Is Your Loan Portfolio Ready for the Next Recession?

By: Sharon J. Lorman
Jeffrey P. Marsico
Matthew P. Prosseda

Guest: Dallas Wells, EVP Strategic Innovation, PrecisionLender

Podcast Show Notes:

Our This Month In Banking (TMIB) podcast features discussion with colleagues and other industry thought leaders on interesting banking news that happened this month. TMIB will be available on the last Wednesday of every month here, and on Apple and Droid podcast apps for your listening enjoyment. Join us on your commute, at your desk or at home.

Topic: Is Your Loan Portfolio Ready for the Next Recession?
Start time: 1:26

About half of the 280 business economists polled in a National Association for Business Economics survey said they expect a downturn by the end of next year. Roughly 75 percent say it will happen by 2021. Only 11 percent anticipate the United States avoiding a recession during that two-year window.
According to Warren Buffet, “You never know who’s swimming naked until the tide goes out.” Many of the same metrics we witnessed in 2006 are similar to today: low non-performing assets to assets ratios, high loan to deposit ratios. While not suggesting we are teetering on the precipice of 2007, many signs are indicating a recession.
How are banks responding to the specter of a recession with regard to their loan portfolios? How should they respond? In 1955, the Chairman of the Federal Reserve William McChesney Martin said about the Fed’s role: “[The Fed] has ordered the punch bowl removed just when the party was really warming up.” What should bankers do to remove the punch bowl?
Our guest, Dallas Wells of Precision Lender, speaks with our panel about what banks are doing or should be doing to prepare their loan portfolio for recession. Dallas Wells leads PrecisionLender’s Strategic Innovation. Prior to PrecisionLender, Dallas held executive positions at two US banks. Dallas graduated as a Danforth Scholar from Washington University with a BSBA in Finance and is also a graduate of the Southwestern Graduate School of Banking at Southern Methodist University. To learn more about Dallas and PrecisionLender click here.
Since losing his two year-old son, Oliver, to neuroblastoma in July of 2018, Dallas and his family have been raising money for childhood cancer research. The mission of Ollie Foundation and its partners is to help find a cure. Childhood cancer is more common than people think and only 4% of federal government cancer research funding goes to study pediatric cancer. Consider donating to Ollie Foundation. The link to donate is below:

This podcast relates to The Kafafian Group’s Strategic Management services. Click here for more information.

Watch for episode 42 of This Month in Banking to be released on Wednesday, June 26, 2019 and a new episode on the last Wednesday of every month.

Thank you for listening!

Relevant links:
The Federal Reserve’s Senior Lending Officer Survey on Bank Lending Practices
Washington Post article on the National Association for Business Economics survey
Economic Policy Institute on the next recession
Ag lending and the next recession
Credit card lending and the next recession
Fintech (OnDeck) and loss experience
C&I loans and the next recession
Bloomberg article on the next recession

Some links to articles may require subscription and/or login.