Overseeing Fixation Hazard.

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Overseeing Fixation Hazard FDIC Kansas City Area Video chat Call February 10, 2010 James LaPierre, Territorial Executive, DSC Al McGregor, Supervisory Analyst, DSC Rich Cofer, Provincial Administrator, DIR CRE Loaning Presentation Became Strongly
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Overseeing Concentration Risk FDIC Kansas City Region Teleconference Call February 10, 2010 James LaPierre, Regional Director, DSC Al McGregor, Supervisory Examiner, DSC Rich Cofer, Regional Manager, DIR

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CRE Lending Exposure Grew Sharply Source: FDIC, safeguarded organizations situated in metropolitan zones FDIC, DIR-KC, 2/2010

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…Including C&D Loans Source: FDIC, guaranteed establishments situated in metropolitan regions FDIC, DIR-KC, 2/2010

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How Did the Industry End Up Here? Innovation Financial Innovation Competitive Landscape FDIC, DIR-KC, 2/2010

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Margin Compression – A Major Symptom Source: FDIC, every business bank FDIC, DIR-KC, 2/2010

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Residential RE Markets Soured Case-Shiller Home Price Index – Q1:2000=100 Maximum Index Value/QQ:YY Index Value as of Q3:2009 Source: Moody\'s Economy.com FDIC, DIR-KC, 2/2010

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Recent Failed Banks Often Have High CRE Exposure… Source: FDIC, 12-31-2007, every single guaranteed organization FDIC, DIR-KC, 2/2010

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…Including C&D Loans Source: FDIC, 12-31-2007, every single safeguarded foundation FDIC, DIR-KC, 2/2010

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Lessons for Kansas City Region Ag Lenders? FDIC, DIR-KC, 2/2010

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Nearly Two-Thirds of the Nation’s Farm Banks Are in the Kansas City Region Source: FDIC, 9-30-2009, ranch banks FDIC, DIR-KC, 2/2010

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Ag Credit Concentrations Have Been Steady Source: FDIC, business banks based outside metropolitan ranges. FDIC, DIR-KC, 2/2010

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But Players Move Up & Down the Spectrum Source: FDIC, business banks based outside metropolitan regions. FDIC, DIR-KC, 2/2010

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Farm RE Lending Up yet Ag Production Lending Down Source: FDIC, business banks based outside metropolitan zones. FDIC, DIR-KC, 2/2010

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FDIC, DIR-KC, 2/2010

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Although Agricultural Credit Conditions Remain Favorable Profitability and Asset Quality in Other Loan Segments Has Weakened FDIC, DIR-KC, 2/2010

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The Percentage of Unprofitable Institutions Has Tripled in the Last Two Years Source: FDIC, every single safeguarded establishment. FDIC, DIR-KC, 2/2010

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Nonmetro Institutions Have Not Been Immune to Rising Credit Problems Source: FDIC, every guaranteed establishment. FDIC, DIR-KC, 2/2010

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Less Than One-Third of Nonmetro Institutions Report Noncurrent Ag Loans Source: FDIC, nonmetropolitan-based organizations. FDIC, DIR-KC, 2/2010

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For Those Institutions Reporting Noncurrent Loans – Nonag Loans Are Most Problematic Source: FDIC, nonmetropolitan-based establishments. FDIC, DIR-KC, 2/2010

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Pertinent Links at WWW.FDIC.GOV FIL-61-96 Analysis and Classification of Agricultural Credits http://www.fdic.gov/news/news/monetary/1996/fil9661.html FDIC Risk Management Manual of Examination Policies, Section 3.2 http://www.fdic.gov/regulations/wellbeing/manual/section3-2_toc.html FIL-104-2006 Commercial Real Estate Lending: Joint Guidance http://www.fdic.gov/news/news/money related/2006/fil06104.html FIL-22-2008 Managing Commercial Real Estate Concentrations in a Challenging Environment http://www.fdic.gov/news/news/budgetary/2008/fil08022.html FIL-61-2009 Policy Statement on Prudent Commercial Real Estate Loan Workouts http://www.fdic.gov/news/news/budgetary/2009/fil09061.html FDIC, DIR-KC, 2/2010 .:tsli

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