BANKING AND FINANCE: Roundtable.

• Position: Industry Outlook - Discussion

Our panel of bankers say they are optimistic about the future, but many are still waiting for the regulatory changes they hoped the election of Pres. Donald Trump would bring. The panel also discusses the financial health of Utah's commercial real estate industry and their efforts to embrace fintech within their organizations.

PARTICIPANTS

RICK ANDERSON

Bank of American Fork

KAY HALL

Zions Bank

SCOTT IRWIN

Holland & Hart, LLC

G. EDWARD LEARY

Utah Department of Financial Institutions

KENT NELSON

Brighton Bank

CLINT OKERLUND

Bank of America

Merrill Lynch

FRANK PIGNANELLI

Utah Association of Financial Services

EDWARD SANCHES

Central Bank

ROGER SHUMWAY

Bank of Utah

DREW YERGENSEN

KeyBank

MARK ZUPON

First Utah Bank

MODERATOR

A special thank you to Juliette Tennert, director of economics and public policy at the Kem C. Gardner Policy Institute at the University of Utah, for moderating the discussion.

Q&A

Let's start by talking about what's changed in your industry since the election last year.

PIGNANEL: A year ago today I went before my board of industrial bankers and said it's like Moses leading the slaves out of Egypt, because the world changed. I may not have voted for the guy, but God bless the results because the world has changed from us playing defense to us playing offense. And it has made a big difference in terms of how Washington, D.C., is reinterpreting Dodd Frank, the great leprosy that is on America.

But the biggest thing for us is the FDIC. Because Marty Greenberg was likely to get reappointed and we were going to have to play strategy to prevent that. And it's gone from that to where we have a new chairman and possibly new board members. Because of that, we now have had applications for IOC charters.

LEARY: Right after the election, there were great expectations from the financial services industry that you'd get significant regulatory changes. Federal agency heads changing. Those kinds of things. And I just don't think they have happened as fast as everybody expected them to. That's been very, very slow on both fronts.

JANELLI: It's been slow. That's been frustrating, especially with the Republicans controlling all branches of government. And part of it is I think there's this fear of the backlash publicity wise, and they need to get over that and put on their Big Boy pants and say, "We are going to change the regulations."

SHUMWAY: The good part is the stock market has gone very well in the positive position. And that makes people somewhat happy. But there are a lot of openings in every regulatory body that haven't been filled. People are optimistic, but so far bankers have to pick their battles of what we want changed, because change just isn't coming yet.

YERGENSEN: One thing we have been starting to see this year is softening in loan demand. Over the last few quarters, bigger bank stocks have slowed their growth, given the softer loan demand. And you start wondering what is driving that. There is some regulatory commentary. But the last couple of years, large companies have taken advantage of loading up debt, building up cash. I think companies that have been wanting to sell have sold. There's a few more with higher multiples, so that activities happen. There's a real concern that maybe there's some softer loan demand and there's going to be heightened competition in our industry as a result.

SANCHES: We are just Utah County based, but we are actually the opposite. Our loan demand has never been stronger. But we are more concentrated on construction lending. And that's just been a huge boom over this last year, and I feel it will continue. The growth of Vineyard and everything happening in north county with Silicon Slopes and all the jobs coming in there, the demand for housing is absolutely at the peak. There's some concern there as far as availability of land, affordability of lots. But as far as the demand, it's never been stronger. Usually in early winter we see a softening of demand, just naturally. And last year it didn't slow down at all. And this year it's not slowing down, either.

HALL: Utah County, Washington County, that's where the growth is. If you go into some of these other communities, it's really slowed down.

On a national basis, some of your bigger, larger corporate customers, away from the consumer housing market, it has slowed down significantly. And the companies are full of cash. They have got a lot of liquidity. The value of deposits still is pretty nonexistent. And so they are paying down debt. It's very interesting to see companies just come in and say, "You know I've got $15, $20 million worth of debt on my facilities and I'm just going to pay it off because I have $30 million sitting in cash. And you are paying me this on my deposit, and I'm paying this on the loan." A lot of big companies are doing that.

The big corporate customers are struggling right now because it has been so slow. Even with the new presidency, we haven't seen any significant changes in our economy as it relates to corporate America. There's just not that opportunity.

TENNERT: From the economist standpoint, it feels like we are getting toward the end of some sort of cycle. It's been long and drawn out. We are in the third largest expansion on record. But mixed in is the uncertainty about policy and what do we do there.

NELSON: At Brighton Bank, we were expecting a slowdown in this coming year and it didn't happen for us, either. Especially in...