Greater Reading Chamber Commerce Quarterly Spring 2017 - 19

GreaterReadingChamber.org

Lauren Tobiassen, Senior Vice-President,
Central Pennsylvania Area President, Wells Fargo

Dave Swoyer, Regional Executive Director,
Corporate and Commercial Banking, Santander Bank

According to our fourth quarter Wells Fargo small business survey,
business owners across the country are the most optimistic they have been
since January 2008. This optimism is largely driven by business owners'
expectations that their finances will improve this year.
o More than 58% of business owners expect their business's revenue
will increase in the next 12 months.
o Seventy percent believe their cash flow will be somewhat or very
good in 2017.
o Thirty-five percent say they plan to increase their capital spending
this year.
o Thirty-six percent expect the number of jobs at their company to
increase over the next 12 months.
o And almost half anticipate that credit will be easier to obtain in 2017.

In speaking with our customers, we sense optimism that 2017 can be a
year of solid growth and expansion. At the same time, there are still plenty
of uncertainties around trade policy and foreign currency rates. While
our customers expect continued pressure on their profit margins, there is
optimism around the ability to grow sales this year.

In a recent Wells Fargo economic commentary, we noted that Janet
Yellen believes the Fed is close to meeting its dual mandate, declaring
the economy is near full employment and inflation is moving toward
the 2 percent target. Economic reports released the last week of January
supported that assessment. We're seeing that the markets are anticipating
that the more growth-focused agenda of the new administration will boost
inflation, or at least they are putting a higher premium on protecting
themselves from an extreme inflation outcome. We certainly have seen
interest rates on loans start to rise.

Our forecast for the consumer price index in 2017 is for an increase of
approximately 2.4%. This will raise interest rates for both borrowers and
savers. Even though borrowing rates are heading higher, both floating and
fixed rates are still very low by historical standards. We recommend that
our customers examine their mix of fixed and floating rate debt. Now is a
good time to lock into low fixed rates, either through a conventional fixed
rate loan, or with an interest rate swap.

We believe that most economic data helps bolster the case for the Fed
to tighten its policy. Businesses have been slow to pass rising costs to
consumers, but with an increasingly tight labor market pushing wages
higher in a low-productivity environment, we expect price increases to
accelerate in coming months.

With unemployment low, we are hearing growing concerns from our
customers regarding their ability to find qualified new employees. This
may be a year of increased capital spending, with the goal of increasing
productivity without having to add a lot of new employees.

As this is an industry wide question it would be best to seek an answer
from an industry association such as the American Bankers Association or
the Pennsylvania Bankers Association.

We support a thoughtful approach to appropriate regulation that protects
consumers, promotes economic growth, and helps regulators do their
important job. We also strive every day to meet and exceed the expectations
of our customers, clients, and the communities we serve. Placing the needs
of your customers first is the best way to be successful as a company and
as an industry.

We're lucky in Berks County to have a diverse mix of businesses, including
companies of varying sizes in manufacturing, the service sector and
professional services. While we look to help companies across the market,
we especially see a growth opportunity with family-owned companies and
in the small business space. In talking with our customers and prospects,
we sense their optimism and this could translate into firms taking concrete
steps to grow their business.

Many local manufacturers have found that exports represent a good
opportunity for growth. As a global bank, Santander has the resources to
help our customers navigate the necessary steps to develop a robust export
business. While many U.S. businesses start by buying and selling in only
U.S. dollars, there can be advantages to offering to do business in your
customer's local currency. We understand these nuances and offer a wide
array of foreign exchange services to manage risk.

With more than 80 lines of business, we are proud to serve companies of
all sizes across a wide breadth of industries and at all stages of a company's
lifecycle. We're the #1 small business lender and #1 SBA lender in the
United States and we pride ourselves on being a Main Street bank rather
than a Wall Street bank.
I have been with the company for close to 30 years and for all that
time we have especially focused on working with small business owners
- it's one of the most important things we do. Berks County needs small
businesses to succeed financially, grow and add jobs in order for the region
to prosper.

Santander serves a wide variety of businesses, including manufacturers,
distributors, service companies, and not-for-profit organizations. Our
broad-based experience enables us to develop customized solutions tailored
to the unique needs of each individual customer. We believe that we have
a competitive advantage in servicing businesses that have international
banking needs. Whether a business is looking to increase its trade exports
or establish a direct overseas presence, Santander can help.
19
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Table of Contents for the Digital Edition of Greater Reading Chamber Commerce Quarterly Spring 2017
