Some Spokane bankers believe the economy here and in the nation hit a low point in 2009, and that 2010 will be better. Still, they're not saying next year will be anything to write home about.

Washington Trust Bank expects "modest" growth in its loan portfolio, says Chairman and CEO Pete Stanton. Deposit growth should be better than loan growth, but not by a lot, he says.

"It's a little bit more of a muddling along," says Stanton. He confides that while he believes "the worst of the economic times are behind us, I'm not getting that feeling when talking to customers. It's not a time to go out and spend a lot of money (on capital expenditures)."

Randall L. Fewel, president and CEO of Inland Northwest Bank, believes that while 2010 is going to be better than 2009, "It's not going to be a great year by any stretch of the imagination. It might not even be a good year, but I believe it's going to be a better year."

The latest employment numbers for Spokane have improved, and state forecasters project continued gradual improvement, Fewel says. "Housing is a little better," he adds. "Our mortgage department had a better year in '09 than in '08, and we think it'll still be a little better yet in 2010." Fewel says that low mortgage rates and the U.S. government's extension of the $8,000 first-time home buyer credit into next year will help housing.

Says Stanton, "We actually made quite a lot of residential loans" in 2009, with volumes holding "pretty steady," particularly on "lower- to moderately priced homes."

Fewel says one of the good things to come out of the recession is that people are saving more. He adds, "You can't use your home as an ATM machine" any longer because lending standards have been tightened.

Still, Fewel says, for the economy to improve strongly, "businesses have got to feel that they can add employees. They haven't felt that way in quite some time."

Says Stanton, "Banks have money to lend, but there aren't many borrowers" seeking loans. At least anecdotally, he says, contractors here have slowed their activity levels from last year.

With state and local governments strapped, government budgets are a big issue, Stanton adds.

In other parts of the country, failed megaprojects have forced commercial real estate values down more than 30 percent, while here, "Your typical owner-occupied property has come down some, but not to those types of levels."

Jon Hippler, CEO of Mountain West Bank, in Coeur d'Alene, says some positive signs have emerged in Kootenai County and Boise-area real estate. In the Boise area, the inventory of unsold homes is down to about four to six months worth of units "from double digits a couple of months ago." Low mortgage rates and the federal home buyer's credit also are positives, but he adds, "The wild card is the underlying strength of the economy." Hippler notes that Mike Ferguson, an economist with the state of Idaho, said recently the bottom of the economic trough has been reached in that state, and recovery is on the way, but will come slowly.

"We're projecting internally very limited growth in our balance sheet in terms of our loan portfolio" in 2010, Hippler says. Deposit growth will be positive, but in "the low single digits," he says. "We're looking at a year of recovery and retrenchment to position ourselves for a better 2011 and 2012," Hippler says.

Like most banks, Mountain West has increased its loan-loss reserves aggressively as the economy has worsened.

Also like other banks, Mountain West is concentrating on seeking commercial loans, but Hippler says, "There just isn't a surplus of good opportunities. Those are driven by the economy."

To reach commercial borrowers, Mountain West continues to emphasize Small Business Administration loans. Hippler adds that bankers are thinking a lot about how to reach customers in the future.

He says, "Building those $2 million to $3 million branches on every corner is just not as attractive as it once was."