Brighter economic prospects bolster banking.

• Author: Richardson, Jeffrey
• Position: Economic prospects for the banking industry in Alaska

Brighter Economic Prospects Bolster Banking

...But managers of the state's financial institutions agree that long-term uncertainties remain.

In 1989, amid the aftershocks of recession, the Anchorage Chamber of Commerce gathered the state's leading bankers for a luncheon panel to reflect on the state of the economy and the banking industry. A record crowd showed up.

This year, as the dust was finally settling from the crash of 1986, the Alaska State Chamber of Commerce convened a similar panel; again the room was packed, but there were significant differences. For one thing, the new bank on the block, Northrim, sent a panelist, reflecting an important development in the state's banking industry. For another, the bankers were whistling a happier, lighter tune, as if finally convinced that the economic cheerleading of the state's media and business boosters has some substance to it.

Why the high turnout for these presentations? Dave Cuddy, senior vice president at First National Bank of Anchorage, speculates that bankers are seen as credible economic informants because of their many interactions with clients around the state. As people try to bring certainty to their decisions about investments, business expansion, college financing, and retirement, they want to learn "what facts bankers use to project the city and state economy. I think some people may be shopping for loans."

Not only that, Alaska's banks now are shopping aggressively for customers to whom they can loan, signaling an important milestone on the road to robust recovery.

The near-term forecast delivered by Cuddy and the other panelists was indeed upbeat. "We all agreed that the next 18 months look great," says Cuddy.

Adds Robert Gray, president of National Bank of Alaska: "I think the banking industry in Alaska is one of the strongest of any in the United States. The imprudent lenders paid the price and they're not here anymore."

But beyond the two-year horizon, fears that oil prices will drop again dampen the feelings of optimism in the minds of some observers. How soon before Iraqi and Kuwaiti oil hit the world markets? Will the Arctic National Wildlife Refuge be opened to development?

Ron Kukes, vice president and Alaska manager for First Interstate Bank of Alaska, notes, "A lot of it has to do with state employment. It's everyone's belief that we will see less oil revenues next year. (There's a lot of oil revenue this year). The concern is we're not going to see that...