2024 Banking & Finance Outlook: Monte McNew

McNew’s 2024 Projection: Inflation seems to be cooling. It looks like we’re headed for a softer landing.

Where do you see mergers and acquisitions in the banking and finance world trending in 2024?
2023 was a pretty soft year for it, for a lot of reasons. You’ve got some pent-up desire from banks that need to merge for scaling purposes and not a lot of opportunity for that to take place recently. I think there’s a lot of optimism for 2024. Much like after the recession, I think you’re going to see a lot of smaller banks, family-owned type banks who don’t want to go through those types of challenges again, and 2024 is going to provide a lot of opportunity. I would tell you, too, that in the recent couple weeks, as bank stocks have kind of risen together, that allows a lot of help for acquisition. A lot of times stock is currency. As you see stocks rise in the banking environment, you’re going to see a lot better opportunity for mergers.

Talk about the impact of the Silicon Valley Bank failure in 2023. Has it had long-lasting impacts? Will the industry feel that in 2024?
It was a pretty isolated incident, really. But it gave everybody a wake-up call to pay attention to something that maybe they really never paid attention to before. A lot of people would call you and want to understand how much exposure they had on their deposits that were uninsured by the (Federal Deposit Insurance Corp.). You want to make sure you’ve got a good understanding of your deposit base, what’s insured, and then also providing solutions if there is exposure to those customers. I think everybody has done a good job of adjusting to that very unique situation that took place at Silicon Valley. Regulatory changes took place, too: more rigorous capital standards, more oversight on deposits and concentration risks.

Interest rates have been closely watched this year, and the Fed has signaled cuts to come in 2024. How will that impact the banking and finance industry?
In 2023 and a little bit before that, it was the speed in which the interest rates rose that was the biggest challenge. You also had an interesting thing happening at the same time. You had the combination of rates going up and then the drying up of liquidity. (Interest rates) impact customers in a number of ways. It’s a good opportunity right now for people regarding their savings accounts and CDs. Not that long ago, they didn’t have the opportunity to receive much interest on that. If the rate environment hopefully softens, I think you’re going to notice the impact quickly in homes because people maybe have needed or really wanted to move, but they couldn’t afford the change in their monthly payments. You’re going to see people who did buy homes, when rates go down a percent or two, quickly wanting to refinance. That’s where you’re going to see a lot of activity. I think these rates do soften over the coming year.

How do you see lending performing in 2024?
We’re optimistic on the commercial side that opportunities and projects now can cash flow. We’re optimistic on our mortgage lending side of things, as far as consumer lending goes. The cost to purchase a car, to purchase a home, things like that, are kind of stuck right now. You’re not seeing as much activity. Lending as a whole, it’s going to be a really interesting year. Our market isn’t as subject to it as many others, thankfully. Living in our community here in Springfield, southwest Missouri, I think it’s going to be great because you’re going to free up some opportunity and cash flow in order to make some new investments, new opportunities. Globally, the big city markets have some challenges for sure they’re facing.