Terry Gray, Chief Lending Officer of Rio Bank, with VBR’s editor on the Valley’s financial outlook.

Q. Nationally, corporations are holding on to cash. Is that trend seen in RGV?
That is happening nationally because there is so much uncertainty about the future of commerce, taxes and Congress. If companies don’t know what is going happen with capital gains or tax relief, they are going to stay in cash. I haven’t seen a lot of companies in the Valley holding on to cash that way.

Q. Does that mean the Valley is weathering the recession in good shape?
I’ve been through two recessions and this one is quite different. The economy is still struggling. The Valley has been fortunate to have an influx of corporations and population, so it is a hot spot. McAllen has the country’s fastest growing MSA. Harlingen has the cheapest cost of living. Sales tax revenue in major Valley cities has grown an average of five percent in the last eleven months and has been very sporadic. Normally in a good economy you see a steady small increase. The economy is still unstable and unemployment remains high.

Q. How are banks, as businesses, weathering the changes in regulations?
Banks are an integral part of the local economy, and they are feeling the pressures like other businesses. All banks are saying the same thing now: compliance issues are costing banks more and more because of the increase in regulations.

Q. Are consumer and commercial accounts benefiting from the hyperregulatory climate?
We are still seeing changes come down from the regulators almost every day. Banks don’t know what is going to come down tomorrow. The increased regulations for bank compliance were established to protect consumers, but they also raise the cost to consumers of bank services. Consumers need to look closely at the service charges on their statements.

Read more of this interview by Eileen Mattei in the October print edition of Valley Business Report, out now.