NMBA conference sees boost in attendance

CHICAGO – With a 20 percent increase over last year to about 100 participants at the 31st National Marine Bankers Association Annual Conference in San Diego on Nov. 7-9, NMBA says members were suggesting that stability is working its way back to the boat loan sector. They also acknowledged that the number of funding sources remains historically low and that firms helping lenders work out troubled loans continue prospering.

“The number of marine funding institutions, including major national banks, has settled in around a half-dozen, reflecting what’s found in the broad financial market,” NMBA President Karen Trostle said in a release. “Financial service firms, which act as agents for the funders, have seen some attrition in the past year, but still serve most active boating markets across the U.S. Our conference had continued steady support from remarketers, maritime attorneys, surveyors and others who are helping resolve the inventory overhang and overbought market conditions. And, we see some hopeful signs of new boat loan and refinance activity, especially resulting from the fall boat shows.”

Trostle shared results of a recent anecdotal “how’s business” survey comparing this year’s fall boat show season with last year’s. She cautioned that the percentage swings reflect a particularly low base for 2009. NMBA plans to repeat this survey quarterly over the next year. A roughly equal mix of 50 dealers and manufacturers, and financial servicers/banks were contacted. Results include:

New Boat Sales:
Northeast: Up 25 percent
Mid-Atlantic: Up 30 percent
Southern California: No change
Northwest: Up 10 percent
Southeast: Up 10 percent

Refinances: Up 22 percent overall

Forecast for 2011: Up for 86 percent of those surveyed

Boat Buyers Paying with Cash: 90 percent for purchases 40’ and above

Used Boat Sales: Up 35 percent

Retail Sales for Boat Show Vendors: Up 30 percent

Economist Gina Martin, Senior Institutional Equity Strategist for Wells Fargo Securities, LLC, told those at the conference that the excesses of the U.S. consumer over the past 30 years are being worked out, but not as quickly as hoped. Though painful, when the issues are resolved, it should result in a prolonged and very stable period of economic growth for the country, she said. Short term positives include expected extended tax cuts and unemployment claims for individuals and tax credits for small business. Strong headwinds will buffet the economy for the short term, and Martin expects 2011 to be much like 2010: bumpy and with slow growth running 2 ½ percent for the year.

In a presentation titled “Return of American Thrift,” Martin noted that consumers and small businesses don’t feel the recession is behind them and favor saving over spending. High unemployment and the drumbeat of bad news over falling home prices and foreclosures has kept confidence in irons and GDP growth under three percent, a level which needs to be exceeded for real recovery to kick in.

For boating specifically, Martin worries that disposable income used for buying boats will be held down by, among other things, increasing food and other living costs. Light vehicle sales, which parallel boat buys, are off 29 percent in the past two years. She doesn’t see recovery in housing anytime soon and predicts prices falling another 5 to 10 percent. As for community banks supporting consumer loans or small businesses, it will likely take another two years before these sources stop failing.

Other sessions at the NMBA Conference reflected issues of concern or opportunities for the lending community. These included diagnosing marine fraud, short sale mechanics, benefits of electronic networking, the changing nature of credit scoring, impact of the Gulf oil disaster on the industry and the effect of financial reform for lenders.

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