- Here’s a trip down memory lane, showing the deposit amounts that FDIC has insured since it was founded in 1934.
|
1934 |
$ 2,500 |
|
1934 - 1939 |
$ 5,000 |
|
1950 - 1954 |
$ 10,000 |
|
1966 - 1968 |
$ 15,000 |
|
1968 - 1973 |
$ 20,000 |
|
1974 - 1979 |
$ 40,000 |
|
1980 – 2007 |
$100,000 |
|
2008 – present |
$250,000 |
- We’ve now helped 14 banks set up warehouse lending programs, and we’ve noticed something about those who really grow it and make it into a real money maker. These banks hire someone who’s 100% dedicated to marketing it. Having it as a step-child of the commercial lending group doesn’t seem to work as well.
- I’ve been reading three of Harman Kahn's books on nuclear war lately, and it got me thinking about Iran ’s imminent nuclear capability. (1) Let’s start with the premise that it would be intolerable for Israel to allow Iran to have that capability. (2) Had there been an Israel in 1941 and had they known about the building of Auschwitz , is there any doubt that they would they have bombed it? Of course they would have. (3) Just as Auschwitz threatened the very existence of the Jewish people, is there any doubt that an Iranian bomb threatens the very existence of Israel ? (4) If so, is there any doubt that the Israelis will protect themselves and attack Iran ’s nuclear facilities? Based on the above, I think Israel will bomb Iran ’s nuclear facilities and I think they should. And here’s how I see it: The Saudis and most Arab states will be very relieved, at least privately, but the backlash could be extraordinarily serious. To neutralize this blowback, I’d propose that as soon as the bombers return from their mission, Netanyahu should go on TV and announce that (a) the Israeli air force has destroyed Iran’s nuclear capabilities and (b) that the Israeli government now recognizes the West Bank as the independent state of Palestine. This would be a double coup, and the world would be relieved to see Iran ’s nuclear weaponry destroyed and for there to finally be Palestinian autonomy. As for Gaza , it would be up to the new State to include them or not.
- Here’s a marketing idea for Comerica Bank. The bank was founded in 1849, and California got on the map the same year with the 1849 Gold Rush. There’s got to be a tie-in there. “When gold was discovered in California in 1949, we were opening our first accounts,” or something like that.
- From Mike McMahon: “Very funny about David Eisenhower. This reminds me about the story I read about Hollywood script writers who get back at people who have done them wrong in life by naming bad characters in their scripts after those people.”
- The guy below is Ted St. Martin. He holds the record for making 5,221 consecutive free throws. This is an 30-year old picture, but at 75 today, he still conducts clinics on free throw shooting. I saw his website once, and I think he has a money back guarantee if you don’t get up to a 90% of your free throws in.
- A thrift client expressed concern about his pending regulation by the OCC, and my answer was based on personal experience. My first set of exams was by the OTS, and we were examined by the OCC at my next bank. Let’s put it this way. Having the OTS in there was like going to the dentist to have your teeth cleaned. Being examined by the OCC was like going to the dentist to have a root canal. Both involve going to the dentist, but one’s a whole lot less fun than the other.
- One of the things we do in our FOCIS-plus Report is give mortgage companies a set of templates for the metrics they need to track. In a bull market you’ll make tons of money even without good numbers, but you’ll make better decisions (and more money) with better data. Here’s Tony LaRussa, the third winningest baseball manager of all time, and no one knows his baseball numbers better.
- The latest FDIC stats are in, and of our 7,830 FDIC insured institutions, 70.7% were profitable last quarter, up from only 61% a year ago. A healthy banking system is necessary if you want a healthy economy, so this is good news for everyone.
- We were at a Southeast bank 5-6 months ago, and it was a perfect case of the production tail wagging the balance sheet dog. The bank had a high loans-to-deposit ratio, limited liquidity, and while they were well capitalized, they were looking at some potential write-downs that could lower their capital ratios to an uncomfortable level. The mortgage division was a big and growing wholesale lender, and they had expanded into some new states and were really growing their volume. It was clear that their mortgage volume was too much given the size of the bank, and it was clear that they needed to stop going into new states. We’re not articulating this well, but the point was that the mortgage people were all excited about their growth and were oblivious to the fact that the bank couldn’t really support that growth. The message is that loan production efforts must be integrated into the asset-liability and liquidity planning of the bank. This bank needed to tell the mortgage people “Look, our balance sheet will only support $100 million a month and we don’t care if you can close $200 million a month.” This is why we have annual budgets, so that the mortgage people will know the maximum they can close in a month.
- The above comment applies to independent mortgage banks as well. Warehouse lines determine the maximum you can close per month, not the energy of your production people. You need to make it clear to production people what their maximum is.
- We did a project for Bank of Transylvania in Romania several years ago, and someone thought we were just kidding. Attached is their latest earnings release.
- One of the great things about America is that everyone wants the President, whoever he might be, to do well and have a successful Presidency. For those who worry about Obama’s poor polling numbers, you can look up the polls for Reagan and Clinton just before their first mid-term elections. Both were dealing with crummy economies and both had polls numbers even lower than Obama’s. This photo is from Reagan in Bedtime for Bonzo, a very funny movie. It’s about a college professor raising a chimp as a part of an experiment and all the hi-jinks that ensue.
I once rented about 5-6 of his movies, and he was actually a very good actor. He was labeled a B-actor, but my view is that he was an A-actor who just happened to get roles in B-movies. By the way, a movie so good I bought it is Harry and the Hendersons about a Bigfoot that secretly movies in with a Seattle family. A great scene is when Harry (the Bigfoot) is watching Bedtime for Bonzo on TV and laughing so hard he almost cries. When Bonzo throws his oatmeal right in Reagan’s face, Harry goes bananas and throws his food at Reagan’s face on the TV.
* *
We’re embarrassed to admit we waited this long, but we just joined the MBA. This is a great organization, and those of you who aren’t members should at least look into it. Also, this week’s cartoon is for everyone who has a sophomore in college who’s thinking of taking the junior year abroad.
Garrett, Watts & Co.
“Helping lenders increase revenues, control costs, and better manage risk.”
- Mike McAuley (281-250-2536)
- Corky Watts (408-395-5504)
- Joe Garrett (510-469-8633)
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