The 80th fall conference of the Robert Morris Associates, opening today in Orlando figures to be a festive one for members who have been riding a rising wave of loan demand for much of the year.
"It's still an expanding economy, this has been a good year for all of us," said Martin "Dev" Strischek, an executive vice president of Barnett Bank of Palm Beach County and president of the association.
"Most of the chapters and groups I've met report improvements in lending," Mr. Strischek said. "It's especially so in the small business area."
Robert Morris Associates is a trade group whose 3,000 loan-officer members account for about 75% of all commercial and industrial loans by U.S. banks. More than 700 were expected to be in attendance.
While generally upbeat, Mr. Strischek cautioned in an interview last week that credit risk could become more of a factor for lenders as rates rise and the economy slows in the year ahead.
"If there's an issue for those of us in commercial and corporate banking, it's that we're being asked to extend credit with fewer covenants that we would have been able to do a year or two ago," he said.
Rising rates will put more pressure on the cash flow a borrower needs to cover his debt. The upshot, Mr. Strischek said, will be that banks will have insist on more collateral and impose tighter terms, or face the potential for credit problems. "The economy can't grow forever," he said. "We need to be aware we have credit risk."
As rates rise, there also will be more pressure for banks to make fixed-rate loans, he said. That will give an advantage to those lenders able to swap fixed rates for floating rates.
The focus of the conference will be on small business loans. Charles S. Anderson, a district director of the Small Business Administration, will deliver an address Tuesday on how to capitalize on new developments in the SBA arena.
The association also is scheduled to unveil a new credit scoring service it has developed with Fair, Isaac that will adapt credit scoring techniques used by consumer lenders to the needs of the small business banker.
Mr. Strischek said the technology, which streamlines loan approval, is adaptable to the small business sector, where the creditworthiness of the businessman is the main concern.
For larger loans, a lengthier approval process is still required, he said, because the borrower's earnings and collateral become more complex and difficult to underwrite.
"As you move into the middle banking market, you have issues of how much in the way of conditioning and covenanting can you give and still win the deal," he said.
The keynote address Monday will be delivered by J. Richard Fredericks, managing director of Montgomery Securities, San Francisco. He will speak on competition in the financial services marketplace and opportunities for banks.
Another major address on strategy will be delivered by Allen Lastinger Jr., president of Barnett Bank of Palm Beach County, and Larry Frieder, professor at Florida A&M University.
Jo Ann Barefoot, president of Barefoot Marrinan & Associates, Columbus, Ohio, will speak Tuesday on regulatory issues.
