Northern Virginia leads the way – The National Capitol Region continues to witness unprecedented economic growth and the local banking sector – particularly in Northern Virginia – continues to be one of the primary beneficiaries of this recent boom. As reported in a recent issue of the Washington Business Journal, net assets of banks based in Maryland and the District of Columbia increased by about $4 billion during the first 9 months of 2005. This represented a solid 9% increase over the prior year. Not bad – until you consider the performance of Virginia-based banks.

As reported in the same WBJ article, during the first 9 months of 2005 net assets of banks based in “the Old Dominion” increased by a whopping $40 billion! The figures were based on the FDIC’s quarterly state economic report and are even more astounding when you consider that the report was tracking bank assets based on where the institutions were headquartered. Therefore, total Virginia bank deposits far exceeded the $40 billion mark when out-of-state institutions are factored into the equation.

What is driving this incredible growth?

According to local experts, construction and development lending is leading the way but other factors might also be at play. “The Dulles corridor is second only to California’s Silicon Valley in terms of being a technology hotbed,” points out Barry Lake, President of Rollins-PCI Construction, one of the D.C. areas premier builders for banks and blue chip companies, “and any of the tech firms that survived the meltdown a few years ago have only come back stronger – just look at Microstrategy.” Indeed, the local software firm led by Michael Saylor saw its stock price plummet from a high around $300 per share all the way down to $1.12 but has recently seen its share price rebound back up to the $90 mark.

In addition, the war in Iraq and growth in the Department of Homeland Security have certainly bolstered direct government spending in the region but, more importantly, the positive economic spin off effects have greatly enhanced the fortunes of countless primary defense contractors and the myriad of small and mid-sized subcontractors in the area. In the realm of defense spending, Virginia may also be the main beneficiary of the Defense Department’s proposed Base Realignment and Closing plan as many of the Department’s employees in the tri-state region could be consolidated into existing bases that are mostly in Virginia such as Fort Belvoir.

A resurgence in the technology sector, growth in government defense spending and a red hot construction and development industry with no end seemingly in sight, will surely keep the region’s bankers smiling.