Marine lenders see slow growth in 2012

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Marine lenders gathering for the annual National Marine Bankers Association conference described the last year as one of growing interest in loans, with a moderate increase in bookings through the early fall boat show season followed by a stall in mid-to-late October.

“This slowdown was likely precipitated by the global financial crisis and a related decline in consumer confidence,” the NMBA said in a statement. “Looking ahead, lenders see slow growth in both boat loan demand and funding, static borrower standards and terms and interest rates continuing at historically low levels.”

Held Nov. 6-8 in San Antonio, this year’s conference marked its 32nd anniversary and was attended by lenders and firms that provide services to the lending market.

Remarketers offered that they see some decline in volume as new (or aged) boat inventory is largely worked off. Marine insurers said premium revenue had grown a bit on a steady book of clients. Marine surveyors and maritime lawyers had similar views, suggesting that the used-boat market continued to be responsible for the core of their activity.

Reporting on the third-quarter survey of members, NMBA president Karen Trostle, of Sterling Acceptance Corp., said two-thirds of respondents indicated that lending criteria have remained the same; the remainder were divided between those who said the criteria became more or less stringent.

About half indicated that the dollar volume of loans booked in the third quarter was the same as in the previous year, 22 percent said volume was up and 33 percent said it was down. Asked about their outlook for the fourth quarter, 66 percent indicated they expect business to be the same or increase from the same period in 2010.

Gina Martin Adams, an institutional equity strategist and retail sector specialist with Wells Fargo Securities, told attendees that consumers can be expected to spend in fits and starts in coming quarters, with activity driven by employment, stocks, taxes, credit, and gas and food prices.

Although federal economists don’t link gas and food to core inflation, these are “going through the roof,” Adams said, and consumers know their ability to spend directly hinges on these costs. This also erodes confidence related to long-term spending on boats and other discretionary purchases.

Softness in housing, directly related to how people feel about their financial health and wealth, may not be resolved for another five years, Adams predicted. Until the bubble from overbuilding in housing is resolved, the other major drag on the economy will be a depressed construction jobs picture and growth in the many sectors that benefit from growing household formation, she added. Construction jobs were a primary driver of economic growth through 2008; lack of them is why the recovery has been so tepid.

Retail sectors seeing growth include warehouse clubs, health and personal care, food and beverage, and restaurants. On the declining side are furniture and home furnishings, appliances and electronics, department stores, and building material/garden stores, all influenced by the weak housing market.

Long-term, Adams said, until the government deals realistically with deficit reduction — tied tightly to health care reform — the vitality of the U.S. economy remains in jeopardy.


3 comments on “Marine lenders see slow growth in 2012

  1. ken Lamain

    Looks like a bit a good news here. Quick question, why is there a person from Wells Fargo speeking at this meeting as an industry expert? WELLS FARGO IS NOT IN THE MARINE LENDING BUSINESS ANY MORE! If they really wanted to help, they could take a fresh look at the industry and put their money where their mouth is.

  2. john ennis

    Check Bloomberg News and you will find Wells Fargo and Wacovia Bank which they took over set a record laundering Mexican drug money. Got a slap on the hands from Uncle Sam. They should have plenty of money to loan.

  3. arch

    So as not to have my post deleted, I will be as PC as possible in my response to the first 2 comments by john an ken.
    JOHN is implying that the banks don’t have money to loan but should since at least 1 has mexican drug money. John, the banks in this country are flush with cheap cash. If they aren’t loaning money, in most cases, it’s by choice. You thought it was a lack of cash that was keeping so many of the banks out of our industry? IT IS NOT! They are not obligated to be in it and choose not to offer boat loans. It is their perogative.

    KEN, who says Wells Fargo wants to help? Adams is a retail sector specialist and was invited to speak at the conference. She wasn’t there to help anyone, or to start a marine lending program. Besides, WF has never been one of the major players in marine finacing. They were never relevant. Wachovia was somewhat, but they were a different company at the time. Do you not think that banks are in it for the money? You don’t think if they saw a big opportunity to make money they wouldn’t jump on it? You really think that the banks just need to take a “fresh look at the industry” in order to see they are missing the boat? “Put their money where there mouth is?” Adams said it could be 5 years before the industry comes back. By NOT being in marine retail financing, I think WF has put their money where their mouth is.

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