Community Bank Conference

I attended the Supercommunity Bank Conference earlier this week, and here are some of the things that I learned at the conference:

1) The conference was very "unattended" and somber. This was obviously due to the current investing climate and interest in financial stocks, but more specifically, was caused by a contraction in money flowing into funds that specifically invest only in community banks. Many of these funds have closed recently as the prospects for buyouts, and the premiums therein have disappeared.

2) There were only one or two banks from Georgia at the conference, strange since the conference was held in Atlanta. I later heard that so many Atlanta banks are in trouble that they stayed away from the conference. The average bank in Atlanta, according to the scuttlebutt at the conference, has a 6% of its assets in the non performing category.

3) I learned of the existence of something called an "interest reserve" on the books of banks. When a borrower makes a payment, not all of it hits the income statement. Some of it is put into a "reserve account" so when loans become non performing, it goes against this reserve, thereby delaying the recognition of non performing assets. This may be why there has been a lag between the deteriorating economy and an increase in past due and non performing assets by banks.