Access National Bank Executive Briefing 2010 Banking Outlook - Growth Capital Event

Sponsored by

Access National BankProgressive Business Bankingwww.accessnationalbank.com

(703) 871-2100

Growth CapitalEducational Series

WHERE The Tower ClubTysons Corner, Virginia 20176

Host David LoughranVice President Commercial [email protected]

Guest Speaker Michael ClarkeCEO Access National Bank

Topic BANKING AND LENDING OUTLOOK FOR 2010What it means for small business

RSVP [email protected]

February 19, 2010 12:00 Noon to 1:30 PM

Special Executive Briefing

Banking and Lending Outlook for 2010

Sponsored by


(703) 871-2100





ISSUES FACING BANKS

Liquidity & Credit availability is constrained

•System is under pressure to de-leverage

•Investors & Management want to payback TARP

•Capital is being hoarded in anticipation “fix” by Congress

•Easy liquidity is gone, increased scrutiny, cost andconditions

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(703) 871-2100





ISSUES FACING BANKS

Profitability under pressure

•Carrying FDIC cost to absorb record failures

•Cost of capital and debt to banks is on the rise

•Banks are absorbing record loan losses

•Regulatory & audit burdens on the rise

•Overhead cost reductions & layoffs

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(703) 871-2100





ISSUES FACING BANKS

Bank appetite varies borrower and type of loan

•Indigestion CategoriesCommercial Real Estate – Income ProducingLand acquisition and developmentConstruction LoansResidential Equity LoansNon-prime residential mortgagesConsumer loans

•Appetite remains at healthy banks forCommercial & Industrial LoansPrime Residential

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(703) 871-2100





PR and Expectations Challenged

•New business has taken a back seat

•Internally focused on problems and cost saving measures

•News stream is ALL negative

•Banks have been declared the “villains’” of this crisis

•TARP-ed and feather-ed

•Best to keep head down and lay low

ISSUES FACING BANKS

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(703) 871-2100





Issues Facing Borrowers

Managing through the “Great Recession”

•No easy task – stress at all levels

•Sales volume, margins under pressure

•Good accounts go bad

•Trade credit more difficult

•Bank credit more difficult

•Asset values are down

•Cash flow constrained

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(703) 871-2100






At the Bank: Rates and fees up

•Fees increased for no apparent reason

•Basic Loan rates increased

•Default rates more prevalent

•Floor rates of interest imposed

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(703) 871-2100





Fine Borrowers are being asked to take loans elsewhere

•Now, the wrong loan type or industry

•Bank’s own financial difficulty

•Borrower had an off period and the bank over-reacts

•Bank Credit Policy changed: more restrictive


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(703) 871-2100





Terms, conditions and monitoring are tighter

•Economic conditions, increased loan lossescapital restrictions have made banks more conservative

•Hot points for operating companiesFinancial reporting – frequency & reliabilityCPA statement quality – audit/review/compilationPersonal guaranteesSpousesMinority partnerCollateral Adequacy


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(703) 871-2100





•Covenant compliance enforcementFinancial ratiosSignificant changes in the business

AcquisitionsOther debtChange in ownershipLitigationRelocation of headquarters or state of incorporation


Terms, conditions and monitoring are tighter

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(703) 871-2100





Your Bank’s Health & FocusHave Never Been More Important

•Adverse credit/business conditions are morelikely about the bank vs. the borrower

•Banks have preferences for loan types and industriesbut don’t do a very good job of communicating

•Large banks are moving middle marketcompanies to call center management

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(703) 871-2100





Your Bank’s Health & FocusHave Never Been More Important

•Bank Health Check

Is it profitable?

Is stockholders equity at least 8% of total assets?

Is management and ownership stable?

Is bank staff in tune with the health and priorities of thebank?

Did the bank take TARP?

Sponsored by


(703) 871-2100





Is There Good News?Solutions for Small Business Capital Needs

•Credit IS available: re-think how you evaluate credit offers

•Strongest relationships are forged and tested in difficult times

•Well managed banks are healthy and interested

•Industry types concentrated in DC metro are in favor

Sponsored by


(703) 871-2100






•Stimulus – Mezzanine Financing

SBIC’s get more liquidity

Cash flow based loans

Ideal for acquisitions, management buyouts, etc

Sponsored by


(703) 871-2100






•Stimulus – SBA loansQualification rules relaxedGuaranty percent increased to encourage banksSBA fees are waivedLimit increase from $2 to $5 million pendingIdeal for turnarounds, acquisitions refinance orstrategic growth

Sponsored by


(703) 871-2100





Contact Information

Mike Clarke, CEO

Access National Bank

703-871-2101

[email protected]

David Loughran, VP

Access National Bank

703-871-2119

[email protected]

Access National Bank Executive Briefing 2010 Banking Outlook - Growth Capital Event

Economy & Finance

Transcript of Access National Bank Executive Briefing 2010 Banking Outlook - Growth Capital Event