As I ponder the industry and the forces in our incredible world of banking, I notice a few topics worth pointing out.
One – The stock market is roaring. The Dow is now over 26,700. The S&P is over 2,900, and the NAS is nearly 7,000. Wow, the markets look good. 401(k) looks good. The financial world is happy.
The result of this is that people are spending on everything from luxuries to restaurants thus the savings rate is nearly zero. Deposit generation is a topic on every call and meeting we have today.
Two – Loans are performing well. Loan delinquencies are at historically low levels. Why? People are employed, and wages are up. This is a recipe for a low loan loss environment.
As the economy moves forward, we are concerned about the cost of deposits increasing and over time delinquency of loans and losses to increase. Both factors will result in a lower income position for us.
Given the current strong market and loan performance, now is the time to invest in long-term solutions to prepare your institution for tougher days.
Are you prepared for your cost of funds to increase? Contact your advisor to discuss ways to grow in this competitive market. All of us at McQueen Financial are dedicated to your long-term success.
Have a great week.
*Data Source: Bloomberg