George Boyan, III EVP/CFO, Unity Bank Jeremy Goss Partner, Forvis In the Spotlight: CFO COMMITTEE Q. What indicators or trends are you closely monitoring to gauge the health and stability of the economy, and how do they influence your strategic decision- making process? BOYAN: I closely track a diverse set of indicators, which can be broadly categorized into two main groups. Let’s delve into each category: 1. Traditional Indicators: ɨ These are the tried-and-true metrics that policymakers, including the Federal Reserve, pay close attention to. They provide valuable insights into the overall economic health. Here’s what I focus on: ɦ Quarterly GDP Growth Trends: Analyzing the ups and downs in our region’s economic output. ɦ Average Non-Farm Payroll Reports: Keeping an eye on employment figures across various sectors. ɦ Inflation Measures: Examining inflation rates and their impact on purchasing power. ɦ All these data points inform my perspective on the trajectory of shortterm interest rates. 2. Customer Insights: ɨ The second category involves listening to our valued customers at Unity Bank. Their experiences and feedback provide crucial context. Here are some key questions we explore: ɦ Small Business Performance: How are our small business customers faring? Are they thriving? ɦ Supply Chain Challenges: Can they easily source materials for their operations? ɦ Hiring and Staffing: What’s their experience with recruitment and staffing? ɦ Homeowners and Real Estate: Are homeowners finding good deals or caught up in bidding wars? How are home sellers faring in terms of asking price? ɦ By actively engaging with our customers, we gain insights that complement the traditional indicators. Much like a pilot flying an aircraft, I encounter a multitude of indicators. The challenge lies in their often divergent messages. Rarely do all the indicators align perfectly. However, when we weigh them collectively, the overall picture reveals that despite significant monetary policy tightening over the past 18 months, the New Jersey economy remains robust. GOSS: Many seem to 'feel like’ we must be in the later stages of the current economic cycle. The yield curve has been inverted for almost two years with less than stellar consumer confidence and delinquencies creeping up in certain credit classes. Because these conditions exist in a period of inflationary pressure and significant monetary policy tightening, recession fears loom. Yet other key indicators such as employment, GDP, housing prices and corporate profits (while admittedly lagging) remain relatively strong compared to historic norms. Competing narratives create uncertainty which is only compounded by the current political environment. Success is measured not by results in any given period, but by the ability to consistently put yourself in a position to take advantage of openings when they do arise. Especially in uncertain times, FORVIS looks for prudent opportunities to broaden our future prospects, whether through hiring new talent, releasing new products and services, expanding into new markets or through strategic partnerships with like-minded firms. Delivering unmatched client experiences is our primary focus in any stage of the economic cycle. Q. In light of recent economic developments, what adjustments, if any, have you made to your bank’s investment portfolio and lending practices? BOYAN: In 2023, the Federal Reserve implemented tighter monetary policies, leading to significant developments in the financial landscape. One of the most notable changes was the scarcity of deposits. As COVID stimulus funds were depleted, customers actively utilized their excess liquidity. Simultaneously, the failures of Silicon Valley Bank, Signature Bank, and First Republic reverberated nationwide, further exacerbating the deposit shortage. In response to these challenges, our institution adjusted its approach. We intensified our efforts to gather deposits, focusing primarily on owner-occupied businesses rather than investor-owned commercial real estate. Additionally, we strategically managed our investment portfolio as both a diversification tool on our balance sheet and a source of liquidity. Overall, 2023 marked a year of adaptability and resourcefulness as we navigated the changing financial landscape. GOSS: While the pace of new lending has slowed slightly given the interest rate environment, banks are still lending to high quality borrowers. Given the uncertainty in certain 22 In the spotlight: CFO Committee
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