Banker To Banker

Thanksgiving Banking

Thanksgiving is a special time when we take a break from our hectic lives and make things even more hectic by trying to cook a four course meal, while pleasing family members and fighting holiday travel. It is a time to rediscover why, despite loving our family dearly, we are thankful we don’t live with them. It is also a time of honored traditions and to understand that for generations before you, going all the way back to the Pilgrims, half the family is going to be on your case for overcooking the turkey and half will be warning you against the evils of salmonella.

Bank Decision Making

Say what you will about the morals and politics of President Kennedy, but his administration did more for bank decision making than almost any other group of people. After a horrible set of decisions connected with the Bay of Pigs in 1961 Kennedy vowed never to make those mistakes again. As a result, he commissioned an “after action review” that was uncommon at the time, but is now standard procedure for the military, highlighting some key failure points in the decision making process of the operation.

Teaching Better Banking

Part of the problem with banking education is that it is incomplete. Banking schools like Stonier and Pacific Coast Banking School are good but they just teach part of the picture. They can talk about how to underwrite a loan or understand risk, but they leave a chasm in understanding about the true risk of underwriting. Outside of banking schools, most loan officers these days are self-taught practitioners in the art of lending and have learned their knowledge through a series of trials by fire.

Lending to Contractors

If you drive a fair bit, you probably agree with us that gridlock is bad, but it is starting to get better. It used to be we used to drive to work only to use the bathroom and then start to commute home. Now, with many of the major Stimulus Package projects coming to an end, we can make it to work and discuss the latest episode of Homeland before having to turn around - And this is a problem.

 

Optimizing holiday cards for return

Over the years we have experimented and collected data on all sorts of different approaches to building a customer base during the holiday season. If you are the sentimental type, this approach likely isn’t for you as this combines sentiment with a heavy dose of quantitative data culled from years of experimenting. The goal here is to not only spread sincere thanks, but build business in the most efficient manner possible.

 

What Drives Bank Profitability

In case your sports calendar was full this weekend, you might have missed the 2013 FIDE World Chess Championship. This is the most anticipated chess match in decades and, so far it is been a classic duel giving bankers insight into both strategy and tactics. The Championship pits The Tiger of Madras, Viswanathan Anand against Norway’s Magnus Carlsen.

The Hero or Public Service Account

On this Veteran’s Day our love and support goes out to all those Americans that have sacrificed or are sacrificing in order to protect this great land of ours. While many banks have a military, public service or “Hero Account” (which is what we call it here at CenterState), more retail banks should. Not only is it a supportive thing to do, but it is also good business.

 

Top Performing Banks

While the Twittersphere has been agog about Twitter’s IPO today, we have been staying focused on Tweeting (@CSB4banks) about bank performance (with some banking sarcasm thrown in). It is a new medium for us and we still struggle to think in 140 character strings.

 

Loan Renewals Are Often More Profitable Than New Originations

Many banks wait until the last possible period before renewing a loan. Waiting often invites competition, as other banks with loans out to that customer know exactly when other bank’s loans mature (hopefully you are capturing this information as well). To beat this problem, banks are smart to lock in renewals in advanced in order to minimize competition. Not only is a renewing loan likely a better credit risk (you have a payment history for starters), but banks can garner a larger spread making the risk-adjusted return more profitable. 

 

Retail CRE Analysis

A couple years ago, I wanted to see what the “New JC Penney” looked like so we took a stroll through one at the local mall. While I was intrigued with the concept of doing away with sale prices, wider aisles and easier to read signs, the wife doubted if not having sales would work – “people love sales,” she said.

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