The RMA Journal

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

Articles from November

Character and Fraud Protection and Prevention: This Article Reprises Presentations the Author Gave at RMA Chapter Meetings in Santa Barbara and Los Angeles, California
[ILLUSTRATION OMITTED] WELL BEFORE THIS latest economic crisis, bankers have employed The Five Cs of Credit as an analytical tool to evaluate their borrowers' willingness and ability to repay their obligations. The Five Cs are character, capacity,...
Credit Portfolio Reporting for Effective Risk Management
[ILLUSTRATION OMITTED] WITH ALL THE regulatory buzz around the importance of portfolio reporting and stress testing, one might assume the increased focus on both has a direct link to more informed portfolio strategies and effective risk management...
Critical Issues, Pre- and Post-Closing
Every appraisal has an opinion of market value. However, numerous assumptions and conditions go into arriving at that market value. So who in your financial institution is going to ensure that all these assumptions and conditions are in place before...
Dual Asset Quality Ratings the Next Generation: The Current Credit Environment Reinforces the Need for a More Granular and Objective Approach to Assigning Asset Quality Ratings
[ILLUSTRATION OMITTED THE ESSENCE OF banking is assuming and managing risk. The old adage "You can't manage what you can't measure" has never been truer. Unfortunately, the conventional single-factor asset quality rating (AQR) framework in place...
FDIC's Final Rule Is Flawed
WHEN WE DISCUSS the value of RMA membership, one benefit that is less heralded--but very important--is our advocacy role in raising industry issues with the regulators. Several members recently alerted us to potential problems with the FDIC final rule...
Fueling Economic Growth: Where's the Impediment to Returning to the Good Old Days of Small-Business Expansion and More Start-Ups?
[ILLUSTRATION OMITTED] MANY ECONOMISTS ARE saying this economy is recovering at half-speed. Clearly, publicly held corporations, one half of the economy, have recovered. Their balance sheets carry cash at levels not seen since the 1960s. Stock prices...
Loans That Go Bump in the Night: A Dark and Stormy Night Prompts Three Banking Horror Stories
"It was a dark and stormy night; the rain fell in torrents--except at occasional intervals, when it was checked by a violent gust of wind which swept up the streets ...." (1) It was the last night of October, and a group of bankers sat huddled in their...
Methods to Estimate Losses Using Linear Regression Analysis: This Article Outlines How Linear Regression Analysis Can Be Used to Calculate the Allowance for Loan and Lease Losses
Nature and Purpose of the Allowance for Loan and Lease Losses (ALLL) (1) The ALLL represents one of the most significant estimates in an institution's financial statements and regulatory reports. Because of its significance, each institution has...
No Enforceable Commitment to Maintain Bank's Capital Arose from Strategic Business Plan
In Federal Deposit Insurance Corp. v. AmFin Financial Corporation, (1) the FDIC sued the holding company, AmFin Financial Corporation (AFC), of AmTrust Bank (AmTrust), a savings bank, for failing to abide by an alleged commitment to maintain the capital...
Risk Knows No Boundaries
[ILLUSTRATION OMITTED] ANYONE WHO HAS worked in banking for any length of time is all too aware of the acute challenges in breaking down the operational silos that inhibit communication, collaboration, and--ultimately--effective risk management....
Secrets of Successful Working Capital Lending: Learn How One Bank Is Driving Growth in C&I
[ILLUSTRATION OMITTED] WHEN RON MEINHARDT took the helm of BLM Industries in 2001, the business was poised for growth. But the company, a 25-year-old Minneapolis-based distributor and repairer of banking equipment, was too thinly capitalized to...
The Risky Business of For-Profit Universities: Despite Their Tremendous Growth in Recent Years, the Risk of Lending to For-Profit Universities Is Expected to Escalate
[ILLUSTRATION OMITTED] LATELY, THE FOR-PROFIT universities industry has come under significant scrutiny for its controversial reputation and recent surge in growth. For-profit universities--also called proprietary colleges--have a unique place in...