Dalrymple: Ask a Banker | SkyHiDailyNews.com

Dalrymple: Ask a Banker

I’ve often wondered: why are lenders so concerned about the borrower when they have a mortgage on the property, and , if the borrower doesn’t pay, can take the house and make a chunk of money when it’s sold?

This could be the oldest, and certainly the most erroneous, myth in lending and finance. Cheops probably needed some cash to conquer some neighbor, and pledged the pyramids to a money lender from Phoenicia. He conveniently forgot about the debt, and the poor lender was scratching his head, wondering who would ever want those piles of rock.

Back in the last century, Johnny Cash and Bob Dylan did a duet, with the refrain, “There ain’t no good chain gang”.

There ain’t no good foreclosure either, at least not from the standpoint of the lender. Not ever.

Seems kind of counter-intuitive, doesn’t it? Say that the property sells for $200,000, and the borrower puts thirty percent down to buy it. That’s a $60,000 cushion for the lender, right? So, the borrower defaults, and foreclosure starts. At that point, it’s very likely that the $200,000 house isn’t worth anywhere near that figure.

And, if it gets to the point where the lender is the successful bidder at the foreclosure sale, then it’s dead certain that there’s a loss on the loan, and probably a big one. It takes months for a foreclosure action to be completed. During that time, the borrower owns the property and can sell it to cover the debt and make a profit, if there’s one to be made. If no buyer has stepped up, that seventy percent loan to value ratio loan is above 100 percent LTV, and probably more.

By this time, that dream home has probably been trashed, so on top of attorney fees and other costs, the lender has to put even more money into the dead horse to bring it back to some semblance of life.

And then the real pain starts. I once worked for a very wise man who counseled me that, “The loss that you book on a foreclosed asset, between the loan amount, and what you actually sell it for, is just the tip of the iceberg. The major loss is in time and lost opportunity”. Meaning that every minute spent on managing a bad asset, a foreclosed home, is a minute that the lender can’t spend making money in its primary business line.

Lenders aren’t real estate investors or developers. Their business is lending and every dollar that’s tied up in foreclosed real estate is a dead dollar. The last thing that a lender wants is a borrower’s house.

This is just the business downside of defaulted loans. If your business happens to be a bank, with insured deposits, then you have the bank regulators piling on. If a bank is deemed to have an excess of REO (Real Estate Owned) then the regulators hit the bank with a plethora of penalties and restrictions which make it almost impossible to do business at much of a profit.

I’ve been in the real estate lending business for over half a century. I have yet to see a good foreclosure.

How do I know all this? I thought you’d never ask. I am a proud graduate of the best, but most expensive, college on the planet: the U of E; the University of Experience.

Pat Dalrymple is a former bank president who has been making mortgage loans in western Colorado since 1967. He’s currently an advisor to Grand Mountain Bank’s Mortgage Lending Outreach Initiative. He welcomes your questions on lending and banking, and can be reached at dalrymple@sopris.net.

first snow

Bella and the Sturgeon Moon

Reader submitted photo by Todd Keleske.

Granby Trails

Wildlife rescue

Golf league update

The Pole Creek Ladies

The Pole Creek Ladies golf league had a large turnout and spectacular weather for their annual 2 day Club Championship tournament on August 17th and 18th. After play on Thursday, the Ladies went to a fabulous luncheon hosted by fellow team mates at Pat Wischmann’s house.The Club Championship results and end of the season prizes were awarded and the Ladies discussed league business. The Club Champion for the 3rd consecutive year is Susie Noel, Congratulations! The winners were: 1st Flight Low Gross: 2nd Place Deb Kohlwey, 3rd Place Michelle DeFrange. 1st Flight Low Net: 1st Place Helen Brown, 2nd Place Marie Johannes, 3rd Place Mary Byerrum. 2nd Flight Low Gross: 1st Place Beth Daniel, 2nd Place Cathy Malone, 3rd Place Kate Labelle. 2nd Flight Low Net: 1st Place Andrea Singleton, 2nd Place Darlene Klancke, 3rd Place Pat Venzke. Helen Brown and Mary Brooks were the seasons winners for Match Play, and Madelyne Stevens was the most improved golfer.

Grand Lake Women’s Golf Association

The Club Championship Tournament for the Lakers at the Grand Lake Golf Course took place over the past two weeks. The first round was Tuesday, August 9 and the second 18 hole round played on Tuesday, August 16. The 2016 Low Gross Club Champion is Laura Summers with a combined score of 192. Kathy Chandler took First Place Gross with a combined of 200 and Mary Ann Montgomery finished in Second Place Gross with a 201. The 2016 Low Net President’s Club winner is Jean Klanica with a combined net score of 139, First Place Net is Joan Ophaug with a 144 followed by Lee Rogers, Second Place Net with a 154. Two birdies were recorded over the past two weeks, Lee Rogers, hole #9 and Jane Demrow, hole #11.

Nifty Niners

Tuesday, September 16, was a different kind of golf day for the Niners at Grand Lake Golf Course. The game was called “Misfortune” and for once, certain mistakes had point values which were deducted from our total scores. It definitely made the morning interesting. The winners were Teresa Harder – 1st, Jacque Davis – 2nd, Lynn Turnquist -3rd, Stephanie Holt –4th and Sue Ronald – 5th. Gladys Howard and Nancy Smith each had 18 putts and split the Putt Pot. Jackie Davis and Lucette Kottcamp both made pars on hole 11 and Jacque Davis also had a par on 13.

Grand Enterprise Initiative helps with 113th new job

The Grand Enterprise Initiative, now in its fifth year in Grand County, has helped set up 53 new businesses and has announced the 113th new job its efforts have helped to create in Grand County. The grass roots economic development effort has added an estimated annual $4.7 million in annual new sales in the county while having served 245 clients since January of 2013, according to Enterprise Facilitator Patrick Brower.

Through the initiative, Brower provides free and confidential business management coaching to anyone wanting to start or expand businesses across the county. The program started in the Granby area in 2012 but expanded to a countywide program in 2013.

“We’re very happy with these numbers and we feel they show how the Grand Enterprise Initiative has been working well to fulfill its mission of building strong communities by nurturing entrepreneurs in all of Grand County,” said Merrit Linke, president of the Grand Enterprise Initiative’s management board. The initiative is a 501©3 nonprofit and other members of the board include Marise Cipriani, owner of Granby Ranch and Wally Baird of Granby. These numbers show that we are making an impact by working with local residents who want to start new businesses or improve their existing businesses.

Brower and his management team have been trained in the principles of Enterprise Facilitation, a business coaching methodology pioneered around the world by Ernesto Sirolli, the founder of the Sirolli Institute. There are enterprise facilitation projects in place in Australia, New Zealand, across the U.S. and in Europe. The Grand Enterprise Initiative is the first and only project in Colorado.

“I work with clients in Winter Park, Fraser, Granby, Grand Lake and Kremmling,” Brower said. “My goal is to help entrepreneurs with new business ideas or existing businesses understand what it takes to succeed. I facilitate basic business management.”

Some recent business successes that were aided by Brower and the Initiative include the new Idlewild Spirits Distillery in Winter Park, Main Street Thrift store in Granby, Momma B’s Restaurant in Hot Sulphur Springs, PINE Restaurant in Grand Lake, Fraser Electronics in Fraser, O22you (non-prescription oxygen delivery service), Stillwater Garage Doors, Lion Head Coffee, the opening of Never Summer Brewing Company in Granby and the acquisition of High Country Machine and Fabrication in Kremmling.

The program is funded by a variety of public and private sources that include Grand County, local municipalities, and private entities such as Freeport-McMoran and Marise Cipriani. It operates under the non-profit umbrella of Kapoks, an institution founded by Cipriani that is dedicated to building strong communities by nurturing entrepreneurs.

Anyone in the county with a business idea or with a business that wants to expand or improve can call Brower at 970-531-0632 or contact him by e-mail at patrickbrower@kapoks.org.

Check Out the Music, library program

In 2006 the Grand County Blues Society (GCBS) donated instruments, music CDs, and instructional DVDs to all five Grand County libraries, sparking a unique partnership and inspiring a program called, “Check Out the Music.” Through this free program, library patrons are able to check out guitars, keyboards, bass guitars, and drum pads- just as they would borrow any other library materials. (In 2007 GCBS was aldo honored by the Colorado Association of Libraries, receiving the “Library Partner of the Year” award, and other libraries across the nation have adopted the program for their own communities.)

Today, the “Check Out the Music” program at the Fraser Valley Library has been bolstered by recent local donations: The 10 year old Casio keyboard was replaced, and an often sought after ukulele was purchased with funds given by Crooked Creek Saloon for their “Music in the Garden” event on July 6th. Bobby Barajas of Smart Tour Media in Winter Park, donated new analog and blues guitar pedals. Leslie Wilson donated a mountain dulcimer, along with 2 instruction manuals, and Delia Master contributed an amplifier. Ann Rosati donated 2 acoustic guitars in honor of Earl Ferguson. In addition, the Friends of the Grand County Library donated a music stand to showcase the instruments in a visible location. Thank you to the generously kind village who have made this program an amazing success!

If you’d like more information about the program, please contact Joy at the Fraser Valley Library.

Letter: Martin, Thank you to sponsors for Touch a Truck Day

Thank you to sponsors for Touch a Truck Day

On behalf of the Town of Granby Recreation Department, I would like to thank the following businesses and individuals for their sponsorship of the 16th Annual Touch a Truck Day: Colorado Department of Transportation; Colorado Parks & Wildlife; Colorado State Patrol; Conroy Excavating; Diamond Excavating; East Grand Fire Protection District #4; East Grand School District; Granby Police Department; Grand County EMS; Grand County Road and Bridge; Grand County Search & Rescue; Grand Fire Protection District #1; Hahn’s Peak Enterprises; Mountain Parks Electric; Northern Colorado Med. Evac.; Town of Granby South Service Water Department; The Trash Company; US Forest Service; Wade Bailey; and Waste Management. Thanks to these businesses and their employees donating there time and equipment, Touch a Truck Day was a huge success and we look forward to an even bigger event next year!

Julie Martin

Town of Granby Recreation Director

Riddell: The top three business priorities

Unfortunately, we are all quite too familiar with the inevitability of death and taxes. But if you own or manage a business, you are also quite familiar with a third inevitable fact, one that has to be confronted every day. We are, of course, referring to the fact that there is never enough time to do everything that needs to be done. Whether it is dealing with personnel issues, regulatory obstacles, cash flow, or simply participating in local events, every owner and manager goes to sleep each night knowing that there is unfinished work to be done in the morning. Without some sort of framework, this reality can sometimes be simply overwhelming. But it doesn’t have to be.

A few years ago it was quite common to read about the managerial skill requirement of juggling–not balls or chainsaws, but business challenges. It was portrayed that the successful manager was one who could handle an increasing volume of challenges, all the while being able to control and direct an intended outcome. Using the juggling analogy, success was determined by who could keep the most balls in the air! I submit to you that this is not the measure of success. Rather, given the ever increasing volume of complexity in today’s business world, success is knowing what balls can hit the floor and not break. Said differently, success today is knowing what is a top priority and what is not.

We have all had occasions to run into well-meaning folks who view and treat every issue as one of a top priority. As we know, when everything is a top priority then, in reality, nothing is a top priority. So how do you rationally separate or categorize priorities to better manage the business while also better preserving individual sanity?

Probably one of the best suggestions I ever received in this regard was the admonition to recognize that many priorities are not fixed. That is, they shift in regard to importance based on the cycle and environment of the business. At the same time, it is critical to recognize that certain priorities are constant. By focusing first on the constant priorities, this enables every manager to minimize the always present “rabbit hole” depletion of energy and focus.

So what are these constant priorities? For a small business it is always cash flow, cash flow, and cash flow. If you lose the ability to generate the necessary cash flow you are simply out of business. While there are a number of books written and an untold number of consultants eager to describe methods of conserving and prioritizing cash payments, it all starts with knowing how much cash you have on hand. So knowing this has to be a number one priority.

The second constant has to do with adherence to legal requirements and regulations. Just as a lack of cash can quickly shut down a business, so too will failure to comply with local, state, and federal regulations. The challenge is staying “up” on any legal and regulatory changes, so time must be allocated to insure this. Clearly business trade associations are an invaluable tool in this regard, but you have to take the time to use the tool.

Finally, the third constant priority is providing customer satisfaction. As the only source of cash to enable the business to continue, insuring satisfied customers has to always be top of mind for every business owner and manager. Now how you guarantee this satisfaction is a function of managerial discretion, but knowing what the satisfaction level actually is becomes a managerial requirement.

Success in any business is all about recognizing your controllables and then acting upon them. Making sure that the controllables are, indeed, those most important for continued success is all about setting priorities. Setting the right priorities and then addressing them are required skills for every successful manager.

Following a successful international business career, John Riddell turned his attention to small business/entrepreneurial pursuits that included corporate turn-arounds, start-ups, teaching, authoring business and sports columns and serving as VP for the Chattanooga Chamber of Commerce directing its Center for Entrepreneurial Growth.