We find ourselves in the middle of one of the greatest wealth transfer periods of all time. Those with wealth must decide whether they want to make transfers, and if they do, they must decide how much, to whom, when and in what structure?
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In general, the Boulder Valley banking industry is ticking along at a stronger pace than the national banking industry as a whole, they say.
“We’re still very high on Boulder. It always has been one of our strongest markets, and I don’t think 2013 will be any different,” said Mike Matthews, Wells Fargo Bank president for the Denver metro market, which covers a banking region from Longmont to Castle Rock. Matthews lives in Niwot and works out of Wells Fargo’s office at 1242 Pearl St. in Boulder one day a week.
Kyle Heckman, president of Flatirons Bank in Boulder, said the bank will have its best year in history from an earnings perspective.
Both bankers, as well as Ross Nicholls, vice president of the commercial banking group at BBVA Compass’ office in Boulder, mentioned restrictions put on banks by the Dodd-Frank Act as potential dampers on 2013. The Dodd-Frank Act includes tighter restrictions on lending and incentives for banks to hold more capital. It was passed by Congress and signed into law in 2010 as a reaction to the mortgage crisis in 2008.
Heckman said he’s worried about consumer lending compliance changes brought on by Dodd-Frank. He also worries about how the Consumer Financial Protection Bureau – the new agency created by Dodd-Frank, which started operating in 2011 – affects business. In general, more regulation costs banks money on compliance measures, those in the industry said.
The consumer bureau enforces federal bank rules and conducts bank examinations as well as collects and track consumer complaints. It is an independent unit inside the Federal Reserve.
The national economic recovery appears to be in limbo, both Matthews and Nicholls said, creating uncertainty for both banks and small businesses. Expected higher tax rates in 2013 may limit consumer consumption somewhat as well, Nicholls said.
“Financial pressures are building for both businesses and consumers, with expectations that tax increases and still slow growth in 2013 will hit on spending,” Nicholls said. “Upcoming fiscal reforms could weigh on lender confidence.”
Overall, the local banking outlook is bright, however, driven by the regional focus on innovation and high-tech companies, Matthews said. Many companies are taking a wait-and-see attitude when it comes to growth, but not in an overwhelmingly negative way, he said.
“It’s something we have to look at,” Mathews said. “But for me, Boulder continues to be a very solid economy. I just continue to see the support in the community and investments and that sort of thing.”