Smith & Wilkinson’s Post

💡 Monday was Presidents' Day (and we're debating whether the Friday of a short week feels different) — but did you know it was also International Tug of War Day, an observance honoring a sport that was once part of the Olympic Games and is still practiced in almost every country in the world? At Argyle, when we hear the words “tug of war,” we can’t help but think of the back-and-forth that occurs between #loan processors and consumers as they chase the documents required to verify (and re-verify) #income and #employment for a loan. And then there’s the push-and-pull between #mortgage lenders’ need to keep costs down and reluctance to pass those same costs on to borrowers. With time savings of 5-7 days per loan and a price point that’s about 80% lower than alternatives like The Work Number, Argyle helps #lenders like LMCU end the verification tug of war for good. Read more ⬇ https://lnkd.in/gFreHVXn

After just looking through my notes from the CBA Executive Banking School a couple of weeks ago I wanted to share the most striking facts I learned - all shared by my friend Cecil Burrowes ... "Before the Community Reinvestment Act (and other fair housing laws), U.S. banks systematically denied mortgages to people of color who lived in certain areas 'redlined' by a federal government agency called the Homeowners' Loan Corporation (HOLC). The HOLC created maps that classified neighborhoods across the country on a 'perceived level of lending risk' based on information gathered from various sources, including local appraisers, loan officers, city officials, and real estate agents." The HOLC was created in 1933. How have things changed since then? •74% of neighborhoods that HOLC colored red ("hazardous") are low- to moderate-income neighborhoods today. •64% of the "hazardous" neighborhoods remain racial and ethnic minority neighborhoods today. •91% of areas colored green ("best") in the 1930s remain middle- to upper-income areas today, and 85% are still predominantly non-diverse. These are multi-generational phenomenon. We've got work to do, folks.

The distinctive characteristics of the fastest growing small credit unions (<250M):- Indirect Auto Loans CUNA conducted in-depth research on the credit unions growth between 2007-2021. It divided the credit unions into quartiles based on YOY growth. The top quartile CU's grew loans at 11% CAGR, while the bottom quartiles grew loans at 4% CAGR. Surprisingly, the quartile 1 credit unions achieved a high loan growth without reducing APR. So, they didn’t play red ocean. Instead, garnered more loans without compromising on the yield Drilling down at the product level, the top loan growth driver for the CU's in the first quartile was Indirect Auto (and the second driver was 1st mortgages) Why indirect auto? Because, the macros supported auto loan growth for over a decade Now that we see the stabilizing prices of cars, increasing auto loan delinquencies, and loans going under water, the market might turn the other way round The next CUNA research might say the top quartile CU's focused on 1st mortgages. As, lenders are highly cautious while lending for homes post the 2008 crisis. Consequently, 1st mortgages look in a good shape, given the LTV ratios or delinquencies. Reference - https://lnkd.in/dYxmiV-u

📰Trepp, Inc. Chief Product Officer, Lonnie Hendry was interviewed by Therese Fitzgerald (Commercial Property Executive) yesterday at the CRE Finance Council Annual Conference in New York, dissecting the current distress in the CRE market... "Trepp’s May 2024 Delinquency Report was actually favorable, with CMBS delinquencies inching down to 4.97%. Even office, which had peaked at 7.38% in April, was down to 6.94% in May", said Hendry. "The market is performing better than the headlines would suggest, but there is a lot of distress that just hasn’t made it through the system yet. The CMBS market has about $30 billion of office loans maturing throughout the remainder of 2024 and a lot of those loans have very low debt yields in place, very low DSCRs and low occupancies relative to stabilized norms." Read the full write up here: https://hubs.li/Q02BnZsw0 #Trepp #CREFCJune2024 #CREFinanceCouncil #CREFC #CRE #CommercialRealEstate #CMBS #Conference #CREEvent #CREConference #CommercialPropertyExecutive #Office

For the top 20 Michigan-based banks with the highest concentration of commercial real estate (CRE) loans, more than $1 out of every $2 they have lent out has gone to borrowers for properties used for retail, office, industrial and multifamily space, to name just a few. That’s more than double the concentration for the top 20 banks in the country overall, topping individual banking giants like JPMorgan Chase & Co. (4.2% of some $3.9 trillion in assets) and Bank of America Corp. (6.2% on $3.2 trillion in assets). Via Crain's Detroit Business with Kirk Pinho: https://lnkd.in/ggZCcAQP

NEW from CICD: Analysis from CICD Senior Economist Matthew T. Gregg and colleagues finds that Native Americans pay more to finance home purchases than White borrowers on average. A major factor in the price gap was the disproportionate use of home-only loans on reservations. CICD Director Casey Lozar (Confederated Salish and Kootenai Tribes) discusses the research findings. Learn more in our new article: https://bit.ly/3IuanHX #Housing #Homeownership #IndianCountry

Outsiders to the credit union industry can often see the impact credit unions have on their communities better than those in the industry can. Chip Filson details a few of those examples that spotlight credit unions that are truly serving their communities.https://https://lnkd.in/gzNZJctg

Credit Unions are such a VITAL part of getting predatory lending out of our communities! So proud of and thankful for the hard work it took to get these updated CDFI rules passed. Great article here from Credit Union News from CUInsight.com

Vista Bancshares President, Daniel R. Sheehan caught up with with Abraham Galvan from Miami Today Newspaper regarding the recent interest rate trends. “We are seeing a pickup in commercial and industrial lending and residential lending. I still believe that there are some long-term factors that don’t necessarily have to do with interest rate movements or deal with geopolitical events that are still going to make Florida a great place for people to move to and start a business.” #communitybanking #lending #florida #commercialbanking https://lnkd.in/gR-WeTYg

Bank of the "Go-Karts" ... AND ... Real Estate Underwriting For those of us who have lived in St. Louis ... the Lake of the Ozarks is a touted Midwestern vacation destination ... but commercialization makes it seem more "Go-Kart" than "Ozark" ... a bit more 'fiction' than 'fact'. Fast forward to 2022 and the Bank of the Ozarks (aka OZK Bank) became the largest real estate construction lender in the US ... "say, what?!?!?" In 2023, it lent $3 BILLION ... and no one else even hit $2 Billion. And Q124 they did $700 MILLION!!! WTF!!! (excuse my Latin). Go-Karts went BIG! ... or did they ... in past two weeks ... OZK Bank has been downgraded ... TWICE! It looked too good! Over the next few weeks ... we are liable to learn whether OZK stuck to the discipline and hallmarks of real estate underwriting ... or not. I fear the latter. Cutting my teeth on commercial underwriting at #BankofAmerica as a recent MBA (also working in the Midwest) ... #VinceLuongo taught me the three pillars of debt underwriting: 1) Project Economics, 2) Market Fundamentals and 3) Deal Sponsorship. Without clear due diligence and understanding of the projections and risks inherent in each, deals are liable to go off the rails with more frequency than ought. The tale of OZK's tape is becoming apparent. $900 million loan on life-science project in San Diego that has no firm tenant committments (as reported in the media) is one example of what might be more to come. BOTTOM LINE - Economics, Marke and Sponsors are the critical elements of every real estate underwriting engagement for both debt and equity.