History always repeats itself. The question is, do we remember? That was the premise of this session at Prosper 2017. The panel of bank credit experts, Tony Hueston of Star Financial Bank and Sherri Slayton of Western Alliance Bank discussed this and other issues.
One significant area of discussion was around the large increase in CRE loans over the past three years. The OCC found that more than 406 banks saw their CRE portfolios double during the same period. The OCC commentary also indicated that underwriting standards have eased to levels similar to 2005-2007. Several members of the audience discussed the on-going process of managing portfolio concentrations and the need for strong stress testing capabilities.
When asked, “What is the biggest issue or concern FI’s will face in 2017 and 2018,” answers varied. Sherri Slayton discussed issues with BSA. Tony Hueston mentioned balancing loan growth goals with regulations, portfolio concentrations and other factors. All agreed that there is significant unknown variables with the future regulation environment.
All attendees agreed history would indeed repeat itself. The unknown variable was when. The best defense? “Stick to your guns” and only do loans that make sense!
