Virtual reality is all the rage this week. Facebook released their Oculus Rift headset and it was announced that the NCAA Final Four basketball games will be live-streamed in virtual reality. This all has the “Wow” factor but the reality of virtual reality is that it leaves much to be desired. It is no surprise that, in our opinion, the technology is over-hyped and out over its skis. We demoed the headset and got nauseated.
We are in agreement with the ICBA that FASB’s proposed current expected credit loss (CECL) model would place tremendous costs and regulatory burdens on community banks. We also agree that CECL, as proposed, will increase reserves and negatively impact many community banks’ ability to lend and support economic growth through lending. However, it does not appear that the current proposal will be modified for banks under $10B in assets. We believe CECL will fundamentally change community banking, but some of those
The number one reason that banks struggle to grow their commercial business is their relationship managers don’t have enough time. Credit memos, compliance, administration and a whole host of other tasks take up the day leaving very little time to bundle a steady pipeline of profitable accounts. However, next to streamlining your calling officer’s day, the next largest impediment to prospecting is the lack of knowledge.
Most bank calling officers are inadequately prepared to effectively sell bank products. It is not because they can’t, but because the art and science of selling bank products is rarely taught. When it is taught, it is without understanding that banking has a set of special needs to include regulatory compliance, the component of credit and the emotional content of dealing with the most private of information – a person or company’s financial position.
Earlier this week (HERE), we highlighted how an employee handbook can have a colossal impact on culture that can radically alter your bank’s trajectory. We talked about how culture alone allowed Zingerman’s, a little Michigan deli, to have a worldwide following. We showed employee handbook examples from Netflix, Zappos and Nordstrom to demonstrate how their cultural tone can be leveraged into a strategic difference.
If your bank only offers fixed-rate loans to 5 years, you are probably competing against every other bank in your region with an identical product. If you cannot differentiate the loan product or the officer selling the product, you will surely compete on price, or, worse - on credit structure – not an enviable position for a bank. Some banks decide that they will create a “special bucket” of longer-term fixed rate loans in o
Let’s be honest. Your bank employee handbook is probably a snooze-fest. If you are like most banks, your employee handbook was likely cobbled together from a template given to you by a third-party human resources firm or a revision of another bank’s handbook. Chances are your handbook is about as inspiring as refrigerator instructions.
We always like to look back and see where underwriting and credit accuracy can be improved. Recently, we looked at almost 5,000 commercial real estate (CRE) loans from across the country that was underwritten in 2012. We looked at the property level cash flow projections to include revenue, expenses and net operating income (NOI) and then compared that to what has actually happened over the last 3 years. Our findings should give you some comfort to the conservative nature of your average underwriter.
We recently compared and contrasted various prepayment provisions for commercial term loans (HERE). The symmetrical breakeven prepayment provision garnered more attention and inquiries from bankers and we want to further expand our discussion of that provision.
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