Sep 25 2018
Everyone involved in the lifespan of a loan, from relationship managers to credit analysts, needs access to industry information. If that information could be physically mined, bankers would start migrating west with pickaxes. As for industry information at the state-level, that’s a special type of gold and fortunately for bankers, it’s available.
If you’re involved in the process of creating and maintaining a portfolio you know that oftentimes loans are issued to local businesses, even businesses operated by people you see at the grocery store on weekends. That’s why state-level industry information is so valuable. Complementing our national collection, state reports offer a more granular look at an industry and helps put an industry’s performance into better perspective, allowing you to gauge the influence of national trends on localized data points.
How to compare multi-level data
Access to more data at multiple levels creates an opportunity to compare more data points and trends. These comparisons shed light on an industry’s full story and make it easier to predict future conditions and performance. Bob Dylan might have sung “you don’t need to be a weatherman to know which way the wind blows” but that’s probably because he didn’t have a significant amount of money invested in the matter. To anyone that does, access to professionally researched and interpreted data mitigates the risk of a bad guess. What does an educated guess look like?
If you want to learn more about auto parts stores in Michigan you need to first think about how many factors influence that business. There are key external drivers, such as per capita disposable income in the state, average age of vehicles currently on the road and the price of new cars. Although the per capita disposable income in Michigan is expected to rise, encouraging the purchase of discretionary goods, such as new cars, economists are predicting an economic downturn on the horizon. If they’re right then new car sales will decline and people will stick with their current vehicles, fixing instead of replacing them. New car sales are also influenced by fluctuations in interest rates, as higher rates discourage potential purchasers from taking out a loan. Taking a look at daily headlines, the yield on 10-year Treasury note is on the rise and the subsequent ripple will benefit auto parts stores. IBISWorld analysts also forecast slowed growth in auto leasing, loans and sales financing in Michigan, another insight that together with the others completes the puzzle on auto parts stores in the state.
If you imagine a commercial bank as a living, breathing creature, then the food it eats consists of varying industries. Making its belly, obviously, the portfolio. To keep your commercial bank healthy, make sure you read the full list of ingredients before feeding it an industry. You don’t want a portfolio full of junk food.
Learn more about IBISWorld’s US State Industry Reports and how they’ll enrich your C&I loans.