By TIM RONALDSON | Business Trends
There is one statement on which most business owners, regardless of sector, can agree: 2009 was not a great year.
Many were counting down the days on the calendar like it’s the end of a prison sentence, with a new beginning starting Jan. 1, 2010.
How bright the next year will be, though, depends to whom you speak.
On the one hand, the banking industry experienced noteworthy gains in 2009 that should continue into 2010, according to officers at the New Jersey Bankers Association. On the other hand, developers and contractors aren’t seeing similar success just yet, as they wait for their sector of finance to ease up.
“On the residential side of lending, things seem to be on an uptick. On that side of the business, I think things are improving,” said Jim Silkensen, who, along with John McWeeney Jr., is co-president and co-CEO of the New Jersey Bankers Association.
Compared to the rest of the nation, New Jersey banks have been more profitable quarter after quarter, Silkensen said. State financial institutions reported a $660 million net profit in 2009 versus $628 million at this time last year, said Silkensen, quoting information from the Federal Deposit Insurance Corporation. In the third quarter alone, $2.8 billion was earned, compared to $879 million in the third quarter of 2008.
“New Jersey’s economy is a stronger economy…than other regions in the country,” McWeeney said. “Even though it’s been impacted, our banks have performed better.”
Of the 130 bank failures nationwide this year, only two were New Jersey-based, said McWeeney, who thinks the banks in the region came into the recession with stronger capital and in a better position. The New Jersey market also didn’t experience a dramatic expansion of real estate construction like Nevada, Georgia and Florida, where those areas were eventually overbuilt and new banks were formed. And while the state’s budget is in dire straits, McWeeney believes it’s tied more to overspending rather than the state’s economy.
The Bankers Association’s primary purpose is to serve as an advocacy agency, lobbying lawmakers in Trenton and Washington, D.C., on behalf of its 126 bank members, Silkensen said. The organization also serves associate members – ranging from law firms, accounting firms, check printers, data processors and any other type of company that does business with banks. It is just completing its first year of being a united trade association, after more than 100 years of representation through various groups representing different sectors of banking.
But not all has been positive for the financial services industry.
For most of the Bankers Association’s members, hiring has not been great, but McWeeney said that could pick up as consumers gain confidence and the economy rebounds. And commercial lending, often considered a lagging sector, is still in the struggling phase.
“On the commercial lending side, the rebound hasn’t hit yet. It tends to lag a bit. Our banks tell us they’re continuing to lend, and hopefully, we’ll see signs come second or third quarter of 2010 with an improving economy.”
That rebound is exactly what the members of the Southern New Jersey Development Council are awaiting. Marlene Asselta, president of the organization, described the business approach of her members as “deliberate” and “methodical” when it comes to spending money and choosing public projects on which to bid, and she doesn’t expect 2010 to be much better than it was this year.
“Even though we’re starting to see some slight job creation – although it’s almost negligible – folks are still worried about the economy,” Asselta said.
To the approximately 300 members of the council, Asselta urges business owners to get out and do what they’ve been doing, with the same kind of enthusiasm they’ve always had, and not “hide under the desk” until the storm blows over. As she said, it’s not necessarily that a company’s product isn’t as valuable now as much as it was two years ago, it could just be that their service isn’t needed now.
“We tell our members that, notwithstanding some gloomy times, they should still be very visible whenever they can be,” Asselta said. “They should still be looking for new relationships, while still maintaining the ones they’ve had for years. They should look for a different way of doing business – not that their current way is wrong.”
Asselta said that a person-to-person relationship – “the old standby” – proves the best when looking to form new business partnerships, and membership in the Development Council works for her members because it has representation from public and private entities.
The heads of the Bankers Association agree that their members will be cautious heading into 2010. Some institutions have been trying to raise capital as a protection against future loan loss issues, and going forward, strategic planning could shift depending on how the banking world changes.
“Like any business in a recession, they’re looking at their expense control,” McWeeney said.
Mon, Dec 28, 2009 at 1:06 pm
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