The RMA Journal

Covers loans, risk management techniques, and analysis of insurance.

Articles from March

A Perspective on Regulatory Risk: Enforcement Actions and CAMELS
Has your bank been the recipient of a recent regulatory enforcement action? How well are you doing in complying with the requirements? This article offers some practical advice that will help you achieve compliance and work toward restoring your bank's...
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Credit Risk Benchmarks from the RMA/AFS Risk Analysis Service
We are pleased to provide third-quarter 2010 metrics for this Journal feature, which provides an up-to-date view of C&I credit quality and trends. Comparing portfolio composition and performance to industry benchmarks is one of the keys to effective...
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Guarantor Policy: Satisfaction Guaranteed
[ILLUSTRATION OMITTED] Napoleon advised in his Maxims, "The best way to keep one's word is not to give it," and then went on to ruin Europe for a generation. Despite Napoleon's Machiavellian advice, most cultures assign considerable value to vows...
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Handling Workouts and OREO in a Distressed CRE Market: The Commercial Real Estate Market Is in Turmoil. Lenders Need Strategies to Handle Workouts, Foreclosures, and Other Real Estate Owned
[ILLUSTRATION OMITTED] THE COMMERCIAL REAL estate market will continue to struggle as lenders face an escalating number of CRE workouts. Bankers learned more about the commercial real estate crisis and other real estate owned (OREO) during a recent...
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How Hungry Are We?
PIGS GET FAT, hogs get slaughtered. That old adage describes well the risk appetite of many banking institutions before the recent financial crisis. Markets, boards, and managements all seemed convinced that the industry's craving for risk needed to...
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It's Not Complicated: If Applied to Risk Management, Three Frameworks Used in Science Would Result in New Ways of Thinking about Problems and Make the Industry More Effective in Dealing with Future Crises
[ILLUSTRATION OMITTED] RISK MANAGERS and the field of risk management are still under a cloud of skepticism as a result of the economic crisis. Given the dramatic increases in the sophistication of risk management tools and techniques, investors,...
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Lender Can Rely on Prospective Borrower's Representations in Extending Credit
A DECISION DATED June 24, 2010 from the New York Court of Appeals, DDJ Management, LLC v. Rhone Group, L.L.C. (No. 131), raised the question of whether a group of four lenders could justifiably rely on what turned out to be false and misleading financial...
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New Perspectives in Analyzing Real Estate Developer Financial Statements
[ILLUSTRATION OMITTED] This article, the last in a seven-part series, originally ran in the December 2002-January 2003 issue of The RMA Journal, yet its insights into analyzing real estate developer financial statements are as valid today as they...
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New Regulatory Expectations for Federal Thrifts: This Article Discusses the Changes That Managers of Federal Thrifts Should Expect from Their New Supervisors: The Office of the Comptroller of the Currency and the Federal Reserve
[ILLUSTRATION OMITTED] THE SIGNING OF the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 has meant the abolishment of the Office of Thrift Supervision (OTS). Accordingly, managements of thrift institutions should expect the following...
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Planning and Preparation Pay off When Examiners Come Calling: Banks Must Be Ready for Intense Scrutiny in a Post-Crisis Environment
[ILLUSTRATION OMITTED] EXAMINERS ARE DRILLING deeper in the aftermath of the financial crisis, and bankers need to be prepared for examinations with documents, policies, and procedures already in place. A panel of community bankers related their...
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Six Gremlins: That Lurk in Your Bank's Property Insurance: Gaps in Property Insurance Can Leave Your Bank Exposed to Significant Losses
[ILLUSTRATION OMITTED] EVERY WEEK I get calls from bankers asking for help with their bond insurance and their directors and officers insurance. Near the end of the conversation, I always bring up property insurance. And almost always, the caller...
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The Classroom Experience: The Authors Teach RMA's Course Enterprise Risk Management for Community Banks. in This Article, the Second of a Four-Part Series, They Examine Course Content and Identify Emerging Classroom Themes
[ILLUSTRATION OMITTED] LAST MONTH WE considered the existing ERM practices reported by nearly 300 bank executives who have attended RMA's Enterprise Risk Management for Community Banks over the past two years. This article examines course content...
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The Crowd Is Untruth: The Problem of Cap Rates in a Declining Market
** There is an alternative to relying on market-based determinants for cap rates in a declining market or in a market lacking comparable sales. [ILLUSTRATION OMITTED] CAP RATES ARE essential in valuing an investment property using the income...
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'Top 10' Rules for Credit Analysts: What to Watch for When Preparing a Loan Committee Package
Loan app, credit app, credit report. Whatever you call it, the loan committee package is a staple of the banking industry. Although every bank has its own template, there are certain common traits. The general structure, for example, is as follows:...
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