While financial institutions have experienced better results this year, bankers here remain somewhat cautious, expecting slow, steady growth to occur again in 2013.

Overall, banking industry leaders cite definite bright spots this year, such as a recovery in the housing market and a steady growth in demand for loans that include home mortgages and commercial and industrial lending.

Loan and deposit growth are expected to continue next year at a steady rate, assuming continued slow economic recovery and increased clarity regarding federal taxation and spending policies, they say.

"The industry is facing the continual headwinds of economic uncertainty, regulations, and compliance costs, which make it more challenging," says Linda Elkin, Spokane-based U.S. Bank regional president. "We remain optimistic that with the recovery in the housing market, that the purchase activity related to home loans will increase."

Jack Heath, Washington Trust Bank's president and chief operating officer, says 2012 ushered in a much better year than 2011. "There's been significant loan growth, and significant origination on mortgage loans," he adds. "A big portion of that has been home purchase versus just refinancing. We're seeing the purchase market come back."

The low interest-rate environment is expected to continue through next year, which puts some pressure on banks' profit margins in a competitive market to get that loan business, bank leaders say.

Ezra Eckhardt, Sterling Bank president and chief operating officer, says the longtime low interest rates are a positive for people refinancing or buying homes, but also a challenge for banks.

"Lower interest rates will put pressure on the net interest-rate margin for banks, because the interest income that banks accrue off loans on the books will be declining," he says. "It makes it difficult for banks to grow and sustain earnings."

Eckhardt says he expects continued industry consolidation as small banks seek buyers amid the same pressure on profitability along with regulatory burdens and fewer resources. Overall, though, he cites signs of improvement in Spokane's economy and for banks in general.

"There is increasing loan demand, and there is increasing loan volume for banks," Eckhardt says.

Greg Hansen, a Numerica Credit Union vice president, agrees many financial institutions are seeing improved earnings, with lower loss provisions on loans, as the economy picks up.

"I think across the board, you have a better economy for commercial borrowers, and commercial real estate's been able to attract more tenants," Hansen says. "I think there's better consumer performance and overall lower unemployment."

U.S. Bank's Elkin says, "Banks have seen nice deposit growth. I would expect that might taper off a little bit because businesses may use their cash."

She adds, "We know there's a significant amount of liquidity on corporate balance sheets."

Heath notes that many businesses have been deferring capital expenditures because of the poor economy, and says, "We're starting to see companies starting to make those investments and positioning themselves for growth."

He and others interviewed point out that customers are concerned about economic uncertainty and the fiscal cliff, which refers to the increase in taxes and decrease in government spending that's scheduled to occur in 2013 unless President Obama and Congress are able to negotiate a plan.

Elkin says overall, though, banks should see continued reasonable growth. "I'm optimistic that the economy in Spokane will grow."

—Treva Lind