by David McSwain, McSwain Consulting
As this blog is being written, the world appears to be more volatile. The trade talks, the government shut down, geopolitics, Brexit, and the volatility of the stock market. World leaders are meeting in Davos, Switzerland, and someone I follow closely, Ray Dalio, is warning world leaders of a global slowdown. Now and every day, there is a headline about a company losing money because of domestic politics and the trickle-down effect hasn’t been absorbed into the markets or Main Street.
Enough doom and gloom. In my opinion, its time to shut off the noise. It’s time to reflect on your loan portfolio and look out to the horizon. It’s time to ask yourself, “Should I Be Asking Better Questions”?
One thing is for certain, the landscape is changing. Rates have increased +/- 200 basis points and too few loan customers have re-priced into rising rates. In the loan review world, we are seeing borrowers’ margin begin to compress for many reasons.
So, that P&L you didn’t ask for last year, should you be asking for it?
The inspections you do once a year, do you now need it twice a year?
The inventory report you received, do you need it more often?
Is it time to review your loan policy to see if its adequate in today’s economic cycle?
Did I stress-test my portfolio?
Are my quantitative factors in my ALLL analysis still valid today?
Is the narrative in my credit memos enough for the complexity of the credits?
Are my projections in line with the historical trends or am I being too optimistic in the projections?
A good loan review will reveal an answer to all these questions. It’s time to start asking.
At McSwain Consulting, we think its time to up your game. We can help through a variety of services. If you are interested in a discussion about your bank, please contact us at 405-880-1039 or firstname.lastname@example.org or through our website at www.mcswainconsulting.net.