It is almost un-American not to procrastinate. We all do it and while the urge can come at any time, it usually surfaces when some major project is due. We procrastinate so much in fact that quotes abound on the subject including, "If it weren't for the last minute, I wouldn't get anything done" and "Anyone can do any amount of work, provided it isn't the work he is supposed to be doing at that moment." Those who monitor the insane and inane say such behavior is probably our way of coping with the anxiety associated with starting or completing some task or decision. We are going to think about that one for awhile before we make up our minds as to whether it is correct or not.
Speaking of procrastination, it has become abundantly evident that bankers are trying to get to year-end so they can turn the page before starting to address some of the deepest seeded issues we all will have to still face. Somehow, a new calendar seems to be something we like to have before starting something new, but this time things are different. Banks are struggling with profitability, credit issues and customers demands, so we can ill afford to wait to see what 2011 will bring. No, this time around we need to keep moving, even if it is only one small step at a time.
To be sure, all bankers will have to focus on their core business, retain tight control over expenses and monitor areas of risk now more than ever. It seems as though regulation is not only getting even more difficult to understand, but more volume seems to be flowing through the industry pipes than ever before. This is a transition time for all bankers and more information than ever will continue to be collected and analyzed by the regulatory agencies. No one wants a repeat of this current credit crisis, least of all the governmental agencies, so bankers can expect more stress testing, more analysis, more audits and more in depth examinations than ever before.
If you have been procrastinating about enhancing the risk management process at your bank, we urge you to get going on it. Start a separate "Risk Committee" that is responsible for all risk (not just ALCO's interest rate risk or loan committee's credit risk), appoint a committee chair, have them report to the Audit chair and focus in on identifying, measuring and controlling risk. This is a multi-year project, so taking steps now, even if they are small, is worthy of doing sooner rather than later.
To that end, if you have been procrastinating getting a better handle on the risk in the loan portfolio, that too is an area worthy of doing more. Regulators expect community banks to have risks identified, the portfolio should be diversified (it takes time, so track the work you have done here and keep moving), data should be collected so it can be analyzed (track current debt coverage and the most recent LTV on your systems and be sure to put the date related to each one on your systems as well). Just knowing when you last had such-and-such a loan appraised, rotating and regularly scheduling appraisal reviews and updating cashflows can add a great deal of strength to any analysis of loan portfolio risk. Stop procrastinating dumping key elements of your loan folders onto systems and start taking steps - it will only help and it does take time, so do it one loan at a time, but keep moving.
In closing, don't forget that procrastination can be powerful when you don't want to do something, but it can also... We'll have to finish this piece later, because right now we have something else to do.