The financial services sector here has grown robustly in the last few years, and Spokane-area bankers say theyre going to be challenged to match this years stellar growth in 2007.


This has been three of the best years weve seen, and now were seeing a soft landing nationally, which will have a ripple effect across our markets, says Jack Heath, president and COO at Spokanes Washington Trust Bank.


Heath says the 32-branch bank expects to close this year with $2.7 billion in loans, which is 15 percent higher than last year. Washington Trust likely will end the year with an 11 percent increase in deposits, with a total of $2.6 billion, Heath says. The bank, which plans to start building new branches in Airways Heights and Rathdrum, Idaho, next year, anticipates that its loans and deposits both will grow by 10 percent in 2007.


Heath says one of the banks biggest concerns next year will be whether long-term interest rates will rise and put a damper on real estate activity. A booming real estate market has helped raise credit quality in the financial services market here to the highest levels hes seen in a decade, but he expects that as the real estate market softens, credit quality will decline somewhat.


As of Nov. 30, Spokane-based Inland Northwest Banks loans were up 14 percent from a year earlier, to $212 million, says Randy Fewel, its president and CEO. Deposits increased 6 percent in that time, to $206 million, he says. Fewel says he hopes the banks loans and deposits both will grow by 10 percent next year.


INB had a record year in 2006, and that growth is going to be difficult to repeat, Fewel says. I think, generally speaking, the industry as a whole should have a very good year in 2007, but I suspect it wont be quite as good as 06.


While favorable interest rates and strong job growth here should help the financial sector next year, a slowdown in residential construction could curb those gains, Fewel says. INB plans to open two branches in North Idaho by next September, and expects to open branches in North Spokane and the West Plains in the next few years.


Steve Dahlstrom, president and CEO at Spokane Teachers Credit Union, says STCU made strong gains this year, but is being conservative about its projections for 2007. As of the end of November, STCUs loans had climbed 15 percent and its deposits had risen 6 percent during 2006. STCU is projecting 12 percent growth in loans and 8 percent gain in deposits in 2007.


Our business goes along with the economy, and the forecast is not quite as robust as 2006, Dahlstrom says. Of course, we could be wrong, and the economy could grow faster.


New STCU branches in Post Falls and Dalton Gardens, Idaho are expected to open early next year.


Spokane-based F&M Bank will become part of Walla Walla-based Banner Corp. under a merger slated to close in the second quarter of 2007, the two banks said last week. All of F&Ms 14 branches in Spokane County are expected to remain open under the Banner Bank name.


Meanwhile, Spokane-based Sterling Savings Bank announced last month it had opened its 13th Idaho branch and 145th branch overall in Meridian, Idaho. AmericanWest Bank, of Spokane, said in October it had agreed to acquire Provo, Utah-based Far West Bancorp., which would add Far Wests 16 bank branches to AmericanWest Banks network of 43 financial centers.