The Most Fun I Never Want To Have Again: A Mid-Life Crisis in Community Banking

by R.D. Koncerak

In the early 2000’s, America was in the midst of an economic boom. Nowhere was the prosperity more evident than across metro Atlanta and Georgia’s thriving community banking industry. Georgia saw more new bank start-ups than almost any other US state between 1997 and 2007…and then suffered more bank failures than most states combined between 2008 and 2012. What happened? This book tells that story. At year-end 2012, the largest 1% of US banks controlled eighty six percent of American domestic deposits …which means that 99% of America’s 7,083 financial institutions held only fourteen percent of domestic deposits. Despite their challenges, community-based financial institutions remain America’s predominant banking model. This is a story about the “other” 99 percent of American banking. Join author R.D. Koncerak on an eye-opening, insider’s look at Georgia’s community banking industry. From the forces that fueled the boom through 2007 to the crises that sent world markets reeling in 2008, this book is part financial documentary, part autobiography, and entirely entertaining. Koncerak combines an engaging writing style with a range of industry sources to deliver a firsthand account of success and failure in the business of banking. Chapters include organizing and launching a bank as a new business venture, managing in times of crisis and the FDIC closure process for a financial institution in distress. The book also offers candid leadership and career advice based on the author's adventures in the field. This exposé includes trade articles and SEC extracts that provide insight into the greatest financial disaster to hit the United States since the Great Depression. Finally, "TMF" includes two guest chapters: an insightful industry overview from accomplished financial author John Mauldin, and advice on the future of community banking from strategist Karl Nelson.

Genres: Finance

358 pages, Kindle Edition

First published July 20, 2013

Reviews

[Gus Lackner · Rating 5 out of 5]

Bob Koncerak is an experienced community banker who writes with clarity. If you are interested in community banking as a career, this book is much less boring than a textbook and will provide definitions and practical advice around ideas and topics in community banking, including, in order of appearance:

- Construction Loans
- Federal Deposit Insurance Corporation (FDIC)
- Office of the Comptroller of the Currency (OCC)
- Organizers, directors, boards, presidents, CEOs, and other leadership positions
- Dirt lending (real estate development)
- Sales: Lending officers and wealth management
- Your employer getting acquired
- Career advice: if not sales, executive overhead
- Small businesses have bad tooling
- De novo banks
- Startup advice in a highly regulated industry
- Marketing: find target market, hire sourcing
- Georgia banking history: anti-branching laws
- 1997 Riegle-Neal Act allows interstate banking
- Serial entrepreneurs and change of control period
- Banks are valued on strength of liabilities
- Underwrite cash flow in bear and real asset in bull
- Iron law: Margin > % Bad Loans
- Real estate markets influence underwriting mix
- Syndicated lending (loan participation)
- Investor (full strategy) vs. speculator (exit strategy) vs. gambler (no strategy)
- Wholesale funding (brokered deposits)
- Build-to-sell
- Multi-state IPOs
- Banking compliance business services
- Offering circular/red herring
- Core processors & operations
- NASD (now part of FINRA)
- Effectiveness statements
- Cooldown periods
- Liquidity risk
- Escrow
- Warrants
- Prospects lists
- Institutional investors
- Jingle mail
- Liar loans
- Stale prospectus
- Challenges selling shares (use warrants as incentives, hire a sales force)
- Fee-based underwriters
- Regulatory minima and breaking escrow
- Board politics
- Structural and audit compliance
- Loan basics
- Prime rate and how the Fed is a mystery to community bankers
- Community banks like higher interest rate (better margin)
- Mortgage bond yield spread from treasury
- Full faith and credit vs. implicit/assumed backing
- Allowance for loan loss (ALLL)
- Cumulative profitability and dividend distribution
- FDIC controls entrepreneurship
- Sarb-Ox and burdensome 3rd party auditing costs, even if unlisted (SEC)
- Mortgage equity withdrawal (second mortgages) propping up GDP from 2000-2006
- American International Group’s (AIG) bad credit default swaps
- Central bankers hate deflation
- Basic quantity theory of money
- Deferred assets, NY Fed’s Term ABS Loan Facility (TALF) program as a part of federal Troubled Asset Relief Program (TARP)
- Deferred assets that actually were
- Fiserv’s eight types of bankers: commercial and industrial (C&I), commercial real estate (CRE), small business (SBU), agricultural (AGR), personal (PER), residential real estate (RRE), high residential (HHR), and diversified (DIV)
- Board ethics
- Reg-O strategy (loans to officers and directors)
- Trust preferred securities (TRuPs) (repackaged debt) and how commercial real-estate crash caused a problem with construction and development lending
- Interest reserves (paying loan installments with line of credit)
- Any portfolio is liquid if the future profits are high enough
- FDIC blames IndyMac for Uncle Sam’s mistake
- Banks ‘close’ not ‘fail’
- <2% leverage capital ratio rule
- so-called Regulatory Accounting Policy (RAP) vs. GAAP
- Cash infusions
- Loss share agreements problem: how FDIC creates incentive to foreclose/sell distressed assets
- Appraisal types: sale in ordinary course, quick sale valuation, bulk sale valuation
- Syndicated lending problem: Loss share covered leaders force low appraisals on participating banks
- Loan stacking to bypass single borrower rule (commercial real estate)
- Delinquency ratios
- Charge-offs and write-downs
- Texas Ratio (bad loans divided by liquid capital)
- FDIC consent orders
- Community banks are essentially a system for real estate people to raise capital from the community
- Talent: Lending officers vs. workout managers
- Making capital injection deals: get an institutional investor to buy from a director for pennies on the dollar
- Bob’s consulting work & FDIC scheduled closures

If this list seems boring, do not read this book. If you would like to see these concepts connected and illustrated in a natural narrative, you can read this book. I found it insightful.

[M Thomas · Rating 1 out of 5]

Managing an Atlanta bank through one of the epicenters of the Global Financial Crisis could have been fascinating. This isn't. The author has tunnel vision and all-encompassing self-interest rather than curiosity. And the writing isn't so good either.

[Anna Lee · Rating 4 out of 5]

Summer family saga read……Would make a good Netflix series.