How To Sign Indiana Banking Lease Template

How to industry sign banking indiana lease template

well thank you dean kiama three decades sounds like a long time to me it seems like only yesterday but I have been involved in equipment financing I'm one of the few people i know that has been doing this craft both in large banks i started at citibank about 30 years ago in an also community bank setting so i've seen this product used successfully hopefully contributing greatly to the profitability of my employers which have all been banks during that time little background the topic of this this afternoon seminar is the role of community banks and I was thinking of the role of banks in equipment financing and and they have some of you folks to to thank in some sense because the regulatory framework that banks of face to get into leasing going back to regulation y which took place before that 30-year period that we're talking about kind of standardized this product if you think about it even a general electric or some non-bank doing a deal a leasing transaction it really conforms to the regulatory guidance that the banks have been given and banks have been able to trade assets back and forth with non banks through that period and the fact that this is a standardized product and also from an accounting an IRS point of view I think makes it something that's understandable to smaller institutions and so that was an additional reason for some optimism as we started this this project this this graph talks about the proportion of banks with nonzero leases and the top line is the non community banks that didn't surprise me a little bit of volatility during this time I've been contributing to that line myself in some ways the lower line is a surprise a pleasant surprise in a certain respect showing that throughout the study period to spend a fairly consistent percentage of community banks that have some involvement in this product this is a response to that first research question that dr. Khayyam was talking about that is to say the systemic relationships between specialization of community banks and whether they're doing equipment lease financing and we use the FDIC specialization categories as you can see their agricultural lending and so on and the first two columns 1990 and 2012 kind of just show the pattern of specialization of community banks by lending area and how its evolved during that time but what's really interesting is the final column there 2012 which looks at the banks that are involved in equipment lease financing and relating it to the specializations that they have and so you can see not to go of reaching everyone but it's a different pattern for example the first line the have a higher percentage of those banks that specialize in agricultural lending I wasn't surprised about the commercial and industrial because historically a lot of that equipment is subject to lease financing and then just the no lending specialty the banks that are involved in equipment lease financing are much less likely to be in the know specialty category and so this lent some interest in thinking well what is unique about community banks that do leasing the do the leasing product this is attempting to get it to the distribution of banks that are involved in equipment leasing by size range and the beginning of our study period you can see the community banks in general were skewed toward being a little bit smaller and even the community banks involved in leasing which are the small red blocks on the bottom the kind of skewed a little bit toward the small Bank size and interestingly enough in more recent days the the average size or the size range has increased a little bit you might notice those size ranges were taken from the Gilbert Meyer and fuchs article which we were really inspired bye in terms of thriving banks that thrive during the recent financial crisis then as our study progressed week's awesome as dr. Khayyam alluded to some real similarities between the attributes of community banks that were thriving during that period and community banks there are involved in equipment financing I was particularly excited to see that there were 87 banks under 50 million dollars doing this business as someone who's worked in equipment leasing over the years and seen the investment you have to make in systems and documents and just a lot of things you have to do to be successful in that business it was interesting to see some relatively small institutions involved in it this is getting at another research question talking about performance indicators and dr. Kim alluded to what they were brought return on assets return on equity and net interest margin and again we looked at the institutions that were involved in equipment financing versus not and we also looked at the pattern from 1990 22 2012 and it's just interesting to observe that to the extent that a bank's been involved in equipment financing during that time it's more likely to have a higher performance measure both especially in terms of our OE that's the biggest one certainly it's not a cause and effect thing the lease portfolios of these institutions have been very small it's not like leasing made them successful but does it just an interesting correspondence between their levels of success in these performance indicators and whether they're committed to or involved in this product this is kind of the sort of more reflective conclusion a slide it was very much inspired by the Gilbert Meyer and Fugue study which we're going to hear about tomorrow where they looked at the banks that the community banks I should say that thrive during the financial crisis and we were asking the question by the way they really took a very rigorous measure banks that maintained to account the high campbell's rating during that period and we're asking the question what are the industry practices of the equipment leasing business tell us about banks and how does that correspond with some of the practices and attributes of banks that we know survive during the biggest financial crisis of my lifetime certainly and we feel like there there are some strong commonalities between the banks that are involved in equipment financing and the ones that thrived we don't maybe some of the ones that thrive at doing equipment financing we can't know that because we didn't those banks weren't identified but and I thought I'd just point to a few what we tried to do was look at some of these attributes that are key to a bank being successful during difficult periods prudent underwriting superior risk control and strong customer relationships and I knew or at least I suspected that prudent underwriting would would be a characteristic of banks that involved in equipment financing because as many of you know it's hundred percent financing that's it's but sometimes people say oh leasing can be done by anyone you know God and least that equipment in many instances these institutional type transactions have to be subject to much more stringent underwriting and you might otherwise suspect because they're 100 percent financing and I was a when we were looking at some of the attributes in that thriving bank article is what we call it one of them was in the top under prudent underwriting internal underwriting that banks that have thrived during the financial crisis or more likely to use internal underwriting and not looking for those standard methods of credit scoring and I thought for a minute about equipment financing and how that has to be done and in many cases there's other issues than just simply straightforward credit reviews like tax risk or residual values accounting considerations in other words it's hard to farm out the underwriting of an equipment leasing transaction and so that's why we had a little checkmark next to that to the common common ground between the thriving banks and those that are successful in this business and under superior risk control standards the second one the review of charged off loans I mean that's as someone who's been working in banking for almost 30 years I guess it is 30 years now you do have to learn from your mistakes and it's probably as important and equipment leasing as anything because whether it's a you're charging off the loan because the credit went down downhill or you're charging off a residual value because it wasn't didn't get materialized there's an awful lot to be learned from the transactions once they've been charged off and again terms of best practices and commonalities I think people institutions banks or not banks that are successful at equipment leasing or also would share those characteristics with banks that are that tend to thrive so to conclude I think we find that the these strong underwriting standards and also approve strong relationships with customers to know what they're doing and underwriting and loan review are very much a characteristic of community banks that have succeeded and strong community banks and many of those community banks that are strong have not even considered this product and so we're thinking that the banks that have good practices good habits and that are effective at what they do and that made them survive during the financial crisis also create an opportunity for those banks to enter products like that that might otherwise appear to be more complex but perhaps surprisingly and maybe not even anticipated in all cases dovetails with these prudent standards and prudent approach to doing business that's made those community banks so successful thank you Thank You Charles Muhammad appreciates the paper this is a bit unusual for academics I think the way I read the paper it's really promoting a new growth opportunity for community banks the presentation indicated that community banks today really don't do an extensive amount of equipment lease financing but did show some evidence that those that do by certain performance metrics do a little bit better so it's calling attention to this as an area of potential opportunity going forward and I think this is a great forum to hear community banks perspective the community bankers in particular in the audience to hear your ideas in terms of this as an opportunity of growth one thing to note in both of our presentations up to this time both researchers both groups of researchers use the Federal Deposit Insurance Corporation definition of a community bank which is more inclusive than just asset size I think this is a contribution moving us forward in the understanding of community banking they want community banks to be involved for example in a certain amount of deposit gathering a certain amount of lending have some geographic focus so it's not only size and so if you're not familiar with the Federal Deposit Insurance Corporation measure of community banks I encourage you to look at that research effort that they've done as a supplement to our understanding of community Ebanks I think too much of what we've done in academics has just looked at asset size solely as the criteria and that we've varied from 1 billion 25 billion to 10 billion as the cutoff and I think we need to pay more special attention to exactly what we mean by community banks and I think we're trying to progress that understanding