Commercial Real Estate to Destabilize Regional Banks

Midsized regional US banks are being hurt the most by commercial real estate woes and it’s only likely to get worse. According to a study released last week by the International Monetary Fund (IMF), Commercial Real Estate (CRE) exposure represents 50% of the outstanding loans at midsized and smaller regional banks. And at seven banks shut down by the FDIC in the last couple of weeks, CRE represented 80% of the nonperforming loans. That’s a very bleak picture given what we’re about to discuss. While at a national level, CRE exposure makes up only 10% of total bank loans, the impact on regional banks has a major impact on small and midsized businesses that depend on them for capital.

Cash at Corporations. Save or Spend?

Companies are currently sitting on more cash than at any other time in the last 50 years. Cash and other short-term assets now account for 7% of all assets at non-financial US companies. If you exclude finance firms, US companies held $1.8 trillion in cash and short-term assets at the end of the first quarter, which is 26% higher than the same time last year and represents the biggest increase since the Federal Reserve started tracking cash levels in the 1950s. According to a recent CFO magazine survey and article, companies within the CFO Midcap 1500 (companies with $100 million to $1 billion in annual sales) are holding 15% more cash in 2010 than the same period two years ago.

Non-Compete Agreements: 15 Year or Accelerated Amortization?

Before, during and after any business acquisition, there are many variables to consider, one of which is the tax implication of the sale from both the buyer’s and seller’s perspective. In this case, we are talking about the treatment of intangible assets.

Bank Lending Troubles – Continued Uncertainty

According to a recent article in CFO magazine, the Bank for International Settlements, "the bank for central banks," issued its annual report published Monday. The article "Banks Not Out of the Woods" highlighted several points about the state of banks in the US:

Working Capital Needs: Bust to Boom

According to a recent CFO Magazine report, 2009 was one of the worst years ever for working capital performance, as companies were slow to adjust to the recession. Reviewing the 1,000 largest US public companies, average days working capital (DWC) jumped 8% in 2009 to 38 days, from 35 days in 2008. In round numbers, receivables were 10% higher in 2009, matched by an 11% increase in days payable. Coupled with companies replenishing inventories after 2008 and those holding unsellable product in 2009, days inventory outstanding (DIO) rose by 9%. This may not sound much, but further down the line to smaller privately held companies, less efficient financial management can exacerbate the problem.

Bank Lending in Doldrums and May Stay That Way

For the last 18 months, ClearRidge has published reports projecting that business lending will continue to worsen long after the end of the recession. History shows that to be true after every recession in the last century.

Oklahoma Bankruptcies Hit New High and Still Rising

There were over 158,000 bankruptcy petitions filed in the US in March 2010, according to a recent report from Aacer, a bankruptcy data collection company, which was 35% more than the previous month. This was also a 19% increase over filings in October 2009, the previous high since personal bankruptcy law was tightened in October 2005.

Impact of Healthcare Reform on Your Business?

Whether you were for or against healthcare reform, it is difficult to have an informed debate. Hardly any of us understand the Patient Protection and Affordable Care Act, let alone have sufficient information to debate how it may impact our businesses in Oklahoma.

Know which bank your business needs to work with

As I was preparing for the panel at the CREC Oklahoma Forecast event in OKC a few weeks ago, I made some calls to check on anecdotal data we had from bank lending in late 2009. As it turns out, we got very different answers from different lenders we spoke to.

What Shape is the Economic Recovery?

CFO.com had a recent article, which polled some of our nation’s most distinguished economists. They asked each one what letter or shape best reflects the outlook for economic recovery, from the"V" shape that described the fast recovery from the 1973–74 recession through to the dreaded "W" — twin recessions or "double dip" that keep the economy on the ropes for years.
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