For our Clients, Colleagues, and Friends, | |
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Maintaining your net worth is obviously important, but when things get tough, liquidity is critical. From the always wonderful MBA Performance Report are the ratios of liquidity to tangible net worth for the industry going back five years:
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- As the saying goes, "Cash is King."
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Fairway Independent Mortgage has agreed to a $10 million fine for redlining. We don’t believe a single MLO or manager intentionally decided to redline, which is a banking rather than a mortgage banking concept anyway. There may be one out there, but we don't know of a single mortgage executive or mortgage loan officer in the industry who has avoided or turned down originating a mortgage. And why would they? The incentives are demonstrably all there to earn a commission on the loan and to badger the internal organization to make the loan. While CFPB prosecutors can threaten all sorts of things to “encourage” companies to settle, we know the management at Fairway Independent and hold them in high regard, so we very much doubt the CFPB found a smoking gun.
- On this day in history, November 17, 1989, the so-called Velvet Revolution began in Czechoslovakia. This was only nine days after the fall of the Berlin Wall. One-party rule in Czechoslovakia was almost over, and the Communist Party’s leadership resigned on November 28th, followed a week later by an anti-Communist government taking over.
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The MBA did another great job with its recent Annual Convention in Denver, and it was a pleasure meeting with clients, colleagues, and friends there. Mike was representing us and said a highlight was meeting with Tricia Migliazzo and some of her Lenders One colleagues. Two key takeaways that should interest any mortgage banking CEOs or CFOs. First, Lenders One has beefed up its L1 Insurance offering to include quotes to applicants for homeowners insurance that is integrated into your origination workflow and provides you with another source of revenue. And second, Lenders One automatically offers each of its members an annual audit of its vendor expenses and provides a detailed dollar savings comparison against any of Lenders One's offerings. This is a free, annual service for members. So if you're not already a Lenders One member, there's no reason not to at least check this out with Tricia Migliazzo or Jason Wright.
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Now that we got the world to stop using the non-word incentivizing, how about clearing up the misuse of the word literally? Literally means exactly, but people will say dumb things like, “I literally died when I saw how much our loan revenue had increased.” No, you didn’t die. Or, “It literally blew me away to see how much bank stocks had risen this year.” And no, you didn’t blow away. For our faithful grammar Nazi readers out there, please send us your better alternatives to "literally" so that we can promote them in an upcoming newsletter.
- Here's Joe on traveling and gin: "The Raffles Hotel in Siem Reap Cambodia is probably my favorite hotel in the world. Cambodia used to be French Indochina, and you feel like you’re in 1920s Paris there. They have a dark and magical bar called The Elephant Bar, in honor of the many elephants in Cambodia. The gin they use is called Elephant Gin, and I just found a distributor to ship a bottle to me from half the way around the world. On a scale of one to ten, it’s an eleven."
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Did you ever try doing the New York Times crossword puzzle and feel like a real dummy? Well, here’s a pick-upper for your ego: Try the weekly crossword puzzle in the National Enquirer. They’re super easy; this week’s 109 across was a four-letter word referring to Pepsi’s rival soft drink.
- Here's Joe with another reminisce on his time at Call Berkeley producing concerts in the late '60s: "Perhaps the most obscure musician I ever produced at Cal was John Fahey. Wikipedia says he had 29 albums, and the people who like his music probably have all 29. John didn’t sing on his albums, but he played guitar with strange, hard-to-describe chords and tunings, and at times, he’d play in a way that sounded like two people were playing guitar. His music is almost meditative, and I have a few of his CDs that are magical.
- "Anyway, John showed up in Berkeley and hung around the music scene for a number of years. He put out lots of albums, and he did a few under the name of Blind Joe Death. I never put him on stage, but I once had him do a workshop on guitar techniques in the Student Union Building here. It was free, and maybe 15 or 20 people attended with their guitars to spend an hour learning from him. He showed up with his wife, and she pulled me aside and told me, 'John has bleeding ulcers, and if I find out that you’ve allowed him to drink, I’ll rip your head off,' or something like that. The moment she left the small room, he asked if he could get a Pepsi, and I sent someone down to get one. When it arrived, he opened a small compartment in his guitar case, I guess where you’d normally keep extra strings and guitar picks, and pulled out a small bottle of Jack Daniels. He poured half the Pepsi into a planter, replaced it with the whiskey, and started gulping it down. I didn’t want to be there when his wife returned, so I skipped out and never heard him play.
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"He was very thin, almost too thin, with wispy hair that looked like it was on its last legs. I heard that a few years later his wife had left him, and he was sleeping in cheap motels and flea-bag hotels. He died at 61 of liver disease. Rolling Stone voted him #35 out of the top 100 guitar players, but I doubt his CDs sell even a hundred copies a year."
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How about Northeast Community Bank, (NECB, $1.9 billion in assets) in Upstate New York? Their stock is up 59% this the year, and along with the quarterly dividends, the board declared a special, fifth dividend.
- The Klamath River (below) is a beautiful river in Northern California near the Oregon border. There were four privately-owned dams on the river, pretty much killing the once-huge salmon and steelhead run. (Joe tells me that the one time he fished it, he only got one bite all day.) The lakes behind the dams didn’t provide very much water storage, and the owners decided it was too costly to maintain these 100+-year-old dams, so they removed all four. The last was fully removed a week ago. Salmon have already been spotted in the now freely moving river.
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- Solar and wind energy are great, but what about days when the sun doesn’t shine or the wind doesn’t blow? Isn’t the answer nuclear energy? Despite the problems at Three Mile Island, no one has ever died from nuclear energy in any country other than the Soviet Union. Or as someone once said, "More people have died in Ted Kennedy’s car than have died in nuclear power plants."
- Did you know that there are over 2,400 downpayment assistance programs out there? A good number are offered by the Catholic Church.
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Question: I heard about something called CDARS, what does it mean? Answer: CDARS is an acronym for the Certificate of Deposit Account Registry Service. In short, CDARS allows a person to invest in Certificates of Deposit (CDs) held by many different FDIC-insured banking institutions. That way, you get CDs which, combined, go way over the FDIC $250,000 limit.
- Very clever peeling of an orange, but why is he walking toward the food processor?
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- Farmers & Merchants Bancorp (FMCB) is a small community bank with 32 locations in California. It was founded in 1916 and has a current market cap of $717 million. Further, it has paid dividends to shareholders for 89 consecutive years … and has amazingly raised its dividend for 59 consecutive years!
- You probably know that there are six banks with more than a trillion dollars in assets: JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley. Did you know that there are also 36 banks with over $400 billion? And while we’re at it, we still don’t think of Goldman Sachs or Morgan Stanley as real "banks." The term "investment bank" fits them much better.
- The people who designed cars definitely had some flair in the 1950s, inspired by the Space Age. This is a 1953 Buick Skylark:
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This is an e-mail Joe got from his then-17-year-old daughter when she first started editing these newsletters:
“Hey dad. Here’s the edited newsletter. I highlighted everything I changed and made a few comments. Very entertaining, other than, you know, the stuff about banking.”
Hannah is a wise young lady.
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