Mid Bay News was able to sit down with CCB Community Bank Florida President Alan Wood to talk about the Niceville and Northwest Florida Economy, what we should expect financially in the area in 2024, and his thoughts on the looming threat [again] of a Federal Government Shutdown in the middle of November.
“I’ve been in banking roughly 40 years now. My wife and I, Tracy moved down to the Niceville market almost 15 years ago, when I joined CCB Community Bank as Florida President. We were looking to grow the market in Florida at that time, and we still are today.”
We’ve grown into three markets in Florida: Niceville, Crestview, and DeFuniak Springs.
My background is on the commercial side of banking. I’ve been on the community banking side of things for probably about 25 years now. Early in my career, I was with a large corporate bank, AmSouth Bank, and got much of my commercial training back then.
Anyone who knows me and my wife, Tracy, [knows] we’re very involved in the community. The bank is also extremely loyal to the communities [we] serve and want to be involved at all levels, whether it’s with high schools, middle schools, charitable organizations, or United Way and those types of organizations.”
“Things have slowed down over the last year.
Liquidity for banks is becoming an issue, which the interest rate hikes by the Federal Reserve have driven. Since March of 2022, as most people know, [The Federal Reserve has] increased rates 11 times, taking the discount rate from zero to almost five and a half today.
Correspondingly, rates on the commercial side of loans, [like] your mortgage products, have increased significantly. That’s slowing down the borrowing side of things, with almost all banks out there and mortgage companies.
I think that trend will continue over the next year. There is light at the end of the tunnel, I think. I was reading something this morning; in fact, the chances of the Fed increasing rates this year are in the 15 to 20% range.
Over the last week, mortgage rates have reached a 16-year high at roughly 7.5% on VA loans and as much as 8.375% on conventional loans. So that’s barring people wanting to borrow money unless they have to.
Correspondingly, on the deposit side, [the economic situation is] helping the depositors. As a result, [depositors are] becoming more savvy in their shopping rates, which impacts the bank’s ability to fund these loans going forward.
A lot of monies are being moved around with CD rates and investment options out there for the depositors who, quite frankly, have suffered over the last ten years because of the low-rate environment we’ve been in.
I just think, in general, things will continue to be slow on the lending side over the next year or so.”
“Luckily, for our market here, home values are still holding roughly where they were a year ago, which people are taking advantage of. [Homeowners are] improving their homes through equity in their houses, either through second mortgage type loans, where they can borrow against it to improve their properties and not have to move per se and keep those low fixed rates they have on their first mortgage in place.
You’ll continue to see banks pushing those products and home equity lines of credit.
People will sit still with the low rates in place [a couple of years ago]. And there’s a generation out there your age that has locked into these rates. And they may never see those rates again in their career. Because, you know, just it’s kind of a unique situation.
Something unique to our market – the military constantly moves people in and out of here. So there will always be that circle going on in this market. And so there will be activity around that. Buying and selling homes, financing those types of transactions.”
“There are so many great rates in place that [for homes with mortgages] over the last several years. Somebody [who needs to sell a home] might want to check and see if their loan is assumable. In that situation, the borrower, somebody wanting to buy their home, comes in, [an assumable loan] might be an option. [An assumable loan is] where [the buyer would] step into their shoes on their loan that they have today and then provide the rest of the financing through a second mortgage product that mortgage companies are starting to introduce into the market.
To purchase the property, that rate is going to be higher on that second mortgage, but it’s gonna be better than having the full amount at that higher rate. So you’re starting to see more of that. There, you know, more people, again, if they have the liquidity to accomplish it, put more down on their home. So they don’t have to finance, you know, at 80%. Maybe they could do 60%. Again, that’s gonna save, save them money over time. So, I think you’ll see more that many VA-type loans are assumable.
So, again, if you’ve got a military background, you could step in to assume that loan possibly, and it’s not something that happens quickly, that is going to take more time to accomplish that, compared to just doing a straight-up loan.
“I do think a prolonged shutdown could impact this market with past due [bills] and [people] not spending money. It would impact restaurants and the entertainment side of things [here]. Hopefully, that won’t happen.
I would say six weeks to two months would definitely start impacting. And anything past that definitely would have a negative impact on our economy around here.
Many jobs will continue to have to operate even in a shutdown on the military side of things. Even though they may not be getting paid, they’re just guaranteed payment that once they do open back up.