Shareholders Daniel Best and Stuart Best recently attended the Michigan Bankers Association (MBA)’s 138th Annual Convention. Now, Dan is sharing his top takeaways!
The convention was once again held on Mackinac Island. For anyone who has not visited the island, I highly recommend doing so, and more so, to spend at least one night on the island. The island is known as America’s summer place and for good reason.
The conference was jam-packed with a number of excellent speakers. Things kicked off with managing director Stephen Nelson and senior vice president Tom Dooley of D.A. Davidson Investment Banking speaking on the importance of having independent banks and other financial organizations. Currently, there are 1/3 as many community banks as there were just thirty years ago. There are many factors, many of which are out of the banks’ control, causing this. One cause is the passing of a major shareholder and the desire of heirs to divest. All financial institutions must identify stable sources of income while at the same time reducing costs to ensure a strong balance sheet at all times.
Next, associate partner and director of financial strategies group Dale Sheller of The Baker Group presented Application Lifecycle Management (ALM) and Interest Rate Risk Management. He quickly pointed out that the likelihood of a soft landing from the Fed’s dramatic interest rate increases drops the longer the Fed keeps the rates high. We are currently at the second longest period and longer than any previous period that resulted in a soft landing. Likewise, the unemployment rate is at or above the rate at the start of the last three rescissions and credit car and car loan delinquency is following a similar pattern to previous recessions. However, there is just no way to identify the impact of the pumping of trillions of dollars into the economy and how this will impact the Fed’s actions at this time.
Day 2 was all about the economy. It started with a presentation from president & CEO Charlie McQueen of McQueen Financial Advisors as a precursor to the keynote speaker, president Neel Kashkari of the Federal Reserve Bank of Minneapolis.
Highlights included that the majority of jobs that the economy has produced in the last 18 months have been part-time jobs. They we are currently in the longest inversion rate for the yield curve (744 days) since 1978. Home sales are at the same level as in 2008, but we have over 20 million more people. Not surprisingly, a major cause is that older homeowners with low interest rates are reluctant to move. This, combined with the high cost of new construction, has created a backlog that could take at least a decade to work through.
Neel Kashkari spoke mainly in generalities. He provided two insights I found most interesting. First, that the protections put in for the too big to fail banks caused systematic risk to everyone else. The Feds will have to work to insure that regional and community banks have the ability to survive. Second, the Fed’s 2% target inflation rate is an arbitrary rate. Further, anything above zero, in order to avoid deflation, would be an acceptable target.
The conference did have its obligatory AI presentation. Although it had the “we should not be afraid of AI as it will help assist people being more productive and not necessarily replace them” spiel. The one bit of advice I found interesting was the recommendation that leaders immerse themselves in AI outside of work, in order to get the feel for what AI can do and that as it develops at work, leadership will be more comfortable with it, which likewise will cause staff to be more accepting of it.
Overall it was an excellent conference with a lot of informative and interesting presentations and speakers.
Our team is constantly monitoring changes in the industry. If you have questions about any of the topics covered in this article or would like to learn more about our consumer collections solutions, connect with shareholder Dan Best at any time.
This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
The convention was once again held on Mackinac Island. For anyone who has not visited the island, I highly recommend doing so, and more so, to spend at least one night on the island. The island is known as America’s summer place and for good reason.
The conference was jam-packed with a number of excellent speakers. Things kicked off with managing director Stephen Nelson and senior vice president Tom Dooley of D.A. Davidson Investment Banking speaking on the importance of having independent banks and other financial organizations. Currently, there are 1/3 as many community banks as there were just thirty years ago. There are many factors, many of which are out of the banks’ control, causing this. One cause is the passing of a major shareholder and the desire of heirs to divest. All financial institutions must identify stable sources of income while at the same time reducing costs to ensure a strong balance sheet at all times.
Next, associate partner and director of financial strategies group Dale Sheller of The Baker Group presented Application Lifecycle Management (ALM) and Interest Rate Risk Management. He quickly pointed out that the likelihood of a soft landing from the Fed’s dramatic interest rate increases drops the longer the Fed keeps the rates high. We are currently at the second longest period and longer than any previous period that resulted in a soft landing. Likewise, the unemployment rate is at or above the rate at the start of the last three rescissions and credit car and car loan delinquency is following a similar pattern to previous recessions. However, there is just no way to identify the impact of the pumping of trillions of dollars into the economy and how this will impact the Fed’s actions at this time.
Day 2 was all about the economy. It started with a presentation from president & CEO Charlie McQueen of McQueen Financial Advisors as a precursor to the keynote speaker, president Neel Kashkari of the Federal Reserve Bank of Minneapolis.
Highlights included that the majority of jobs that the economy has produced in the last 18 months have been part-time jobs. They we are currently in the longest inversion rate for the yield curve (744 days) since 1978. Home sales are at the same level as in 2008, but we have over 20 million more people. Not surprisingly, a major cause is that older homeowners with low interest rates are reluctant to move. This, combined with the high cost of new construction, has created a backlog that could take at least a decade to work through.
Neel Kashkari spoke mainly in generalities. He provided two insights I found most interesting. First, that the protections put in for the too big to fail banks caused systematic risk to everyone else. The Feds will have to work to insure that regional and community banks have the ability to survive. Second, the Fed’s 2% target inflation rate is an arbitrary rate. Further, anything above zero, in order to avoid deflation, would be an acceptable target.
The conference did have its obligatory AI presentation. Although it had the “we should not be afraid of AI as it will help assist people being more productive and not necessarily replace them” spiel. The one bit of advice I found interesting was the recommendation that leaders immerse themselves in AI outside of work, in order to get the feel for what AI can do and that as it develops at work, leadership will be more comfortable with it, which likewise will cause staff to be more accepting of it.
Overall it was an excellent conference with a lot of informative and interesting presentations and speakers.
Our team is constantly monitoring changes in the industry. If you have questions about any of the topics covered in this article or would like to learn more about our consumer collections solutions, connect with shareholder Dan Best at any time.
This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
