President’s Message (January 2018)

For Celtic Capital, the first half of 2017 was pretty slow. The market was soft and we didn’t see many deals coming from banks. In addition, we lost two of our Client Development Officers (CDOs). Mid-year, however, everything changed as we once again were at full staff, and beginning in August, we saw deal flow pick up significantly. We saw a great many opportunities from a variety of sources that included bank workouts as well as some fresh money deals from companies that were growing or had specific goals they wanted to accomplish; a very encouraging sign for the economy.

Encouraging for us was that along with all the new deals, we had lower than normal run-off and a lower number of liquidations. And interestingly, we began discussions with two former clients who wanted to join us again – one the result of a merger, the other in need of working capital in excess of its bank’s limits.

I’m optimistic about 2018. I believe the trends we started seeing in the second half of last year will continue and I’m looking for Celtic Capital to grow as a result. I’m looking to bring on a new CDO and expand in the Southeast – ideally in Atlanta, Birmingham, Florida or the Carolinas. And we will continue to explore and serve the equipment-only financing market. Our willingness to provide these deals has proven to be a great benefit to banks. As an example, the A/R lender of one of our existing equipment-only clients decided to exit the business and the most natural, easiest course for the bank was to come to us to take them out; a win-win for everyone.

In terms of economic growth; that’s hard to tell. While the idea of tax reform has made people more optimistic, I don’t see any major impact for the Celtic Capital borrower. I’m not hearing any small business owners planning to increase their infrastructure as a result of tax reform.

While the growing segment of cap advance players will, I believe, continue to proliferate, this segment really impacts factors to a greater degree than asset based lenders. We may see some impact, however, that should only affect the lower end of the market.

In 2018, as in all other years, we will continue to look for ways to enhance service levels to meet the needs of our clients. Last year was the first full year on our new operating system. As it is more user-friendly than our prior system, clients have adapted well and say they like it very much.

I’m looking forward to a successful 2018 and wish you all the best for a successful year, too.

Mark Hafner
President & CEO
Celtic Capital Corporation