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I am honored to accept the Presidency for the Chesapeake Chapter this year! During this past year the Chapter was awarded Gold status, the task list received a Gold Circle Award and the newsletter received 1st Place. As Peter Hickling, Past President, stated “it takes a team”. Kudos to everyone for a great year!
We have a challenging and exciting year ahead. I have no doubt with our supportive Board members, volunteers, and the addition of the new administrative support team, Mariner Management & Marketing LLC, we will not only meet, but exceed our goals.
The Chesapeake Chapter received numerous accolades for being a gracious host for the annual RMA conference in Baltimore. Many, many thanks to all volunteers and especially to Kathy King, chair of the host committee and coordinator for the volunteer staff, for an outstanding job!
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Pictured are CCRMA Host Committee chairs
Kathleen King and Elaine Ingebritson.
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Check the website for our current calendar of upcoming events and exciting programs at www.rmachesapeake.org. We look forward to your continued support and shall to strive towards meeting your ongoing needs and expectations.
And don’t hesitate to contact me with your ideas and questions. I can be reached at 410-665-7600 x 3003 or jtaylor@chesapeakebank.com.
Jo Taylor
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Chesapeake Bank Vice President Assumes Presidency
Mary Jo Taylor, Vice President of Chesapeake Bank of Maryland, accepted the presidency of the Chesapeake Chapter of the Risk Management Association (CCRMA) at their October board meeting. Cheryl Dahut, Vice President of BankAnnapolis, was elected 1st Vice President and Nicole Persons, Senior Vice President of Presidential Finance Corp., Baltimore, as 2nd Vice President. Their one-year terms began October 1.
Taylor, a resident of Timonium, has served on the chapter’s board since 2000. She is the Community Business Manager at Chesapeake Bank of Maryland responsible for instituting and managing a successful commercial lending department. She has been banking for 30 years serving on the staff of several local institutions including Susquehanna Bank, NationsBank and Maryland National Bank.
Dahut, who as 1st Vice President also serves as president-elect, has served on the chapter board since 2001. At BankAnnapolis, Dahut is Senior Portfolio Manager providing underwriting and approval support to line lenders. Her background includes 13 years of commercial banking experience with a number of local institutions including Citizens National Bank and The Bank of Glen Burnie.
Dahut, a resident of Gambrills, is a graduate of Johns Hopkins University, School of Professional Studies where she graduated with a MBA.
Nicole Persons, a resident of Baltimore, most recently chaired the chapter’s Young Financial Professionals group. Persons has been with PFC for over nine years currently serving as Senior Vice President of Mid Atlantic Sales which has her working with bankers in Maryland, DC and Virginia to help companies that do not qualify for traditional bank financing.
Persons has an undergraduate degree in Finance and Masters in Finance from the University of Baltimore.
Also elected on the board are: Trent Pusey, Branch Officer, Peninsula Bank, Salisbury; Charles Ruch, Senior Vice President, Annapolis Banking and Trust Co., Annapolis; Kevin D. Turner, Portfolio Manager, National Cooperative Bank, Washington, DC.
Click here for a complete list http://www.rmachesapeake.org/officers.html
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 Behind the emails and on the other side of the phone is Chesapeake Chapter’s new staff. Heading the team are veteran association professionals, Peggy Hoffman and Peter Houstle. We both have 20+ years experience managing associations. So, we are more than a friendly voice … we will use that wealth of experience to make sure you get the greatest possible value for your dues dollars.
Over the next year, we’re helping the board build a stronger chapter. Some changes already in place include on-line registration for events, this new newsletter, and capability to alert members about events and news by email.
In addition to leading CCRMA staff team, we own and operate Mariner Management & Marketing, an association management company, which you can visit at www.MarinerManagement.com.
When to contact the office? Whether it is a question related to the profession or one about your membership from information on events to update your member record, contact us. The new phone is 301-725-3540 or send an email to info@rmachesapeake.org. The mailing address is P.O. Box 1046, Laurel, MD 20725-1046.
Let us know how we can help you!
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It is easy to – and often faster – to take steps two at a time. But you give up something, as this Bank and Franchisor [names changed for confidentiality] discovered.
Prime Bank looked to its new product, SBA guaranteed loans, to increase loan volume. This new product gave the bank an ability to fund small business loans with reduced credit risk and improved pricing. And it was an ideal fit they thought for a small business product for Franchisees. They launched a strategy to establish a network of relationships with Franchisor’s beginning with a well-known Franchisor, John’s Auto Shop.
John’s provided advisory services to help the small businessman set up repair shops throughout the US. Services included site selection, demographic studies, financial projections, employee screening, advertising, inventory procurement, and a three-week training session to assist new owners in the set-up, operational, and marketing of their new business.
Under the new relationship with Prime, John’s delivered to the bank for evaluation several loan packages for franchisees in small middle market cities covering $150,000 for a mixture of equipment, inventory and working capital. The owner injected approximately $50,000 for Franchisee fee and leasehold improvements. Each package included site selection, demographic studies, business plan, financial projections, and owner resume. The dollar amount and loan packages made this an ideal fit for the Low Doc SBA 85% guarantee product.
Due to the very thorough and detailed information Prime concluded that the loans were generally underwritten to acceptable bank standards. The first double-step was a reliance on the relationship with the Franchisor in making a decision to dismiss a somewhat high failure rate among the Franchisees and some litigation. The Franchisor conceded there were always a few disgruntled Franchisees, but the selection process was modified to improve the screening.
A second double-step was the reliance on thinking that the deal size and SBA guarantee made some aspects of traditional due diligence unnecessary. An onsite evaluation and in person discussion with the prospective owner were sidestepped. Further, the financial projections were not stressed for possible downturns due to economic, competitive or management issues.
The Warning Light
A year later tax returns began to arrive indicated operating losses on some with most not meeting the sales projections initially established by the Franchisor. Next came the calls: owners closing the doors or selling the business. The loans were quickly transferred to the Bank’s Special Asset department for servicing. Several issues surfaced. One was the owner’s lack of self-assessment: prior background in large corporations did not prepare them for the small business environment. Most lacked crucial or necessary skills to succeed as an independent owner. Second, industry and competition were not sufficiently understood. Lastly, an over reliance on the Franchisor for assistance and advice led to problems. This was especially true for the Bank.
Lessons Learned
Both the owners and the Bank came to a quick conclusion of their mistakes: the Franchisees for being ill-prepared to be a small business owner, and the Bank for not following prudent underwriting of both the Franchisee and Franchisor. The Bank’s losses were minimal. After liquidation of the equipment, personal assets and collection of the guarantee, the owner’s cost was far more significant relative to the equity, debt and emotional suffering.
David Schallich, Managing Director, Special Assets, National Cooperative Bank, Washington, DC
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RMA recently announced their 2003-2004 Audio Conference schedule which features a series for community banks. Each conference begins at 1:00pm Eastern and lasts one hour. The cost is just $95 per telephone line – and you can include as many people as can fit around your speakphone. On-line registration is available. Find a complete list and links at http://www.rmachesapeake.org/events.html.
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Five Training Events Top Chapter Events Calendar
CCRMA opened its year with a special luncheon
with OCC’s Barbara Grunkemeyer, (see related story) and
three co-sponsored RMA training events held in September and
October. We also gathered for a networking dinner during the
RMA conference. And there’s more to come.
Highlights of the next six months include
six RMA courses covering Advanced Lending, Problem Loan Workouts,
Lending to Nonprofit Organizations, Real Estate Developer
Financial Statement Analysis, Uniform Credit Analysis and
Analyzing Construction Contractors, a panel discussion on
alternative financing and a series of events tailored specifically
for Young Financial Professionals (see related story). Log
onto http://www.rmachesapeake.org/events.html
for more details and access to on-line registration. If you
don’t see the course you’re interested in, log on
to the RMA site http://www.rmahq.org/Ed_Opps/calendar.html
for courses in adjoining chapters. The Carolinas-Virginias
Chapter for example is offering Cash Flow Analysis and Analyzing
Personal Financial Statements and Tax Returns in November.
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 Barbara Grunkemeyer, Deputy Comptroller for Credit Risk at the Office of the Comptroller of the Currency (OCC) addressed CCRMA members and guests in an excellent presentation on credit market trends in the current economy on September 17, 2003 in Washington, D.C. For attendees this was a special opportunity to learn first hand about the positive and negative trends the OCC was seeing in national banking portfolios.
A few of her key points on the current state of credit markets were that corporate credit quality is stabilizing, demand is sluggish, and credit risk remains at elevated levels. Grunkemeyer has served more than 12 years with the OCC in various positions, and was named in March to serve as the Comptroller’s principal advisor on credit risk facing the national banking system. She shared lessons learned including these five strategies that worked:
Active portfolio management
Setting limits and sticking to them
Diversification
MIS
Maintaining balance sheet strength – banks
Strategies that didn’t work included:
Underwriting standards succumbed to competition.
Maintaining balance sheet strength –borrower
Cash flow matters – EBITDA
Stress testing
MIS
Cuts in control
Everyone who attended, whether they represented a small community bank, regional, or large national bank, left with several valuable lessons that they could immediately put to use, to strengthen their portfolios and enhance credit quality.
Kim Armstrong, SVP/Risk Management, Wachovia Bank, McLean, VA
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Career Corner – Take Charge of Your Career Development
Times were when you could count on your institution’s training department to make sure you had the skills you needed to develop along a career path. Well, these times have passed and many of those new to our industry do not have easy access to in-house training in the essential areas.
As a developing professional, it is important for you to map out the essential skills you’ll need and to find a way to train in those skills.
Here are a few pointers for making your own career development & training map:
Find a mentor within your own organization and ask what skills he/she considers most essential for a solid background.
Join the CCRMA Young Financial Professionals group. Contact Charles Ruch at 410-626-2113 or via e-mail at charles.ruch@
mercantile.net.
Use the CCRMA network and ask others in your area how they are training and what they consider essential skills. CCRMA has three events in planning which will combine education with building your network. The first event scheduled for December 3 will feature senior commercial lending officer Jerald Ellis discussing “Troubled Credit: Early Warning Signs”. For details, click here http://www.
rmachesapeake.org/
events.html
Search for the courses, classes, seminars that will provide you with a curriculum for your needs. First, check within your own institution. CCRMA’s website can also be a great resource.
Consider options other than traditional classroom training – self-study courses, multi-media courses, web courses. Again, RMA & CCRMA have all these options.
Map out your plan – a curriculum.
Ask your boss for support. Let him or her know you plan to pursue opportunities for training and development. Make your case on how such training will benefit your institution.
Approach your department head when you see an opportunity for an essential course coming to your area. Often, you’ll get approval.
Be prepared to make a commitment to get the skills, even if it takes some of your own time. Many self-study or web courses can be completed on your own time.
RMA is one of our industry’s most respected training sources for credit and lending essentials. Check out your opportunities at www.rmachesapeake.org.
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Associate Members
David Becker, Susquehanna Bancshares Inc
Jamie Gronning, Regal Bank & Trust
Amy Hansen, National
Cooperative Bank
Sylvia Jackson, National Cooperative Bank
Kelley McIntyre, National Cooperative Bank
John Muncks, AmericasBank
Bruce Parker, Regal Bank & Trust
James Ruffing, National Cooperative Bank
Yang Zou, Farmers & Mechanics Bank Associate
Professional Members
Philippe Bastie, Euler Hermes ACI
Miguel Florez, First Annapolis Consulting
James Kirschner, Beltway Capital Partners LLC
J. Kreis, First Annapolis Consulting
Robert Merino, Ernst & Young LLP
Rebecca Sinclair, Presidential Financial Corp
Note: 2003-2004 Chapter Dues Invoices have been mailed! If you didn’t receive yours, please contact the CCRMA office at 301-725-3540 or info@rmachesapeake.org.
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