Banks have been resilient through the pandemic — until a few weren’t. Some institutions failed to incorporate fundamental economics and core asset/liability gap management banking principles, and the fallout may have far-reaching impact, including consequential new regulation. The collapse of these banks is grabbing global headlines and raising concerns about broader risk in the regional and community banking system.
Recent struggles in the banking industry are likely to accelerate consolidation, a trend that we have helped our community bank clients navigate in recent years. How does industry consolidation affect our bank clients? How can we help them compete? What are the consequences of a shrinking small community bank market within rural communities? And how can banks add loan growth efficiently, and with heightened risk awareness and stewardship?
While the ultimate fallout of recent bank collapses remains to be seen, two things are certain:
Over the past several years, we have worked with many community banks to incorporate variable-rate C&I loans (otherwise known as senior loans) into their overall book of loans. Senior syndicated loans are an established asset class and represent a core capital market that is active and growing. In the current environment, we believe these loans are even more compelling for banks looking to diversify their portfolios and minimize exposure to interest rate risk.