Category Archives: Guest Posts

CBA 124th Annual Convention The Economic Outlook: Key Takeaways

Screen Shot 2015-06-05 at 2.24.22 PM By Christopher Thornberg, Founding Partner Beacon Economics, LLC

Dr. Christopher Thornberg of Beacon Economics recently presented the firm’s economic outlook for California at the California Bankers Association annual convention. Business owners and managers of all types are wise to keep abreast of economic trends that may affect their industries and customers. As such, we are grateful that Beacon Economics has allowed us to share this summary with our clients and readers.

National Economy: What, Me Worry?

Eerily similar to 2014, growth in the first quarter of 2015 was much weaker than most analysts had expected, largely due to a sharp widening in the U.S. trade deficit and a slowdown in domestic consumption. But also similar to last year Beacon Economics believes this blip is largely transitory. Consumer spending, for example, seemed to be impacted by weather issues. With a still hot labor market, worker wages starting to rise, and a boost from lower energy costs, consumer spending is poised for growth. This view is supported by the savings rate, which rose by a full percentage point in the first quarter. Expect these savings to boost spending in the latter part of the year. The weather also accounted for the slowing in construction—but not all of it. One big hit came from reduced spending on new oil wells, driven by lower oil prices. This will likely continue for a couple more quarters but will be offset, in part, by increases in spending on other types of structures. New home sales have picked up, as have permits for new non-residential structures, in many parts of the nation. Gains here should be more than enough to offset the slowing from oil exploration. Trade continues to be a drag on the economy. The strong pace of U.S. growth has caused a sharp appreciation of the U.S. dollar. That will weigh on growth this year, but not as heavily as in the first quarter. The global economy appears to be stabilizing slowly, and with stimulus programs being put into place in China and the European Union, we see better numbers by the end of the year. Add it up and Beacon Economics expects the nation to get close to 3% growth this year, still better than last year but not by as much as initially hoped.

California: Go West Young Man!

Our ongoing optimism about the Golden State’s prospects bore fruit again this year. California is growing at well over a 3% pace. This translates into 500,000 jobs created in the state in the last 6 months, accounting for almost 1 out of 6 jobs created nationally and totaling 100,000 more jobs than created in Texas. While some of these jobs are in the red-hot San Jose and San Francisco economies (ranked 1 and 3, respectively, for growth in major U.S. economies) they aren’t carrying the state on their own. Los Angeles, for example, grew at half the pace of the West Bay—but that still implies that L.A. added more jobs in absolute terms than San Jose and San Francisco combined. And growth isn’t limited to the coasts—Fresno, the Inland Empire, and Sacramento all posted growth numbers well above the national average. The biggest problem the state faces currently is its lack of housing and rapidly declining levels of housing affordability. California can grow more rapidly as long as there is slack in the workforce. But at the current rate of job growth that slack will run out in the next 18 months. After that, growth can only continue on the basis of net migration—not easy when there isn’t even enough housing construction to supply the needs of natural increase (births minus deaths). Unless something dramatic is done to deal with this chronic problem, expect growth to slow in a couple years.

Credit Environments

The credit environment is still improving. Delinquencies and charge-offs continue to decline for all classes of loans. Banks have similarly been reducing their loan-loss reserves in response. Despite this, however, the pace of bank lending remains subdued. Growth in direct loans has been running in the 6% to 7% annual range, lower than the typical 10%. C&I and Commercial Real Estate continue to run hotter than normal, consumer loans cooler, and residential loans are still in decline. The slow recovery in housing as well as the ongoing struggle with new financial rules and regulations has limited the available supply of credit to potential borrowers. California based banks continue to buck the trend on this front. Outstanding loans grew at a 16% rate through the final quarter of last year, driven largely by C&I, construction, multifamily, and commercial real estate loans. Even housing has changed course in the state. Loans tied to residential properties grew by 12% over the course of 2014. So far there are few signs of problems in the credit markets. Auto loans being made by non-financial institutions did show some increase in delinquencies at the end of 2014—likely due to the aggressive push in sub-prime auto loans by these entities. And valuations for tech firms seem aggressively high relative to profits. But a true financial crisis is not caused by modest front line trends. Rather the issues have to be much more broad based, and equivalently, have to be accompanied by an expansive increase in overall credit. Today, credit is flowing at a pace that matches economic growth, or in other words, the debt to GDP ratio is at a reasonable level. No worries—at least not yet. As for rates, the 10-year bond remains steady at 200 bps, while the Federal Reserve has stayed the course. Estimates of Fed tightening actions keep getting pushed back largely on the basis of current economic conditions. We always expect very slow action on the part of the Federal Reserve. Forget equity prices; it is leverage that worries the Fed most—and leverage is not expanding in any troublesome way right now. Equivalently, the share of discouraged and underemployed workers, while falling, is still high from a long-term standpoint. There isn’t much of a punch bowl to take away. Low interest rates, and high valuations on many assets, is a function of the wave of capital crashing onto U.S. shores without many places for it to be absorbed. Until the global economy returns to a sufficiently aggressive growth plane and can re-absorb some of the liquidity, Beacon Economics sees low rates, low returns, and high valuations as a part of the financial landscape for at least the next few years. For additional information about Beacon Economics or Christopher Thornberg, please visit www.BeaconEcon.com.↗ Dr. Thornberg’s complete PowerPoint Presentation is now available on the Beacon website.

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↗ Linking to Non-Grandpoint Bank Websites This icon appears next to every link that directs to a third party website not affiliated with Grandpoint Bank. Please be advised that if you click this link you will be taken to a website hosted by another party, where you will no longer be subject to, or under the protection of, the privacy and security policies of Grandpoint Bank. We recommend that you review and evaluate the privacy and security policies of the site that you are entering. Grandpoint Bank assumes no liability for the content, information, security, policies or transactions provided by these other sites.

Are You a Trusted Advisor?

Guest Post: News and Views from our Clients and Friends 

Whether you are an internal or external consultant, a manager, or a member of a project team, you want people to rely on you to give solid advice. You can be the best in your field, but if you can’t build relationships with the people who hire you and with whom you work, you can’t add value. Author David Maister wrote a book that I just love: The Trusted Advisor. In it, he talks about the fact that as our relationships with clients, customers, or co-workers deepen, we become more than an expert to them. We become “a trusted advisor.” Someone they look to for honesty, a sounding board, and sometimes plain old friendship. Here are some coaching tips for how you can become a trusted advisor:

  1. Be a better listener than talker. Professionals fail all the time because they provide services they think others need, but that don’t really solve a problem or fit the situation. I recently “fired” my insurance agent because he kept trying to sell me products unrelated to what I told him I needed. A good advisor collects information to help identify the real needs of others.
  2. Be discrete. This means you don’t talk about others or use their names without their permission. I once overheard a cell phone call in the airport that was totally inappropriate. It was a consultant who was working on the campaign of a famous senator. By the time the call was over I knew all the tactics his firm was going to use in an upcoming election. If the senator ever got wind of it, I’m sure this company would have been fired.
  3. No one likes to think they’re being gouged. Set a fair price on your product or services but know when it’s appropriate to throw in something extra or not bill for a ten minute telephone consultation. In the long run it won’t make much difference to you but it will to your customers.
  4. Be someone others want to be around. People don’t buy your product or services, they buy you. There are plenty of people who can provide what you sell or the services you deliver — why should anyone buy from you?
  5. Be honest. If you’re not the best person for a particular job, recommend someone else who is. Remember the scene from Miracle on 34th Street where Santa Claus was sending shoppers to other stores? It wound up getting his store even more customers because they appreciated his honesty. Similarly, if your client or customer asks for something you think isn’t appropriate for the situation, say so rather than simply provide it in order to make the sale.

Dr. Lois Frankel, a friend of Grandpoint, is known in Southern California for her KNX segment, Eye on Your Career, and internationally for her bestselling business books. Follow her on Twitter @drloisfrankel or visit her website drloisfrankel.com.screen-shot-2016-09-13-at-11-07-51-am

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The views & opinions expressed in any guest post featured on our site are those of the guest author and do not necessarily reflect the opinions & views of Grandpoint Bank.

screen-shot-2016-09-13-at-11-07-51-am Linking to Non-Grandpoint Bank Websites
This icon appears next to every link that directs to a third party website not affiliated with Grandpoint Bank. Please be advised that if you click this link you will be taken to a website hosted by another party, where you will no longer be subject to, or under the protection of, the privacy and security policies of Grandpoint Bank. We recommend that you review and evaluate the privacy and security policies of the site that you are entering. Grandpoint Bank assumes no liability for the content, information, security, policies or transactions provided by these other sites.

Nice Girls Don’t Get Rich

Guest Post: News and Views from our Clients and Friends 

Grandpoint Bank is proud to support the efforts of Bloom Again Foundation, a nonprofit organization devoted to providing rapid response financial assistance for living essentials to working women living at the poverty level who miss work due to medical challenges.  To thank us for our support, they invited Grandpoint employees and clients to a free workshop entitled “Nice Girls Don’t Get Rich: 7 Habits of Financially Savvy Women” on Thursday, September 25th at 6:00 p.m. at the Women’s City Club of Pasadena.  Complimentary refreshments will be served, and there will be a no-host bar.

We’ve asked Dr. Lois Frankel, author of bestselling business books for women, including the megahit Nice Girls Don’t Get the Corner Office, to give us a sneak peek at what she and co-presenter Donna Chaney, CPA/PFS will be covering.  As you can see below, it promises to be an interesting evening!

“Women have a complex relationship with money,” says Frankel.  “Although as little girls they are often taught about the importance of saving, they aren’t given the same messages about accumulating wealth as are little boys.  In fact, if you ask women if they want to be rich, you often hear them say they just want to be comfortable.”  As a result, Frankel suggests, women wind up making financial mistakes that cause them to work harder and longer than their male counterparts and still not be “rich,” which she defines as having all the money you need to live your life the way you want, free from concerns about money.  What are some of those mistakes?  Here are a few that will be discussed at the workshop:

  • Not having a financial goal.
  • Loaning money and expecting it to be paid back.
  • Turning your money over to someone else to manage and not tracking progress.
  • Renting instead of owning your home.
  • Failure to “pay yourself first.”
  • Weak negotiation skills.
  • Use money as an emotional salve.
  • Manage egos more than money.

Not only will you learn about the mistakes women make with money, you’ll be given tangible tools and tips to put you on the path to thriving, not just surviving.  This is the perfect opportunity to grab a friend and learn new ways to take charge of your financial life!  And, again, it’s FREE to Grandpoint employees, clients and their friends and families.

To register, e-mail info@bloomagain.org and indicate the names of people who will be attending.  You will receive an e-mail reminder with directions and more information. To learn more about Bloom Again and why Grandpoint Bank supports this cause, visit www.bloomagain.org.screen-shot-2016-09-13-at-11-07-51-am And while you’re there, consider making a donation to help working women when they need a hand.

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The views & opinions expressed in any guest post featured on our site are those of the guest author and do not necessarily reflect the opinions & views of Grandpoint Bank.  

screen-shot-2016-09-13-at-11-07-51-am Linking to Non-Grandpoint Bank Websites
This icon appears next to every link that directs to a third party website not affiliated with Grandpoint Bank. Please be advised that if you click this link you will be taken to a website hosted by another party, where you will no longer be subject to, or under the protection of, the privacy and security policies of Grandpoint Bank. We recommend that you review and evaluate the privacy and security policies of the site that you are entering. Grandpoint Bank assumes no liability for the content, information, security, policies or transactions provided by these other sites.