Bear Market Breakdown

Now that we're in one, what is a bear market, really? And how should bankers adjust their strategies, if at all? In this week’s podcast, Alex Habet and Dallas Wells discuss the carnage in the stock market and what it means for banking in the short and long term.

Helpful Links

[eBook] I’m Still Standing: Bond King Bill Gross and the PIMCO Express
[Article] Explainer: U.S. yield curve inverts again: What is it telling us?
[Article] Fed’s interest rate hikes may mark start of tough new economic climate
[Blog] May 2022 Commercial Loan Pricing Market Update

Transcript

Alex Habet

Hi, and welcome to The Purposeful Banker, the podcast brought to you by Q2 PrecisionLender, where we always discuss the big topics on the minds of today's best bankers. I'm your host, Alex Habet.

There's a lot to unpack; there's a lot going on. It doesn't take a ton of research to figure that out. Just fire up your browser, see what's going on in the news and you instantly just get dizzy, whether it has to do with banking or not. It's the same story, there's just a lot going on. To this host it becomes abundantly clear when the team and I huddle together to figure out, plot out what do we want to talk about on this podcast, deciding on what are the themes we want to tackle or what are the latest trendy things, who's disrupting what? But as much as we want to discuss those things and focus on them, we regularly have to address the parade of elephants that just constantly move through the room.

I'm sure there are a lot of people in this audience who have pretty much had enough of all the inflation talk, the doom and gloom that is attached to terms like bear market. There are a lot of families out there who are grappling with some of the very same macroeconomic issues, which is why this tends to become so much of an emotional topic. There's definitely an undercurrent of anxiety; it's taking hold everywhere.

So while we don't always have the luxury of only talking about the things we want to talk about on this show, whether it's innovation, competition, or technology, we cannot understate how important it is to bring some of these macroeconomic issues and give them a special place at our dinner table here on this show. So unless you've been living under a rock, and some people do and I actually almost envy them, you know about the recent interest rate hikes, as well about the perspective increases that the Fed will likely deliver in the near future.

You've also learned recently that the equity markets have officially entered into a bear market. So today we will examine, as we always do, what the impacts look like in the commercial space, whether it's on market dynamics or the broader strategies that the banks are thinking about. Now, I can say that we got lucky with one thing today. We're joined by Dallas Wells, head of product at Q2. And this guy does not need an introduction. He's basically a legend and, without question, has the most odometer miles on this show. But he can pick apart the story on the industry like no other. He's what I would call the LeBron James of this stuff. So Dallas, welcome to the show.

Dallas Wells

Thanks Alex. That's quite an intro. I think what I heard in there was legend, LeBron James, and also something about being part of a parade of elephants. So the package deal, I'll take it all. So I appreciate it and I'm glad to be here.

Alex Habet

You're welcome, buddy. For today's episode, we figured it made sense to split it into three parts. Because there are three things, at least we as a team, think about a lot. First, it would be what are the headlines, what's going on out there, what are people reacting to? The second would be, how do those headlines, or those major events, how are they impacting the sector in particular, the banks that many of you who are listening work for? And then the third, what does our dataset suggest based on some early indicators that we're seeing through some of the fluctuating environment in recent months? So Dallas, figuring we could just focus on the headlines first.

There are really three key headlines to spotlight in this first part. It would be the rate hike, the bear market, and maybe to a lesser extent because it happened now a month and a half or so ago, the yield curve inversion. Probably, just diving into the rate hike first. So just to quickly summarize for those of you who have been living under rock, 75 basis points raise on Wednesday, June 15. It's the largest since 1994 and, Dallas, would you happen to know what the top movies of 1994 were?

Dallas Wells

I don't. That's a big callback. I'm sure that teenage Dallas thoroughly enjoyed them but I don't know them off the top of my head.

Alex Habet

So it turned out it was a huge year for movies because I was like, I can't believe how great all these movies are but three of them I will call out. It was the year of Forrest Gump, it was the year of Pulp Fiction, and finally a favorite here in this household, Legends of the Fall.

Dallas Wells

Wow. That's a big three right there.

Alex Habet

So it's clear, though, and if it hasn't been already, we've been living now decades of falling rates, and borrowing costs have been pretty much non-existent. They've been there but fairly low, but things are changing. There's a new math for investments. Before I turn it over to you, I just wanted to read one quote that I found really interesting from The Washington Post. I think they did a really good job summarizing this succinctly, that "For over 40 years, the formula for U.S. economic growth has been the same: cheap money, consumers could borrow easily to buy homes and cars, companies whether profitable or not could tap bond investors for cash to fund their operations, and Washington could afford to bail out both Wall Street and Main Street by running eye-popping budget deficits made possible by borrowing the funds. So whenever the stock market wobbled beginning since the 1987 crash, the Fed rode to the rescue by slashing rates and flooding the market with cash." Those days are clearly over now, so, Dallas, I would love for you to share your perspective here.

Dallas Wells

Yeah. Well, a couple of things and I think you added a great context there and a rate hike of 75 basis points in a vacuum is not that big of a deal. But the issue is 75 basis points from where we're coming from, so it's like a meaningful percentage increase in those underlying rates and, therefore, real borrowing costs to real world borrowers. These are businesses that now there's one more line item that's going up along with all the other inputs that they have.

So the environment matters and so a 75 basis point increase from these low levels is one that folks will feel. You probably wouldn't have felt that in 1981, but you certainly feel it today. And the other thing is that, as you said, the Fed is now, because of this pretty widespread and deeply seated inflation, the Fed is raising rates into a declining stock market and what feels like a slowing economy when they've been doing the exact opposite with pretty darn good success for the last several decades. I recently read a pretty good history of PIMCO. Bill Gross is quite a colorful character and there's a relatively new book out about Bill Gross. We'll link to it in the show notes if you're a bond nerd who's interested in such things. But as you read the history of PIMCO, they basically rode that wave of bond prices higher and rates down for multiple decades and made themselves and their investors a ton of money.

But at multiple points over the last, probably, 15 years, they were calling like, "Alright, this is it. Everybody beware, the ride is officially over." And they've been wrong every time. At some point that call will be correct, and I think that's part of the jitteriness here. It's not just this move on its own. It's the, "Are we turning a different direction here? And are the rates increasing at exactly the wrong time when we need wind in our sails from declining interest rates and instead we've got now a headwind of increasing rates on top of everything else?" So I think all of that is why there is so much uncertainty and you can see the volatility pick up, the real sign of a true bear market. It's not just the price declines, but things get wonky.

And so you start to see big volatile moves, intra day moves. You see single names being 25% off and it's like, "Well, wait. What's going on there?" There are things that get a little unusual, and those, of course, always have follow-on implications. A hedge fund blows up ... you didn't mention crypto explicitly but I think it's a big deal what's happened in the crypto market over the last few weeks. So it all just mixes to uncertainty, which investors don't like. Bankers sure as heck don't like it. And I think that's what we probably need to talk about is, when the path forward gets a little fuzzy what should you do? And especially since it's been a while since we've been through a real rough patch. We had a blip at the beginning of the pandemic, but it was so short lived that I don't know that it really counts. And otherwise it's been smooth sailing for a long time.

Alex Habet

That's an excellent segue to our next part of this first section, talking about the whole bear market concept. And I don't want to sit here and dwell on it. I mean, it's a definition at this point but it is true that trillions in retirement savings in particular have been wiped away. The Fed is in this mode right now, I think from trying to wring out all that extra stimulus that was put into the system. But it may be beyond the reach of the soft landing we don't have to, again, dwell on that too much. But one of the interesting things in my daily research, one thing that I came across that was really interesting is that in the last two and a half years, about 1,500 companies have went public. And a lot of them were not built for dealing with upward moving cost of capital, there's that issue. The housing market is not built for this either.

I mean, the purchase applications in recent weeks, I think are down somewhere around 40%. Another indicator of what's going on there, which I think has a parallel to crypto, is the actual brokerage platforms like Redfin and Encompass, they're letting employees go, which is very similar to what you're hearing now with Coinbase and others. $9 trillion wiped from wealth: That's going to have a lagging impact to the economy, which you're not going to see that right away. And it's for sure, I will bank on, I will invest money on this too, I will back this up that the Fed will not ride in and build yet another bubble for us to bail it out whether they've built the FANG bubble, the growth stocks, the stock market at large, crypto, venture, whatever it is. They're not going to ride in, so I'm inundated by this whole bear market talk in my newsfeed these days but I would just love to hear specifically with that one and we'll drop the topic I promise right after you weigh in here.

Dallas Wells

Yeah. Well, so there are lots of ways to measure a bear market and to measure a recession. And there are lots of technical ways to measure those things. But there's also the old, like the old definition of pornography from the senators back in the day. I don't remember the names but it's like, I'll know it when I see it. That's the only way you can define it.

So whatever the technical measures are, things are clearly different and so one of the first areas that you're seeing it is that capital was cheap and it wasn't just borrowed capital but equity capital got cheap too. There was so much liquidity, there so many venture capitalists that went out and raised these gigantic funds and people were seeking yield, seeking returns. And so it was easy to raise money, which means it was easy to fund a very high burn rate if you're building software, if you're trying to disrupt the taxi industry, if you're trying to disrupt the office market industry, the hotel industry. All of those pretty well known big technology companies that were just burning money like it was going out of style. Well, capital's more expensive now, both the borrowed kind and the equity kind.

So whereas for a while over the last 18 months if you could fog a mirror you could raise a seed round and start a new company, or you could go raise a series B that showed, "Hey. We're a unicorn now, we're worth a billion dollars," and also under your breath and our margins are negative 35% last quarter. So we go out and we build a thing for a dollar and we sell it for 75 cents and we call it growth and kind of classic bubble stuff. Well, when those things stop, they come to a screeching halt and so when it gets harder to raise that next fund round, that's where the layoffs come from. You've got to reduce the burn rate. So you've seen it across big swaths of the tech industry. Fintech has been hit particularly hard, big layoffs, and so I think that's a natural question for bankers is, it's almost like counterparty risk. I like to bring back one of the terms that we all said too many times through the financial crisis, do you know who's on the other side of the table?

And so for a while you chose tech partners based on what promises could they make and how awesome was their slide deck and did they have a slick demo? And the question of, will they be solvent and can they keep up this pace was secondary. We at Q2 got into lots of interesting negotiations with bank customers where they're like, "Well, these new kids down here said that they're building the same thing and they'll do it for half price," and we're like, "OK. Well, we're not going to do it for half price. This doesn't make any sense." Well, this is where I think you have to go back and revisit some of those and do you have critical infrastructure that's being operated by someone who loses and burns cash in a painful way?

And so for the tech companies, they have to make that decision between profitability and growth. It was easy just to chase the growth and the appreciation of your equity value for a while. Now, there's like some real business decisions to be made. Do you keep hiring into this? Do you have to cut staff? Do you elongate your roadmaps? And what are all the implications to that? And from the banker's side, where are you in the middle of projects, do you need to reevaluate things? What does your budget process look like? What does theirs look like? Everybody's going to have to do a little bit of a reset here. And so I think that's what, it's easy to say bear market and everybody look at their 401(k) and feel the doom and gloom. I think you also have to look at the pragmatic stuff that comes next of, "Alright, well, what does this really change about what we're doing day to day and do we need to approach anything differently?"

And I think lots of things are in the process of being reset right now and there are lots of decisions that may get revisited. So it'll be, I think, some painful times to come. There will be pockets that'll keep trucking right along like always, but I think there are also big sectors of the banking tech where those overlap, where there are some hard conversations coming.

Alex Habet

So you touched on some of these things already around how it's going to impact some of the companies that some of our listeners work for or just the industry at large. But before we step in a little bit more into that, let's take one minute, only a minute, to talk about this yield curve inversion only because there's accelerated talk of recession now. You hear the administration say it's not a given. However, we have a measure that has been accurate, I think 39 out of the last 40 times in predicting a recession.

Although, I won't give them credit for 2019 because I don't think a yield curve inversion could have predicted COVID, but it's hard to argue with that. The way Reuters describes it is, "The U.S. curve has inverted before each recession since 1955 with the recession following somewhere between six and 24 months, according to a 2018 report by researchers at the Federal Reserve Bank of San Francisco." It happened in 2019, recession followed again, although I don't think that it could have predicted COVID. So we had this happen very recently, how much should we factor that into all this other news that we're seeing?

Dallas Wells

Yeah. So it has predicted essentially every recession in modern times, but it's also had a bunch of false positives, in fairness. So there's the joke that it's predicted 15 out of the last 10 recessions or whatever. So it doesn't always, it's not a sure thing. It doesn't mean that we are definitely going into a recession. What it does mean, though, is that there are some expectations that need to be settled out. So if you just look at the structure of the yield curve, what it's saying is rates are high right now but we expect them to get lower a little later, basically, as the economy slows, that growth rate slows. That's what it's forecasting. So is it a good predictive tool? Maybe. I think probably the more difficult part is as we get into the mechanics with bankers, where that inversion happens is right squarely in the belly of the yield curve which is where all commercial lending happens.

So it has real world implications and there are pricing decisions to be made, and it causes some questions when it's like, "Well, wait, the two-year rate is higher than the five-year rate. That doesn't make any sense." You have to make decisions of, do you follow the yield curve or do you put your thumb on the scale because it looks funny? And those decisions have real consequences on, do you win too many deals that you shouldn't in a slowing economy? Do you miss out on deals that you wish you wouldn't have six months down the road? It has real consequences, and I think bankers just need to be aware that even if it doesn't 100% accurately mean a recession's coming, it means that all warning indicators should be flashing and you should be paying very close attention to really what I think of as the entry gate right onto your balance sheet.

That's what pricing really is at the front end. You can use it to constrict or open up the flow of deals onto your books. And so the decisions that you make in this goofy interest rate environment will change the flow of deals, which ones do you win and lose. And you don't want that to be accidental. You want to be very intentional about that and you want to have a strategy and follow through on it and have ways to measure and see if it is working. Is it doing what I expect it to do? Because if not, you may have some nasty surprises. If this indicator is right and you made the wrong decisions right now today, these are the ones that you regret, the last few under the gate.

So in the financial crisis, it wasn't the home loans that you made in 2004 that were a problem. It was the ones that you made in the fall of '07 or in the fall of '06, at the end when you should have seen the warning indicators and changed some things and you didn't. Those are the ones that kicked you in the teeth. So it doesn't mean we're definitely here, but it means this is one of those indicators that are saying, "Hey, we could be here, you should pay attention."

Alex Habet

So let's go back then to the second section of this episode. And again, you touched on some of this, how all this stuff we've been talking about so far is going to impact the banking industry as a whole. And in two areas that you've at least spotlighted to us in private is the M&A activity or how consolidation could be affected. And then second would be infrastructure, meaning how banks are investing in their own infrastructure now that they have some other bogeys to deal with or other uncertainties to come up with. So any view on either of those you'd like to share with this audience?

Dallas Wells

Yeah, sure. So the first thing to do is to look at the real data we have so far. So is the M&A market behaving differently? And the answer is yes. Valuations have changed, there's also a little bit of a ... because the regulatory approval process has been so slow and so painful it's been really drawn out for some of the bigger mergers that were announced over the last couple of years. I think that's cooled the M&A market, those two things together quite a bit.

And where it seems sort of, we talked about it on this podcast. It felt inevitable that if you were a smaller institution (and that's a relative term, basically if you're not one of the big four a lot of times you feel small) but if you were a smaller regional or a community financial institution that you either had to have a unique, different strategy and approach to the market or you needed to put the for sale sign in front of the headquarters. Those were your really only two viable options, and there was probably some interested buyers. It was a good time to sell. Now, I think there's some question of, "Well, is now really a good time to sell? Are we really going to get the return that we would be after here?" And so the M&A market has slowed.

And I think just from discussions with bankers and thinking strategy it's like, "Well, it's not as enticing as it was six months ago so we're going to hold it out. We're going to see how this goes." Especially since like all the credit metrics still look golden, nobody really feels like they're in trouble right now even though things feel slower. It's not like there are loan write-offs all over the place. Not yet.

Alex Habet

With declining valuations, I guess, stocks or using equity to facilitate the transaction becomes less attractive and bank financing, the banks are going to be less eager to finance transactions. In fact, I guess they're probably about pulling credit lines at this point.

Dallas Wells

I'm sure they are, and that's a really good point. If stock prices are down and essentially everyone's is, your currency to go make an acquisition is not worth what it was, and that means it's going to have a different effect on your capital ratios post deal. And so the fact that it's just more expensive to buy, less lucrative to sell, and we don't see any credit problems yet but I don't think anybody's going to ... I don't think investors are going to be too mad at bank management teams for stockpiling a little bit of capital when things look the way they do right now. To your point about the headlines, it's like, "Hey, we're going to hit the brakes a little bit and we're going to build the capital a bit just in case." I think everybody's like, "OK. Well, we'll make that trade-off for now." So I think all those things align to say like M&A will be slower. The second part is investing in infrastructure and technology.

And it felt like there was this mad dash of almost an arms race where banks had, I don't know ... sometimes it felt like infinite projects that they wanted to get done and the question was really not are they willing to spend the money and get it done, but how many can they do at once? And there were some real constraints around that and that became the bottleneck. So the question is, does that change? We haven't seen it changing yet and part of it is that there's still some catch-up to be done from (when) we did a lot of innovating and tech spending and projects coming online through the pandemic. And a lot of those are still in flight, decisions that were made, money that was spent. There are things that are still in motion that we don't see any sign of those stopping. Again, there's nothing that feels like cutting muscle and bone a little bit instead of just trimming fat and so we don't see signs of it yet.

But again, with uncertainty comes next year's budget will be the one where it's, "OK, we were going to hire 10%. We're going to back that off. We were going to spend X percentage of the operating budget on new tech. We're going to cut that in half." So it doesn't go away, it's just that we'll do as many projects as we can possibly juggle. Mentality, I think, goes away and instead it's like, "We're going to continue to buy tech. We're going to be rolling stuff out constantly," but it's like mission critical stuff instead of a bunch of flyers on strange pilots and weird partnerships that it's like, "OK, even if that works what's the end game there, pal?" I think we'll see less of that stuff because innovation was seen as cool and trendy and made you seem cutting edge. I think a lot of that fluff gets cut out and instead it is (that) real infrastructure spending will have to continue just to keep up, but around the edges there will definitely be some impact there.

Alex Habet

Alright. So we're rounding the corner now to the last part of this conversation. And before we dig into, it's still early innings. There's a lot of movement that's happening now and as Dallas mentioned, a lot of it's going to lag. But we've had a few months of observed behavioral changes that the data's suggesting to us that we recently were publishing our May update, I think, on the website. So you can go and check that out. But we have a couple of notes from that to share here. Again, realizing that in about a month or two is when it'll start to really crystallize a little bit more. But Dallas, anything you'd like to specifically point out with respect to some of the impacts that we're seeing on some of the down economy activity as of late?

Dallas Wells

Yeah. So first of all, just to be crystal clear about the data that we're talking about because as bankers know it takes time to get deals booked, especially a complex commercial transaction. So a lot of times what the data that you will see in most places is closed loan transactions. Well, those are all decisions that were made 90 days ago, maybe more if it's a deal of any size. So that's a real lagging indicator. The data that we're talking about here is priced transactions, so this is yesterday. Somebody talks to their relationship manager at a bank, they're talking about a potential deal, they're structuring it and pricing it. That is a data point that lands in our data. So we're talking about deals that were being negotiated in May and we will pretty early in July have that same data for the month of June. Deals that were discussed in June.

So it lags less but I would say that there still is a lag. You're still talking about, this is a project that someone has put together and they are well down the road by the time they're like, "Hey, let's structure some financing for this thing." So whether it's an equipment purchase or a real estate deal or a change to their revolving line of credit, these things have been in motion for a little while. So deals in May, March or April decisions, there's been a lot of ugly headlines since then. And a couple of high inflation points since then that makes it feel like it's a little more entrenched and we've seen the Fed change course since then. So while this is pretty fresh data, I don't think you're going ... this doesn't capture all the headlines that we've been talking about.

So that's my addition to your caveat there, that's the fine print. But what the data does say is that even with inflation running pretty high, even with things like hiring slowing down and even with some other general economic indicators showing at least a slowing pace, the commercial lending market has just kept trucking right along. Volume is pretty healthy, seasonally looks like about a, and I'm using air quotes on a podcast but it's a "normal" pace at this point. And we don't see any really strange things yet in the pricing and structures. Again, some of the real volatility in rates in the yield curve is probably not going to show up here yet. But so far it's steady as she goes. That's the biggest takeaway to me is it's trucking right along.

And when we talk to bankers even they're like, "Yeah. Demand's still good," and the other side of the balance sheet that I think will become more of a strategy point, we still have deposits to lend. So as rates increase, banks will have to figure out again how to price deposits. It's been a while since we've had that discussion or that challenge that will come but it hasn't yet. There's still lots of excess liquidity out there, there's still plenty of funds to be loaned out. And so what you see is still a lot of banks being pretty aggressive, so pricing is tight. We haven't seen spreads widen out but we haven't seen anything that's really like, "Oh, there's a big left turn in the data." It's just been essentially a continuation of the trends that we've been seeing for a while.

Alex Habet

Yeah. I think that's an important distinction when I read the takeaways specifically on spreads. So for the Prime-based spreads, basically, all the ones that adjust are keeping up. It's the fixed rate that's still not as elastic. That is an observation that we made in last month's report and that continues to be true in this month's report. So you could infer by and large that banks appear to be handling the rising interest rates better than the stock market at least, just if I could just point to one comparable there. But specifically to that, I mean, anything you'd point out to that?

Dallas Wells

Well, I think, again, we're talking about decent sized commercial debt transactions. So these are at the very top of the capital structure and these are for generally pretty solid companies. So where we have started seeing some issues is in things like buy now I'll pay later paper which has been being quasi securitized in lots of places and it's being held in some cases, some surprising balance sheets. But you're seeing some changes in those markets that are more on the fringes of the credit spectrum. And so the question for bankers will be how far toward us does that creep? So you'll see it there, you'll see it in some consumer lending, you'll see it in some auto lending. Maybe you'll start to see it in some small business stuff. You'll see all that well before you see it in your grade A prime commercial credits. But again, like we said earlier in this conversation, a lot of times those transitions can happen really abruptly.

It's not like ... you ease into the stop light, you slam into a brick wall at 70 miles an hour and come to then an immediate stop. So that's the question is, how far does it creep and how painful is the transition if it does happen? But so far just looking at the data, not making any guesses, the data looks rock solid and healthy and those transactions, I think still look ... While they're tight, they still look profitable, they still look good. And so essentially, what banks are saying is if we see good solid commercial deals, we're just lending right into this, no concerns.

Alex Habet

Yeah. That was at least a very similar reaction. I mean, it was like a sigh of relief at least but again, caveat, this is all lagging but so far steady as she goes. I guess the last thing I'll ask, I think we talked about this in the last episode on this. But with more rate hikes coming, does any of your outlook change, is there anything new you learned in the last couple of weeks that you'd share about how that could all play out? Again, without getting too predictive because that's not what we do here. But has your opinion on anything changed or are you still in the same flow?

Dallas Wells

So again, depending on when you're listening to this, mid-June, there was some really volatile days in the bond market, quarter point plus moves that translated all the way through to mortgage rates. And mortgage back securities, and I'm not talking the garbage stuff but I'm talking Fannie, Freddie mortgage back securities for a while on a couple of afternoons essentially, went no bid, there was so much volatility and so much uncertainty that there was not a lot of buyers in that market. So it was a little tough to even settle out like where are mortgage rates exactly right now? That volatility we don't see in just normal, mild slowdowns.

That typically is a sign of some real market dislocation and potentially some real recession coming on. So I would say that the real potential of recession there starts to have really some hard to predict implications for commercial customers. And we've already had lots of them struggling with like supply chain issues and labor costs and, heck, finding enough labor at all to keep the business running. The fact that we saw that volatility and those market changes ... again, just to go back to the very beginning, I think that creates real uncertainty. And so expansion plans get put on hold, hiring recs get frozen, new contracts don't get signed and that's how banks really have to be careful about these deals that are midstream.

So did anything change over the last couple of weeks? I would say that just like the antenna got raised a little higher again, to your point, we don't see it in the data yet but there's enough warning signs out there that look ... bankers are a cautious bunch, rightfully so. It's the way the business is structured. It's razor thin margins on high volume so don't screw it up. So I think they're going to be approaching this the right way but some won't, right? So be cautious, be aware of the indicators that matter for your business, for your balance sheet and the volatility is not a bank's friend. It's a trader's friend, it's not a bank's friend. So just tread carefully. We've been here before but there are a lot of employees around you who haven't been here before.

So some cool heads all will be fine but maybe we just are a little extra cautious. Maybe there's an extra set of checks before deals hit the books, before we finalize the new vendor contract. Just one more sober check of reality and say, is this really strategically important? Does this really make sense? Is this something that we'll regret 12 months down the road if trends continue? And just to use that final check then I think you're good. And I'm sure if things continue like this, we'll revisit this in a few weeks and then we'll say, "Did your opinion change again?" Very possibly, but so far I think it's just be extra cautious. The spidey senses are up from being an older guy who's seen a couple of these now. This feels like things we've seen before that didn't end well for a lot of banks.

Alex Habet

Well, fully expect that I will ask you that same question, I guess, on the next one.

Dallas Wells

Fair enough. I'll be ready.

Alex Habet

But with that, we'll wrap this week's episode. Dallas, thank you man. As always, I called you the LeBron James of this stuff and I meant it and I think you proved it here.

Dallas Wells

Thank you, Alex.

Alex Habet

Thanks to all of our listeners for tuning in. Don't forget, if you want to listen to more shows, you can go to the podcast page at explore.precisionlender.com or you can head over to q2.com to learn more about the company behind the content. And if you like what you've been hearing, make sure to subscribe to the feed in Apple Podcast, Spotify or Stitcher. We'd love to get ratings or feedback on any of those platforms. Until next time, this is Alex Habet and you've been listening to The Purposeful Banker.