As this blog is being written, the world appears to be more volatile. The trade talks, the
government shut down, geo-politics, 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. Its time to reflect
on your loan portfolio and look out to the horizon. Its 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.
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 david@mcswainconsulting.net or through our website at
www.mcswainconsulting.net.