Pub. 4 2015 Issue 8

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 10 T he KBA Lending Conference was held at the Wichita Marriott and saw increased attendance this year with a transition to September from previous dates in February. The conference has traditionally been held in Wichita but look for a change in scenery with a move to Manhattan next year. KBA Chairman Bob Leftwich greeted bankers as the conference opened with his challenge to share a story about the trials faced by community banks that have prevented them from giving loans due to increased regulation. Craig Poms from PrecisionLender provided a business session on pricing culture. Using a baseball analogy and the storyline from the movie “Moneyball” he demonstrated how analytics can be used as a strategy to measure risk. In the 1980’s there was parity between large and small markets but with restrained resources and 82% of the industry assets wrapped up in mega banks it has become more difficult to compete. Being able to take rate risk will be more important as we enter a rising rate environment and banks set goals for their portfolios. The common practice of setting pricing as a reaction to competition will need to be a thing of the past as a pricing strategy is put in place. Poms walked through best practice steps for setting targets and discussed strategy for negotiating other aspects of the loan such as reducing maturity, reducing amortization or reducing LTV when the competing rate is lower than you are comfortable bringing into the bank. He provided a proactive approach to loan pricing to improve outcomes and discussed relationship awareness. KBA President Chuck Stones provided an update on efforts for regulation relief in DC. The Shelby Bill is currently wrapped in spending legislation to help get it moving. Stones also commented on the challenges of reeling in Farm Credit to work within the original mission of the GSE and gave examples of committee hearings that have brought a higher level of awareness to the issue. He also discussed the challenges of competing with credit unions as a tax exempt competitor. Vanessa Klein, of the Small Business Administration, gave an overview of how the SBA can assist banks on business loans and discussed current incentives for rural areas. The loan volume with SBA is down but the dollar amount is up 35%. There is staff available to train lenders on programs as well as webinars for training. The conference featured the following breakout sessions; “Global Cash Flow Analysis for Community Banks” and “Seven Habits of Highly Effective Loan Committees” by Ancin Cooly, Synergy Bank Consulting; “How the Best Loan Officers are Building the Best Pipelines” by Craig Poms, PrecisionLender; and “Appraisal Review – Finding the Value” by Ron Rushing, Rushing Consulting Group. Armistead Boyd with nCino provided the closing session of the first day, “Seizing the Commercial Lending Opportunity: Why the Time is Right for Community Banks and Their Customers”. Day two began with an economic outlook from Federal Reserve Bank of Kansas City Economist Troy Davig. Noting that the world is using quantitative easing while the United States is starting to look at increasing interest rates should provide a relative return of capital back to the U.S. and appreciation for the U.S. dollar. The Bank of England is looking to increase rates but we have diverging monetary policies with Japan, China and most of Europe. Davig reported a moderate growth outlook and improving labor markets amidst a record number of job openings. The wage growth is expected to be modest. Ron Rushing of Rushing Consulting Group provided the closing presentation titled “Credit Culture: What is Your Bank’s Culture and Why it Matters”. He presented two possible cultures; value driven and production driven. Covering the key points of both, the presentation was interactive with rating grids for lenders to score the commitment, incented behavior, communication and line of business, to help determine the culture of their bank. Rushing maintained that a bank is either one culture or the other and must define where they fall to tie strategic plans, goals and practices around it. He maintained that without clarity in credit culture you will have high turnover in lending personnel and asset quality will be extremely diverse and overly conservative or way too risky with nothing in between. KBA LENDING CONFERENCE Ron Rushing's talk titled, "Credit Culture: What is Your Bank's Culture and Why it Matters" closed the conference on a high note.