Vision 2014: Operating-in-todays-risk-management-framework

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1. ©2014 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information…
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  • 1. ©2014 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public. Operating in today’s risk-management framework Tony Hueston STAR Financial Bank John Watts Experian #vision2014
  • 2. 2©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. How executive management sleeps well at night (While dealing with regulations and growth challenges) TOP 10 Tom Le Goff / Getty Images stock
  • 3. 3©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. How executive management sleeps well at night (While dealing with regulations and growth challenges) 10Have ONLY compliance officers on staff
  • 4. 4©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. How executive management sleeps well at night (While dealing with regulations and growth challenges) 9Have on-staff appraisers
  • 5. 5©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. How executive management sleeps well at night (While dealing with regulations and growth challenges) 8Achieve double-digits ROEs on EVERY loan
  • 6. 6©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. How executive management sleeps well at night (While dealing with regulations and growth challenges) 7Portfolio delinquency rates are below 0.25%
  • 7. 7©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. How executive management sleeps well at night (While dealing with regulations and growth challenges) 6 Re-establish the open bar in the bank’s break room at 4:00 pm Friday
  • 8. 8©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. How executive management sleeps well at night (While dealing with regulations and growth challenges) 5 Your loan review department stated to the board of directors: “We found NO concerns last year”
  • 9. 9©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. How executive management sleeps well at night (While dealing with regulations and growth challenges) 4 Your portfolio has no troubled debt restructures (TDRs)
  • 10. 10©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. How executive management sleeps well at night (While dealing with regulations and growth challenges) 3 You received a letter from your primary federal regulator stating: “We will only examine you once every five years”
  • 11. 11©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. How executive management sleeps well at night (While dealing with regulations and growth challenges) 2Loan growth is at a 10-year high
  • 12. 12©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. How executive management sleeps well at night (While dealing with regulations and growth challenges) 1Focus on quality growth  Be a trusted advisor
  • 13. 13©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Introducing… Tony Hueston STAR Financial Bank
  • 14. 14©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Barriers  Competition  Regulations  Credit culture vs. sales initiatives Growth  Legal lending limits vs. in-house limit  Loan enhancements
  • 15. 15©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Rate / margin squeeze  Pricing calculations (relationship ROE) Open structure  Lack of structure from competition  How loose of a structure can you live with? Competitive pressure
  • 16. 16©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. How do you handle opposition to appraisals? Q: a) Obtain, but bank pays for it b) Waive new appraisal if credit has performed c) Too bad – client will pay for it d) Look for other ways to secure note
  • 17. 17©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  New or updated appraisal ► Who opposes? ● Client ● Account officer  Updated title work at renewal  Flood insurance Appraisal regulations / other real estate due diligence
  • 18. 18©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Account officer has an in-depth discussion with prospective small business client for a new line of credit. After discussing, the account officer states, “… our bank is not a good fit, we need to pass…” Q: YES NO
  • 19. 19©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Accepting an application ► NO pre-screening ► DO NOT discourage  Requiring non-owning spouse to guarantee ► Paper applications?  Case study ► Discrimination settlement Fair lending
  • 20. 20©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. How do you handle TDRs? Q: a) Not an issue. Don’t have any! b) Loan modifications are limited to avoid TDR classification c) Rely on examiners to classify loans as TDR d) Work with borrower in a different fashion to avoid TDR classification
  • 21. 21©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Growth objectives
  • 22. 22©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. To remain competitive and grow, have you done any of the following? Q: a) Approve a longer-term commercial mortgage b) Re-structure the loan using business assets rather than real estate c) Consider lending on an unsecured basis
  • 23. 23©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Come from senior management and board of directors Examples: New agriculture loans ► Growth $XXX ► Rate 2.99% Commercial real estate ► Growth of $XXX ► Calling efforts on CPA Growth initiatives
  • 24. 24©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Targeting campaigns / calling efforts  Municipal lending  Professional practices ► Medical ► Attorney Marketing
  • 25. 25©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. How do you handle competitive pricing issues? Is this a concern for small business or commercial lending? Q: a) All pricing is determined by the account officer. Pricing exceptions are not a concern for business lending b) Maintain a rate sheet and monitor rate exceptions c) Pricing exceptions must be made by senior management or designated personnel
  • 26. 26©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Finance department involvement  Pricing model ► Focus on relationship ROE; MUST include treasury services  Targeted campaigns with thin margins ► Excess funds on balance sheet…earn a little or earn nothing Pricing concerns
  • 27. 27©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Solving these issues with the help of technology
  • 28. 28©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Q&A
  • 29. 29©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Barriers can be overcome  Growth needs to be a goal and is attainable  Technology and systems are a key enabler  Sleep well…
  • 30. 30©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. For additional information, please contact: John.Watts@experian.com | @jdubbs4 Hear the latest from Vision 2014 in the Daily Roundup: www.experian.com/vision/blog @ExperianVision | #vision2014 Follow us on Twitter
  • 31. 31©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Visit the Experian Expert Bar to learn more about the topics and products covered in this presentation.
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