TARP Funded Banks: Interview with the CEO (Wall Street Transcript)
Sat, 13 Jun 2009 17:52:00 Etc/GM
Topics covered: 20 TARP Banks--TARP Bank CEO Interviews--the Origins of the Crisis--Balance Sheet--Return of TARP Funds--Regional Banking--Business Strategy in Commercial Banking--Business Strategy During Economic Crisis
Companies include: Home Federal (HOME), HF Financial Corp. (HFFC), MB Financial Inc. (MBFI), Umpqua Holdings Corp.(UMPQ), First Community Bankshares Inc. (FCBC), Banner Corporation (BANR), Cascade Financial Corporation (CASB), Heritage Financial Corporation (HFWA), First PacTrust Bancorp, Inc. (FPTB), TCF Financial Corporation (TCB), First Niagara Financial Group (FNFG), UCBH Holdings, Inc. (UCBH), City National Corporation (CYN), Boston Private Financial Holdings, Inc. (BPFH), Pacific Capital Bancorp (SABB), Zions Bancorporation (ZION), Marshall and Ilsley (MI), Midwest Banc Holdings, Inc. (MBHI), Valley National Bancorp (VLY), Regions Financial (RF)
In the following brief excerpt from the 108 page report, the current CEO and President of First PacTrust Bancorp, Hans Ganz, discusses the development of his bank's business plan. Currently, First PacTrust Bancorp is a recipient of significant financial aid from the US Treasury. This interview is from August of 2005.
TWST: I would assume there have not been too many bad loans along the way.
Mr. Ganz: As a matter of fact, we haven't had any. We had recoveries the last couple of years, which obviously had to do with our underwriting standards. It also had to do with the fact that as a real estate lender, if you had big charge-offs in real estate over the last three years out here in California something would be seriously wrong, as you know, the housing market has been just tremendous! But I do think our underwriting standards contributed to it, and we have not relaxed our underwriting as a lot of lenders have done lately.
TWST: Are you interest rate-sensitive?
Mr. Ganz: We are somewhat interest rate-sensitive, not tremendously so. Where we're more sensitive than we are to interest rates is to the flattening of the yield curve.
TWST: The whole real estate thing has been remarkable in the recent years. What are your feelings about the near future, or the middle future especially in your part of the world?
Mr. Ganz: I do not see a bubble, as has been predicted. I mean, I don't know how it is in New York, you can open any newspaper here and any day you open the business section there is a new scenario for a bubble. You have UCSD and all these people predicting that by the middle of 2006 this baby is ready to pop. I do not quite agree with that. If you look back at the last cycle where we had a devaluation of real estate in San Diego, during the 1989-1994 period, there was some turmoil in the market, but the impetus in 1989 was not just the interest-rate scenario. What happened was that with the collapse of the aerospace industry in San Diego County a lot of high-earning blue-collar and white-collar workers lost their jobs and left the state, which exacerbated the downturn. The downturn at that time was about 20%-25% max in real estate values. I don't think that's in the cards today. Could I see a 10%-15%decline over the next couple of years to even things out? Absolutely possible. Do I think it's going to be worse than that? No. Is there a possibility? There always is.
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source: http://biz.yahoo.com/twst/090613/infotarp2.html?.v=1