

The Responses:

(Union Bank) – The banking industry in California faces several challenges. They are: increased competition from banks and non-banks; the possibility of a slower economy, which can impact business conditions and add challenges for our customers; and increased compliance issues, particularly related to the nation’s anti-terrorism programs.

(Wells Fargo) Challenges facing the industry include: Identity theft, Home Ownership and Compliance.

(Bank of Orange County) – The challenge in our business continues to be attracting and retaining outstanding bankers to service our customers. Maintaining a healthy net interest margin is an additional challenge in a rising interest rate environment.

(Banco Popular) – One of our challenges is to generate additional fee income to offset the shrinking net interest margin. Our challenge is the aggressive rates being paid on deposits by non-banks (credit unions and online banks).

(Washington Mutual) – We are facing the same challenges as everyone else, in terms of interest rates being raised. Our multi-family, small-business and residential lending have seen steady growth in 2005 and we believe it will continue in 2006. I believe the industry is seeing a couple of challenges. In OC, as with many California communities, home affordability is posing a problem, creating challenges and opportunites for the industry.

(National Bank) – So we see the current environment as more of an opportunity for savvy entrepreneurs than a challenge. Attracting and retaining people is a challenge for any organization that has grown as fast as we have.

(Pacific Premier Bank) – Our challenges are similar to those of many institutions. We anticipate a very challenging interest rate environment.