As most of you probably already know, United Bank and Trust will host its annual shareholder meeting as follows:Date: April 26, 2011 Time: 4:30 PM EDT Location: Downing Center Office, 209 E. Russell Road, Tecumseh, MI 49286
I encourage anyone interested to attend and ask questions or give the management your input.
My opinion on the annual meeting is this: At the end of every year, the Management of the Bank evaluates the performance of each of its employees. At least all well run companies do this. Typically employees are asked to compare their performance against metrics established at the beginning of the year. Management asks the employee to identify where he/she has succeeded, and where he/she has come up short. Management asks the employee why he/she has come up short, and what his plan is to get the job done in the next year. And this is the only time all year where small shareholders have the chance to ask management questions.
I believe that at the Annual shareholder meeting, Bank management should have to answer performance evaluation questions (in front of other shareholders) if shareholders have those types of questions. I realize that the answers to these questions are not easy, are sometimes complex to explain, and not every shareholder in the meeting is interested in management evaluation questions. I realize that the person running the meeting must balance those considerations when he answers questions.
However, anyone in his or similar positions should have to answer questions from people whose lives they've impacted. This includes executives at board meetings, city council people, school board members or other politicians.
Stepping down now from my soapbox, these are the questions I would ask him, and they are very similar to the questions I've been asking for the past few years:
- How did the bank get into this horrific loan loss situation in the first place? Was it bad lending policy? Was it bad strategy? Was it bad economic forecasting? Or was it something else? (Note: As I've mentioned before, I realize that the bank does business in an area only about 50 miles from ground zero of the economic destruction of the US Auto Industry. This doesn't mean, though, that they couldn't have seen this destruction coming in the mid 2000s.)
- When does the Loan Loss Expense bleeding stop? The bank has lost over $72 M (including 2011 Q1) since 2006. At the shareholder meeting held at the end of 2009, it was suggested that the loan loss expense was "in the bottom of the 7th or the top of the 8th inning". How far into extra innings have we come, and when's the game over?
- Since there has been over $72M lost in bad loans since 2006, what has the bank learned about lending money? The bank didn't seem to have this problem prior to 2006, what bank policies have changed to prevent this from happening again? (Note: I asked this question last year, and was emphatically told that nobody did anything wrong to cause this situation. But then during 2010, I seem to recall that some type of risk management committee was put into place.)
- When will the TARP money be paid back? (Note: I suspect that the plan is that the loan losses will wash out soon, and then core earnings will build up capital, such that in a few years, when the preferred is theoretically due, there will be enough money to pay it back and maintain reasonable capital ratios after it's paid back. I'd rather hear that type of answer than "There's no plan to pay back the TARP money in the near future. It's cheap money, afterall." which was the response last year.)
If I am there, those are the questions I will ask. If I cannot make it, I hope somebody can ask these questions.