JPM, Regions, Associated Banc-Corp Innovate in Face of Crisis

There’s nothing like a credit crisis to get the innovative juices flowing.

New initiatives at three diverse banks — JPMorgan Chase, Regions Financial Corp., and Associated Banc-Corp — show how the credit crisis has refocused banks on doing a better job.

JPMorgan Chase is refining its loan underwriting. Jamie Dimon, the bank’s chairman and chief executive, said yesterday that JPM has begun underwriting its loans by metropolitan statistical area, or MSA. In other words, JPM is looking at economic factors at the MSA level and tweaking its credit underwriting and, presumably, pricing accordingly. I wouldn’t be surprised if JPM started underwriting to the ZIP soon.

Regions Financial Corp., meanwhile, is innovating in its collection operation. In response to soaring credit chargeoffs, Regions Financial Corp. has started a unit to collect just on home loans in Florida. The Florida team now begins its collection calls at just five days past due, said Irene Esteves, the bank’s chief financial officer. This is local collecting by a team locally focused.

Regions’s net chargeoff rate in Florida is hovering between 4% and 5%, compared to about 1% for the remainder of its loan portfolio. Regions has about $99 billion of loans in its portfolio. The bank’s Florida book, in particular, has many condo and homebuilder loans, Esteves said.

Finally, Associated Banc-Corp is using dislocation in the mortgage market to improve its home-loan portfolio. The bank is refinancing its mortgage borrowers into first-lien home equity loans that encompass the consumer’s first- and second-lien loans into one credit facility. Associated has grown this home equity portfolio more than 30% over the last year to about $2.9 billion of outstandings.

Credit the crisis.

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