With the advent of a new year and a new federal administration, what is on the minds of financial advisers and bankers regarding changes 2017 could bring? One adviser and five bankers from the area share their thoughts.

STEVE COGGINS, chief investment officer, IronGate Partners

Coggins pointed to a “barely positive” stock market in 2016 prior to the post-election rally and stated that investors assume that President Donald Trump will be a “strong pro-business president.”

“We do expect there to be regulatory and tax reform and are hopeful that this combination will help spur economic growth. Overall we are optimistic for the prospects of 2017 being a year of reasonable growth, all the while acknowledging that there is a great deal of uncertainty regarding policy initiatives by the new president and Congress.

President Trump has stated that regulatory reform should include the financial system. He has been critical of Dodd-Frank, and we could see a repeal or changes to that Act. He believes that some of the need for reform is based on Dodd-Frank having the opposite effect of its original intention by enriching the big banks and Wall Street firms at the expense of community banks and smaller market participants.

Financial institutions and markets are already highly regulated, and we believe any regulatory reform should make it easier for companies and individuals to do business together while not having taxpayers on the hook for any firm that is deemed ‘too big to fail.’

So while we are hopeful that words become actions relating to the U.S. economy, the investment markets already face some reasonably significant headwinds. Stock market valuations remain very elevated, so there is little room for error with corporate earnings.

However, valuations themselves are rarely a cause of market downturns.

The Federal Reserve is intending to continue raising interest rates this year, and if that happens it will negatively impact borrowing rates for companies and households as well as returns for bond investors. Also, as rates go up, more tax revenue is required to go to paying interest on our national debt, which is now almost $20 trillion. Despite a soonto- be GOP-controlled executive and legislative branch, so far there has been little talk of tackling the issue of the deficit and debt levels.”

CHARLIE MATTOX, market president and senior vice president at BB&T, and also chairman of the Wilmington Chamber of Commerce board

“I really think that with the election and the new administration, although there’s a lot of things that remain to be seen, there will be a rollback of many regulations that have impacted our economy for the last several years.

I have talked to a lot of business owners – companies of all sizes – and there seems to be a renewed enthusiasm about the ability to be able to focus on things that enable a business to grow.

As we look ahead to 2017, to the rest of this year and also the years to come, we certainly do need regulation, but we need to be sure it’s smart regulation and that companies of all sizes have what they need to be able to play by the rules but still be able to grow in a positive manner.”

JAMES HANSEN, regional president in the Carolinas, PNC

“Trump campaigned for fiscal stimulus, and that has continued to be a topic. We think there is infrastructure opportunity in America and in the world, including water-based infrastructure. This bodes well for port activity: moving goods, growing business...

When we look at themes for the year in economic growth, which is good for the [banking] industry and good for our company, we see two areas: one is fiscal policy around infrastructure and one is tax reform, including repatriation of corporate taxes. Lower tax rates give consumers confidence and businesses become more confident.

Our most recent PNC economic forecast [published in October] showed increased confidence among small business owners.

There is no specific bill being discussed at this point, but it seems there will be tax reform. In terms of repatriation, now there’s a 35 percent tax on money brought back to the U.S. [by corporations]. Trump and Congress have proposed a tax rate of between 5 and 10 percent.
Then companies reinvest that money. We think it’s going to have an impact on the U.S. economy.”

MARK TYLER, regional president, South State Bank

“I think Wilmington in particular is positioned to outperform the state from an economic standpoint in 2017, according to the numbers provided at UNCW’s Economic Outlook Conference this past fall. Based on those numbers, we could see 3 percent growth in the Wilmington MSA this year.

Looking at Wilmington in particular, there is continued strengthening of jobs and consumer spending, which should keep unemployment in check. Another driver for us is the port. Look at the infrastructure of the port, especially the recent widening of the port’s turning basin, which helps strengthen the local economy...

Another anticipation in 2017 is some relaxing of [banking] regulations, which may encourage banks to lend money, which allows businesses to grow. Tax reform could also benefit small businesses’ and banks’ ability to lend.
Something to watch in the coming year would be foreign trade policy changes that would impact our port.

It’s probably too early to tell what impact the new administration will have, but based on comments [from officials], the administration would be pro-business, which would certainly be helpful.”

JIM ENGEL, CEO and president, Aquesta Bank

“Right now we’re seeing a lot of loan demand, with businesspeople looking to expand. There’s a pretty positive attitude in the business world regarding growth, in terms of expansion. There is significant loan demand in Wilmington, and most is actual business expansion rather than refinancing...
There is also hope for easing of [banking] regulations with the new administration, although nothing is proposed that is concrete. But we’re pretty optimistic.
When I speak with other bankers, we all talk in terms of what we’re seeing. If you are near cities, you are seeing positive activity. Some of our rural areas are still struggling a bit.”

MARK JOHNSON, vice president and New Hanover County market executive, Sound Bank

“If the new administration can lower and ease regulatory oversight for banks and at the same time make it easier for small businesses to cut through red tape, it’s going to be a really good thing.

All banks are under a much higher degree of regulatory oversight [than before Dodd-Frank]. It impacts community banks at a greater level than larger banks. We don’t necessarily have the efficiencies of larger banks – don’t have the resources a larger bank may. Therefore, lowering and easing regulatory oversight for banks, I think, will have a significant impact on community banks specifically from an efficiency standpoint in general. I welcome it...

I do think a reduction in some of the policies can really boost a bank like ours on a bottom line and enable us to reallocate resources and capital to grow and expand our business.

Capital is king. It could be there would be some regulatory moves that are significant to capital and how it’s measured that could have a positive impact on community banks. Right now, though, that’s just talk.”