As senior vice president, chief investment officer and chief economist for NBT Bank, Ken Entenmann oversees more than $11 billion in assets under management and administration, including 401(k) plans, retirement plans, endowments, foundations, personal trusts and corporate assets.
With overall assets of $14 billion, Norwich, New York-based NBT is among the top 100 largest banks in the country. In New Hampshire, NBT operates locations in Manchester, Nashua, Concord and Keene.
Entenmann was a recent guest on NH Business Review’s “Down to Business” podcast, from which this interview was adapted.
Q. What is the economic outlook right now for New Hampshire’s very large population of small businesses?
A. The economy is growing marginally above trend. For the United States, that’s about a 2% growth rate. We’ve averaged around a little over 2% for the last year or so. The economy is slowing a little bit, but I think we need to put that in context, because if we had this conversation a year ago, everybody was awaiting the imminent recession. For two years, Wall Street has been waiting for the imminent recession, and it just hasn’t come. The economy has been remarkably resilient.
Small businesses will benefit on two fronts. They tend not to be too recession resilient. A lot of small businesses go out of business. I think it is highly unlikely, given where we are today, that we’ll face a recession in the next six to nine months, barring any kind of major economic pandemic macro event.
We’re looking at what economists call a soft landing, where the economy has slowed a little bit, but it’s not crashing and it’s not going into recession. The second thing that I think is really important for small businesses is that inflation has begun to come down. If you think about your restaurants and family businesses, hospitality, inflation has been really, really difficult.
The consumer price index peaked in June of 2022 at a growth rate of 9.2%, depending on what inflation metric you want to use. It’s 2.5% to 3.5%, so it’s come down a lot. It’s still stickier than I think most people would like, but it’s come down materially. And that’s really important, because that is what has allowed the Federal Reserve to begin to cut interest rates.
Q. A lot of small businesses struggle with retaining workers because there’s not a lot of supply in our housing market. What insight do you have about that?
A. It’s a problem nationwide. Depending on how you look at it, statistically, there is a shortage of single-family homes nationwide between 3 million and 5 million. COVID threw a wrench into how the housing market works.
New Hampshire’s been a beneficiary of it. The people who were paying high dollars to live in Boston have decided to pick up and move to Nashua or Manchester. It means they’re selling very expensive real estate in the Boston metro area and coming to Manchester or Nashua and paying up, which puts pressure on the housing prices. They may be selling something for $800,000 in Boston and buying something for $600,000 here in Manchester. And they’re getting more space and it’s great.
But that puts big pressure on prices.
In the NBT Bank footprint — which is seven states, basically New England, New York, Pennsylvania — the three-year average house price is up 49%. You compound that with what interest rates did in COVID. We all know that mortgage rates not too long ago, six months ago, were over 7%. They’re somewhere hovering around 6.5% nationally today.
At NBT Bank, we do quite a bit of lending to real estate developers. It’s an incredibly regulated industry. If I’m a real estate developer and I’m saying, look I think Manchester is a booming city. It’s got all this promise. You have the biomed growth initiatives going on. I want to build a 250-unit property. It could take two to three years to get that through the regulatory labyrinth.
You want to protect the environment. You want to protect from overgrowth and urban sprawl and all of those things. But the demand is so great that the regulators play a big part in the housing situation. It is a major constraint on a lot of markets for economic growth.
Q. Manchester’s ReGen Valley is preparing for an influx of biosciences and life sciences employees. What possibilities do you see in this space?
A. These are people with Ph.D.s, and they’re highly educated people. While they may be in a startup mode and they’re eating ramen noodles today, if they’re successful, the upside is enormous. It will also attract quite a bit of private equity and venture capital investment, which it kind of feeds on itself, and hopefully it will be successful.
Being so close to Boston, which is a major education hub, you’re going to have access to those scientists. With the improvement of legal immigration, hopefully we’ll be able to keep those highly educated scientists. It’s a wonderful concept with just tremendous upside if we can get it to work.
Our role at NBT Bank is supporting the real estate developer that will convert the mill to build the lab space that will help these entities. It’s not the role of a community bank like NBT to lend directly into these startup biotech companies. Our role is to support the infrastructure that surrounds them.
