BANKING: Banks faring better, but consolidating more

Times Board of Economists - Report from David Rose, president of Northwest Indiana Market for Horizon Bank
2013-10-20T00:00:00Z 2013-12-18T16:20:21Z BANKING: Banks faring better, but consolidating moreJoseph S. Pete, (219) 933-3316
October 20, 2013 12:00 am  • 

The banking sector has been improving gradually over the last couple years, and should continue to make positive gains, a Northwest Indiana banker said.

Horizon Bank executive David Rose said banks have benefited from increases in home sales and new home construction, as well as a decline in commercial real estate foreclosures. Lending activity, however, will generally slow as interest rates rise.

Interest rates remain low, and it is a good time for businesses to take on debt for expansion projects they may have been putting off since interest rates are likely to rise at some point in 2014, Rose said.

"It's probably a good thing," he said. "When loan rates rise faster than deposit rates, margins go up."

The trend of consolidation likely will continue in the industry, because complying with banking regulations has made it more expensive to do business, Rose said. Older bankers also may decide to sell their banks to bigger chains when they retire.

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