Dear Clients and Friends,

As 2017 draws to a close, I wanted to send you a copy of our latest monthly statistical summary for Michigan banks. Clearly, the collective performance of the state’s institutions has been impressive this year, as most currencies rode the wave of expectations coming out of last November’s election…carried that momentum through 2017 with solid performance and improving fundamentals…and now appear poised to benefit from recently passed tax reform legislation and the hope that the underlying economy will continue to strengthen as we move through 2018.

Ever the cautious optimist, I recognize that with current economic recovery getting a little long-in-the-tooth and the general sense of uncertainty / unknown surrounding the Fed’s plans to unwind its massive balance sheet, the combination of corporate tax reform and steadily rising rates (with some hoped for cooperation on the long end of the curve!) could serve to extend the robust market performance of the banking sector. The timing and magnitude of potential pricing pressure on deposit funding costs as rates continue to rise, and competitive dynamics inevitably force banks to respond, is in my mind the most critical wild-card on the banking front.

As I scramble to complete my Christmas shopping (thank God my wife is both a calming and generous influence on our families and friends, and graciously covers my shortcomings without complaint), I am again looking forward to the conversations I hope to have with most / all of you in the coming year and hearing your thoughts on where you would like to take your institutions in 2018 and beyond. The landscape is no less challenging, but expectations of a seemingly more constructive (versus punitive) regulatory touch would appear comforting.

I am a big believer in the meaningful guidance and oversight on the regulatory front that came out of the Financial Crisis, particularly as it related to proactive risk management efforts and strategic testing of one’s balance sheet and business operations, but it was clear that “one size did not fit all” and a more logical application of enforcement “energy” that is appropriate to an organization’s general complexity and market dynamics was needed. On my Christmas list is the hope that “regulatory relief” translates into something akin to a constructive, but disciplined partnership between the banks and their regulators. Tag teaming on meaningful defenses to potentially debilitating cybersecurity threats would be a wonderful start.

ProBank Austin brings a multitude of experience, expertise, and market knowledge to the table for our clients, spanning broad geographical swaths of the banking industry across this country…and the strong desire to continue to deliver that insight and value-added to all of you in the future. Please do not hesitate to reach out to me and / or my colleagues if we can ever be of assistance as you take your organizations forward.

On a personal note, I have enjoyed spending time with many of you this past year, and getting to know your banks and your communities more intimately in the process. The level of candor has been both refreshing and insightful, and your willingness to accommodate my visits has been greatly appreciated. I look forward to continued dialogue as we enter 2018, and in the interim, my best wishes to you and your colleagues for a happy and healthy Holiday Season!

Mike

Michigan Banking Summary December 2017