Commercial Lending with Joel Pruis

Hey, GonzoBankers. Tony DeSanctis back with another hot take.

Wanted to talk a little bit about commercial lending. Lots of news out there about it. Commercial lending’s dead. Everybody’s getting out of it. Everybody’s backing off, selling off their portfolios.

Decided to bring in the big guns here. I’ve asked Joel Pruis to join us and give us the real story about what’s going on in the commercial lending space and what some of the trends are.

So, Joel, thanks for joining us. What’s hot?

You know, I think the comments you just made about commercial lending kind of being dead...

Yeah.

It’s more asleep. It’s just kind of taking a pause right now. It’s resting, recouping, kind of getting back into the swing of things here.

So I think we’re right on the verge. You’re hearing some of the most recent economic talk about, hey, rate cuts.

Oh, that could be awesome.

If it starts to happen, that means that, hey, we’re maybe going into a recession or this slowdown.

Yep.

When we come out of that, boom, things are going to take off and be hot again. So we’ve got to be ready for that and get prepped for it.

What about on the technology side? What’s going on in the commercial lending space? Is it still all about just commercial lenders and paying them a crap ton of money to sell loans?

No, we’re starting to really see now more of an emphasis on the digital transformation for commercial lending.

Okay.

And I really do kind of equate it to what we’ve seen in the automotive industry, where if you’ve had a legacy commercial lending department, segment, whatever, it is more difficult to make that transition into the digital side versus if you’re just a brand-new startup, kind of like the credit unions as they’re trying to enter into that member business lending segment.

So legacy banks trying to get that conversion done, you’re fighting political battles, you’re fighting consistency battles.

Sure.

You’re fighting just even data capture issues that you’re running into. Banks have got to start tackling that right now, and it’s only going to get worse if they don’t start doing it at this point.

Absolutely. And then everybody, when we talk commercial lending, immediately goes to commercial real estate. But that’s not all commercial lending, is it, Joel?

No, it’s not. It’s not.

So yes, commercial real estate has got to be there. It’s going to still be there, but the real big opportunity that’s looming ahead of everybody is really in the C&I segment. $1.7 trillion of potential outstanding growth that we’re going to experience as we get into the expansion.

And you know what? The top 10 banks, they’ll get 50% of it if we don’t change how we’re operating today.

We’ve got to go after and get that.

Great market, great market opportunity to get into that C&I space, especially for some of the community banks and even some of the credit unions.

Yeah. No reason that they can’t have it. In fact, all their customers in their community really wish that they could bank with their local bank there. But unfortunately, because you’re not offering the right products and services, they have to default to the larger banks in those cases.

So it’s really up to them. It’s in their control. They’ve got the opportunity, and they just have to take advantage of it.

Got it. So commercial, not dead. Technology evolution’s happening. Don’t be GM, try to be Tesla. Figure out how to evolve into the space.

Excited that we have C&I School coming up here. If you’re interested in learning more about the C&I opportunity that Joel talked about, certainly join us for that as well.