Utah banks are healthy.

• Author: Horowitz, Alan
• Position: Federal Reserve reports excellent condition for Utah banking industry; see related article on Roy Simmons, patriarch of Zions First National Bank

"I would not dispute the report coming out of the Federal Reserve that Utah and Idaho have the best health in terms of the banking industry. The banking industry in Utah is as good today as it's been in 20 years," states George Sutton, Utah's commissioner of financial institutions.

Sutton's confidence in Utah's banking industry is echoed by many observes. "The industry's in excellent condition - perhaps the best it has been in for the last two decades," concurs Roy Simmons, chairman of the board of Zions First National Bank.

"I can't think of a single state or region in the country right now that has a more stable banking environment than does this one," says Jeff K. Thredgold, senior vice president and chief economist at Key Bank.

It was not always so. Within easy memory, Utah's financial industry was reeling. Its thrifts were shuttered by the state, savings and loans here suffered losses and insolvency, and the bottom lines of just about every major local bank took a beating. All this happened during the early and mid 1980s.

This year, most if not all of the major banks report record earnings, the thrift crisis is a distant recollection, the surviving S&L are strong, the credit unions are doing well, and no one expresses any significant concerns about what the 1990s hold for Utah's banking industry. According to Gary Zimmerman, economist, Federal Reserve Bank of San Francisco, Utah's banks are enjoying a 0.91 percent return on assets. This compares with the Federal Reserve's district (nine Western states) average return of 0.54 percent and the nation's average of 0.59 percent. "Utah is doing significantly better than the district and the country," he notes.

Long-Term Effects of Problems

Despite the current health of the industry, the recent brush with disaster has left a permanent mark on it. Of the state's six major banks, only the two largest, First Security Bank and Zions, remain locally owned. Out-of-state ownership was one of the consequences of Utah's banking industry's problems during the 1980s. First Interstate, which years ago bought Walker Bank, is based in Los Angeles. Key Bank, which purchased Commercial Security a few years back, is headquartered in Albany, N.Y. Phoenix, Ariz.-based Valley National also made a local purchase in the late 1980s, Valley Bank & Trust. West One of Boise bought and merged two local institutions, Tracy-Collins and Continental Bank & Trust.

Another result of the industry's problems has been consolidation. There are fewer banks and S&Ls than in the past, which is also a trend nationwide. "During the rest of this decade, I see some consolidation [in Utah], with a number of the larger banks purchasing some of the good, smaller banks," comments Thredgold.

The cause of the industry's current good fortune is easy to see: Utah's economy, in the doldrums during the 1980s, is currently thriving. According to Lawry Alder, president of the Utah Banker's Association, local banks are strong because "our economy is good. Banking tends to be a mirror image of the economy, and we've got a lot of our problems behind us that developed in the early and middle 1980s."

This "cleansing" has given the local industry new-found strength and aggressiveness. First Security is again on the acquisition trail, having recently bought several community banks. The state's first new bank in years was recently started in Orem. All the banks have strong balance sheets.

Loans for Small Businesses

But for the small business owner who wants bank financing, there's some disagreement as to the willingness of the local banking industry to be supportive and the ability of businesses to get financing. Alan Rindlisbacher, vice president, business attractions, Economics Development Corp. of Utah, says that back in 1987, 1988, and even into early 1989, he kept hearing from...