Don Childears - part1

Colorado Banking Association Acquiring Capital for Growth: Myth vs. Reality<

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  1. arifgangji
    Colorado Banking Association
    Acquiring Capital for Growth: Myth vs. Reality<
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    Don Childears - part1
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    • 1. ACQUIRING CAPITAL FOR GROWTH: MYTH VS. REALITY Part 1 Colorado Bankers Association 140 E. 19th Avenue, Suite 400 Denver, CO 80203 303-825-1575 www.ColoradoBankers.org
    • 2. Deposits in All Banks Grow; in CO Based Banks Decline
    • 3. CO Based Banks Good News
    • 4. CO Based Banks More Good News
    • 5. CO Based Banks More Good News
    • 6. CO Based Banks Real Estate Lending
    • 7. CO Based Banks Non-RE Lending
    • 8. 4 Regulatory Forces on Lending4 major forces (+ shareholders) impactinglending – increasingly heavy/complex•1-Safety & soundness, complianceregulation (Fair Lending, Truth inLending, ECOA…) – Consumer FinancialProtection Bureau (DFA)•2-Harsh economy of last few years – weakloan demand, borrowers’ problems…
    • 9. 4 Forces on Lending (cont’d)• 3-Hyper regulation – Regulators over- reaction to bad economy – Backdrop: career damage if too lax; not if too harsh – impacts bank, customers & community – 3 regulatory issues – classifications, concentrations, capital
    • 10. 4 Forces on Lending (cont’d)• 3-Hyper regulation – 3 regulatory issues – Loan classifications – regulators’ grade counts; worst case; force bank to take action bad for customer when never missed a payment – substantially worked out • “Insufficient collateral” then bank ordered to write down (using a “fiction” that loan is worth less or worthless) • Appraisals – regulators override without local knowledge – Concentrations – “guidance” now firm limits (CRE) – managed around regulators’ requirements • If bank noncompliant (over limits) then sell loans to comply, but forced to sell best loans – Capital requirements – grew; managed to meet regulators’ requirements • Banks would be delighted if regulatory requirements were firm/final, but regulators always want more • Technical requirement of 8% • Regulators require 12-13% • 16% in CO (+ some loan loss reserves) – profitability challenge
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