President’s Message (July 2022)
I’m happy to report that this Letter is filled with good news. What a refreshing change.
When I wrote my January Letter (in December, 2021), I said that EIDL were set to sunset which would, “stop the bleeding” and we’d only be dealing with subordinations going forward. I’m pleased to say that has turned out to be the case. Fortunately, too, the subordination process has been streamlined and Celtic Capital has performed so many that we’ve been getting them done in just about a week. And we haven’t received any pushback from the SBA denying any of our requests. Couldn’t be much better than that.
There have been rumblings in Congress to increase SBA lending in general which is concerning because of the effect (undercutting) that would have on the private market but so far, just rumblings. Let’s not spoil our good mood.
I’m also pleased to tell you that Celtic Capital’s first six months of 2022 have been reasonably good. We’ve had periods where we’ve been fairly busy and some where it’s been quiet; but decent deal flow has put our outstandings back to pre-pandemic levels. Our clients are growing, too, with requests for Line increases and equipment loans to boost liquidity. Supply chain disruptions have hampered some clients but for the most part, our clients are doing well.
Inflation concerns abound and the Fed will probably have raised rates again by the time this Letter is published. Though no one is sure, it does look like a recession looms. Most banks believe that so we should see them tighten up and move marginal credits out soon. That’s good news for the businesses that need help regaining their footing and we see a busier second half of the year because of it.
Internally we’ve had some changes; all for good reasons and with good results. While we don’t enjoy seeing any of our Sales staff move on, two have this year. They’ve moved on to do other things. We hired one new person for our Pacific Northwest territory who started at the end of May and just hired a new person for our Mountain West territory who started in July.
And my last piece of good news is that we’ve had a change in equity partners. We swapped out our private equity partner for a family office. The equity partner referred them to us. It was a very friendly transition. The change is a better long-term fit for Celtic Capital in that it will provide us with more stable long-term capital.
More good times ahead? Let’s stay positive!
Wishing you a great second half,
Mark Hafner
President & CEO
Celtic Capital Corporation