The Bottom Line - Banking on Delivery
Banking On Delivery
The art and science of capital confidence - making sure capital is there when you need it
In most lines of business, unknowns and unpleasant surprises are not a business owner's best friend. In banking and matters of finance, that’s especially true. When errors or miscalculations in capital occur, the ripple effects can seriously impact receivables, payables, and payroll.
Confidence and certainty are critical ingredients in a successful banking and business relationship. As bankers, our clients rely on us to deliver clear, decisive support, especially when facing a situation filled with variables – inventory costs, delivery times, concentration of risk, labor costs, and availability. The last thing they want to hear from us when making a critical investment or purchase is “maybe” or “that might work.”
However, there’s a delicate balance between knowns and unknowns, confidence and misgiving, risk and reward. It's a tightrope walk, underscoring the reality that there is both an art and a science to what we do as bankers.
At Country Club Bank, we take pride in our ability to be agile and proactive yet rigorous in our process. It not only helps us make better lending decisions but also helps our clients think through their business plans carefully and consider their opportunities from all angles.
When done well, this process allows us to provide our clients with the certainty of execution they must have, no matter what they’re pursuing—whether it’s a new headquarters, new product line, or new market expansion.
This process involves asking the tough but necessary questions. It’s about offering a third-party perspective that someone outside the industry can provide. We’re not serving our clients, employees, or shareholders if we simply nod and say “yes.”
Smart companies want someone who challenges them, engages in meaningful dialogue, and helps them think through their decisions with a critical eye.
One of the aspects I value most in my role is being part of those crucial conversations with our clients. When we do this with candor and common sense, our clients can trust we will be there when they need us most—not just in the good times but also when decisions become less clear, the stakes rise, and risks increase.
The certainty of delivery is not just the signing and fulfillment of a loan. The paperwork is the easy part. It’s everything leading up to that moment that matters. It's the clarity of the capital plan, the character of the individuals driving it, and the quiet confidence of understanding, trust, and mutual respect among all parties involved.
How could this work for you and your business? Let’s discuss your future, aim for the best, and set the stage for success. Thank you for your continued confidence and partnership.
— Daniel Zinser, Senior Vice President, Country Club Bank — Member FDIC
Economic Insights
Rate cut in clear view as inflation recedes and Fed looks to boost outlook and investments
The U.S. economy continues to show resilience, with key economic indicators painting an optimistic picture. The latest good news: Inflation fell to 2.9% over the last 12 months, its first dip below 3.0 percent since March 2021.
This decline is mainly due to falling energy prices and easing supply chain pressures. However, core inflation, which strips out the more volatile food and energy sectors, remains slightly elevated at 3.2%. This indicates that while headline inflation is slowing, underlying price pressures, particularly in housing and services, may still keep economists guessing about sustainable CPI trends.
On the labor front, the national unemployment rate rose 0.2% over the month to 4.3% and is 0.8% higher than in July 2023. Even with this slight uptick, it remains well below historical averages and has provided welcome relief to employers looking to stabilize labor costs and reduce wage increases.
These favorable-to-neutral data points already have the Fed assuring markets that an interest rate cut in September should be expected.
Since July of last year, borrowing costs have remained at their highest levels in 23 years, with the Federal Open Market Committee (FOMC) raising the federal funds rate to a range of 5.25% to 5.5%. The spring uptick in inflation dashed hopes of a much-anticipated rate adjustment, as the committee opted to maintain its current stance until more evident signs of sustained stability presented themselves.
Due to new inflation and employment numbers (the Bureau of Labor Statistics (BLS) recently revised down jobs created in the past 12 months – from 2.9MM to now 2.1MM – now this is still on pace with jobs creation prior to the pandemic), market expectations have shifted dramatically. According to the CME FedWatch Tool, most traders now anticipate not just one but two rate cuts at the FOMC's September meeting. This anticipated move would represent a significant pivot from the Fed's current tightening policy and reflects growing concerns over the possibility of an economic slowdown.
The latest GDP report, however, showed that the U.S. economy grew at an annualized rate of 2.4% in the second quarter of 2024, exceeding expectations and reflecting robust spending and investment. This solid GDP performance suggests that the economy remains stable despite ongoing challenges.
Bottom Line: While inflation remains a moderate concern, the rising unemployment rate and downward revisions in job growth are pushing the Fed towards an almost certain .25% rate cut – and possible .50% cut – when the FOMC convenes again September 17-18. This could provide some relief to businesses and consumers facing higher borrowing costs. However, the broader economic variables of spending and new investments could suffer from cautionary consumer and business sentiment. As we approach the fall, all eyes will be on the Fed as it adjusts monetary policy to cool the economy while maintaining healthy labor and GDP levels.
— Marcus Scott, CFA, CFP®, Chief Investment Officer (CIO) for Country Club Trust Company
CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.
The opinions and views expressed herein are those of the author and do not necessarily reflect those of Country Club Trust Company, a division of Country Club Bank, or any affiliate thereof. Information provided is for illustrative and discussion purposes only; should not be considered a recommendation; and is subject to change. Some information provided above may be obtained from outside sources believed to be reliable, but no representation is made as to its accuracy or completeness. Please note that investments involve risk, and that past performance does not guarantee future results.
Client Success Story
How Team Aero lands new business with agile lending solutions from Country Club Bank
Buying airplanes and airplane parts is expensive. Aircraft, even older ones that may not fly anymore, can run in the hundreds of thousands to millions of dollars, depending on the make and model.
When you factor in a global aviation market that often requires decisions and deals to be made in hours instead of days or weeks, there is little room for dithering or delays. Once sellers and buyers connect, agree on pricing, and strike a deal, the cash for closing must be ready to wire.
Jeff Altendorf, principal and co-owner of Team Aero, along with his brother Phil, works in this high-stakes, high-speed environment every day. A passionate aviator since his youth, Altendorf turned his love for flying into a full-time pursuit when he founded Team Aero with Phil in 2006.
What began as a small regional operation in Spring Hill, Kansas, buying and parting out aircraft for spares, has evolved into an international leader, specializing in parts and recyclable components for business jets like Citations, Falcons, and Learjets.
“We started simply by parting out one plane, and then another, and so on, and we made money, but it was always a challenge to use our capital,” said Altendorf. “We had to get creative and constantly figure out how to get the cash we needed for new deals.”
Opportunities to acquire aircraft for parting out often arose suddenly, and without ready capital, Altendorf had to presell engines or avionics packages to finance these deals. This approach, while necessary, usually meant leaving money on the table.
A critical turning point came when Team Aero partnered with Country Club Bank. With a line of credit and ready-made, short-term loans designed specifically for Team Aero’s aircraft and inventory parameters, Altendorf has been able to access the necessary capital to secure deals without having to presell assets.
“Once Country Club Bank learned about our business and saw our success, they were able to get behind us, and that’s made a huge difference,” Altendorf said. “We can buy better, sell at better margins, and stock the inventory we need to serve a national and international market.”
One recent example highlights the importance of this partnership. Altendorf was presented with an opportunity to acquire an aircraft in Mexico, a deal requiring immediate action. Thanks to the pre-established financial agility of Country Club Bank, Altendorf secured the necessary funding quickly, outmaneuvering competitors.
In addition to the financial support, Altendorf values his personal relationship with the bank’s team and appreciates its straightforward approach—knowing that when they say a deal can be done, it will be done.
“All banks do pretty much the same thing, but nobody does it like Country Club Bank,” Altendorf said. “I enjoy working with them personally, and they do what they say they’re going to do.”
Looking ahead, Team Aero is expanding further by constructing a new 15,000-square-foot hangar at New Century Airport, which will consolidate operations and enhance efficiency. Altendorf is energized to continue growing Team Aero and is pleased to fund it with capital from Country Club Bank.
CC Capital Advisors Insights
What you need to know about critical milestones and documents in the M&A process
Merger and acquisition (M&A) transactions involve complex legal processes, intricate negotiations, and numerous stakeholders. Understanding the key milestones and documents in the M&A process is crucial for navigating these complexities.
In this article, Hayden Merritt, senior investment banking analyst, outlines the essential documents that facilitate negotiations, due diligence, and transaction closing. By breaking down each document's contents, the responsible parties, and their roles within the deal lifecycle, this guide aims to demystify the M&A process and provide clarity for business owners and stakeholders alike. Read the full article here.
Payment Solutions
Streamline your business finances with One Card
The One Card from Country Club Bank is designed to simplify and enhance financial management for companies with an annual spend exceeding $1 million. This innovative solution combines corporate travel and purchasing card programs into one card, offering comprehensive benefits like no annual fees, detailed transaction data, and flexible spending controls. By integrating expenses into one streamlined process, businesses can reduce costs associated with processing checks, invoices, and purchase orders while improving overall efficiency and visibility in spending.
To learn more about One Card, please contact your commercial lending officer or Kevin Miller at kmiller@countryclubbank.com, or 816-360-8631.
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