The RMA Journal

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

Articles from Vol. 87, No. 10, July-August

Appraisal Review Tips for Bankers: Tips 1 & 2
This series is intended to help a bank's beginning to intermediate-level appraisal reviewer identify some of the more common issues. Time Warp It's not unusual for an appraisal to include a line adjustment in the sales comparison approach entitled...
Are Hedge Funds at Risk in the Commercial Finance Arena? Caution Is Warranted
This article is not intended as an indictment of hedge funds. It is a criticism of perceived trends. The author believes that if a major high-profile loan goes bad, there will be an exodus of funds from the industry that will be negative for everyone....
Corporate Credit Portfolio Management: Changing Skills Requirements
This article provides an overview of the credit portfolio management function, structural alternatives, the skills necessary for its effective implementation, and a final word on training and compensation. The focus is on corporate credit portfolios,...
Credit Portfolio Management: An Introduction to the Challenges and Opportunities in This Emerging Field
The growth in liquidity of credit markets and the active management of credit risk are among the most significant developments in commercial banking in the past 20 years. These developments hold the potential to permanently reduce the risk profile...
Economic Capital: Implementation Practices and Methodologies
Good news for the industry: A recent study from RMA confirms far more commonalities than differences in economic capital implementation practices among leading institutions. Recent developments in the use of economic capital as a management tool...
Economic Update: A Semiannual Economic Forecast for Bankers
The economy is performing well. Real GDP and job growth are sturdy, and inflation and interest rates, while edging higher, still remain low. Creditors are benefiting from the good economy, as loan growth is strong and credit quality is good and improving....
Establishing Exposure Limits for a Credit Portfolio
Active management of concentration is a key objective of any credit portfolio management effort. This article outlines a sound but practical portfolio limit framework that allows an institution to manage concentration risk yet position itself to respond...
Evaluating Contractor Financial Statements: Recognizing the Guy in the Black Hat
Although most dealings with contractors turn out well, it's the occasional bad guy who could get you into trouble. It's important to be aware of assumptions you may be tempted to make regarding the percentage completion method of accounting, and this...
From Rags to Riches: An Interview with Curtis S. Reis, Chairman and President
Alliance Bank's total losses in 1986: $1,806,000 Alliance Bank's total earnings in 1996: $338,000 Alliance Bank's total earnings in 2004: $3,938,000 Even with its need to regularly raise capital to remain well capitalized, Alliance Bank's diluted...
Getting the Most out of Portfolio Reporting
Improved reporting can help bankers monitor and manage their portfolios more effectively. Steps to getting the most out of portfolio reporting include knowledge of 1) weaknesses with traditional portfolio reporting; 2) required types of portfolio reports...
Hedge Funds Move to Credit-Investing Strategies
This article acquaints financial institutions with how hedge fund credit-investing strategies operate. Three strategies currently in use by hedge fund managers are the credit cross-over fund, the relative value fund, and the structured credit opportunities...
June Middleton, Farmers and Merchants Bank: She Took on the Challenge
Keeping a chapter viable is no easy task. Rebuilding a chapter is even tougher. It takes a dedicated board, tenacious chapter president, and dedicated officers to help a faltering chapter regain its footing. June Middleton and the Northern Indiana...
Placing Credit Portfolio Management within the Organizational Structure
The credit portfolio management function within many financial institutions has evolved significantly as risk mitigation and distribution mechanisms have developed. Questions arise about whether it's better to have the credit portfolio management function...
The Federal Reserve Bank of Philadelphia Implements Its Own Process for Enterprise Risk Management
In 2003, the Federal Reserve System emphasized the importance of risk management by creating an ERM guidance document providing direction and defining a common risk language. In 2004, Spyro Karetsos, the Philadelphia Fed's enterprise risk management...
The Quest for Answers
This is the first of several columns about action. Relationship managers will learn the routines and activities that generate greater revenue. Sales managers will learn how to ensure top performance from their sales staffs. Sales is a process that...
You Get What You Earn
Rick Harbaugh's letter last month, "You Get What You Pay For," discussed the benefits and responsibilities of RMA membership. As I was thinking about RMA's very successful new Credit Risk Certification (CRC) program, a variation of Rick's title immediately...