Blog Entries tagged 'Talking Credit'

DUE DILIGENCE: ARE YOU ASKING THE RIGHT QUESTIONS?

eoleary — Fri, 14 Jun 2013 00:00:00 +0100

Lenders must mind the factors that form their thinking

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In this column recently I described the importance of due diligence in underwriting credit with an emphasis on ascertaining the borrower's capacity to execute and accomplish his repayment plan. In recent weeks we have watched the not-pretty spectacle of the House committee investigating the Internal Revenue Service's handling of application [...]

IS TONE OF YOUR LOAN POLICY KEEPING YOUR COMMUNITY FROM GETTING BACK TO BUSINESS?

eoleary — Fri, 07 Jun 2013 00:00:00 +0100

Be sure policy points don't frontload pessimism and negativity

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While the U. S. economy is experiencing a recovery of sorts as measured by business loan demand, are bankers doing enough to "sell" credit?

There are different ways of stimulating loan demand. What I'm speaking of here is making the process more user friendly to both borrowers and lenders.

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FIX YOUR PROBLEMS TODAY, AND MAKE THE FIXES PUBLIC

eoleary — Thu, 30 May 2013 00:00:00 +0100

Lessons from headlines of the Chase Whale and the IRS egg

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News today inevitably gets wrapped up in the emotions of the moment. But there's an old adage to the effect that learning from the experiences of others--viewed directly or at a safe distance--saves us our own pain. What can bankers learn of lasting value from two recent headline generators?

Speculation concerning wh [...]

SHOULD THE CEO AND CHAIRMAN BE THE SAME PERSON?

eoleary — Fri, 24 May 2013 00:00:00 +0100

Let's look beyond the JP Morgan Chase affair--what's really important?

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We learned earlier this week that James Dimon, chairman, president, and CEO of JP Morgan Chase, will retain all of his job titles, at least for the foreseeable future. Why is this big news? What does it mean for the principal constituents of a large banking corporation? And, by the way, who is the main constituent of any large ba [...]

WHY LENDERS SHOULD CARE ABOUT CORPORATE GOVERNANCE

eoleary — Fri, 17 May 2013 00:00:00 +0100

Controls and oversight keep the bank's eyes on the compass

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There's been a lot of heat generated over whether the roles of board chairman and chief executive officer should be split. Frankly, I think it's probably a good idea--though there's hardly a consensus behind it either within or outside of the banking industry. And how banks make decisions about such issues in the corner of [...]

IF CHARACTER IS #1 "C," THEN WHAT IS #2?

eoleary — Fri, 10 May 2013 00:00:00 +0100

The answer is also a community bank fundamental

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Bankers are trained as an article of faith that Character is the top C of Credit. If we all agree that this is so, the next question is, which of the other four comes in second?

Not all Cs are alike

It may never have occurred to you that the Cs of Credit, that list of principles on [...]

LET'S WORK AS BANKS AND BANKERS TO PREVENT A PERFECT STORM

eoleary — Fri, 03 May 2013 00:00:00 +0100

Lessons learned, let's apply them going forward and avoid trouble

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There have been a number of articles in the financial press recently about the exposure to banks' income and asset values due to a rise in market rates of interest.

With interest rates at historic lows and net interest margins under severe pressure for several years, it's probably inevitable that some banks have reached for yield by [...]

CONTROLLING YOUR BANK'S LEGAL FEES

eoleary — Thu, 25 Apr 2013 00:00:00 +0100

Sometimes improvement begins on the bank's side

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Legal fees are on every bank management's list of expenses they can't seem to control, and that most acknowledge are too high. Why is this universally so?

I suspect that it's largely the fault of the bankers, for not reining in these expenditures. It's not easy t [...]

APPLE, J.C. PENNEY, THE U.S. ARMY, AND BANKER SURVIVAL

eoleary — Fri, 19 Apr 2013 00:00:00 +0100

Enjoy past success with a healthy serving of humility--or eat crow later

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Reports the other day that J.C. Penney's CEO, Ron Johnson, had been dismissed were no surprise. The whiz kid from Apple's marketing department tried to pull off a remake of the big retail department store chain's marketing strategy and failed miserably.

[...]

A BEACON TO SET RISK MANAGEMENT BY

eoleary — Fri, 12 Apr 2013 00:00:00 +0100

For all the talk about "ERM," do small banks have any direction?

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I've been having a sense of déjà vu. All the talk about enterprise risk management reminds me of another risk-inspired regulatory shift, something out of the long past.

Days of "riskless" exams

It's been nearly 40 years since the Comptroller's Office went on its [...]

CONSERVATIVE BANKS OUTPERFORM THE HIGH FLIERS

eoleary — Fri, 05 Apr 2013 00:00:00 +0100

Proud reading for community banking

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The Federal Reserve Bank of St. Louis published a remarkable article last month on "Lessons from Banks that Thrived During the Recent Financial Crisis." Here's the statistic that jumped out at me: 702 community banks maintained a composite CAMELS rating of 1 during the six years beginning 2006 through 2011.

WHAT'S HAPPENED TO THE PRIME RATE?

eoleary — Wed, 27 Mar 2013 00:00:00 +0100

Could 18% prime whack you and your customers in this lifetime?

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The other day I read an article in The Wall Street Journal that told how William Zeckendorf, principal in the NY real estate development firm Webb and Knapp, in 1946 arranged the sale of his property on New York's East River to the United Nations. The story reminded me of Mr. Zec [...]

TALE OF THREE CITIES: LONDON, WASHINGTON, AND ROME

eoleary — Fri, 22 Mar 2013 00:00:00 +0100

What can bankers learn from recent headlines?

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This last week was a busy one for the politicians who are expert at making political theater and carrying it to an art form. Sen. Carl Levin's Government Oversight Subcommittee once again took up the issue of JP Morgan's large derivative trading loss of 2012 (known as the London Whale problem) seeking to determine whether the bank misled investors a [...]

DEVELOPING THE WELL-ROUNDED LENDER

eoleary — Fri, 15 Mar 2013 00:00:00 +0100

4 steps to take, and a word on "typecasting"

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With community banks' lending business picking up by most accounts, many banks are becoming more acutely aware that they are experiencing an actual or potential shortage of qualified commercial lenders. And they feel it. With razor-thin net interest margins there simply isn't much margin for error in underwriting and administering credit. [...]

A COMMUNITY BANKING SPRING?

eoleary — Fri, 08 Mar 2013 00:00:00 +0100

Smile-there's some good stuff going on out there

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There has been some talk of lending bubbles the last few months. More money pouring into lending products that have been dormant or starved in recent years is encouraging for bankers to think about.

Is such a thing possible during this time of na [...]

TWO LESSONS FROM THE HEADLINES: CREDIT CONCENTRATIONS AND CORPORATE GOVERNANCE

eoleary — Fri, 01 Mar 2013 00:00:00 +0100

A large bank and an international church, both in the news

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Concentration concerns bring up history and controversy

Moody's Investor Services this week expressed concern about Wells Fargo's expansion of its investment banking activities with its just-announced large credit participation in the Heinz leveraged buyout led by Warren Buffett's Berkshire [...]

HOW A NEW BUBBLE GETS CREATED

eoleary — Mon, 25 Feb 2013 00:00:00 +0100

Don't let "income anxiety" mess up your bank's future

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Every credit person is taught that to make money, you've got to keep the action going.

When a business manufactures a product, it creates a potential gross profit on that product. Then the product is sold and a receivable is created; when the receivable is collected in cash, the cycle is complete. But it requires a succession of [...]

IT WAS THE BEST OF TIMES; IT WAS THE WORST OF TIMES. (WHICH IS IT?)

eoleary — Fri, 15 Feb 2013 00:00:00 +0100

It's time to peep out of the fox holes and see what's really out there

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It was Charles Dickens who made this statement in the opening lines of his classic novel A Tale of Two Cities. There are many who disagree on which part of the statement aptly describes our situation as commercial bankers today, especially those of us who are working as community bankers.

Over the [...]

WHAT MAKES A BANKABLE LOAN TODAY?

eoleary — Fri, 08 Feb 2013 00:00:00 +0100

5 C's notwithstanding, has it changed?

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Late last year FDIC published its Community Banking Study. Among other things, it explores the questions of what is a reasonable definition of a community bank, while looking at the issues of geography, structural change, comparative financial performance, and balance sheet and capital strategies of community banks.

The report contain [...]

THE SYNOVUS CASE: DIRECTORS AND THE OVERSIGHT OF CREDIT

eoleary — Fri, 01 Feb 2013 00:00:00 +0100

Case's best lessons lie in re-emphasis of some basics

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This is a companion to a blog by Jeff Gerrish, community banking blogger, which addresses the Synovus case from a corporate governance standpoint.

A few weeks ago Synovus Financial, a $27 billion regional bank holding company headquartere [...]