Construction and Land Development loans (C&D loans) drove a substantial portion of the loan growth at community banks between 2000 and 2007, especially for banks under $2B in assets. While C&D loan volumes bolstered total loan growth, these same loans resulted in substantial detraction from risk-adjusted return on equity (ROE). In fact C&D loans were one of the major causes of bank failures from 2009 to 2011. Compared to their peak in 2007, current C&D loan portfolios are relatively small.
Banker To Banker
In case you missed it, BBVA Compass, one of the most impressive banks over the last year, just introduced a concierge banking service (HERE). What is fascinating about the strategy is that they are one of the first regional or national banks to introduce this high-touch treatment for – everyone.
Cash is going away. It is going away faster than anyone thinks and will stick around just longer than checks (and all other paper items), but that is not too distant in the future. Checks will eventually go away because it is the will of the people. Cash, on the other hand, will be relegated to history because banks will stop being the enablers and hasten its demise quicker by charging for the service of dealing with cash. Cash has about another five years of glory and a total of about ten years of useful life.
Yesterday we had a chance to interview Joe Garrett, a former successful community bank CEO, active bank investor, current bank director and partner in Garrett, McAuley & Co., a firm specializing in advising banks on how to improve their mortgage business. Joe is not only an expert in bank mortgage operations but one of the sharpest wits around with a near-photographic memory when it comes to politics and baseball. We sat down with Joe and asked him the top three questions that have been on our mind.
Since we have suggested a Summer and a Winter customer acquisition promotion in the last couple weeks, of course several bankers wanted a suggestion for Fall. As such, we will let you in on our best innovative idea of what we are working on. This idea has not been done by banks so you could be the first in your area.
If there is any point in the loan process that is the most critical it is the presentation of the term sheet. If done right, the term sheet ends up closing a profitable loan and if done wrong, it generates more questions and begs to be negotiated. One feature that we have found advantageous to the process is the inclusion of multiple options in loan structuring.
You have probably received an email from a spammer and thought “Why can’t these guys use spell check?” Or in similar vein, if everyone knows about the Nigerian Prince email scam in this day and age, why still say you are a Nigerian Prince? The immediate assumption is that the sender is moronic, a foreigner or careless. The ironic part is that the exact opposite is true and the move shows a bit of brilliance that every banker should employ.
The Math of the Scam
As of yesterday, general registration for the .BANK web domain extensions opened and an estimated 4,000 domains were applied for. Approved by ICANN in 2008, financial organizations and trade associations banded together to establish an fTLD Registry Services, an entity that would control these “financial top level domains” (fTLDs). Open on a limited basis since May, yesterday was the first day any bank could apply. What ensued was the greatest land grab by banks in the history of the industry and it was all anyone talked about yesterday.
When it comes to commercial customer service, next to execution, there is nothing better to garner satisfaction than becoming a trusted financial advisor. As community bank relationship managers, we can be the foremost trusted advisors to our commercial customers. Given that we have seen multiple business and real estate cycles for hundreds of customers, and experienced banker possess the knowledge, insight and the ability to analyze a specific financial situation to then offer prudent, customized advice.
Last week we ran a blog with the concept on an idea for a new relationship account and a New Year’s countdown promotion to go with it (HERE). In response, many bankers asked our ideas for a summer promotion to gain new customers.