Small and middle market businesses — particularly in the Western U.S. — are cautiously optimistic about revenue growth despite fears of a recession, a new survey found.
The Umpqua Bank 2023
That was particularly true in the West.
The region has closer geographic ties to Asia, a vast agriculture industry and a leading technology hub, which could at least partially explain how it recorded significantly higher marks of optimism than other regions in the survey.
Roughly 57% of business respondents based in the West rated the economic conditions in the U.S. as either excellent or good compared to 33% in the Midwest, 39% in the South and 36% in the Northeast.
"I would agree that the middle market companies seem upbeat, especially in Utah," said Shane London, president and CEO of Deseret First Credit Union in West Valley City, Utah.
The $1 billion-asset institution had $175 million in member business loans on its books at the end of the second quarter, a 17% increase compared to a year earlier.
London said higher interest rates and inflation have impacted many companies, but overall it doesn't appear to be putting a damper on primarily positive sentiments.
"Utah continues with low unemployment, strong inward migration and growth and consumer discretionary [spending] appears to be relatively strong," London said. "Restaurants are still busy and local businesses appear to be doing well."
The higher level of optimism in the West was underscored by the fact that 42% of respondents in the region said they are likely to hire and
Columbia Banking System, Umpqua's parent, disclosed in its latest earnings report that 31% of its second-quarter total loans consisted of commercial real estate credits, including both owner-occupied and non-owner-occupied loans. Another 21% of the portfolio was composed of commercial-and-industrial loans.
Year-over-year comparisons were skewed by the
Richard Cabrera, head of middle market banking for
"That could be in the form of equipment purchases — manufacturing equipment in particular. And then real estate. Those provide opportunities for loan growth, but it's tempered against the backdrop of higher interest rates," he said.
Approximately 1,250 owners, executives and financial decisionmakers of American small and middle market companies responded to the online survey from July 27 to Aug. 8.
Canvas Credit Union in Lone Tree, Colorado, had $595 million in
Todd Marksberry, president and CEO of the $4.3 billion-asset credit union, said its business members in Colorado seem optimistic relative to the Colorado economy and see opportunities for continued growth and success. But they're also watching the legislators in Colorado closely.
"This last legislative session was contentious, relative to initiatives proposed that were
A number of the issues were defeated but could reappear on the spring 2024 docket. If they succeed, Marksberry said it will "absolutely have a negative impact on small to medium-sized companies in Colorado."
Russell Rosendal, president and CEO of Salal Credit Union in Seattle, said owners of home-improvement companies have seen many consumers still looking at new projects because the housing market is so tight. But he added that those business owners are concerned future interest rate increases could price some consumers out of the market.
The $1.3 billion-asset credit union had $73 million in member business loans on its books at the end of the second quarter, a 3% increase compared to a year earlier.
"We think there may be opportunities in the member business lending space next year as some regional and community banks look to pull back, but those opportunities will need to be priced appropriately," Rosendal said.
