Banking boom

By KRISTI ALBERTSON

Construction, real-estate sales drive growth of local financial industry

The Daily Inter Lake

Perhaps "booming" is the best way to describe the financial industry in the Flathead Valley.

New branches, expansions and acquisitions are in the works for many financial institutions in the valley, part of economic growth that is driven primarily by steady in-migration and a robust construction industry.

Government officials and economic experts across the country are debating the impacts a cooling housing market might have on the nation's economy. In the Flathead Valley, however, it remains a non-issue as the housing market continues to flourish, and the economy's pulse beats as strong as ever.

"I would think it's the general economy that's been fueling the [banking] explosion," said Bob Schneider, president of First Interstate Bank in Kalispell. "The general economy in the Flathead has been very, very good for the last six, seven, eight, nine years."

It is, in part, a matter of sheer numbers. The more people there are, the more financial institutions are needed to give loans and open accounts.

"It's a desirable place for people to retire," Schneider said. "They're looking for a better quality of life. Population growth like that and retirement-growth dollars spur economic development."

And as the economy develops, so does the financial industry.

"The population growth plus the economic prosperity - a combination has been leading to more banks and more branches," said Bob Fitzsimmons, deputy commissioner of the Montana Division of Banking and Financial Institutions.

The growth isn't confined to the Flathead, he said. His department recently approved two new banks in Missoula that are now awaiting approval from the Federal Deposit Insurance Corp. Brand-new banks have gone up in Kalispell, Columbia Falls and Polson within the last few years, and many existing banks are building new branches.

"I would say, in general, western Montana has seen probably close to or as much as the growth of banking in the Flathead Valley," Fitzsimmons said. "Probably you could say the western part of the United States - Nevada, Arizona, Utah, Idaho - they've all seen similar-type increases over the past few years."

And across the West, real estate - both commercial and residential - has been the driving force, he said.

"Fully a quarter to a third of the local economy is the building industry," said Dave Stenberg, manager of Flathead Credit Union. "And it's built itself so it's perpetuating itself. There's critical mass. There's momentum there that is carrying the market."

That's definitely been true in Bigfork, said Doug Tillett, president of Flathead Bank.

"We've had a real good interest-rate environment for several years," he said. "The economy of the valley has been real vibrant. It's obvious with all the real-estate construction and the establishment of new businesses.

"We've certainly seen that in Bigfork, in the number of people that are moving here or are coming here and building second homes. The real-estate market is real strong."

IN THE rest of the valley, however, Tillett believes industry and small business as well as construction are driving the financial boom. Craig Ostman, manager of Heritage Bank in Kalispell, agrees.

"Construction is the No. 1 growth in the valley," he said, "but we also see growth in other areas that we also try to help."

Commercial development and the service industry are among those "other" areas, he said. Increased personal banking also contributes.

"Obviously, the construction is definitely fueling the banking growth, but with that also comes an increase in population and the needs of the consumers in personal loans," he said. "If you look at the growth of the valley, with that growth comes increased financial need; so in order to provide the services the community needs, it means that banks must grow, too. That's why you see all the development."

Glacier Bank has likewise experienced an increase in every department, said Bob Nystuen, president of the downtown Kalispell branch.

"But obviously there'd be more of an emphasis on construction, both more residential and commercial," he said. "It's really taken off within the last three to five years or so. I think there's a certain amount of optimism in our area here for growth."

And although reluctant to gaze too intently into the crystal ball, most are confident that growth in the financial industry will continue for a few years at least.

"I guess we don't see any real slowdown yet," Fitzsimmons said. "We've got to believe it's coming one of these days. If interest rates continue to grow, that might dampen the housing boom."

And a slowdown likely won't impact every area in the same way, Nystuen said.

"There may be no real slowdown around the lakes," he said, explaining that waterfront development will likely continue for some time regardless of what happens in the rest of the valley. "There clearly might be other parts that may feel it before others."

Even if interest rates increase, the valley might be able to stave off economic deceleration longer than much of the rest of the country.

"I think [the growth] will continue," Tillett said. "Historically, as the rest of the nation has had economic slowdowns, we've experienced some of that but not nearly to the degree that the rest of the country does."

Reporter Kristi Albertson may be reached at 758-4438 or by e-mail at kalbertson@dailyinterlake.com