My family emigrated here from Hong Kong when I was about 5 years old, and I grew up in the Pasadena, Calif., area. My dad went to Fuller Theological Seminary and was always deeply religious, but ended up actually working at Bank of America guarding their cash vault. He worked the night shifts guarding the bank’s cash vault downtown so his work was tied to banking, but not much in the lending sector.
I studied business at The University of Southern California, but did things a little differently. I worked and paid for my tuition by going into banking, and my first job was collecting on past-due credit cards through cold calls. I was 19 years old and calling people to pay their credit cards. It was fun to call these people and, for the most part, it wasn’t stressful at all. You would just call and say something like, “Mr. Jones, you’re past due by $100. Can you make the payment?” About nine out of 10 times, people would say, “I know,” or mention that the check was in the mail. We would then note this and follow up with them later. For the ones that didn’t, we froze their credit line and helped them with a payment program, because they were overextending themselves by using the credit card. Eventually, I went into Bank of America’s management training program, and that’s how I got into lending.
Well, my job’s a little different every day. The primary responsibilities for chief credit officers are to oversee the approval and management of the loan assets of this bank. Our bank has three broad categories: the consumer, commercial real estate, and commercial and industrial business loans. This amounts to overseeing about $30 billion and we have a team of credit supervisors, so they’re really the ones who are helpful. Seventy-five percent of the loans can be approved at the initial line, with the deputy senior credit supervisors, and any amount beyond $20 million will then come up through me.
The one mistake I always see is overleveraging and borrowing too much. Sometimes the companies that go bankrupt are perfectly good companies — they just have too much debt. Overexpansion is also another mistake that many companies make. Retailers, for example, can overexpand by thinking that opening more stores is better and open them in locations that aren’t the right fit for their brand. Even Wal-Mart is an example of this — they thought that they could open smaller and more local Wal-Marts, but the concept just didn’t work. Sears is another example of a concept that is no longer working. They’ve experienced a decline in their sales year over year for the past four to five years, and they’ve also accumulated a lot of debt.
So I think that overexpansion and being too optimistic about your business plan are big downfalls. The danger comes when you borrow based on a bright future, but that future doesn’t come, and you don’t have the cash flow that you’re counting on. Then, all of a sudden, you have all this debt to repay, and you don’t have that growth you’d anticipated.
Some companies emerge out of that — they’re good operators that are able to reduce their expenses and compensate for the loss. But there are also good operators that can’t and they file for bankruptcy and just go out of business.
My advice for businesses is to not overborrow and to always have a contingency plan. You should always have a “what-if” scenario. Forces beyond your control, like the economic downturn, can affect your business. The energy sector is a perfect example. Who would have thought that the price of oil would drop down that much?
You have to stay abreast of not only the economy overall, but also read analyst reports. I really like to read analyst reports to know what’s happening across different sectors. I enjoy it, really! My wife thinks I’m strange.
On weekends, I spend more time with my dogs than with other people. I have three dogs — two poodles and one Bichon. They stand at the window until I come home. I mean, they’re always happy to see you and they never complain, so I’d much rather spend time with them!
I have one daughter who’s getting married on the CalTech [California Institute of Technology] campus. I’m not nervous about her getting married, and I think it’s a good time for her to take the next step. Plus, I really like my future son-in-law — they treat each other really well. She’s living at home right now, but they’ll be moving to an apartment in old-town Pasadena. My daughter and I practice our father-daughter dance for the wedding every night and I think we have it down pretty well. Everyone’s trying to outdo everyone else, but I think we’re ready!
As chief credit officer of my household, we are prepared and we’ve been planning for the wedding for over a year — since my son-in-law proposed. It’s showtime!
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