Monday, September 03, 2012

Banker Quotes: As Told to Me v4

I learn a lot from bankers and industry experts as I visit their offices, speak to them on the phone or at industry events. Occasionally they will offer an insight that I think my Twitter followers would find interesting. Since I estimate my Twitter community only reads about 10% of their tweet stream, and so many of my blog readers do not follow Twitter, below are selected quotes that I tweeted since version 3.

Note that if the quotes exceeded 140 characters, I would have abbreviated or substituted some words to make them fit. So if you are a CPA and want to count, a few of the quotes may exceed the 140 here, but not on Twitter. I quote bankers anonymously to protect the innocent.

1. Bank Senior Lender on branch traffic: It's like groundhog day. They see the same people every week.

In addition to declining branch transactions, in-branch sales opportunities are pressured by the above reality.

2. ALCO Consultant: If your bank is making loans, forget about retail and fund with an FHLB advance.

Sad but true that the combination of operating expense and interest expense to generate retail deposits exceeds the cost of getting on the phone and calling your FHLB. But does it make your bank more valuable? In lieu of Hudson City Savings Bank sale price, I’m not so sure.

3. Me to bank credit consultant: What's the best leading indicator of a loan problem? Consultant: The borrower doesn't return your call.

How do you fit that square peg in your ERM round hole?

4. Bank chairman to me: It's difficult to have vision when you're fighting alligators.

This short-term thinking may be a key driver in future consolidation… community FIs with no vision for a sustainable future.

5. Bank chief credit officer relaying to me an OCC comment: "We haven't issued an asset quality upgrade in quite some time."

This is a telling statement since industry credit metrics have been improving for at least a year.

6. Bank exec to me: The public is starting to come around that community banks do not have to be thrown under the bus like big banks.

Thank you, public.

7. Bank CEO: That bad loan is in Seaside Hts. Me: Maybe it's Snooki. CEO: You know she's pregnant.

Who says bankers are out of touch?

8. Bank chairman to me: It would be interesting to know our branch's profitability.

Do you think?

9. Me to Chief Credit Officer/CCO: Isn't having a 3% delinquency rate on a 7% yield portfolio OK? CCO: The 7% thing would never happen.

Sad, but true. If you can’t get the yield for the risk, perhaps you should let the next guy/gal do the loan.

10. Bank retail chief: Saying customer service is our differentiator is a 'me too' position.

You mean everybody doesn’t have superior customer service?

11. Bank CEO: I think 4 FTE's is the right number for future branches.

Note that he was thinking out loud in a session designed to improve branch profitability.

12.  Bank CEO: My most demanding job is playing pen pal with my examiners.

To say that we have been forced to engage in flattery with our regulators is an understatement.

13. Bank loan consultant: There is too little a difference on yields between the best and worst rated credits in bank loan portfolios.

See my comment on getting paid for risk.

14. Bank consultant: Your strategic plan projections should drill down to a value proposition.

Agreed! Your plan should deliver increasing shareholder value, discounting projected earnings to present day value.

15. Bank examiner: When evaluating an acquisition, assume that every loan portfolio is worse than you think it is.

Told to a CEO who relayed it to me... and perhaps the Day 1 loan mark will be worse than you estimated.

16. Senior lender to me: Does it make sense to have my lenders calling on businesses for operating accounts when we are so liquid?

My answer was to hunt when the hunting is good, not when you’re hungry.

17. Me: Maybe Dodd-Frank will result in reduced compliance costs because CFPB streamlines regs. Bank CEO: That's not going to happen.

But the Treasury Department said it was going to happen.

What are bankers telling you?

~ Jeff


  1. Jeff - glad to see that there are some thoughts out there about identifying the profitability, and true potential, of branch locations. I hope this momentum continues...

    One concern that I do have based upon the above comments: that you know where Snooki is from -

  2. I knew where she was from. But I didn't know she was pregnant.

    I'm working on my own Situation here.