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Managing Concentration Risk FDIC Kansas City Region Teleconference Call February 10, 2010 James LaPierre, Regional Director, DSC Al McGregor, Supervisory Examiner, DSC Rich Cofer, Regional Manager, DIR CRE Lending Exposure Grew Sharply

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Managing concentration risk l.jpg

Managing Concentration Risk

FDIC Kansas City Region

Teleconference Call

February 10, 2010

James LaPierre, Regional Director, DSC

Al McGregor, Supervisory Examiner, DSC

Rich Cofer, Regional Manager, DIR


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CRE Lending Exposure Grew Sharply

Source: FDIC, insured institutions based in metropolitan areas

FDIC, DIR-KC, 2/2010


Including c d loans l.jpg
…Including C&D Loans

Source: FDIC, insured institutions based in metropolitan areas

FDIC, DIR-KC, 2/2010


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How Did the Industry End Up Here?

Technology

Financial Innovation

Competitive Landscape

FDIC, DIR-KC, 2/2010


Margin compression a major symptom l.jpg
Margin Compression – A Major Symptom

Source: FDIC, all commercial banks

FDIC, DIR-KC, 2/2010


Residential re markets soured l.jpg
Residential RE Markets Soured

Case-Shiller Home Price Index – Q1:2000=100

Maximum Index Value/QQ:YY

Index Value as of Q3:2009

Source: Moody's Economy.com

FDIC, DIR-KC, 2/2010


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Recent Failed Banks Often Have High CRE Exposure…

Source: FDIC, 12-31-2007, all insured institutions

FDIC, DIR-KC, 2/2010


Including c d loans8 l.jpg
…Including C&D Loans

Source: FDIC, 12-31-2007, all insured institutions

FDIC, DIR-KC, 2/2010



Nearly two thirds of the nation s farm banks are in the kansas city region l.jpg
Nearly Two-Thirds of the Nation’s Farm Banks Are in the Kansas City Region

Source: FDIC, 9-30-2009, farm banks

FDIC, DIR-KC, 2/2010


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Ag Credit Concentrations Have Been Steady Kansas City Region

Source: FDIC, commercial banks based outside metropolitan areas.

FDIC, DIR-KC, 2/2010


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But Players Move Up & Down the Spectrum Kansas City Region

Source: FDIC, commercial banks based outside metropolitan areas.

FDIC, DIR-KC, 2/2010


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Farm RE Lending Up but Ag Production Lending Down Kansas City Region

Source: FDIC, commercial banks based outside metropolitan areas.

FDIC, DIR-KC, 2/2010


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FDIC, DIR-KC, 2/2010 Kansas City Region


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Although Agricultural Credit Conditions Remain Favorable Kansas City RegionProfitability and Asset Quality in Other Loan Segments Has Weakened

FDIC, DIR-KC, 2/2010


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The Percentage of Unprofitable Institutions Has Tripled in the Last Two Years

Source: FDIC, all insured institutions.

FDIC, DIR-KC, 2/2010


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Nonmetro Institutions Have Not Been Immune to Rising Credit Problems

Source: FDIC, all insured institutions.

FDIC, DIR-KC, 2/2010


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Less Than One-Third of Nonmetro Institutions Report Noncurrent Ag Loans

Source: FDIC, nonmetropolitan-based institutions.

FDIC, DIR-KC, 2/2010


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For Those Institutions Reporting Noncurrent Loans – Nonag Loans Are Most Problematic

Source: FDIC, nonmetropolitan-based institutions.

FDIC, DIR-KC, 2/2010


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Pertinent Links at WWW.FDIC.GOV Loans Are Most Problematic

  • FIL-61-96 Analysis and Classification of Agricultural Credits

  • http://www.fdic.gov/news/news/financial/1996/fil9661.html

    • FDIC Risk Management Manual of Examination Policies, Section 3.2

    • http://www.fdic.gov/regulations/safety/manual/section3-2_toc.html

  • FIL-104-2006 Commercial Real Estate Lending: Joint Guidance

  • http://www.fdic.gov/news/news/financial/2006/fil06104.html

  • FIL-22-2008 Managing Commercial Real Estate Concentrations in a Challenging Environment

  • http://www.fdic.gov/news/news/financial/2008/fil08022.html

  • FIL-61-2009 Policy Statement on Prudent Commercial Real Estate Loan Workouts

  • http://www.fdic.gov/news/news/financial/2009/fil09061.html

FDIC, DIR-KC, 2/2010


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