Strength, Unity, and Growth

Article excerpt

A tough three-month period for the U.S. has tested the mettle (yet again) of our financial institutions. Many banks in the hard-hit Gulf Coast region have had to subordinate profitability to more immediate needs in the aftermath of an unusually ferocious and sustained hurricane season. You have proven yourselves to be caretakers not only of your shareholders but also of all stakeholders within your communities.

Forecasts for a possibly harsh winter will only exacerbate problems related to fuel costs. Fuel prices and hurricanes could be creating tremors in our portfolios that will manifest as problems in 2006 or 2007. In this month's RMA Journal interview, John Dugan, Comptroller of the Currency, discusses how things have gone well up to now because of a very favorable two-year period that may have reached its zenith in July. Now, he says, is the time to watch trends very carefully to ensure that everyone--regulators and institutions alike--stays on top of them. He voiced particular concern about the growth of unorthodox mortgage products, such as interest-only and option-ARM (payment-option adjustable-rate) mortgages. The proliferation of these products could result in a significant spike in nonperformers and foreclosures in a rising-rate environment.

We also must look beyond the coming months, though, to further into the future. The playing field continues to expand with high-level participants. John Allison, keynote speaker at RMA's Annual Risk Management Conference in October, provided his vision of the winners and losers in a globally competitive environment and what U.S.-based institutions must do to maintain their edge. If you were not there in person to hear Allison, who is chairman and CEO of BB&T, I urge you to read an edited transcript of his address, which begins on page 18 of this issue, along with the addresses of RMA Chair Ken Chalk and keynote speaker John Silvia [chief economist, Wachovia], the points taken from keynote speaker Tim Russert (Meet the Press), and numerous summaries of conference sessions. …