an LECG Company
EMERGING ISSUES AND MARKET
TRENDS
Presented to
2007 CSBS Annual Conference
June 1, 2007
Coeur d’ Alene , Idaho
550 S. Hope Street By:
Suite 1645
Los Angeles, CA 90071 David E. Abshier, Senior Managing Consultant
Tel: (213) 629-3500
Fax: (213) 629- 7420
The Secura Group, an LECG Company
Email: DAbshier@securagroup.com
Website: www.securagroup.com
an LECG Company
Summary
♦ Background
♦ Emerging issues and Expectations
♦ General Banking Trends
♦ Conclusion
2
DAbshier@securagroup.com
www.securagroup.com
an LECG Company
Background
♦ Secura’s market coverage is nationwide. Types of engagements
include:Strategic and Financial Advisory, ERM, Credit Risk, BSA/AML,
Compliance Risk Management, ALM/Market Risk, Basel II, Fair
Lending, Capital Requirement/Allocation and others.
♦ Secura was recently acquired by LECG. LECG is a global expert
services firm with over 1,000 experts and professionals in 13
countries. The firm provides independent expert testimony, original
authoritative studies, and strategic advisory services to clients
including Fortune Global 500 corporations, major law firms, and local,
state, and federal governments and agencies around the world.
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DAbshier@securagroup.com
www.securagroup.com
an LECG Company
Emerging Issues and Expectations
♦ Enterprise Risk Management (“ERM”).
♦ Generally Accepted as “Best practices”.
♦ Develop a Frame-work or Methodology – Functional Criteria
♦ Tailor Key Risk factors to your Business Model
♦ Identify Efficiencies/Tangible benefits
♦ Corporate Governance and Board Reporting
♦ Contingency Planning
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DAbshier@securagroup.com
www.securagroup.com
an LECG Company
Emerging Issues and Expectations
♦ Subprime Non-prime and “ALT A” Lending
♦ Credit Risk
♦ Buybacks/Repurchases
♦ Increase in delinquencies and foreclosures
♦ ALLL (accounting risk as well)
♦ Concentrations
♦ Compliance Risk
♦ Unfair and Deceptive Acts/Predatory lending
♦ High Cost Mortgages/Disclosure Requirements
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DAbshier@securagroup.com
www.securagroup.com
an LECG Company
Emerging Issues and Expectations
♦ Human Capital Risk.
♦ Qualified Management and Staff.
♦ Identification/Retention/Development
♦ Ethics and Standards
♦ Training
♦ Pro-active, Ongoing and Bank-wide.
♦ Documented
♦ Validate/test Effectiveness
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DAbshier@securagroup.com
www.securagroup.com
an LECG Company
Emerging Issues and Expectations
♦ De Novo Banks
♦ Identification and Retention of Qualified Management.
♦ Corporate Governance & Regulation O concerns.
♦ System of Controls/Infrastructure.
♦ Capital – Pressure to generate assets/grow to critical mass.
♦ Competition for Core Deposits.
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DAbshier@securagroup.com
www.securagroup.com
an LECG Company
General Banking Trends
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DAbshier@securagroup.com
www.securagroup.com
an LECG Company
General Banking Trends (cont.)
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DAbshier@securagroup.com
www.securagroup.com
an LECG Company
General Banking Trends (cont.)
10
DAbshier@securagroup.com
www.securagroup.com
an LECG Company
General Banking Trends (cont.)
11
DAbshier@securagroup.com
www.securagroup.com
an LECG Company
General Banking Trends (cont.)
12
DAbshier@securagroup.com
www.securagroup.com
an LECG Company
General Banking Trends (cont.)
13
DAbshier@securagroup.com
www.securagroup.com
an LECG Company
General Banking Trends (cont.)
14
DAbshier@securagroup.com
www.securagroup.com
an LECG Company
General Banking Trends (cont.)
The Big Picture….
♦ NIM tightening – loan volume – erosion of credit standards.
♦ National market slowdown in real estate – the market is working.
♦ Fed’s survey of senior loan officers – 40% said they had tightened
Standards.
♦ Subprime/Non-prime loan delinquency and foreclosures rate are up
significantly.
♦ Overall loan delinquency and non-performers are up modestly, but not
severely.
♦ “Gradual Erosion” of credit process/standards and loan covenants over
time.
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DAbshier@securagroup.com
www.securagroup.com
an LECG Company
Conclusion
♦ As I mentioned, we have been busy around the country reviewing
ERM, credit risk management, ALM, strategic plans, etc…
♦ Human capital risk – identification, sourcing and retention of qualified
management and staff.
♦ Credit Risk - review of credit risk ratings, ALLL, loan review function,
staffing and training.
♦ Enterprise wide Risk Management - be ready for opportunities to
improve efficiencies and maximize shareholder value!
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DAbshier@securagroup.com
www.securagroup.com
an LECG Company
THANK YOU!
DAbshier@securagroup.com
www.securagroup.com
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