What comes next? Industry future perspectives panel with Angela Mago
Upon the conclusion of Angela Mago's panel discussing Industry Future Perspectives at MBA CREF22, we sat down with her for some additional exclusive insights.
Yeah, well, thanks Lisa. What we talked about on the panel was the fact that the Fed has done a pretty big pivot here in the last couple months, because six months ago or so we were not talking about maybe a few rate increases toward the end of 2023. Now, the futures markets are predicting maybe up to six to seven rate hikes, potentially. And so that's a big change if that were to happen. What I am gratified about is that our bankers are advisors, and that's what we do, we advise our clients. So real estate is interest rate sensitive and clients are going to have to pivot, make some different decisions and choices. So it might be that we're going to see more clients opt for a fixed rate solutions. Some of the borrowers that we're doing more opportunistic forms of capital and using floating rate debt, they may find that with the rise, especially in the short end of the curve, that's may not suit their needs.
At the end of the day we're advisors and we're going to be helping our clients through it. And in fact, I would argue that whenever we go through changes like this, that's when our clients need us most, because they're uncertain and we can come in and talk to them and buy them. The beauty of our platform is we're not a one stop solution, we've got a broad set of capabilities in terms of the bank's balance sheet, and across the mortgage banking platform we have a myriad of fixed and floating rate options. We're going to focus on what's best for the client. First we're going to advise we're going to educate and we're going to place them where they need to be.
Angela Mago (00:00):
You know, what's exciting about me is our people and our platform. I think we've got the best platform in the business. When I think about how we had a terrific 2021, we literally had records in our balance sheet businesses, our mortgage banking businesses, our investor placement business. We had a stellar year. Our servicing business.
Angela Mago (00:28):
When I think about that, and I think about the momentum going into 2022, and the fact that I think real estate is still a very constructive place to be ... I mean, there are pockets of probably some overheating, but relative to other investments, it's a good place to be. I think we're going to have a good 2022 and our teams are ready to help customers. I feel really good about people, momentum and just what we have to offer the space.
Perfect. You also said that what concerns you or worries you a little bit about the future is our next generation of leaders. Talk to me a little bit about what you mean by that.
Angela Mago (01:08):
Yeah. I think the question that we discussed on the panel was the things that keep us up at night. For me, it's always about people and talent, right? Because we're nothing without our people and our bench. I think we have to plan for the future. We are not experiencing it today, but we have to plan for an aging of our workforce and really bringing up the next generation of talent. That is something that concerns me. We're also in a very tight labor market. I do think that we have the best platform offer employees, but it's competitive and people have choices. We need to make sure that we're wrapping our arms around our talent and making them feel good about being here at Key in their career paths.
Angela Mago (01:54):
Then I also think about the diverse talent that we want to continue to invest in and grow. I think we've got to just continue very intentional there, because as we look at the sea of people that are in the space currently, it's not terribly diverse and we've done a great job as an industry changing that, but we have to be even more intentional. We have to continue to be part of the solution and we have to put our money where our mouth is. That's the challenge that we have, that I have, but I think we're up for it.
Angela Mago (00:06):
Yeah, affordable housing is a space where I'm very passionate. This is a business that five or six years ago, we decided we could be more impactful in the space. Fortunately we picked Rob Likes to be our leader and he's done a fantastic job. He's surrounded himself with other great leaders and we've continued to grow the business.
Angela Mago (00:26):
When you think about the space, unfortunately, there's just a huge unmet need, right? There's at least 7 million too two few rental units for very low income people in the country and we're only putting about 110,000 new units of stock into service each year. So, it's a huge demand.
Angela Mago (00:47):
We've got a great opportunity as a platform to fulfill and meet those needs so we've been investing in people, first and foremost. We've been investing in capabilities. We've got, certainly, a broad set of capabilities on the debt side. We've also invested in our equity business. We hired Stacie Nekus and Christina Knuckles and developed an equity syndication platform that we're home growing. We're very excited about that. We've got a commercial mortgage banking platform that we continue to grow and expand. So really when you think about all those services and capabilities working in combination, we can really serve the market broadly.
Angela Mago (01:25):
2021, we raised about three and a half billion in capital for our clients. That was probably doubled that business over the past three years and we're going to double it again because we are committed to this. It's the right thing to do, but it's good business.
What I think differentiates Key's commercial banking model from our peers is that we are very targeted around industry verticals. So we've got seven industry verticals where we have deep industry expertise, but we also deliver that in a relationship-driven way. So our clients experience that. They experience our teams working seamlessly together on their behalf, but really we've got a full set of capabilities. We can compete with firms that are much bigger than we are, but we're small enough and nimble enough to be able to deliver those capabilities and those solutions to the client in a very intimate, personal way.
I believe our teammates, I mean, we instinctively know how to collaborate at KeyBank. It's in our DNA. It truly is. And so I think that's clearly one of the things that differentiates us and we have some proof points that sort of would suggest that we do a better job. We know that we're growing loans faster than our peers. We're also generating more investment banking and debt income as a percentage of loans than our peer group. But importantly, we're also managing credit risk better than peers as well, as it relates to some of our credit metrics and our stress test results.
So we feel really, really good about that. That we've got relationships, that we're really making those relationships fulsome. But importantly, we're serving our clients with their ideas and our expertise, which is what they need from us.