Tag: Lending

8 Steps To Profitable Loan Growth Given The Environment

Lending Management

Loan growth is slowing for community banks, and credit spreads are widening. As is typical in economic cycles, recessions present an opportunity for healthy banks to thrive and for weaker banks to be whittled.  Despite the flat and low yield curve, the current banking environment is a perfect recipe for healthy banks to win new, strong credit relationships, and increase loan profitability.  However, healthy banks need to act prudently today in choosing the correct type of credit, appropriate structure, enforceable prepayment provisions, and long-term relationship customers.

 

How Community Banks are Developing Lending Opportunities

Lending Growth in the Age of Covid-19

The future path of the economy is currently unpredictable. Still, the majority of banks have now eliminated two possible scenarios: 1) Best case scenario – that nothing will change from February 2020; and 2) Worst case scenario – that the pandemic will not end in the foreseeable future and banks should avoid loans and invest in riskless securities.

15 Items That Will Trip Your Borrowers Up in The New PPP Forgiveness Application

PPP Application Workflow

Last Friday night, the SBA released the long-awaited Paycheck Protection Program (PPP) application, and while it clarified some aspects of the program, its complexity also surprised many bankers. In the SBA’s defense, it is hard to strike the right balance of speed to market, simplicity, and breadth of idea inclusion, so overall, we must give the SBA high marks for this effort. Despite those marks, we have identified 15 areas where banks will need to focus on providing further education, process, or technology to make the process as efficient as possible.

An Update to Our CRE Credit Portfolio Forecast

Managing CRE Risk In Age of Covid-19

In past articles, we discussed a proposed Coronavirus stress test under CCAR (HERE) and provided our COVID-19 probabilities of default and loss given defaults for a model bank portfolio (HERE). In this article, we update our CRE modeling and take a deeper dive into loan-level analysis in order to help banks triage and manage both individual credits and their portfolio-level reserves.

How to Set Up For PPP Forgiveness

PPP Forgiveness Application

As you wind down and clean up Round 2 of the Paycheck Protection Program (PPP) and before you produce your 1502 report to the SBA, it now merits thinking about how to best set up for the wave of forgiveness work that starts immediately after funding. Obtaining forgiveness is critical to both the bank and the borrower as it increases profitability, enhances cash flow, aids in liquidity and removes the risk for both parties. Unlike the origination process, banks now of the luxury of some time to get this process right.

Managing The PPP Event With the Power Planning P

Bank Event Management

If you are in the military or public safety and have participated in a tactical operation center, you are likely familiar with the "Planning P." The Planning P is a national framework that helps quickly assimilate information and drive to decisions. This is exactly what is needed in any fast-moving event, such as if your bank has been involved in the production of Paycheck Protection Program (PPP) loans. It is also a great tool for any leader or manager to have, as many of these concepts are applicable to everyday business activity.

9 Vital Tips For Banks To Improve PPP Performance

Increasing PPP Production

 We have often characterized banks as being “manufacturers of credit.” Like any manufacturing process, banks need to produce a product, in our case loans, to meet the customer’s demand. Loan production takes inputs such as capital, analysis, and documents and combines them in a standardized process to produce an end product. The Paycheck Protection Program (PPP) has presented a tremendous challenge for banks. After three days of manufacturing credit, we have honed ten essential concepts that may help your bank do more than its fair share of getting America going again.

Case Studies in Loan Restructuring

COIVD-19 Credit Shock Loan Restructuring

We have been writing on the various strategies available to community banks when structuring commercial loans in this current challenging business and credit environment. With the flat and low yield curve, we have discussed how banks may offer commercial loans through the ARC hedge program using two different strategies: 1) embedded floors, and 2) forward starting floaters.

The Stimulus Package and CARES Act Bank Playbook

CARES Act and Payroll Protection Program Tactics

Go to any Trader Joe's market and then go to a competing market, and you will be likely to find a significant difference. Trader Joe's has produced a COVID-19 response that is thoughtful, practical, relatively inexpensive, and caring.

Using The Forward Starting Floater For Loan Restructuring

Loan Restructuring Idea

The impact of coronavirus on community banks will be widespread, and, with some borrowers, the restructuring efforts may take a long time and will sap substantial bank resources. Even as bankers are exerting time and effort to help some borrowers stay in business and continue to service their bank debt, other borrowers are looking for new funding, and existing customers, who are creditworthy, are being solicited by competitors. The question for community bankers is how to retain existing strong customers and appropriate ways to structure new debt given the current challenges.

Pages

Subscribe to Tag: Lending