"March 6, 1978 : Northwestern Banker Newsletter, Vol. 6, No. 45," The Northwestern Banker (March 6, 1978). https://fraser.stlouisfed.org/title/6477/item/637964, accessed on March 2, 2025.

Title: March 6, 1978 : Northwestern Banker Newsletter, Vol. 6, No. 45

Date: March 6, 1978
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image-container-0 V V Vol. 6 No. 45 Des Moines, Iowa March 6,1978 ! | Vf M Lj L -A - r V , i l V 4 Loans, Interest Rates T o Rise in 1978 Businesses are likely to demand a record amount of funds this year, and short-term interest rates are expected to rise, although the increase will be lower than the 2 % hike in 1977, the economist for Chicago’s Continental Bank fore cast recently in New York. Speaking at the 1978 Financial Conference o f The Conference Board, Richard S. Peterson, Continental senior vice president, said commercial and industrial loans at large banks, where growth was relatively modest last year, should rise somewhat faster this year, partly because of new pricing and m arketing techniques at money-center banks. The expected increase in business credit demands continues the impressive increase in overall loan demand last year, an increase that has been overlooked by many analysts, according to Mr. Peter son. “ The current erroneous impres sion of weak loan demand may be attributed in part to the propensity of analysts to focus on bank loans to business, rather than on total bank loans,’’ he said. “ It also may be ascribed to analysts’ concentration on the behavior of commercial and indus trial loans at large weekly reporting banks, particularly the New York reporting banks, rather than on business loans at all banks,” he continued. Between 1971 and 1974, loans at commercial banks increased from $328 billion to over $500 billion, Mr. Peterson pointed out. This excessive annual growth rate of almost 16% prompted bankers to become more cautious and to restructure their balance sheets by intentionally slowing the growth of loan portfolios. In addition, businesses have been m aking greater use of alternative credit sources, such as the commercial paper market, he said. “ Less attention has been given to the remarkable growth of finance company loans to non-financial business,” Mr. Peterson noted. “ Finance com pany loans to business grew at an 18% annual rate over the 1970-1977 period as compared with growth rates of 10.7% for commercial paper, and 9% for bank business loans.” Banks are becoming more active in this area, either through purchase of finance companies by bank holding companies, or by purchasing loan participations from commercial finance companies. Mr. Peterson said. Also, since early 1977, banks have met increased competition for When you need a little help call us on our toll free wats number 800- 362-1615 Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis EDDIE A. WILLIAM B. CY RICHARD RAYMOND WOLF GREAVES KIRK BRO SCHNEIDER short- and intermediate-term credit demands by reducing the spread between their lending rates and their cost of funds, he continued. “ In addition, banks increased their efforts to make term loans, attempting to draw business away from private placement and public bond markets, and have intensified efforts to get business from both ‘middle market’ firms and overseas borrowers,” Mr. Peterson main tained. He said the more aggressive posture of banks seeking new loans would probably continue in 1978, while demand for credit by households and business should remain strong. “ Commercial banks, therefore, may be expected to finance a larger portion of economic activity this year than has been the case so far in this recovery,” he forecast. “ But competition for these credit de mands also is likely to intensify in the period ahead, limiting the probability of a major boom in bank lending.” While he pointed out that there is no necessary direct correlation between credit dem ands and interest rate movements, “ the balance of supply and demand forces suggests that interest rates will rise in 1978.” However, even with a somewhat LOANS & INTEREST RATES . . [Please turn to page 7] Correspondent Bank Department *fc. Central National Bank & Trust Com pany DES MOINES IOWA « A F F IL IA T E D WITH CENTRAL NATIONAL BANCSHARES. INC.
image-container-1 A good correspondent bank relationship is still built by good people. Yours and ours. Terry Martin Vice President Call me toll free . . . 800- 332-5991 Merchants A National Bank 151 C edar Rapids. Icwa 52401 A B A N K S O F IOW A' B A N K Iowa News The 1978 Agricultural Credit Conference, sponsored by the Iowa Bankers Association, will be held March 21*22 at the Scheman Continuing Education Center on the campus of Iowa State Universi ty, Ames. Registration will begin at 9 a.m. on Tuesday, March 21. Edward Leahy, president, North western State Bank, Orange City, will preside. Topics to be covered are lending, planning and market ing, farm financial management and crop outlooks. BEDFORD: The Bedford National Bank has received consent to establish an office in New Market. AM ES: Tom Vaughn, an assistant coach on the Iowa State football staff since 1975, has accepted a position with the Union-Story Trust and Savings Bank here. Jr., to executive vice president and general counsel and the election of two new board members, Dr. R. P. Oshana and David J. Wright, owner and operator of the local Chevrolet Agency. CLINTON: Mark D. Pingrey has been elected executive vice presi dent of Iowa State Savings Bank here. He comes to the bank from the United Bank of Lakewood, Colo., where he was vice president. Jacky Cavanagh has been elected assistant cashier. DES MOINES: Edward J. Cun ningham has been promoted to vice president of the Plaza State Bank. He also is manager of the bank’s instalment loan department. Mr. Cunningham has been with the bank since 1970 and is currently serving as first vice president of the Des M oines Chapter o f the American Institute of Banking. BRIGHTON: Jack Moore, cashier, has been elected to the board of the Rubio Savings Bank. CARLISLE: The Hartford-Carlisle Savings Bank has announced the promotion of William R. Schooler, Bemie Kersey Call 1- 800- 362-2514 to get a lot of help for your V ’ M money. ■ j h i N A TIO N A L B A N K BANCO® Member FDIC An Affiliate of Northwest Bancorporation F A IR FA X : D. C. Neuhaus, execu tive vice president of Fairfax State Savings Bank, has announced the promotions of Donald E. Young to assistant vice president and Mich ael H. Jones to assistant cashier. GLIDDEN: The First National Bank has announced the election of three new officers: Peggy Irlmeier and Vicki Becker, assistant cash iers, and Doyle (Rob) Walker, loan officer. Mr. Walker has joined the bank from the Norwalk-Cumming State Bank in Norwalk. OSCEOLA: Jack Callison and Pat Frey have been named assistant vice presidents of the Clarke County State Bank. Peggy Frizzell and Phyllis Lynn have been named operations officers. POLK C ITY: Open house on March 23, 24, 25 will mark the 75th anniversary of Polk City Savings Bank, with the main day scheduled for Saturday, March 25, according to Bob Miller, executive vice president and cashier. For Northwestern’s World of Service Jerry Just Northwestern Ban k Of Sioux City An Affiliate of Northwest Bancorporation ____________BflÑfcÓ POSTVILLE: The Postville State Bank has announced the following promotions: W. A. Kneeland to chairman, Ronald E. Taylor to president, M. F. Kiesau to vice president, and Jeanine A. Lenth to assistant cashier. Harvey Schultz, director for 36 years and vice president for 17 years, has retired. STORY CITY: Roger Auestad, executive vice president of The Story County State Bank, has been elected to the board of directors. Nebraska News HOLDREGE: Louis G. Titus is the new president of the First National NEWS .. . [Please turn to page 4] Call your roving correspondent at Bankers Trust Use our to ll-fre e WATS line: 800-362-1688 Member: F.D.I.CVFederal Reserve System
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Date: March 6, 1978
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