Rebirth 79: I opened a bank in the United States

Chapter 307 The Time Cost of Funds

"Residential loans are enough. At least, it shouldn't be a big problem to survive this period of vicious competition!"

Closer to home, let’s get back to the topic.

As the person who designed this cycle model with Carter, Goodman naturally understands the huge profits.It's just that after knowing that there is nothing wrong with living, people's minds become active.
"But you know, I'm the manager of Black Bank, the actual manager of it. Right now, our utilization rate of depositors' funds for the bank itself...don't you think it's too low?"

"Such a sum of money, our Black Bank alone has [-] million. If we add the deposits of Forest Bank and Bath Bank, it will be less than [-] million! This is not a small sum, just let it go Is it lost in the vault?"

"This amount needs to pay 60 yuan in interest every year! I know that compared with the income brought by the loan, there is no pressure to pay the 60 yuan in deposit interest, just"

Goodman was heartbroken:
"My heart aches!! That's all the green Franklin! That's it, I gave it away for nothing. I... I can't stand it!!"

To put it in a more fashionable way, this is called heartache can not breathe!
"Hahaha, what should I do otherwise? The credit card business can consume part of it, but if not, the amount will increase a little. When the cycle of housing loans starts to run later, our bank's capital will also increase. At that time, the credit card limit will also increase. Raise, this short-term consumer credit, we can raise the interest rate a little bit."

Looking at the lovely Goodman, Carter couldn't help being amused.

Indeed, it is a bit cruel to let a bank steward guard a large sum of money in the bank vault every day, and then watch them generate high time costs. It is indeed a bit cruel!
It's like shrimp and pig's heart!

"The most critical question is, even if we take down the bank in Plains now, haven't we found any suitable way to consume it? If we can't find a loan demand, then we take it down, but it will increase more the cost of"

"But it is close to Columbus and Albany after all! There are many opportunities in big cities, and the demand for loans is also great! At worst, we can reduce the loan interest rate to 10%! Then transfer the deposits in our three banks, and then"

Goodman snapped his fingers and settled the bill for Carter.

"The 10% loan interest rate is definitely low, and it's almost unbelievably low. But this interest rate, I don't believe it won't attract people. Even if we don't make money, we can reduce our losses, right? The 50% cost offset, That saves us half a million a year! Half a million! That way, our actual interest payments drop to $50 a year."

"Even with the savings from Plains. In fact, there is not much need to consider it. At worst, we will temporarily abandon the deposit there and use it as a port for loan issuance. In this case, apart from the initial needs Repaying a lot of deposit debt, we basically don't have much wear and tear."

"Then it can save our capital retention costs, which is why I hurriedly called you back after I received the call from Patterson. I asked Patterson roughly, and the Deroste Bank in Plains The deposit debt is only about 150 million, which is a little smaller than our Douglas, probably a little bigger than a small town, and the burden in this regard is not a big problem.”

"In addition, the total loan amount is 180 million. If we can recover a little bit, we can compensate some of our M&A costs. Even if we can only recover 100 million loans, our actual M&A cost will be reduced to about 50 to 60. It’s about the same as the time cost that we can cover in one year after we win it. After one year, the benefits will be greater than the expenses!”

hiss~
After pondering along Goodman's train of thought, Carter suddenly found that this seemed like a really good idea.The loan spread is similar to the deposit spread. A spread of 2% can save money for businessmen and borrowers every year. 10 yuan can save 2000 yuan in interest every year, which is indeed a lot!
For a shrewd businessman, saving two thousand yuan is basically equivalent to a month's salary for three workers.All he had to do was drive a short drive to Plains and get a month's worth of free labor from three workers.

This kind of good thing, Carter thought about it, if it was him, he would be willing to do it too!It's simply a benefit without cost!

"Well, what you said makes sense, but now the problem comes to the repayment. With a loan amount of 180 million, how about the bad debt rate?"

"Currently about 11%, I'm talking about the total amount. If it is calculated by the number of loans, it is lower. Only about 4% of the total loans are almost definitely bad debts. The lenders are completely unable to repay"

Since there was the idea of ​​merging the Plains Drost Bank, Goodman naturally inquired about related issues from Patterson.Patterson, who was counting on Black Bank to wipe his ass, unless his brain had a twitch, it was impossible to hide these situations.

With the data provided by the FDIC, a banking regulator, Carter continued to count.

11% of the funds have bad debts, which is 19, and the 8 loans are almost impossible to collect.There are still 20 million left. From the current point of view, if they can all be recovered, they can still hedge the cost of mergers and acquisitions.
"Plains is, after all, close to a big city. There should be more and more job opportunities and business opportunities than here. Even if the bad debt problem increases, it should not be too fast or too much. So what I just said To be able to recover 100 million, well, it should be a relatively conservative figure.”

Seeing Carter's hesitant expression that was clearly moved, Goodman chased after the iron while the iron was hot and suggested:
"There is another very important point. It is the time cost of the M&A funds. This part of the money comes from depositors' deposits and will not actually occupy our own cash flow. That is to say, the acquisition of Droste Bank does not It will affect the operation of our normal business, let alone the development of your other industries!"

"So why don't we seize this opportunity? Even if the bad debt rate will rise, our cost will be higher. But in the long run, I think it's still worth it! We can afford this loss now, even if that We can’t even get back a penny for 180 million, so we’re not too bad.”

"Reserve 50 as a reserve fund, and loan out the remaining 300 million at an annual interest rate of 10%. The annual interest we have to pay is 30! It still saves 30 in capital retention costs. Regardless of other circumstances, five years, this book we have It was taken back."

"In addition, don't forget that when the economy improves, a new market can bring us new income!"

"Okay, let's do it! But it's up to you, you have to make this clear to Patterson! Even if we want to expand, we will go south! DuPont, Homerville, Naylor, and banks in other directions If something goes wrong, don’t look for us! It’s useless to look for us again!”

It’s all said and done, if it is only used as a cost-saving node, without considering its revenue and development.That really saves a lot of trouble, and it's okay to acquire the Droste Bank!
It's just that mergers and acquisitions belong to mergers and acquisitions. Carter is somewhat annoyed by Patterson's behavior of dumping the pot:
"Even if we can turn stones into gold, then we have to give us some time to find the stones! How can anyone blame us for this? When you call him back, remember to say Make it clear! Word it harshly!"

(End of this chapter)