By way of introduction this is Jeff Neilson at Capital Pro Partners. As part of our planning process within our organization we went through various issues of how we as lenders could help you as commercial lenders in your daily job responsibilities and customer contact issues which is the greatest part of a Commercial loan officer or Relationship Managers job.

To address the question and issue I thought of my more than 38 years spent in commercial banking activities with thirty-four of those years dealing primarily and almost exclusively in credit related functions, and activities. To that end I asked myself what the most important activities and talents did one need to possess to gain an advantage over their competition and become the primary banking contact for their valued commercial clients in a very competitive banking environment.

As I thought through the question one of the issues that kept coming to me based on the thirty plus years spent in commercial lending was the idea that what my commercial customers were looking for in a banking relationship manager was the following.

• Foremost was “Can I trust this person? Though this simple phase seems obvious I had many commercial loan customers and potential commercial customers over the years express to me that they had their doubts? The most frequently mentioned item that drove this uncertainty on their part was the issue of whether or not there was a conflict of interest on the part of the bank representative vs what will help me grow and have a very successful enterprise.

• The second most important issue to most of the commercial banking customers I worked with was your ability to be conversant with them regarding not only financial statements, but what can you bring me about the current world, national and local business environment that will help me perform better ( translated- make me more profitable), and what should I be planning on based on your information and observations gathered from other business people you visit each day.

In my almost forty years of banking, the two principles listed above were paramount among all the commercial banking customers/prospects that I met over that time frame. What success I had or did not have over those almost forty years of banking hinged on how well I managed the two principles above

To that end we at Capital Pro Partners asked how we might be of best service to all the many fine financial institutions and individuals that we get to work with every day in our duties. To that end we feel because of our extensive contacts with so many of you and contacts in the commercial world that we are able to keep you up to date on the latest trends in banking and most important on world, national and local business news and trends that will help each of you become better at serving your many fine business customers.

Key economic take away’s at play right now:

• Rising interest rates through 2023 dragged down real estate returns throughout 2023.The year started with many expectations that the Federal Reserve would start cutting rates in March 2024 (obviously that did not happen), and it was expected that there would be 4-6 rate cuts for 2024. Obviously with the newest Consumer Price Index (CPI report coming in a bit higher for February 2024 3.2%, than that of January 2024 at 3.1%.That rattled credit markets a bit as they now believe that any Fed rate cuts will not occur until June 2024 at the earliest, but a consensus is now building that it may be September2024 before Fed rate cuts are on the table.

• Some regional banks (New York Community Bank in particular), are under much stress as their commercial loan portfolio (much centered on office properties) see more and more likely that the office properties in most major cities are going to be taking big haircuts through the next year or so as the commercial loan market begins to find it’s equilibrium level based on higher interest rates than those found in the easy to zero interest policies that characterized most central banks around the world employed from2009 through late 2022. New York Community Bank, the big regional lender in NewYork, has seen its common stock share price sink 66.27% since the first of the year.

• The Fed’s Fund rate, which is at 5.25% to 5.5%, is currently at its highest level in 22years.

• The unemployment rate was 3.9% nationally for February 2024. This number is right inline with the pre-covid era of early 2020 and represents some of the lowest unemployment rates since the early 2000’s era.

We hope that this newsletter proved interesting and helpful. If any of you have ideas that could help all of us in our careers, please let us know and we will submit those in our next “Lender update. We would love to look at any deals that you may have been having trouble with underwriting or any that you might suspect you may have trouble underwriting. If that happens to be the case for anyone any three of us below can be of help to you.

Jeff Neilson

Business Development

Capital Pro Partners