BusinessReport.com

Credit is tighter, a presidential election hangs in the balance and a buyer’s market in area housing is predicted this year, but BancorpSouth President Larry Denison says he’s still bullish on Baton Rouge.

Repeated nearly as often as a mantra these days, area bankers predict “modest, but stable growth” for banks and the area. They say it’s based on actual numbers instead of a negative media generalizing national economic worries. They don’t foresee a recession making its way here this year, but they do expect a mild slowdown so they’re staying cautious.

“Credit will tighten some on real estate deals, but that’s mostly because of perception,” Denison says. At his bank, loan applications are up, and a new branch opened recently in Dutchtown.

“As a bank, we’re extremely excited about the growth potential in Baton Rouge,” he says. “While it is impacted some by what’s happening nationally, we don’t feel it will impede our growth significantly. We’re looking forward to steady and consistent growth in our customer base.”

Population growth will parallel job growth, which Denison says is the key to a sustained economy. Numerous sizeable projects in the area like Perkins Rowe are creating new jobs and drawing new people. “As infrastructure lags behind in New Orleans, excessive insurance makes it expensive to build there and problems with education continue, you still have people moving companies here. While the migration continues to other areas, too, it’s no where at the same level as Baton Rouge.”

Let’s not forget it’s an election year, too.

Election years tend to be stronger economically as Republicans and Democrats tend to infuse more pro-business incentives into the economy to build support. But he says who is elected will decide how long a national slowdown might last.

And for those questioning whether the area could repeat Louisiana’s dreaded 1980s recession again, Denison doubts it. A once oil-dependent Louisiana crushed by an oil bust, has since diversified so it can better withstand downturns, he says. Baton Rouge’s banks, harder hit by land speculation at the time, were swept up in a national move to more stringently regulate loan underwriting, which is why they avoided riskier investments like 100% financing and didn’t get heavily into subprime loans.

Danny Montelaro, president of Regions Bank’s South Louisiana Group, says he’s cautiously optimistic about this year.

“I don’t think there’s any segment of our business that concerns me as far as giving any difficulty,” Montelaro says. “But it’s going to be a tough year to grow just because of the uncertainly in the market and the business community’s hesitation to do projects.”

He maintains they’ve got money to lend to good projects, but no appetite for speculative lending or risky transactions.

While Denison says everyone’s scratching their heads on how the year will go, he sees bright spots in area economy. Billions of work is planned or under way in petrochemical and Class A office construction projects, which he considers especially good because it indicates business wants the space. He is concerned about the area’s growing single-family housing inventory, which statistics show might be overbuilt.

Donnie Landry says Lafayette-based MidSouth Bank is watching its pennies this year.

“It’s going to be probably the toughest year we’ve had in the last 10 years because it’s flattened out,” says Landry, MidSouth Bank’s executive vice president and chief lending officer. “We’re going to look at the budget and probably feel out the first six months to see if we want to make commitments [new branches]. Also, competition continues to grow.”

Landry isn’t predicting recession or that banks—including MidSouth—will pull back on lending, but it’ll be a cautious year. There are no worries about the bank’s soundness because it made responsible loans and didn’t get into subprime, but the market is flat and there’s more competition. Still, storm reconstruction is keeping it “blowing and going” in areas like Houma, Morgan City and Thibodaux. More cautious business owners in the oil and gas industry, who remember the oil bust, are slower to borrow now because they’re cash-rich.

Chase Bank President Mark Bensabat says healthy state and city-parish tax receipts, the petrochemical industry’s numerous expansions and the economic multiplier effect, a growing health-care sector, Interstate 10/Interstate 12 corridor development add up to a healthy outlook this year for the Baton Rouge metro area.

Capitalizing on the growth, Chase has expanded its mortgage business in the last six months, bringing in more mortgage bankers, and is doing more business, Bensabat says. As for the credit crunch, he says that’s only for people with marginal or poor credit.

“The volatility in the market is one thing, but we’re staying the course and so far the markets are fine locally,” he says. “Until you see employment levels start to decline, which they haven’t, you have to believe the economy has good legs and will hold up well.”