Western Independent Banker - March/April 2009 - (Page 14)

selling a portfolio is a decision to invest in that portfolio. Sometimes it makes sense to invest in the portfolio, and sometimes it does not. Th at depends on what type of returns the bank is looking for and what are the bank’s alternative uses of capital and the commensurate returns on those assets. Other factors to consider include the impact keeping the assets will have on the bank’s performance ratios and what this may mean for the bank’s share value and relationship with the regulators. Sell. If the bank targets a return on equity of 15 percent for loan originations, and by selling this portfolio the bank redeploys the $20 million into earning assets, the bank will generated an incremental $10.4 million in revenue for a total value of $30.4 million. After doing the analysis, Bank ABC makes the decision to sell this portfolio of assets. At this point, the bank should focus on the following issues to make sure 371184_Audit.indd 1 3/3/08 11:41:58 AM What’s your document management objectives? We can help you achieve them! Proﬁtability of Hawaii, a leading provider of imaging & ﬁnancial software, virtual printing & digital conversion services can help you meet your goals. Backed by 30+ years of experience, POH provides customers with innovative and ﬂexible solutions for check processing and document handling for both inhouse and service bureau environments. POH offers integrated solutions for Check 21, check image exchange, IRD and image statement printing including eStatement, check imaging, remote capture, storage, display & research, image statements, web presentment, items processing, and returns processing. that the bank realizes the best price for the portfolio: 1. If a bank chooses to employ a loan sale advisor (LSA), take the time to do some due diligence and fi nd a reputable LSA. In today’s environment, there are many fledgling operations that do not have the experience, expertise and contacts required to market and sell complex transactions. Using less reputable LSAs will adversely impact the pricing of your assets. 2. Auction bids typically do not get the seller the best price. In a buyers’ market where there are so many opportunities competing for capital, you may not get the attention of viable buyers in a “best and fi nal” auction process, and the probability of achieving a successful price is lower. 3. Be wary of bidders that reflect higher indicative bids to get the deal, as their fi nal bids will often end up in line with the market following due diligence after you have tied up time and resources in trying to consummate a transaction. 4. Explore and employ alternative strategies in conjunction with the sale of assets that may help offset the sale of the assets. For example, are there some less strategic branches that your bank may want to sell? Are there some performing loans that you can add into the portfolio? In sum, while the thought of selling assets can often be disconcerting and intimidating, the reality is that if you take time to analyze and think strategically about your portfolio, selling assets can be a very effective and productive tool to help manage your portfolio through all credit cycles. Stephen Trauner is a founding partner of Beltway Capital Management, a firm that invests in, manages and works out commercial and industrial, commercial real estate and residential mortgage nonperforming loans. He can be reached at 410-403-2066 or at strauner@beltwaycapital.com. Our solutions help ﬁnancial institutions meet their ﬁnancial & customer service goals. 14739 Catalina Street • San Leandro, California 94577 • 510-357-1400 • Fax: 510-357-1490 14 379787_Profitability.indd 1 7/7/08 9:49:58 AM www.wib.org Western Independent Banker http://www.audit-one.com http://www.poh.com http://www.wib.org

Table of Contents Feed for the Digital Edition of Western Independent Banker - March/April 2009

Western Independent Banker - March/April 2009 Contents A Message from the President & CEO Profitable Liquidity: Yes, You Can Non-Performing Assets: The Keep Versus Sell Decision Is BOLI the Way to Go? The Troubled Asset Relief Program and Its Eff ect on Executive Compensation TARP Money or Not, Secondary Offerings Belong in Your Plan 52nd Annual Conference Private Equity: Another Capital Option Strengthening Your Bank’s Bottom Line by Adapting to Difficult Times Managing Your Branch Network Capital Dealing with a Hard Insurance Market WIB Service Corporation Report WIB Calendar New Members Index of Advertisers Advertiser.com

Western Independent Banker - March/April 2009

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