Page 16 - BusinessWest July 24, 2023

Despite the interest-rate hikes, the economy is still humming in many respects, Jeff Sullivan says, meaning the Fed may still have some work to do to slow it down.
Staff Photo
Overall, banks’ fortunes are tied, ironically enough, to how well the economy is doing, and they are in the unusual position of hop- ing that things cool off a little, said O’Connor, adding that, like the Fed itself, banks don’t want to see efforts to curb inflation throw the
“That whole weekend, myself and our commercial team and our retail people were on the phone explaining what was going on, answering their questions,
and putting their minds at Banks
ease,” he recalled. “And I
talked to a number of my
economy into reverse.
The biggest question, among many others, con-
cerns when the pendulum might start swinging in the other direction and things will improve for banks. There is no consensus there — not with the economy still doing well, a presidential election looming in 2024, and other factors.
But the general feeling is that the uphill portion of this trek won’t be over soon.
“I won’t even call this a short-term problem any- more when it comes to profitability,” Sullivan said. “It’s a medium-term problem that we’re all having to adjust
to.”Moriarty agreed, noting that, while the first two quarters of 2023 has been a difficult year for most banks, the rest of this year and 2024 might be an even more of an uphill climb.
Points of Interest
Senecal told BusinessWest that, as he was head- ing home for the first weekend in March, he planned to take a break from his phone and spend a few days unplugged.
And he did ... until news broke that Silicon Valley Bank (SVB) in California had failed after a bank run on its deposits.
So he started looking at his phone again. And he kept looking at it.
Indeed, there were many discussions with other leaders of the bank about how to communicate with customers and convince them that their deposits were safe.
“The weekend that SVB failed, the four largest banks in the country took in roughly $140 billion in new deposits, and community banks, in general, lost $130 million in deposits. There was a huge
move to larger institutions out of fear.”
Continued on page 18
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