How Lenders are Coping with High Rates

Gita Thollesson from Q2 discusses commercial banking, including balance sheet strategies. We also look at regulators' latest guide for third-party relationships.

Let’s get this week started, Bank Slaters!

I am writing from Minnesota, where I am discussing fintech trends at a conference hosted by the Minnesota Bankers Association. Those of you who follow our newsletter know the importance of fintech ecosystems and navigating complex regulatory hurdles — in fact, we just got a fresh guide from the FDIC, OCC, and the Fed for handling third-party dealings. We’ll go over this later in the newsletter.

I also volunteered at Wake Forest University (where I earned my MBA), helping with the Global Strategic Management class. I served on a fictitious board — student groups that completed a lengthy simulation had to present and defend their financial results and performance. Most did quite well — and those that stumbled learned a thing or two along the way. This is my third time volunteering — it won’t be the last!

Let’s talk about commercial banking.

We’ve been discussing commercial lending a lot recently, given concerns about commercial real estate. We’ll take a look later in this newsletter at what some banks are doing to reduce their exposure to CRE and other risky industries.

Other dynamics are at work as commercial lenders navigate a period of high interest rates, either by being more aggressive with deposit-gathering or de-emphasizing less-profitable lending businesses.