Risk Management Chapter Sees Demand Increase

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Eighteen months after its Northwest Arkansas chapter was formed, interest in education opportunities from the Risk Management Association is rising.

On Sept. 29, an instructor from the international organization presented a class in Springdale on “Problem Loan Workouts,” a highly relevant topic in light of soaring rates of nonperforming loans in Northwest Arkansas. The $318 million worth of loans in nonaccrual status at the end of the second quarter was 121 percent greater than a year earlier.

In the last year, class attendance for the Northwest Arkansas chapter has been higher than the more established Little Rock chapter.

Headquartered in Philadelphia and founded in 1914 — a year that saw the creation of the Federal Reserve and ended with one of the biggest one-day stock market sell-offs in history following the onset of World War I — the RMA is a not-for-profit professional association whose sole purpose is to advance the use of sound risk principles in the financial services industry.

RMA promotes an enterprise approach to risk management that focuses on credit risk, market risk and operational risk. It has 3,000 institutional members, more than 20,000 individual members and scores of chapters across the country and from London to Sydney.

Robin Simpson, senior vice president for BancorpSouth in Fayetteville, is the new RMA chapter president in Northwest Arkansas and has taken numerous courses since joining the company in 1996.

“It is not only geared for bankers, but it is highly beneficial for bankers,” Simpson said. “It’s a way for bankers to share their experience and learn from other people. We also have student memberships and memberships for professions such as appraisers, attorneys and accountants.”

Courses offered by the RMA in Northwest Arkansas are selected by the chapter’s education board based on input from member institutions in the area.

The upcoming course subjects aren’t surprising given the area’s troubles in the real estate market:

On Dec. 10, the RMA will offer a course in “Analyzing Business Tax Returns” and on Feb. 4, the chapter will host a meeting in Rogers covering “Understanding and Interpreting Real Estate Appraisals.”

On April 22-23, the chapter will host a two-day course on “Structuring Commercial Loans.”

Class costs vary, but Simpson said they are usually a bit less than $400 for members and less than $500 for nonmembers. Simpson said classes for the local chapter have ranged from as few as 10 to some with more than 30 in attendance.

The Northwest Arkansas housing bubble has popped in a way less pronounced than imploding areas like Miami or Phoenix, but still severe enough to bring down dozens of developers and homebuilders and land a few banks under federal scrutiny.

One bank, ANB Financial NA, was shut down by the FDIC in May and three others — Metropolitan National Bank, Legacy National Bank and Parkway Bank — are under varying degrees of oversight agreements with the Office of the Comptroller of the Currency or the FDIC.

Simpson said “experience is one of the best teachers” and that the current credit conditions locally and nationally represent a strong learning opportunity for the area’s financial professionals. Previously they had to travel to Tulsa, Kansas City or Dallas to attend a class.

“There are a lot of bankers around who weren’t in banking during the [early 1990s] recession,” Simpson said. “They haven’t managed a portfolio in a recession. A market correction can be a good thing to restore balance.”