There was a lot to digest in 2023 related to the banking industry. We saw bank failures, a historically steep increase in interest rates and a switch from banks being over capitalized to the fight for deposits.

As we look forward to 2024, we expect relative stability when it comes to monetary policy. The consensus for the last 12 months has been that rates would decrease, but a resilient consumer and continued geopolitical issues have kept inflation unexpectedly high. This has resulted in borrowers adjusting to the “new normal”. As credit card debt reaches all-time highs and personal savings decrease, the market continues to speculate on an inevitable slowdown.

While there are certainly outlier industries like Commercial Real Estate, the consensus among Minnesota companies remains somewhat optimistic in large part due to a strong local economy. Investment has slowed, but well capitalized companies remain active for opportunistic and growth purposes. Finally, the tight labor market continues to be the common challenge amongst our business customers.