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Scott Custer, Chairman & CEO RBC Centura Bank

Scott Custer, Chairman & CEO RBC Centura Bank. Topics for Discussion. Overview How we got where we are What it means for 2008 What it means for businesses and professionals. Overview. Could not have predicted what would happen in 2007 Severe decline in housing industry nationwide

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Scott Custer, Chairman & CEO RBC Centura Bank

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  1. Scott Custer, Chairman & CEO RBC Centura Bank

  2. Topics for Discussion • Overview • How we got where we are • What it means for 2008 • What it means for businesses and professionals

  3. Overview • Could not have predicted what would happen in 2007 • Severe decline in housing industry nationwide • Credit & liquidity crisis in the banking sector • Major global banks have lost more than $100B in the last 6 months, with more to come… • Citi – $8B • Merrill Lynch – $6B • Morgan Stanley – $9B To say it has been a turbulent and challenging environment is an understatement

  4. How did we get here?

  5. Overview • Disintermediation between borrowers and ultimate holders of debt played a major role in sub-prime mortgage chaos • At the same time the sub prime issue came to the forefront, the housing industry was beginning to see serious slowdown.

  6. Sub prime Market Exploded in the Last 36 Months

  7. Ability To Sustain Growth Not Realistic

  8. The Housing Market Awash In Inventory… # of excess unsold homes for sale (in thousands) Sources: Census, Moody's Economy.com

  9. “We have not seen a nationwide decline in housing like this since the Great Depression.” John Stumph, CEOWells Fargo

  10. We’ve Been Here Before

  11. We’ve Been Here Before But We Always Turnaround

  12. And there are worst places to be…

  13. Lucky to Call NC Home: 1 of top 5 states for home price stability % change in home prices, 2006-2007

  14. What does this mean for 2008? • Two to three additional rate cuts from the Fed to help stabilization. • Optimistic stabilization is near given past trends. • But, will be 2009 before we really see improvements.

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