Surge in business loans a sign that local economy is going strong

EVERETT — Joe Smeby thought about purchasing a building for his firm Omega Engineering a few years ago.

And then the recession hit.

“Before things turned sour, I definitely wanted to get into my own space,” Smeby said. “At the time, things just didn’t work out — fortunately.”

Fast forward just a few years and things couldn’t be more different. His three-person firm that does site development for builders has been so swamped that he’s turning down clients.

“We’re very busy,” Smeby said. “We’re as busy as we can be right now, we’re saying no to almost as many projects as we’re saying yes to. It’s a good problem to have.”

So he decided to buy a building at 2707 Wetmore Ave., close enough to walk to the Snohomish County offices where he does the bulk of his work.

Bankers say that more and more businesses are feeling comfortable enough post-recession to take out loans to purchase property and invest in equipment. Commercial loan volume is up this year over 2013 with several bankers saying that they’re seeing a double digit increases.

And things look especially rosy in Snohomish County.

“I would say nationally the economy is getting better but locally I think our economy is stronger,” said Mark Duffy, CEO of Mountain Pacific Bank, which worked with Smeby to help him secure a Small Business Administration loan.

His bank has made $28 million in commercial loans so far this year, Duffy said. That’s up from $24 million the year before or a 16 percent increase year over year.

Coastal Community CEO Eric Sprink said his bank is seeing a 20 percent increase in loan demand year over year. He also believes that the county is in a good position.

“I think we should all be very grateful that we’re part of such a diverse economy that’s really kicking into gear right now,” Sprink said. “We’re in the sweet spot. We have the Navy. We have Boeing. We have Microsoft and Amazon not too far away.”

Brian Vance, CEO of Heritage Bank, which merged with Whidbey Island Bank, has a good view of the region. His bank has more than 70 branches mainly along the I-5 corridor from Bellingham to Portland. He said one of the hottest markets on West Coast is Seattle and that is rippling both to the north and south.

Snohomish County also is especially attractive, because it’s has available real estate with existing infrastructure already in place, Vance said.

Bryan McDonald, chief lending officer for Heritage, said the bank is seeing an increase in the number of commercial loans and an increase in the total amount being borrowed.

And he said that they’ve held discussions with several businesses looking to potentially move to the area.

“It’s not every week, but every other week there’s another company considering Snohomish County and we get to visit with those folks,” McDonald said. “It might be a year or two years off, but just the number of people looking at Snohomish County continues to be strong.”

One of the reasons for confidence in the local economy has to do with what happened a year ago: Members of Boeing’s machinists union voted to accept wage and retirement concessions for a long-term contract that will guarantee construction of a new long-range wide-body aircraft in Everett.

The outlook for the region totally changed with that vote, Duffy said.

“If that vote went the other way, I would have had discussions with the board to position ourselves to sell in the future,” Duffy said.

Even though Boeing has moved some jobs away from the Puget Sound region, the vote helped tie Boeing to this area for years to come, Duffy said.

“I think they are shifting jobs elsewhere but they’re making a big commitment here and will be here for a long time,” Duffy said.

The agreement provided the type of stability to the region that gives business owners the confidence to invest in their companies, Sprink said.

“That stability and confidence is wonderful,” Sprink said. “If it wasn’t there, people would have waited a while to see how things settle.”

The positive vibe should continue into the future barring any unforeseen global calamity. One known concern on the horizon is the potential for interest rates to rise.

“We’re watching that very closely,” Sprink said. “How is it going to affect the consumer? How’s it going to affect businesses?”

Even so, it’s something the economy could probably handle, Heritage’s Vance said.

“Interest rates are still at historical lows,” Vance said. “Assuming that interest rates rise, business can deal with that and factor that into their planning.”

And that’s still on the horizon and isn’t affecting business owners like Smeby who are borrowing now.

He was under a tight deadline for the purchase of his building and Mountain Pacific helped him with a bridge loan to close the deal. And then restructured it with a Small Business Administration loan afterward.

“They stepped up and made it really easy to make this deal happen,” Smeby said.