Collier EBCS: Second Quarter 2023 Report
Headlines across the nation were dominated by the Silicon Valley Bank (SVB) in mid-March. SVB surprised investors on March 8, 2023 when it announced that it needed to raise $2.25 billion to shore up its balance sheet. Forty-eight hours later, the California-based bank collapsed, making it the largest bank failure since the 2008 financial crisis.
It’s still too early to determine what the true implications are from the collapse of SVB, but there are some data points available that help provide some perspective. While the U.S. Consumer Sentiment dipped five points in March 2023, Survey of Consumers Director Joanne Hsu noted “[t]his month’s turmoil in the banking sector had a limited impact on consumer sentiment, which was already exhibiting downward momentum prior to the collapse of Silicon Valley Bank”. Furthermore, Florida Consumer Sentiment Index improved in March 2023, rising two points to 69.7. Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research, noted, “[c]onsidering the chaos in the banking sector in mid-March… the positive change in consumer attitudes among Floridians in March comes as a surprise”. The Federal Open Market Committee, which raised rates in March, stated in their March press release that the “U.S. banking system is sound and resilient” and “the extent of these effects is uncertain”. Although we have not observed significant impact on the Consumer Sentiment, the “turmoil in the banking sector” is translating into tighter credit conditions to businesses and consumers.
Results from the Executive Business Climate Index (EBCI) followed suit with the data observed at a national and state level. While the index slipped 2.2 points in the second quarter of 2023, the Current Economic Conditions component rose 3.7 points from the prior quarter. Instead, it was both Future Economic Conditions and Future Industry Conditions that fell, suggesting further uncertainty over the next 12 months among survey respondents.
This quarter, the survey also asked respondents questions regarding their banking relationships for their business. Results from the survey showed that 59 percent of the respondents used a regional bank, while 53 percent used a national bank (respondents were allowed to select multiple responses). Only 6 percent used a credit union. Forty-four percent of respondents stated that they were in contact with their bank at least once a week, while 22 percent were in contact once a month. Cash management was among the most popular banking services used by businesses (71 percent), followed by credit lines (59 percent) and payments (47 percent).
We would like to thank all of the executives that participated in our survey. Without your continued feedback each quarter, our surveys would not be possible. Furthermore, we would also like to thank our sponsors, Collier County Government and the Greater Naples Chamber of Commerce, for helping make the survey happen.