Economic Climate - Financial
A Message on the Economy
From Jim McConoughey
This quarter and the previous one have been the most difficult of this recession. People have been scared. It’s that fear that is driving this economic situation but I think we are starting to see an increase in consumer confidence.
Many economists say the bottom is near or maybe even here. It looks like people are ready to listen and are starting to take note of the positives. Take the stock market for example. We are beginning to see a slight rise with some better-than-expected earnings. There has also been talk of an uptick in manufacturing because many companies let their inventory dwindle and now need to start rebuilding them. That will be a sure shot in the arm for economic growth.
Rebuilding our financial industry won’t happen overnight but it will happen. We met with Dan Daly from Busey Bank to get an update on what’s happening in the financial world nationally and locally. To view his full interview, click play below.
“The Economic Situation:
A National Overview and Local Update”
The financial industry is struggling worldwide, but according to Dan Daly (West Region President of Busey Bank) Central Illinois is faring well, all things considered. “Banks are lending.” Daly says the vast majority of people with good credit ratings will have no trouble borrowing money and even those with a marginal credit rating will be able to borrow but they will likely see some higher rates than more conventional loans. “If you have a well conceived project there is money to borrow.”
Central Illinois financial institutions are strong, well capitalized, well managed, and able to compete. Daly says competition creates better deals for consumers and businesses. “We are blessed with a solid competitive market. When things do start to recover globally they’ll recover quicker here because we are doing ok.”
Area financial institutions are starting to see a tremendous increase in mortgage refinance according to Daly. He says consumers are taking advantage of historic low interest rates. “Refinancing can do one of two things…it can put money in people’s pockets or help them to pay their mortgage debt down sooner.” Either way he believes this is a long term positive for the community.
There are many news reports each week of buyouts from local small companies to larger corporations. Daly says that was expected because anytime you have this serious of an economic downturn you see an uptick in acquisitions. “Companies that were weak going into this downturn are finding themselves in a place where they can’t recover and will not succeed on their own so a buyout is necessary. The terrible part is the shakeout process and laying people off.” However, Daly says there are benefits to acquisitions.
This is part of the process that we go through in every economic cycle. “Going thru the process isn’t necessarily enjoyable but results can be good. There is an opportunity with mergers and acquisitions to have a long term benefit to the company and the community.” Daly says the week will be weeded out and the strong will have more market share. They’ll wind up with more talented employees and have acquired assets that will carry them beyond where they were before. “This creates that long term positive impact for any community.”
Daly says Central Illinois has companies that are generally in good shape and stable. We have a good base of strong companies in the area and they will be the survivors. “They will thrive long term. Many of our companies will be the ones to acquire others.”
May 4, 2009