CEOs concerned about the banking crisis, but staying course for now: Marcum-Hofstra Survey

MAY 9, 2023 (New York City, NY) – Nearly two-thirds of mid-market CEOs are concerned about the stability of their company’s bank – but not enough to change institutions, according to the latest Marcum LLP-Hofstra University CEO survey.

The survey, coming less than a month after the failure or federal rescue of three regional banks, reveals executives’ uncertainty about the implications of the bank collapses and how to respond. For example, while 62.4% of mid-market CEOs said they’re somewhat or very concerned about the stability of their company’s bank, 87.8% say they plan to maintain the relationship.

What’s more, the percentage of CEOs who reported being concerned about their bank’s stability was virtually the same whether the company used a large national bank or a smaller regional institution.

So far, the fears about a larger banking crisis have not affected most CEOs’ outlook about the business environment, with the number rating their outlook as 5 or higher (82.5%) virtually unchanged from the last survey in February.

However, when the survey is broken down by industry sector, there are stark differences in outlook which reflect growing concerns that banking collapses may trigger a commercial real estate crash. In February, 45% of real estate executives polled expressed strong optimism about the business outlook (ratings between 8-10). By April, that number had fallen to just 11%, according to the survey.

Yet over the same period, the percentage of manufacturing and distribution CEOs who reported having a very optimistic business outlook rose from 27% to 45%.

The Marcum-Hofstra CEO Survey is a periodic gauge of mid-market CEOs’ outlook and priorities for the next 12 months. The survey polls the leaders of companies with revenues ranging from $5 million to $1 billion-plus. This latest survey was conducted the week of April 10, 2023, and polled 255 mid-market CEOs.

“In light of recent events, mid-market CEOs show increasing concern for banking partner stability, yet the majority maintain their relationships, reflecting trust in financial institutions,” said Jeffrey M. Weiner, Marcum’s chairman & chief executive officer. “Though CEO optimism persists across industries, their strategic planning is being shaped by economic uncertainty, talent scarcity, and escalating costs.”

Janet Lenaghan, dean of the Zarb School of Business, said that the last few years prepared CEOs to manage uncertainty like the volatility in the banking industry.

“CEOs have had to juggle multiple challenges that emerge and evolve faster than ever before,” Lenaghan said. “In a sense, they’ve been in crisis management mode since the COVID-19 pandemic hit, so they know how to live with unpredictable conditions, when to be nimble and when to stay the course.”

The survey is developed, conducted, and analyzed by Zarb School MBA students, led by Dr. Andrew Forman, associate professor of international business and marketing, in partnership with Marcum.

“With growing uncertainty in the banking sector, the Marcum-Hofstra CEO survey provides students with an instructive lesson on the importance of corporate leaders remaining vigilant and continually assessing even their company’s most long-standing relationships,” Forman said. “Similarly, we see them considering their employees’ evolving preferences regarding remote work and balancing these with the organization’s good.

Other key findings:

Banking

• About 27% of CEOs reported that they’ve found it more difficult to borrow from lending institutions over the past year. Forty percent did not, and almost 33 percent have not attempted to borrow in the past 12 months.

Business Planning Influences

• Economic concerns continue to be the most-cited influence on business planning, with 58% of CEOs reporting it as one of their top three concerns. Behind that was the availability of talent and rising material and operational costs due to inflation.

Remote Work Policies

• About 45% of CEOs reported they permit their employees to work remotely and will continue to do so. Almost 13 percent say they have discontinued this option, while about 29 percent are considering that.

Here are some of the reasons CEOs reported for reconsidering their remote work policies:

• “COVID’s threat diminished.”
• “Decreased employee productivity.”
• “Some employees abuse the policy and are not working 8 hours a day.”
• “Need face-to-face interaction.”
• “We do our best work from an office setting and find it’s more professional.”
• “We lose a lot of the collaboration we get at the office.”

About the Frank G. Zarb School of Business at Hofstra University
Hofstra University’s Frank G. Zarb School of Business prepares students to become tomorrow’s global leaders. Located just 25 miles from New York City, Zarb students have access to internships and networking opportunities across every industry. The Zarb School combines entrepreneurial, hands-on learning and research with real-world experience and mentorship in state-of-the-art facilities, including a Behavioral Research in Business Lab, Center for Entrepreneurship, and academic trading room. Our undergraduate and graduate programs in accounting, management and entrepreneurship, marketing and international business, finance, and business analytics are ranked and recognized by US News & World Report, Princeton Review, Pets & Quants and Fortune Magazine.

About Marcum LLP
Marcum LLP is a top-ranked national accounting and advisory firm dedicated to helping entrepreneurial, middle-market companies and high net worth individuals achieve their goals. Marcum’s industry-focused practices offer deep insight and specialized services to privately held and publicly registered companies, and nonprofit and social sector organizations. The Firm also provides a full complement of technology, wealth management, and executive search and staffing services. Headquartered in New York City, Marcum has offices in major business markets across the U.S. and select international locations. #AskMarcum.