BankNotes ...

Bankers Should Have Cautious Optimism on Housing Market

Posted by Wendell Brock on Fri, Apr 30, 2010

This week, Standard & Poor's posted new figures that show the domestic housing market's rebound is anything but certain, causing bankers to have cautious optimism.

Utilizing 10- and 20-city composites, the S&P/Case-Shiller Home Prices Indices data compared one-month price changes from January to February 2010, and also twelve-month prices from February to February.

January to February

In the 20-city composite, only one location-San Diego-saw a rise in prices from January 2010. The 0.6% rise, though, was slight. All other cities saw decreases that ranged from New York's -0.4% to Portland's -2.4%. The 20-city composite fell -0.9%.

What a Difference a Year Makes

A brighter picture emerges, though, in the sampled metro areas' twelve-month comparisons. San Francisco's 11.6% rise was the largest among the surveyed cities. San Diego came in second with a 7.6% increase. The 20-city composite improved 0.6%.

Las Vegas, which has endured one of the country's largest drops in home value, continues its decline with a -14.6% drop from February to February.

Writing in, Stephanie Armour states that prices in Charlotte, New York, Las Vegas, Portland, Seattle, and Tampa have fallen to new lows.

Home prices peaked nearly four years ago in June and July of 2006. February's average prices dropped close to their numbers from 2003's summer and early fall.

But David M. Blitzer, chairman of the Index Committee at Standard and Poor's, is cautious. "It is too early to say that the housing market is recovering," he says. "The homebuyer tax the likely cause for these encouraging numbers and this may also flow through to some of our home price data in the next few months. Amidst all the news, however, we should also pay heed to foreclosure activity, which have reached their highest level in at least the last five years."

Consumer Confidence

But even with these dismal numbers, it appears that consumers think the economy is turning a corner. The Conference Board's Consumer Confidence Index shows an increase from March to April 2010.

April's Index number was 57.9, which is an improvement over March's 52.3. Providing evidence that the rebound may not be fleeting, this is the highest the Index has been since September 2008. The Index pulls its data from a survey of 5,000 American households.

Americans are also feeling good about the job market. 18% of those surveyed thought the future would bring more jobs, which is an improvement from March's 14.1%. Similarly, those who believed the number of jobs would decrease dropped from 21.1% to 20%.

In March, 45.8% of survey respondents said that jobs were "hard to get." This is a decline from February's number of 47.3. Combined with the optimistic responses to April's survey, these data could indicate a rising trend.

Topics: Banking, Loans, Economic Outlook, Growth, real estate, Standard & Poor's, Case-Shiller, Foreclosure, Consumer Confidence

Bank Portfolio Management - Solve the Problems

Posted by Wendell Brock on Wed, Mar 10, 2010

It's a tangled mess in the financial jungle. In order to navigate the issues of portfolio management and compliance while still staying profitable and able to weather the market's unpredictable trends, financial institutions must arm themselves with the best information and resources. Yet many don't have either the knowledge or analytical resources to not only stay abreast of changing trends but also act on them in a timely and profitable manner. We have solutions.

New Rules, Economic Trends

A financial planner I know is now telling his older clients that the stock market is so volatile that it cannot be relied on as a stable platform for long term investing. Thus, the age-old saying that "assets are soft and debts are hard," has never been truer. In these difficult economic times, financial institutions need reliable information about their asset portfolio, including how the loans are matching up with the current value of the assets supporting the loans, along with the borrower's strength, all at a simple click of a mouse. 

By the time the CFO, CCO, CLO, CEO or any other member of the management team assembles enough information about the portfolio in a spreadsheet to make decisions, it seems the market may have changed enough to make the choice more difficult.  The analytics we can provide at a simple click of the mouse gives you 100 percent loan penetration and enough analytical information about your assets that your institution will have an objective defendable system to help manage the portfolio.  

Regulatory Requirements

The frequency and breadth of audits are increasing; requiring financial institutions to stay in a mode of continuous compliance, in one year's time they could be subject to internal and external loan review, IT audit, financial audit, CRA exam, and regulatory exams. Compliance is mandatory and with RiskKey, staying in continuous compliance is much easier.   

Industry Standards

There is a paradigm shift coming to financial institutions. Because lending is often formula driven, bankers need aggressively take on the roll of being asset managers. In addition to managing the loans in the portfolio, they need to manage the assets that support the loans. The tools and knowledge to help actively manage your portfolio are available with a simple, cost effective, mouse click!


With forward-thinking analytics, you can determine your portfolio's risk. These analytics provide a defensible probability of default within the portfolio, you can also stress test the portfolio along several different data inputs, including, percent of asset recovery, interest rate, fico score, and others. This basis can provide a direction as to the quality of the overall portfolio, all the while allowing the banker to zero in on the individual problem loans and assess their grade based on the institution's custom grading scale.


Armed with a new, comprehensive understanding of your portfolio's risk, the analytics will subsequently locate the most pressing issues and provide options.


Finally, with your portfolio's risk evaluated and acted upon, you will have the tools and resources needed to clearly and concisely report your findings, to loan committees, the board of directors, and regulators.

Easy, Secure & Forthright

Working with us is simple. We take care of merging your data into a single platform. Your data will be protected and your analyses kept completely confidential. Our pricing is straightforward and simple.

People, Time & Action

Your employees should be generating revenue and managing accounts, not gathering statistics.  De Novo Strategy will allow your people to get back to profitable work. Our innovative practices are well beyond spreadsheets and simplistic reports. There's no laborious compiling of figures or making difficult assessments across a range of formats. Integrated reports and analyses mean less lag time between making a decision and executing it.

To learn more about Silverback Portfolio Analytics click and let us know. This will help you Build a Smarter Bank!

Topics: Bank, Bank Risks, regulators, Bank Regulators, Bank Asset, Regulations, Bank Policies, Compliance, Growth, real estate, Commercial Bank

Tightening the Screws: Is the FDIC Putting Off New Charters?

Posted by Wendell Brock on Mon, Jan 19, 2009

2008 was a year most bankers would rather forget. Around the country, twenty-six banks failed, mostly on the tide of rising loan defaults. Seemingly, the FDIC scrambled all year to sell off bank assets and continue to fulfill its promise of deposit insurance. It wouldn’t be unreasonable to think that all of this activity has left a bad taste in regulators’ mouths.

A recent article in American Banker suggests that this ‘bad taste’ has resulted in an unofficial suspension of insurance application approvals for banks in certain states or banks that intend to focus on certain types of lending. The article references the FDIC’s unexpected denial of Perimeter First’s insurance application—the Georgia bank’s business plan emphasizes commercial and industrial lending. The FDIC has denied that any type of moratorium is in place.

Georgia banks face uncertain future

Given the record-poor performance of Georgia banks in 2008, it isn’t too far of a stretch to assume that regulators denied Perimeter First’s application on the basis of industry conditions. Of the twenty-six bank failures last year, nearly 20 percent of them were located in Georgia. According to Atlanta Business Journal, Georgia banks were holding out for a real estate recovery in the first half of 2008. That, of course, didn’t happen, and the consequences were disastrous. All five of Georgia’s bank failures occurred in the second half of the year.

Atlanta Business Journal also estimates that as many as 50 Georgia banks could collapse in 2009, citing rising unemployment and a foreclosure crisis that just won’t quit.

Other states likely to be under scrutiny

The combination of bank failures, rising unemployment and massive foreclosures isn’t exclusive to Georgia. If FDIC is unofficially proceeding with caution with respect to Georgia insurance applications, it’s likely to be doing the same for de novo banks in California, Florida and Nevada—all three states have higher than average unemployment and top-ten foreclosure rates. Here are the stats:

•  California experienced six bank failures in 2008. And, the state’s foreclosure rate, according to RealtyTrac, ranked fourth in the country at 3.97 percent. The golden state’s unemployment rate in November was 8.4 percent, versus a national average of 6.8 percent.

•  Florida had two bank failures last year, to go along with 7.3 percent unemployment in November and a 2008 foreclosure rate of 4.52 percent.

•  Nevada had three bank failures (including WAMU), 8 percent unemployment in November, and a nation-leading 2008 foreclosure rate of 7.29 percent.

Whether FDIC has suspended approval for certain states, or has simply adjusted its standards to fit a new and more difficult environment, the end result is the same: de novo banks will have to be more careful about how they proceed with their organization process. Now, more than ever, it’s crucial to have the right programs, plans, timelines and management teams in place to be successful.

Topics: FDIC, real estate, charters, Georgia banks, California banks, failures

Subscribe by Email

Most Popular

Browse By tag

To Obtain a White Paper


BankNotes© is published by De Novo Strategy as a service to clients and other friends. The information contained in this publication should not be construed as legal, accounting, or investment advice. Should further analysis or explanation of the subject matter be required, please contact De Novo Strategy at