Even though global stocks dropped like a stone Thursday, a panel of South Coast bankers expressed economic optimism and dismissed the idea of a “double-dip” recession.
Speaking at a luncheon meeting of the Santa Barbara CPA/Law Society, Jeff DeVine, president and chief executive officer of American Riviera Bank, Tyler Dobson, vice president of commercial lending at Rabobank, and Annette Jorgensen, vice president of Community West Bank, all seemed optimistic in their remarks to the crowd of about 50 accountants and lawyers at the Canary Hotel.
When asked of the country is headed back into another recession, which it has been struggling to get out of, Dobson said there will be no “double-dip,” a phrase used to describe a return to the dire economic conditions from 2007 to 2009.
However, DeVine said the country is still hammered by high unemployment and what he described as a weak local real estate market. Even so, he said, housing affordability is up and interest rates will remain low for at least another 18 months.
But the panelists seemed most up beat about commercial real estate.
“A lot of clients are paying more on their lease than they would on a mortgage,” Dobson said. “Right now is the best time to buy a building.”
Jorgensen agreed, while also touting the availability of U.S. Small Business Administration loans even for start-up companies. She and Dobson are UCSB graduates.
DeVine and Dobson said banks have money to loan, but uncertainty and a lack of confidence in the economy is slowing the lending process. They said banks’ net profits and cash flow are much higher than in recent years.
“Banks have returned to profitability,” DeVine said. “Banks are awash in liquidity.”
DeVine, a South Coast banker for 20 years, said the federal government is closing fewer banks than during the past two years when several hundred financial institutions could not meet capital ratio requirements.
“We may be four years into a ‘lost decade,’” DeVine said, but the nation’s upcoming economic problems won’t be like what it went through during the past four years.
The South Coast bankers’ remarks came as stocks plunged and extended a sell off to four days. In that time, policy makers have failed to halt global economic stagnation, which sent markets plunging.
But that has to do more with the crisis in Europe and less with what is happening in the United States, Dobson said.
On Thursday, Wall Street’s so-called fear gauge, which is the CBOE Volatility Index, jumped 12 percent. The Dow Jones industrial average dropped 391 points, or 3.51 percent, to 10,733.83. The Standard & Poor’s 500 Index lost 37.20 points, or 3.19 percent, to 1,129.56. The Nasdaq Composite Index slid 82.52 points, or 3.25 percent, to 2,455.67.
The South Coast Biz Blog is a roundup of the latest business news in the Santa Barbara area and is written by Ray Estrada, who has covered business in the region for numerous publications over the past couple decades. See more at independent.com/biz and wordpress.com/southcoastbizblog.