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Bluegrass Market Review | Ample bank assets support growth

‘Balanced mix of economic drivers’ tapping credit lines in a well equipped financial sector
Lexington’s downtown serves as a major financial center for most of Central and Eastern Kentucky.
Lexington’s downtown serves as a major financial center for most of Central and Eastern Kentucky.

Central Kentucky’s economy is having another strong year, aided by manufacturing job growth and good performance in healthcare and other sectors, but crucially it is all supported by a well-equipped financial infrastructure that is able to serve businesses of all sizes as they grow more comfortable using their credit again.

That financial services infrastructure is considered key to both last year’s robust economic performance and its expected continuation throughout 2017 and beyond.

“We’re really fortunate to have a balanced mix of economic drivers for the area,” said Todd Ziegler, Central Kentucky market president for Republic Bank & Trust Co. “The manufacturing (sector) is growing, we continue to have good health care activity, the service industries are really good, logistics and automotive impact have been positive lately. The balance of the economy in all of those ways has all had an influence on a nice year, economically.”

“I see lines of credit usage moving up,” Ziegler said. “For a time, (credit) balances were at the lower end of the average, but today they’re a up a little higher – no doubt about that.”

Republic Bank is the state’s largest state-chartered financial institution, with $4.8 billion in assets. Outside its Louisville home base, Republic serves customers in Central Kentucky through five Lexington branches, supplemented by offices in Georgetown, Shelbyville
and Frankfort.

The Kentucky Department of Financial Institutions released its 2016 annual report on July 31, 2017, and it paints a picture of a healthy banking sector. The department oversees 133 state-chartered banks, according to the report, with assets ranging from $23 million to as high as Republic’s $4.8 billion. Together, assets at all Kentucky banks totaled $50 billion.

Those assets are able to support the lines of credit needed as businesses expand into the future, whether by hiring more workers or upgrading their facilities.

“Central Kentucky businesses have great access to capital because of a strong banking community, including local and regionally based institutions – with a commitment to investing in the region,” said Bill Craycraft, Lexington market president for City National Bank.

Circumstances were different as recently as two or three years ago, when the post-recession conservatism gripping many businesses left them reluctant to access their lines of credit. As a result, expansion was either stagnant or financed by revenue as the economy stuttered back to life.

Today, bankers say the rising employment and overall good economic health have caused businesses to loosen their purse strings.

Luther Deaton, chairman, president and CEO of Central Bank, agreed that the Central Kentucky economy remains strong for area banks.

“Our Central Kentucky economy is very diverse, led by manufacturing, education and medical services that are providing job growth,” Deaton said. “These opportunities appeal to people who are attracted to the beauty and livability of our entire region.”

With $2.1 billion in assets, Central Bank operates numerous branches in Lexington, as well as dozens of others across Central and Northern Kentucky.

Mark Gooch, president and CEO of Community Trust Bank, likewise has seen Central Kentucky’s diverse blend of economic drivers as the impetus behind solid growth, particularly in the housing market.

“A strong economy with a growing population and very low unemployment is leading to growth in residential single family, multifamily and rental unit new construction,” Gooch said. “The local economy is driven by small business, auto-industry related job growth and certainly strong health care and the University of Kentucky. We see this in surrounding communities of Richmond and Scott County as well.”

Pikeville-based Community Trust Bank operates 70 branches across the state as well as branches in West Virginia and Tennessee. In Central Kentucky, the bank’s notable branches include those in Lebanon, Campbellsville, Danville, Versailles and Greensburg. The KDIF Annual Report lists the bank with $3.9 billion in assets.

Employment pushing housing up

Kentucky’s labor force is hovering at just over 2 million since January (according to the federal Bureau of Labor Statistics), and its average unemployment rate this year of 5 percent. While the state figure isn’t a good as the 4.5 percent national average for the same period, Fayette County’s average joblessness rate is under 4 percent.

Manufacturing employment is especially healthy, with year-over-year increases for the first five months of 2017 ranging from 1.5 to 3.1 percent, according to the BLS.

For banks, it means more activity and customers, whether for deposit accounts when workers relocate for jobs, loans for new homes, and the above-mentioned lines of credit for businesses supporting the increased retail commerce.

John Gohmann, regional president of PNC Bank, Lexington, predicts the low unemployment rates will spur competition among businesses.

“Our local economy remains on sound footing for 2017,” Gohmann said. “A tight labor market and favorable mix of jobs will lift wage growth. The jobless rate is projected to average a low 4.2 percent even as the workforce expands. This rate of unemployment will be low enough to generate wage pressures.”

Craycraft credits the automotive sector, as well as education and healthcare, as drivers for low unemployment.

“We would be remiss in not mentioning the ongoing economic impact of Toyota, which has been a catalyst for growth throughout Kentucky,” he said. “We think this is augmented by the aggressive attitude community leaders demonstrate in soliciting new companies to locate in our region.”

The only downside of having an influx of workers and businesses competing with rising wages is the impact on home prices, especially in Fayette County’s saturated market.

“Here in Fayette County, there’s
not a lot of land left to be developed,” Ziegler said. “For the middle- and higher-priced homes, inventory has been lighter than demand and it has driven the prices up pretty good in a low-rate environment.”


Bank of Lexington


Bank of the Bluegrass & Trust Company


Bankers’ Bank of Kentucky


Branch Banking & Trust Co. (BB&T)


Central Bank & Trust Co.


Central Kentucky Federal Savings Bank


Century Bank of Kentucky Inc.


Chase Bank


Citizens Guaranty Bank


Citizens Commerce National Bank


City National Bank


Community Trust Bank Inc.


Cumberland Valley National Bank & Trust Co.


Deposit Bank of Carlisle


Farmers Bank & Capital Trust Co.


Farmers National Bank


Farmers National Bank Corp.


Field & Main Bank


Fifth Third Bank


First Federal Savings Bank


First Southern National Bank


First State Financial


Forcht Bank


Guardian Savings Bank


Kentucky Bank


Mainsource Bank


Old National Bank


PBI Bank


Peoples Exchange Bank




Republic Bank & Trust Co.


South Central Bank


Town & Country Bank and Trust Co.


Traditional Bank


United Bank & Trust Co.


US Bank




Whitaker Bank



Commonwealth Credit Union


Greater Kentucky Credit Union


Health and Education Federal Credit Union


Kentucky Employees Credit Union


Federal Credit Union


Lexington Postal Credit Union


Members Heritage Federal Credit Union


Metro Employees Credit Union


Park Community Federal Credit Union


University of Kentucky Federal Credit Union



Ag Credit



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