THE FINANCE BRIEF - Kansas State University...With the continued support of Jeff Gates and Gates Capital Management, we brought a group of SFA students to New York this past spring.

THE FINANCE BRIEF

Kansas State University Finance Department Newsletter 1

Department UpDateby: Ansley Chua, Department Head of Finance & Associate Professor

A Newsletter from the Finance Department at Kansas State Univeristy Issue #1 - December 2020

Dear K-State Family,

I want to introduce you to our first Department of Finance Newsletter. The goal of this newsletter is update you about what is going on in the department. For those that we have not seen in a while, I look forward to reconnecting you to the K-State family. We hope to share updates twice a year.

As we continue to navigate through these unprecedentedtimes, I wanted to take an opportunity to let you know some of the various challenges we have encountered this past year and the positive things we are doing within the department and at the College of Business.

K-State has been severely impacted as the COVID-19 pandemic swept through this past spring. After spring break,faculty had to quickly migrate to remote teaching.

True to the K-State spirit, our faculty rose up to the challenge. Though there were a few hiccups, our students received the same high quality of education you have come to expect from K-State. I commend our faculty and students for adjusting to the new structure, communicating effectively, and being flexible during this time. As a university we are following CDC guidelines to protect students, faculty, staff and visitors.

Even with through these challenges, we have continued to progress our goal of expanding opportunities for our students. One of the Finance Department’s initiatives is to increase the geographical opportunity for our students. During the fall 2019 semester, we brought our Student Finance Association (SFA) students to Dallas. There we had the chance to showcase our high-quality student pursuing a degree in finance to potential recruiting firms.

With the continued support of Jeff Gates and Gates Capital Management, we brought a group of SFA students to New York this past spring. The students got to learn about careers and networked with various K-State alumni in our nation’s financial hub, New York City. Additionally, this past spring we held our third annual Gates Capital Stock Pitch Challenge virtually, where students pitched their stock analysis to

industry professionals. We are now leveraging all of this to launch the Center for Financial Analysis and expand avaliable opportunities to students. I am excited for the future of the Department of Finance, CBA, and K-State.

I hope you enjoy our first edition of The Finance Brief. Within this edition you will have the opportunity to be updated about our student organizations, learn about the economic impact of COVID-19, the launch of the Center for Financial Analysis, and more! If it’s been a while, I hope this helps you feel reconnected as a Wildcat and a finance alum. Thank you, alumni, for your support over the years and enjoy the first edition of The Finance Brief.

Sincerely,

Ansley ChuaDepartment Head of Finance & Associate [email protected]

this issUe: insiDe

Articles Submitted by Kansas State University Faculty.

eDitorial policy:Items submitted for publication in theFinance Brief are subject to editorialreview for punctuation, grammar,spelling, format and content. The Finance Brief follows AP Style guidelines.Changes within these guidelines will bemade at the discretion of the editorial staff.

contact the Finance Department: 2097 Business [email protected]

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Finance aDvisory BoarD FacUlty memBer oF the year: Dr. Kate WilKinson, instructorKate joined the Finance Department in 2016. She has her undergraduate in Finance from Macquarie University in Australia, her master’s degree in Graduate Statistics from Massey University in New Zealand, and her PhD. in Finance from Texas Tech. In 2019, Kate was selected by the College of Business to receive the 2019 Ralph Reitz Outstanding Teaching Award and was recognized as Kansas State University’s Professor of the Week this past February. Kate is an outstanding instructor with a reputation of going above and beyond for her students. A fun fact about Kate is she taught the head coach of the Arizona Cardinals. On behalf of the Finance Advisory Board, we are pleased to recognize Kate Wilkinson as the FAB Faculty Member of the Year.

Dr. Ansley Chua joined the FinanceDepartment as an Associate Professorin Fall 2011 and has been DepartmentHead since 2016. He received his PhD. from Florida State University in ‘09. His research interests are corporate finance, specifically in Initial Public Offerings and Executive Compensations. He’s taught Case Studies in Finance, International Finance, Financial Modeling,

Entrepreneurial Finance, MBA/PMBA courses. To learn how to get involved with the Finance Department contact Ansley at [email protected].

1 Finance Brief

2 Department Update

2 FAB Faculty Member of the Year

3 Diversity in the College of Business

3 Investment Club Update

4 Corporate Finance During a Pandemic

5 Alumni Update

6 Center for Financial Analysis

6 Career Coach Spotlight

7 Comparing the Data

7 2020 Mentee of the Year

8 SFA Update

9 Alumnus.Faculty.Student.


THE FINANCE BRIEF

Every organization is on a journey to create a culture of belonging for all, no matter how they identify, to be representative of the demographics of their region, andserve diverse employees and customers. As individuals,we are also on a lifelong journey to understand identities different from our own, be more equitable in our work, and inclusive of others. Real change on-campus requires a strategic plan and individual commitment to this work. We recognize this journey is never ending and we are committed to continual progression.

This past summer, Kansas State University receivednational news attention for challenges we faced involvingdiversity, equity, and inclusion on campus. Black students shared their personal experiences on Twitter using the hashtag #BlackAtKState. A controversial tweet about George Floyd by a K-State student sparked fury amongmany, and our student athletes used their power and influence to demand strategic change.

President Myers responded with sincere empathy andcommitment to change that will combat hate andracism on campus. Action items included the creationof a new Student Ombudsperson Office to advocate for students experiencing a campus climate concern, examine university discrimination and harassment policies with the goal to identify and address institutional bias and barriers, increase recruitment and graduationrates of students of color, among many others.

celebrating successes While K-State is reflecting on strategic ways to improve how diverse, inclusive, and equitable the campus is, the in-stitution has been recognized for many successes over the years. From our beginning as the first land-grant university in 1863, K-State has had open enrollment for all students regardless of gender, race or creed. Through our history of strategic Diversity and Inclusion planning, we have made strides in the right direction.

Since 2014, K-State has won the HEED awardfor diversity every year, an honor fewer than a hundreduniversities have been selected for. We are the only university in the state to receive the designation.

Our Black Student Union (BSU) has been named the best in the BigXII 11 times in the past 14 years. We are the top school in the state for LGBT+ students with awards from Best Colleges and Campus Pride’s 2020, Campus Pride’s 2017 Top 25 schools in the nation for LGBTQ inclusion, and 2018’s 30 Best of the Best LGBTQ-friendly colleges and universities.

K-State is one of 31 institutions to be selected as a First Scholars® Network institution for our support of first-generation students. In addition, K-State has received awards as a top school for veterans.

In the College of Business Administration, we understand the need for diversity in our classrooms and in the business world. Our vision is to be recognized as a regional leader in the development and success of students from under-represented groups, the cultural competency of all business students, and in having an inclusive climate.

Between 2007 and 2019, undergraduate U.S. Black,Indigenous, Person of Color (BIPOC) student enrollmentin the college has increased by 75 percent. BIPOC and international students comprise of 19.9 percent of total enrollment in the College of Business.The first-to-second year retention rate in 2018 was more than 25 percent higher than the national average. Our undergraduate U.S. BIPOC student graduation rate in 2018 is 15 percent higher than the national average and on par with the university as a whole.

stronger together as We looK to the futureA climate survey was conducted in spring 2020. This data is informing the areas in which the universityand College of Business need to improve. Strategicplanning is underway to support the goals of the university and our commitment to business students, faculty, staff, alumni, and corporate partners. Among the priorities in the College of Business are:

¹ Recruitment & retention strategies that supportfirst-gen, BIPOC, LGBTQ+, & international

2 Initiatives to foster an inclusive climate

in the classroom and college overall

3 Initiatives to support cultural skill building for students who work with diverse peers, colleagues, and customers

4 Launch a new academic certificate “Inclusion and Diversity in the Workplace”

⁵Partner with alumni & companies to supportdiversity, equity, & inclusion development ofstudents, faculty, staff, & community members

for more information contact: Olivia Law-DelRosso - she/her/hers Assistant Dean for Diversity, Equity,Inclusion & Belonging Instructor - ManagementCollege of [email protected]

stronger together: Diversity, eqUity, anD inclUsion in the college oF BUsinessby: Olivia Law-DelRosso, Assistant Dean for Diversity, Equity, Inclusion & Belonging

The Investment Club was founded in 2009 by DarinMainquist (‘09) and Seth Auld (‘11); and has continuedto be a university-recognized student organization since. While most investment clubs typically pool and invest members’ money, K-State policy and tax issues, as well as transient nature of students, doesn’t allow for collective investment of funds.

The mission of the group is two-fold: complete activities in the Student Finance Association (SFA) by offering students an additional opportunity to learn from/interactwith investment professionals, and support the InvestmentManagement certificate and associated activities.

During the fall 2019 semester, Alex Cornwell (‘22) stepped forward to lead an effort to increase Investment Club activities. A meeting to gauge interest and initial planning was held early in the spring semester with strong student interest and involvement. Plans set at that meeting

included two additional meetings with speakers, a lunch-and-learn event during Finance Week, and a group trip to the Berkshire Hathaway annual meeting. Unfortunately, due to COVID-19, these events were cancelled and the university moved to a online setting.

To keep this early momentum going, a virtual meeting was with James Dykstal, CFA, who is a portfolio manager at DeMarche and Associates. Students who attendedthe event were actively engaged with questions.

So far this semester, the Investment Club officers have held meetings in-person and online as have allowed for conditions allow. While a fall trip was not possible, we are tentatively discussing a spring trip, hopefully to the Berkshire Hathaway meeting. Either way we look forward to another strong year.

stUDent org UpDate: investment clUBby: Scott Hendrix, Instructor & Gates Capital Management Faculty Fellow

Scott Hendrix has been anInstructor in the department offinance at Kansas State since 2002. He teaches a variety of Finance courses and managesthe Investment Managementcertificate. He received his Bachelors of Science and MBA in Finance from the University of Tennessee at Chattanooga and

has completed doctoral work in finance at the University of Memphis. He has received multiple teaching and advising awards at the university and college levels. To learn more about the Investment Management Certificate or Investment Club, email Scott at [email protected].


One of the neat things about being able to teach in the College of Business is getting to see students from throughout Kansas and around the world. I liketo emphasize to students the advantage of our locationas a banking institution because Manhattan has twomajor institutions: Kansas State University and FortRiley. It creates opportunities for a bank with both housing and consumer loans. Students and soldierstend to make a big ticket purchases in Manhattan.

Given these institutions, Manhattan has always beenfairly buffered from major economic downturns. In 2008, Manhattan didn’t experience a sharp downturn from the “mortgage meltdown”. Retail and hospitality industries fared well as people would still eat, drink, and shop, even in a recession. I preach that Manhattan is fairly buffered from the economic pain that is felt by big cities because of the two anchors that will always be in business.

Even with our relative stability, the banking regulationscrutiny increased. Smaller banks faced regulations that were designed to “reign in” larger banks’ lending practices. This impacted smaller banks significantly, as they had to hire additional staff to address regulations. I thought Manhattan was sheltered from large swings.

I was wrong! COVID-19 has impacted everyone the last year. In March, Kansas State pivoted to remote teaching and Fort Riley locked down. This affected all the business-es that rely on these two institutions for revenue. Bars and restaurants were the first to be ordered to shut down, then came the stay at home order. This affected all businesses. Many businesses operate on a month-to-month basis or shorter. Bankers live by three words “cash is king!” This could not have been more evident than during the pandemic.

An employer’s biggest concerns is their employees and keeping them employed. When businesses are ordered to shutdown, owners have to make some tough choices. Without any ability to produce revenue, businesses are

forced to cut jobs. Nationwide, 20 million jobs were lost in April; in a single month, unemployment jumped from five percent to almost 15 percent. For banks, it could be disastrous on two sides: business loans to the bars, restaurants, and retail stores, and consumer loans for the laid off employees. This pandemic has affected everyone across the world. When I first heard about a government stimulus package,I began to research the program. The premise was that this package was designed for business owners to keep their employees employed during the pandemic. The program became known as the Paycheck Protection Program (PPP). The PPP gave employers funds based on employee costs. Companies had to spend at least 75 percent of the money to keep employees employed; employers could also spend up to 25 percent on rent or mortgage interest; if used as designed it’be forgiven.

As I researched the program, I noticed was it would be administered by the Small Business Administration (SBA) through the banking system. I felt some angst because the borrower would have to sign a promissory note for an unsecured loan at one percent. Thus, if the borrower doesn’t properly utilize funds, it must be repaid. This is in opposite of the businesses’ expectation of free money.

Customer interest was huge, however, there were a lot of unknowns at the time. In the early days, the SBA’s typical answer to our question was, “we don’t have any guidance on that yet”. Though the banks were to implement the program, bankers still did not know most of the parameters. The program was set to launch on Friday, April 3. On Thursday, April 2 at 6:45 p.m., the banks received the “interim final rule” and by 3:30 a.m. on Friday, April 3, in the morning, the system through the SBA had not opened. Crashes and inability to access the system plagued the program on the first day.

Over that weekend, all of our officers worked to obtain tens of millions of dollars for our customers. To put some

scale, for the last five years, the SBA has averaged $17.4 billion annual total loans approved under its small business loan program. In April and May this year alone the SBA processed roughly $518 billion, or 29 years’ worth of SBA loans. So far, the program has been successful and saved thousands of jobs in Manhattan and throughout the U.S. However, as the six-month mark approaches and our customers have to start making payments, banks do not have clear guidance from the administration of the “forgiveness” portion of the program.

As banks continue forward, understanding the cash flowof businesses and being flexible is important. We don’t yet know the effects of the pandemic, it may be permanent. The way that we do business is going, it could radically change again, just like it did with the financial crisis. Regulations will change, business practices will change, customer practices will change, and college preparations will change. It will be interesting to see what the next six months to year bring as we continune to navigate through these “abnormal” times.

a look at corporate Finance DUring a panDemicby: Randy Stitt, Adjunct Instructor & Senior Vice President at Community First National Bank

phillips 66 trip to Bartlesville, ok

Back in February, Finance and Accounting students were invited to visit Phillips 66 in Bartlesville, OK to hear more about the company, tour the campus,and learn more about opportunites for students. Visits, such as this. provide Finance students with the chance to learn more about the industry and network with professionals. If you’re interested in setting up company visits or network events with students contact the Finance department at [email protected].

Randy Stitt is an Adjunct Instructor at K-State and teaches both Insurance and Commericial Banking. He received his B.S. in 1994 from Kansas State University in Elementary Education. Heis currently a Vice Presidentat Community First National Bank and has been employed in this capacity for 18 years. Randy has 31 years of banking experience. To

contact Randy about corprorate banking or insurance courses at K-State email [email protected]


alUmni news & UpDatesWe love hearing our alumni success stories! Whether it’s a new job, baby, promotion, or retiring we want to celebrate with you! Congratulations to all!

Do you want to be in the next issue? Send us your update at [email protected].

Note: Alumni Updates are submitted by alumni and not vertified by the editors. The Finance Brief is not response for the information contained in submissions.

2020 Gates Capital Management Stock Pitch Challenge Winners

First PlaceAVERY BOLAR & COOPER KINLEY

PITCH: BALLARD POWER SYSTEMS

Second PlaceREAGAN IRVIN & TAYLOR WERNER

PITCH: MLM - MARTIN MARIETTA

Third PlaceLANDRY BREWTON & ALEX GIANINO

PITCH: CARVANA

Ashley Rowland (KSU ‘16) was promoted to a Senior Specialist College Recruiter in the Human Resources department at BNSF Railway.

Brett Scott (KSU ‘07) welcomed his third daughter, Olivia Scott, on May 6, 2020.

Brett Whelan (KSU ‘15) became a Analytics Sales Specialist for Key Accounts.

Bruce Brinkman (KSU ‘76) began a new job as a Personal Financial Counselor for the military with Zeider Entreprises. Bruce is currently stationed at the Naval Operations Service Center in Oklahoma City.

Bruce Peters (KSU ‘69) has been enjoying retirement for the past nine years. He and his wife completed funding for the Earl M Peters Finance Scholarship this year to help current and future finance students education.

Chad Vawter (KSU ‘00) was promoted to Chief Financial and Strategy Officer for Family HealthCare Network (FHCN).

Corey Rasmussen (KSU ‘98) celebrated 10 years as an Estate Planning Attorney with Rasmussen Law, LLC.

Courtney Siefkes (KSU ‘07) became a Certified Professional Category Analyst through the Category Management Association in May and is currently working towards the Certified Professional Category Manager. Courtney works as a Senior Merchandising Analyst at Whole Foods Market Global in Austin.

Debra Sheldon (KSU ‘75) is a Senior Accountant for Straightline/Yoder Smokers.

Delton Klassen (KSU ‘78) is a Pricing Analyst at Kansasland Tire Inc.

Derek Wilkes (KSU ‘07) became a Vice President - Supervisor Manager at J.P. Morgan.

Dwayne Clark (KSU ‘72) is a Realtor at Coldwell Banker in Frisco, TX.

Francesca Hotchkiss (KSU ‘09) was promoted to Portfolio Manager at Wells Fargo.

Frederick Stork (KSU ‘81) retired from from the postal service after 34 years.

Grant Bergner (KSU ‘12) began as a Financial Analyst for Ascend Learning.

Jeff Aelmore (KSU ‘05) celebrated 15 years of service at Financial Industry Regulator Authority (FINRA) and is aDirector of Risk Monitoring at FINRA’s Denver District office.

Jill Wilks (KSU ‘91) began as Senior Bice President & BSA Officer for a small business bank in Lenexa, KS.

John Kinsella (KSU ‘84) retired as a Quality Engerring Director in New York state.

Jon Hermes (KSU ‘10) was promoted to Deals Director - Capital Markets Accounting Advisory Services at PwC in the Seattle office.

Jon Schlatter (KSU ‘04) is a Shareholder at Morris, Laing, Evans, Brock & Kennedy, Chtd.

Josh Schwagerl (KSU ‘12) started a new job as a Technical Accounting Manager at Fiserv, Inc.

Judith Cox (KSU ‘94) celebrated 25 years of working in finance.

Justin Estes (KSU ‘03) is a Senior Vice President at PNC Bank.

Kassaundra Kirk (KSU ‘16) started as a Financial Analyst at her local hospital.

Laura Skinner (KSU ‘00) is an Investment Advisor Representative at LPL Financial.

Melissa McClarty (KSU ‘06) was promoted to Managing Director, Tax for Flint Hills Resources.

Michael Miller (KSU ‘90) joined the Advisory Board for theKSU Personal Financial Planning Degree Program.

Miriam Schager (KSU ‘06) started a new job with a small RIA in Denver, CO.

Paul Stark (KSU ‘10) was promoted and relocated to Califorina with his current company.

Richard West (KSU ‘04) was promoted to President of Operations at his workplace.

Robert Cillessen (KSU ‘11) joined the family business traffic control and pavement marking company as a Vice President.

Russell Disberger (KSU ‘88) purchased a license PDP Representative Behavior assessment firm in Denver, CO.

Sarah McKittrick (KSU ‘15) started a new job as a Digital Strategy Manager at University of Kansas Health System.

Shauna Schwart (KSU ‘95) celebrated 25 years with Hallmark Cards, Inc. Shauna is a General Manager for Hallmark International.

Traci Herrick (KSU ‘93) started a new job at State Street Bank.


The Finance Department is pleased to announce the launch of the Center for Financial Analysis (the Center/ CFA) within the Department of Finance in the College of Business Administration at Kansas State University. The Center will provide unique opportunities for finance students and help to expand the finance degree program offerings in the future.

The Center’s strategy and mission, have developed through discussions with alumni, students, and faculty. From this, we have outlined two broad goals for the CFA:

First, the Center will be the home to financial analyst (FA) track students. FA is the latest addition to finance degree track offerings. Established in 2018, the program to better prepare students for investment banking and higher-end buy-side careers. Although it is one of the four finance track offerings, it has a competitive application-based entry. Currenlly there are 30+ finance students pursuing a degree in this track across all cohorts.

Every year we have and will continued to admit 10 - 12 students after a rigorous selection process, including an entrance exam and interviews with the faculty. Despite being a young program, we plan to make the FA track into one of the desired programs within the College of Business Administration.

The Center for Financial Analysis will facilitate numerous value-added activities that will serve FA track students.

These activities will include outside speaker events, alumni networking opportunities especially within the target industries, trips to financial centers, conference attendance/participation to expand networking, and resources for students to better prepare their financial knowledge and interview skills. We are currently in the process of becoming a Chartered Financial Analyst (CFA) affiliated program and the Center will continue to maintain our relationship with the CFA Institute. More importantly, the Center will be the primary liaison between target industries, alumni, and FA students, as well as be tasked with expanding the department’s relationship with the industry.

Finally, the Center will help FA students develop cohort mentality with common physical space. The space will be used to hold current financial news discussions, meetings regarding internship and job search efforts, andprovide study space reserved for the FA track students.

The second broad goal laid out for the Center for Financial Analysis is to play a key part in developing a master’s degree in finance (MSF) at Kansas State University in the future. The internal discussions regarding the degree characteristics such as general vs. specialized and on-campus vs. online, are currently continuing among the alumni and the faculty. The master’s degree will utilize practitioners to provide real-world experiential learning and integrate other disciples across the campus. The Center will be positioned to attract practitioners who can teach within the MSF program.

Generous contributions from our alumni have made it possible for us to launch the Center. The Department of Finance is looking for additional funding to secure key staff positions and establish a budget to enhance student activities. We are excited to share our plans with you regarding the Center for Financial Analysis because it will play a role in improving student experiences and career opportunities for our finance students.

Our Foundation development team advises alumni and friends on ways to make their desired impact at K-State. Reach out to Brett Seidl, Senior Director of Development, to start a conversation at [email protected] or 785-775-2051.

The Career Development Program is housed in the Student Success Center on the first floor of the College of Business Administration. The Career DevelopmentProgram’s mission is to provide world-class training, resources, and experiences to guide students to a clear path of success. The program operates under the goal to prepare business students for an internship or full-time employment, both during their education and after. There are four areas of service within the Career Development Program: Executive Mentors, Corporate Partners, Career Accelerator and Career Coaches by industry. The Career Coaches work with College of Business students to development their leadership, communication, professional integrity and business skills while helping them learn how to market themselves to employers and gain internship experience.

Prior to the Fall 2019 semester, the Finance and Accounting departments shared a Career Coach while the Management and Marketing departments each had their own. It was decided in spring 2019 that the Finance Department would open a search for a Finance-dedicated Career Coach, giving each academic unit a Career Coach to help students interested in pursuing the field post-college.

Tip Bui began in late 2019 as the Finance Career Coach. From October 2019 – July 2020 he had 96 scheduled meetings with students and became the co-advisor ofthe Student Finance Association. Tip has his undergraduate degree in BusinessManagement and Leadership from Kansas University and his MBA from Avila University. He has brought real-world experience from his prior work as a StrategyConsultant with Accenture and as an Implementation Team Manager with CivicPlus.He has experience in financial reporting, strategy consulting, and career development.

A Career Coach works closely with the department to help the students implement their academic lessons to real-world situations. They focus on developing/refining resumes, preparing students for interviews, helping students network, review applications and learn what their best skills are.

In addition, Tip works to build relationships with finance employers to give students opportunity to receive an internship or full-time offer. There are many reasons a student decides to attend college and pursue their degree, one of which is to open the door to opportunities in their chosen field. The College of Business and Finance Department recognizes this, and works to prepare students for success.

Finance Department anD career coach: how we prepare stUDents For post-collegeby: Courtney Roszak, Office Coordinator

Finance Department laUnches center For Financial analysisby: Sabuhi Sardarli, Associate Professor & Director of Center for Financial Analysis

Book clUBOver the summer Financial Analyst students gathered with faculty via zoom for a monthly

book analysis. Books selected and discussedcovered topics related to investment management,

banking, and the buy-side of financial markets.Finaincial Analyst have contiuned to meet with faculty

on Friday morning’s during the semester.

Dr. Sabuhi Sardarli is aAssociate Professor and theDirector of the Center for Financial Analysis. He earned his Ph.D. from University of Florida in 2013, and joined K-State that fall. His research interests include Empirical Corporate Finance, Investments, Mutual Funds,and Retirement Savings Plans. To learn more

about the CFA contact Sabuhi Sardarli at [email protected]


During these uncertain times, we have seen large shifts in the economy including a significant increase in unemployment, bankruptcies of small/large businesses, and drops in GDP that indicate that we are currently in a recession. I want to review where we are economically and compare the situation to the Great Recession.

Review of economic Data anD compaRisonsStock market performance has been interesting to watch during this pandemic. At the start of the pandemic the S&P 500 index declined significantly, falling 34percent. During the great recession, markets fell 50 percent and took much longer to rebound. While it is a little early to say if this market recovery is sustainable but there are clearly market segments that have rebounded significantly.

During times of crisis fear tends to reign in markets. The VIX (the CBOE S&P 500 Volatility Index), which gauges the markets’ fear, peaked in March at a level higher than the depths of the financial crisis in November 2008. During that time, we were literally close to a complete shutdown of financial markets. We were nowhere close to that this past March. As we continue to navigate through this pandemic, I would expect to see significant market movements and typical fear responses such as a flight to quality or perceived quality (gold) as we go forward. However, the financial markets should continue to function.

Unemployment is currently a big topic. Since the start of the COVID-19 pandemic, we have seen a quick rise in unemployment. As states began to reopen, we are seeing a decline in unemployment but it continues to remain high and it is unclear if the jobs losses will return in the same sectors and how quickly these jobs will return. During the Great Recession, the unemployment rate reached 10 percent, much lower than that of the current crisis, yet it took years to return to “normal”.

Anytime we experience economic hardships, we see gyrations in the credit markets. One indicator to look at is the spread between high and low risk credit. When comparing high quality corporate yields to treasuries,we saw a spike in the credit spread in March, the same spike we saw when comparing high and low quality corporates. These spreads have normalized and peakedat lower levels than during the crisis of 2008 - 09.

It’s important to remember that the Great Recession was

a true financial crisis and markets were significantly disrupted. This crisis is more of a “real” crisis where economic activity has declined due to pandemic related closures. A real crisis can spread into the markets, a true financial crisis is more disruptive.

The Federal Reserve (Fed), has learned lessons from the last financial crisis, and has been proactive during this time. The Fed immediately cut interest rates to near zero and injecting enormous amounts of liquidity intofinancial markets through various bond buying programs. This bond buying has ballooned the size of the Fed’s balance sheet and does, in my mind, create some concerns for financial market stability in the long run as the Fed shrinks its balance sheet in the future.

Another area of concern to me is the Secured OvernightFinancing Rate (SOFR), the rate that banks lend to each other overnight. This provides liquidity and helps financial institutions open daily and pay depositors. This market almost collapsed in the last financial crisis and will cause major issues if it collapses during the current crisis. We have seen some recent, smaller disruptions in this market, driven by the banks’ preference to hold their reserve at the Fed. As of now, the health of the Overnight Market looks good and is functioning well. We will continue to watch this market as things progress.

outlookAs we move forward in these abnormal times, thereare several questions what we must consider as our economy moves forward:

1 How will corporate earnings fare in the second, third,and fourth quarters? These earnings will give a goodindication of the overall health of the economy.

Some sectors will lag and beimpacted by the pandemic. It will be interesting to see how different industries such as airlines, dining, and retail respond

2 How will supply chain disruptions impact ourlong-run economic recovery. We truly operate in aglobal business environment and world-wide

supply chain disruptions may add three to six months to recovery as business reopen and rebuild supply chains.

3 How much more stimulus will the Fed provide given the size of the balance sheet and that rates are at zero, policy options are going to be

limited moving forward.

4 What is the long-run impact of significant deficitspending? We’ve added trillions of dollars to theUS debt through our stimulus packages. To an

extent, this is probably the right thing to do. Borrow when rates are cheap and invest in recovery. I do worry about continued deficit spending and the economy’s dependence on the government as a catalyst (or ultimately a driver) for economic growth.

5 When or will we enter another finacial crisis like that of 2008 - 2009?

I hope I have made an effective argument that we arenowhere near the market conditions of the 2008 - 09 financial crisis. Some economists including Obama economic policy advisor Austan Goolsbee has suggestedthat a financial crisis is possible if there is anothershutdown due to a surge in COVID-19 cases. This is a possibility, I don’t view it as likely. A new shutdownwould lead to several corporate bankruptcies in certain economic sectors which will create some disruption in the credit markets, but financial institutions are muchless levered than they were in 2008 - 09 and creditisn’t concentrated in one sector (high-yield mortgages)as it was in 2008 - 09. Some banks may suffer but thecredit risks are less systemic than in 2008 - 09.

While markets are clearly turbulent and there is a great deal of uncertainty about the future, I do believe it is important to be optimistic. Our economy has reboundedfrom worse situations than the one that we are in today. I pray that all of you and your families are well.

comparing the Data: the cUrrent crisis vs. the great recessionby: Eric Higgins, Associate Dean & von Waaden Chair of Investment Management

Dr. Eric Higgins is a Professor and Associate Dean in the College of Business. He joined the Finance faculty in fall 2001. Eric earned his Ph.D. from Florida State Universityin 1996, and graduated MagnaCum Laude with a B.S. in Finance from Kansas State University in 1992. Eric began

his career as an assistant professor of finance at Drexel University in 1996. His research interests are capital markets, corporate finance, and financial institutions.

Taylor Werner was awarded the 2020 Mentee of the Year through the College of Business Executive MentorProgram for the 2019 - 2020 Academic Year. Taylor graduated in May 2020 with a degree in Finance. Taylor’s mentor, Stephanie Siders said “It has been so fun to follow Taylor’s journey of the last year. I credit her for taking initiative at every step of the way to ask advice, evaluate opportunities and make informed decisions. Our formal mentor/mentee relationship may be ending soon, but I look forward to mentoring her thoughout her career.” Taylor now works at Commerce Bank in their Ascend Program as a Bank Trainee. Congratulations Taylor!

2020 Mentee of the year


stUDent org UpDate: stUDent Finance associationby: Tip Bui, Finance Career Coach

The Student Finance Association (SFA) is a student-runorganization that works to develop financial awareness in its members by exposing them to the financial industry.SFA works to facilitate interaction between members,peers, faculty and individuals in the business community.

As we look back at the previous academic year, SFA has continued to offer its members ways to develop. A goal of SFA is to continue to engage with employers from across the financial industry through club meetings where various employers participate and educate students on their work within the industry. In addition, they share opportunities on how the students can join their organization, whether that be through internships or post-graduation.

Thank you to the employers who have dedicated time to SFA, Commerce Bank, US Comptroller of the Currency, Textron, Equity Methods, Koch Industries, and more.

As part of the SFA mission, last academic year the organization took two trips outside of Kansas to visit various employers in different financial hubs, both trips included 12 finance students and faculty advisors.

In Fall 2019, we traveled to Dallas and visited: American Airlines, Wingstop, Goldmand Sachs, Loan Direct (Azura

Holdings), White Rock Advisors, Bank of America andNeuberger Berman. In Spring 2020, we traveled to New York City to visit: J.P. Morgan, Bloomberg, BAML, NYSE Columbia, Gates Capital Management, and Threadneedle,

Due to COVID-19, SFA hosted officer elections online for the 2020 – 2021 year. The officers will work with faculty to guide SFA members to develop professional skills that are essential in today’s financial job market.

The 2020 - 2021 SFA officers are:President: Adam HazlettVice President: Jeffrey ThisiusDiversity Chair: Madison BrownController: Dylan HigginsBond Fund Chair: Matthew PaulsonPromotions Chair: Carlos Ruiz

SFA also saw the handing of faculty advisory role from Dr. Ansley Chua to Dr. Hardy Johnson, Associate Professorand Tip Bui, Finance Career Coach. The students want to thank Ansley for his guidance over the years as advisor, the opportunity members received to network with employers and educational trips.

SFA will continue to provide opportunities for members to engage with employers and gain exposure to different career fields within the financial industry. In the “new nor-mal,” we are following social distancing guidelines to keep everyone safe by utilizing a hybrid model with on-site and virtual engagement. We will continue to interact with a mix of employers in various financial fields to give members a full view of the industry and opportunties. We will rely on alumni in the industry to discuss their roles and careers.

We look towards tackling diversity through working with other on-campus student organizations, such as Women in Business and the Multicultural Business Student Association There is a lot of excitement for SFA this year as we adapt to a changing environment, grow membership and new financial leaders at Kansas State.

If you would like to support the SFA or learn how toprovide opportunities through employer engagement,contact Adam Hazlett at [email protected] or Jeffrey Thisius at [email protected].

SFA Officers, advisors & NYC

President: Adam Hazlett

Vice President: Jeffrey Thisius

Diversity: Madison Brown

Bond Fund: Matthew Paulson

Controller: Dylan Higgins

Promotions: Carlos Ruiz

Advisor: Tip Bui

Advisor: Hardy Johnson


Q What first interested you in Finance? I’ve always been interested in math and science so I gravitated to Engineering when I filling out my collegeapplications. While I was at

K-State, I had the opportunity to play basketball as a walk-on but this created a conflict with the Engineering coursework. Knowing I loved math and wanted to leverage in college, my mom recommended I pursue a degree in accounting. Here my passion for accounting took off and transformed into curiosity about Finance. I liked how finance looks at the application to business and strategic growth plans of companies (plus finance professionals dress like they have important business). I was fascinated with the ways to apply analytical models and market information to evaluate investments and business problems.

Q Who or what motivates you? My biggest motivations are helping others achieve their goals and improving personally and professionally each day. I believe if I focus

on serving others and contributing to their goals, it helps me become a better teammate and leader. I always look for how I can learn from others, projects, or experiences that I might apply in the future.

Q What was your favorite spot on the K-State Campus? I loved the alcoves in Hale Library; I spent time there studying, and building friendships. I have fond memories of places, like Hale, at K-State.

Victor OjeleyeK-State Class of 2012CargillFinancial Planning & Analysis

ALUMNUS.FACULTY.STUDENT. 3 WilDcats / 3 Questions

ALUMNUS

Q What first interested you in Finance? I wasn’t sure what I wanted my major to be in college, but that I wanted to be in the College of

Business. Finance seemed like a good fit because I was interested in business and enjoyed math, I began attending SFA meetings my freshman year and was able to get a sense of what opportunities there were in finance for after graduation. When I toured K-State I also got to hear about how important it was to the Finance Department that student’s got hands-on experience through speakers, trips, and interships.

Q Who or what motivates you? I try to leave the world just a little bit better than I found it. Working with non-profits and focusing on

sustainability is something I’ve always been interested in, and I hope to merge my love for this with my interest in finance. I hope to use my degree to help further organizations making a difference in the world. Understanding money and how to utilize it is a huge benefit and I want to help elevate people and organizations that are fighting current injustices and problems.

Q What was your favorite spot on the K-State Campus? The large, wood tables on the second floor in the College of Business. They are large enough I can

spread out my laptop, a notebook, my planner, and a Radina’s coffee if I’m treating myself. Whenever I see one of those tables is open I rush towards it and try to grab a seat; they are a hot commodity in the college. I love this spot because while it is practical, it’s in a busier part of the building, so there’s always the opportunity to chat to professors and friends as they head to classes. Plus you are in a great spot to receive some natural light from the atriums glass wall.

Madison BrownSenior, K-State Class of 2021Financial Analyst Track Student

STUDENT

Q What first interested you in Finance? I became interested in finance at a young age. My grandfather worked for ConEd in

Chicago in several different business roles. When he passed away my grandmother gave one of his books, “Crowell’s Dictionary of Business and Finance”. It was ancient but really got me thinking about business and finance.

Q Who or what motivates you? Family motivates me, it’s why I came back to Manhattan. To be near family and raise my

kids here. Also, I wanted to be back with my K-State family. K-State means a lot to me and being a Professor/Associate Dean here is a tremendous honor.

Q What is your favorite spot on the K-State Campus? The clock tower in front of the library

Dr. Eric HigginsK-State College of BusinessProfessor/Associate DeanK-State Class of 1992

FACULTY


THE FINANCE BRIEF - Kansas State University...With the continued support of Jeff Gates and Gates Capital Management, we brought a group of SFA students to New York this past spring.

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