Seattle has been a relatively strong housing market throughout the housing slump, although it has declined in recent months. Seattle-based Horizon Financial (OTCPK:HRZB) said on their FQ2’09 conference call that housing inventory is shrinking-- a good sign. However, unemployment is about par with the national rate, the Boeing machinists strike didn't exactly help things, and construction loan delinquencies are on the rise.
On Seattle’s economy:
September's preliminary unemployment rate for Washington (inaudible) at 5.8% continues to look better relative to the U.S. unemployment rate of 6.1%.
There are a total of 27,000 machinists with 24,000 in King County and Snohomish Counties. The other 3,000 are in Wichita. Average wages for the machinists range about $65,000 with overtime. So a month long strike is estimated to take out about $130 million from the local economy in lost wages.
Our commercial and multifamily real estate loans are performing well as are the C&I loans in our portfolio. The largest part of the increase is for the land development and residential spec construction projects.
Unfortunately, we are also seeing an increase in delinquencies, with those loans 30 days to 89 days past due at September 30th totaling approximately $46 million, compared to $13.4 million at June 30th and $7 million at September 30th a year ago. This, of course, was another contributing factor to the increased provision expense for the quarter.