Updated about 3 years ago on .
Tale of Two Commercial Banks
Tale of Two Commercial Banks
The big banks started reporting earnings last week and to hear it from them, things are getting worse. Even Goldman, which beat estimates today, still had a net profit down 48% in the second quarter. When you hear Jamie Dimon, president of JP Morgan/Chase-the biggest of the main banks, start sounding the doom and gloom card….you take notice. Much of the losses are in setting aside loss reserves….in other words, setting aside money for what they perceive to be a lot of failures and in lower trading revenue. The big banks seem to be VERY nervous.
Here in Texas, I am know most of the local banks and many of the presidents of those banks so I called my friend Bill who is the president of a local bank near me and asked what he was seeing. He said they had a record year last year because of PPP loans, and they stripped those loans out of their budget for this year. But if the second half of the year is like the first, he said they will even beat out last year's numbers. He says they are nervous and are reviewing loans more cautiously. They see the inflation and the fed hiking rates, but he said they are in the healthiest position they have ever been in and they are NOT seeing the effects yet of that inflation-at least based on their revenue and profits.
Two banks, two different stories. Which one is right? I can point to five (5) facts that argue that things are going strong-like the most recent employment numbers. I can point to five (5) facts that say we are about to hit the skids-like the inverted yield curve. So which is right? I honestly DON’T KNOW. It could go either way. I can see both arguments. I would be leaning more toward recession because inflation and rising rates are not good for the economy, and of course, there are more geopolitical risks than we have seen in a long time so that is a negative as well but there is still PLENTY of underlying strength. It’s the craziest market I have ever seen. So what is the play? Well, the way I am looking at it is this…..
1. Keep doing what is working….don’t stop because you are scared of what
“might” happen-wait until it does
2. Be ready to pivot!- have some cash reserves, and be ready to pivot your business when
the market actually changes
3. Work on yourself. If you are in business for yourself, and most people are even if they
are technically employed by someone else, then the highest and best thing you can do is
improve yourself. Improve your attitude, improve your sales, improve your networking….just work on getting better personally-there is no downside to that!
Until it crashes, it hasn’t crashed. Keep working, be ready to pivot, but keep working. It is the plan that seems to mesh the best with a market that is tough to decipher. Have a blessed week!
Karen Schimpf
(512)-358-1511
karen at applycommercialloans.com
P.S. WE have money to lend and we do not charge ANYTHING to get you to that term sheet. That's right, we are the ONLY NO RISK OPTION IN COMMERCIAL. I will preview your loan and, quickly determine whether we can get it closed or not and if so, we will have terms in 72 hours from receipt of the basic docs. No cost, no risk. We close you or we make NOTHING. IF YOUR CURRENT BANK IS SAYING NO OR WORSE...TAKING FOREVER TO DECIDE, GIVE ME A CALL TODAY at 512-358-1511.
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