How might the current banking “crisis” affect the billboard industry?

Tony Hull, President, Yesco Financial Solutions

By Tony Hull, President, YESCO Financials Solutions

There were no bank failures in the United States in 2021 or 2022. The last time we went two years with no failures was 2005 and 2006. For those connected to the banking industry, it was pretty alarming to see the 2nd and 3rd largest bank failures in U.S. history take place in early March 2023.

And while things have calmed down a little in the last few weeks, if you’re not connected directly to the banking industry, why should you pay attention? Assuming you’ve already executed a strategy to make sure your deposits are held in accounts safely protected by the FDIC, how might this “crisis” affect your OOH business?

 

(U.S. bank failures by year. Source: FDIC)

First, the potential for a recession has increased, which could affect advertising budgets. Nearly 40% of all business loans in the U.S. are provided by small and medium sized banks; and they were already tightening. The panic from those two bank failures in March caused investors to scrutinize small and medium size banks for the same potential risks. As bank stocks lost 30-70% of their value over the course of four days, depositors began to shift portions of their money to larger banks. Setting aside the impact of increased oversight, smaller banks are being forced to tighten credit standards in order to slow lending so that they can rebalance their capital ratios. Historically when lenders pull back, business and consumer spending slows down, and the risk of recession rises.

Steve Burt, Business Development, YESCO Financial Solutions

Second, it will likely now become more difficult for you to get capital from the banking industry. If you’ve been planning to replace an aging digital face, or put up new digital billboards using a bank loan – this “crisis” will make things more challenging. Consider taking steps now to strengthen your existing bank relationships. Keep your banker (or even better, the bank credit officer), up to speed on your capital needs in 2023.

You might also consider developing relationships with non-bank lenders, like YESCO Financial Solutions, that don’t rely on deposits for funding and underwrite digital billboard loans based on their many decades of experience in the OOH industry.

Steve Burt, Business Development for YESCO Financial Solutions, will be in Houston for the Spring IBO conference next week. Send him an email or text message if you’d like to arrange a time for a quick introduction.

Contact information:

Tony Hull, President

thull@yesco.com

(801) 464-6482

 

Steve Burt, Business Development

sburt@yesco.com

(801) 493-7349

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