How incubators help start-ups become bankable

Business incubators provide support for businesses in the earliest stages of their existence. They provide space for ideas and inventions (the beginning of the business lifecycle) and access to working capital through pooled funds provided by banks, micro-credit financiers, venture capitalists, grants, and guaranteed loan programs. [Continue]

Refined lending approach attuned to business lifecycles

The best companies in your loan portfolio are likely the ones at capacity, providing stable and predictable return on investment. It doesn’t matter if these firms are large economic enterprises or small mom-n-pop shops — sales and earnings variances are low and businesses experience planned growth with long term stability. [Continue]

De novos: Refiguring the cost of entry

The economy has a lot of influence on the de novo market, which might be picking up, albeit tepidly. James LaPierre, FDIC Kansas City Regional Director, shared at a seminar hosted by the Eide Bailly accounting firm that as of Nov. 1, that the FDIC has approved nine applications for FDIC insurance so far this year and the agency currently is considering 12 pending applications. [Continue]

Would liquidity be worse if the crisis hadn’t happened?

As interest rates rise, it is an interesting time to think about deposits. The change in the rate environment puts pressure on community banks to pay more to retain – let alone attract more – deposits. Loan demand seems strong in many places, reflecting a strong economy, but finding the money to fund those loans can be difficult. [Continue]

Craft breweries pervasive while start-up capital scarce

When Sarah Howat and her business partner decided to open a Denver brewery in March 2013, they put together a business plan and found a small group of investors made up primarily of friends and family. Their initial target was $250,000, which Howat described as the low end for starting a brewery. Early in 2014, Black Project Spontaneous & Wild Ales was up and running. [Continue]

With core providers, breaking up can be hard

Aaron Silva is president of Paladin fs, a research firm that gathers data on core services (and other fintech products) and provides a resource for banks looking to comparison shop. Silva calls Paladin’s data a “blue book” for fintech services. This information, among other things, helps banks determine whether breaking a contract with a core provider is financially feasible, which is an increasingly common scenario, Silva told BankBeat.

Q: What are common issues banks are facing when it comes to core service providers?

Aaron Silva: They are learning the core suppliers are not financially guaranteeing any of their system’s performance. For example, if there is a failure, or something happens that causes the bank harm, they can’t go back to their contract and find a credit or some sort of benefit. They will find they have to beg for it — or sue them. Another issue we see is the bank’s rights around termination of the contract. Today these contracts are written as such that if you leave a certain service for any reason — or even a part of the service — you have to pay the entire balance of your contract, anywhere from 50 to 100 percent of it. [Continue]

Charter conversions not a concern for Otting

The number of national bank charters in the Midwest has dropped precipitously in the last decade. And while industry contraction is a factor, community bankers also point to savings on examination costs, local decision-making by (and access to) examiners, along with the dilution of national banking powers as reasons they’ve opted to convert to a state bank charter from a national charter.

One place where the decline in national bank charters is astonishing is in Comptroller of the Currency Joseph Otting’s native Iowa, where there are 17 national charters today where there had been 42 a decade ago. The difference is even more pronounced in Nebraska, which currently has 12 nationally chartered institutions, down from 57 a decade ago. [Continue]

Marijuana dollars spreading

Banks are increasingly going to have to consider the implications of doing business with companies that come into contact with marijuana. Cannabis is now legal for medical use in 23 states; it is legal for recreational use in another 10 states, and it is legal in Canada. [Continue]