President’s Message (January 2024)
In my Letter last July, leads were up; fundings were up; and my spirits were up. 2023 was on a path to be a good year for Celtic Capital, and I’m happy to report that turned out to be the case. In terms of new business, we ended the year back to our pre-COVID levels and we’re projecting an even stronger 2024.
While inflation is easing and the case for the Fed to lower interest rates is heating up, the Fed is not being as aggressive in lowering interest rates as when it raised them. While the consensus seems to be that rates will go down in 2024 (two or three cuts), how quickly, by exactly how much, and starting when is still up for debate. According to Fed Chairman Powell in the most recent FED meeting, it will be contingent on the trajectory of the economy and inflation. In the meantime, there are still plenty of bank deals that should be moved out and we are seeing more of that activity – more so in some geographic areas than in others though not in all banks.
Among the deals we’re now seeing, they’re a little more challenged than is the norm with more issues to overcome. We’ve also been seeing continuing cash flow problems among our clients. We’ve had more over-advance requests than is usual among those struggling to manage cash, as well as more losing money. I see this trend continuing for at least the first half of 2024; the second half, because it’s an election year, is harder to predict. We’ll see what the political landscape brings as we get closer to November.
With respect to our industry delegation’s successfully lobbying to add a safe harbor provision to its recent California disclosures regulation, a safe harbor provision (as of the writing of this Letter) will become effective on January 1, 2024. Quite a coup for our delegation in which I was pleased to be actively involved. Fourteen other states have followed California’s lead and have either passed disclosures legislation or have it pending. Specific information on those states can be found on the SFNet website.
To catch you up on our in-house news, the majority of our workforce continues to work remotely or hybrid which has proven to work out quite well. In terms of our Sales team, we’ve re-structured to go slightly smaller but with a more experienced group. This group’s expertise in all aspects of the deal process enabled us to take this stance and it, too, is working out quite well.
With respect to our internal staff, we have initiated a program to “train up” employees either to a more senior position or by expanding responsibilities in their current positions. Not only are employees pleased with the opportunity of a foreseeable career path, management views the program as one what can only serve to better the organization as a whole.
All in all, I’m pretty pleased with 2023 and I’m carrying over my positivity into 2024. Let’s hope I’m proven right yet again.
Wishing you a positive 2024!
Mark Hafner
President & CEO
Celtic Capital Corporation