By the time this blog is posted, May 1 will have come and gone. May Day, when I was growing up, was always a great day. It was the harbinger of springtime and a time of great fun. We scoured our craft drawers and boxes for construction paper and lace doilies, and I hounded my father (who at that time was a pipe smoker) for pipe cleaners. Using those materials, we constructed May baskets. Then the fun began. We headed to the candy store uptown (in my hometown of Watseka, Illinois, it was either Index or Variety and News) and bought penny candy such as Smarties©, Bit O’Honey©, Milk Duds©, and the like. We then searched our yards for early-blooming violets or lilies of the valley to add a sweet fragrance to our baskets. We rushed out and put them on our friends’ doors, and if it was a boy we were sweet on, we rang the doorbell and ran — hoping to be caught for a sweet spring kiss.
I didn’t understand (or perhaps was blissfully unaware) that there were other reasons many celebrated May Day — International Workers’ Day. This was a day of labor movements, parades and, unfortunately, demonstrations gone wrong, which included the famous Haymarket tragedy in Chicago in 1886 when many were harmed and killed. Not quite the idyllic May Days of my childhood.
Many of our communities have never celebrated International Workers’ Day; rather, they honor labor on Labor Day on the first Monday in September. And in my experience, when I ask my coworkers what their memories about making and giving out May baskets are, I usually draw blank stares or, worse yet, eye rolls that mean, “Here she goes again, talking about the good old days; get with the program, Sara!”
Our business is not as simple as making a May basket out of construction paper; penny candy stores are gone. But pipe cleaners and the makings of a May basket can be sent via the Internet and delivered the same day. As it goes with our business. We need to be nimble enough to accommodate a change that is necessary for survival, but we need to use our experience of the past to identify the risks that may cause issues in the future.
Right now, credit quality is good for our financial institutions — idyllic in fact. Past dues and charge-offs have fallen slightly on a year-to-year basis, and loan demand is robust. But we do not want it to explode into a freefall as we experienced during our “great recession.” I was at a risk management conference a few weeks ago, and the words from the first panelist were, “Get your special assets departments together.” It sent shivers down my spine, but it also was a reminder that being proactive instead of reactive is the best way to manage what is to come. Look at your key performance indicators in your credit area; watch any trends and project them forward. Are exceptions to policy starting to increase? It may be competition, but are you getting paid for the risk? Is your loan review looking at your new lenders’ work and ratings? Being proactive with a strong credit culture and loan review process can keep your portfolio a bit more idyllic and sweeter, rather than a riotous mob of problem loans. Your Wipfli Loan Review team can help provide support to keep your credit administration strong and provide information to manage your portfolio on a proactive basis. Contact your Wipfli relationship executive for more information.