Four Reasons Why Waiting to Sell May Be a Bad Idea


bank-strategy-2-5-16.pngMost community banks have a timeframe for liquidity in mind. Strategic plans for these institutions are often developed with this timeframe as a key consideration, driven by the timing of when the leader of the bank is ready to retire.

We meet with a lot of bank CEOs, and we regularly hear some version of the following: “I’m in my early 60s and will retire by 70, so I’m looking to buy not sell.” When we ask these CEOs to describe their ideal acquisition target, the answer often involves size, market served, operating characteristics and, most importantly, talent. After all, banking is a relationship business and great bankers are needed to build those relationships with customers. Buyers will undoubtedly pay a higher premium for a bank with great talent that still has “fire in the belly.” It is hard to recall a time when a buyer was looking for a tired management team ready to retire. So, it seems ironic that a buyer cites talent as the key component to a desirable acquisition candidate, but that same buyer is planning to wait until retirement to sell. Put differently, they’re planning to sell at the point their bank will become less desirable.

We have highlighted four key items for boards and management teams to consider when evaluating the timing of a liquidity event as part of the strategic planning process: the timing of management succession, likely buyers or merger partners, shareholders and the overall economy and market for community banks.

Management Succession
Timing of management succession is critical to maximize price for shareholders. As referenced above, if the leadership of an organization would like to retire within the next five years, and there isn’t a logical successor as part of senior management, the board should begin evaluating its options. Waiting until the CEO wants to retire may not be the best way to maximize shareholder value.

Likely Buyers/Merger Partners
The banking industry is consolidating, which means fewer sellers and buyers will exist in the future. While there may be a dozen or more banks that would be interested in a good community bank, once price is considered, there may only be one or two banks that are both willing and able to pay the seller’s desired price. These buyers are often looking at multiple targets. Will a buyer be ready to act at the exact time your management is ready to sell? In fact, there are a number of logical reasons that your best buyer may disappear in the future. For example, they could be tied up with other deals or they may have outgrown the target so it no longer “moves the needle” in terms of economic benefit.

Shareholder Pressure
Shareholders of most banks require liquidity at some point. While the timing of liquidity can range from years to decades, it is worthwhile for a bank to understand its shareholders’ liquidity expectations. And liquidity can be provided in many ways, including from other investors, buybacks, listing on a public exchange, or a sale of the whole organization. As time stretches on, pressure for a liquidity event begins to mount on management and, in some cases, a passive investor will become an activist.

Overall Economy and Markets
With the Great Recession fresh in mind, virtually every bank investor is aware the market for bank stocks can go up or down. Before the Great Recession, managers who were typically in their mid-50s to early 60s  raised capital with a strategic plan to provide liquidity through a sale in approximately 10 years, which would correspond with management’s planned retirement age. We visited with a number of bankers in their early 60s from 2005 to 2007 and indicated that the markets and bank valuations were robust and it was an opportune time to pursue a sale. Many of these bankers decided to wait, as they were not quite ready to retire. We all know what happened in the years to follow, and many found themselves working several years beyond their desired retirement age once the market fell out from under them.

Over the past two years, we had very similar conversations with a lot of bankers and once again we see some who are holding out. While bankers and their boards generally can control the timing of when they would like to pursue a deal, the timing of their best buyer(s), the overall market and shareholder concerns are beyond their control. Thorough strategic planning takes all of these issues into account and will produce the best results for all stakeholders.

How to Get the Most out of Your Annual Reviews


annual-review-12-14-15.pngThere has never been a more challenging time to be a bank director. The combination of today’s hugely competitive banking market, increased regulatory burden and rapid technological developments have raised the bar for director oversight and performance. In response, an increasing number of community banks have begun to assess the performance of directors on an annual basis.

Evaluation of board performance is done in many ways, and ranges from an assessment by the board of its performance as a whole to peer-to-peer evaluation of individual directors. Public company boards are increasingly being encouraged by institutional investors and proxy advisory firms to conduct meaningful assessments of individual director performance. The pace of turnover and change on most bank boards is slow, and more often the result of mandatory retirement age limits than focus by the board on individual director performance. This may be untenable, however, as the pace of external change affecting financial institutions often greatly exceeds the pace of changes on the bank’s board.

While some institutions prefer a more ad hoc approach to assessing the strengths and weaknesses of the board and its directors, we suggest that a more formal approach, perhaps in advance of your board’s annual strategic planning sessions, can be a powerful tool. These assessments can improve communication between management and the board, identify new skills that may not be possessed by the current directors, and encourage engagement by all directors. If used correctly, these assessments often provide valuable information that can focus the board’s strategic plan and help shape future conversations on board and management succession.

So what are the key considerations in designing an effective board evaluation process? Let’s look at some points of emphasis:

  • Think big picture. Ask the board as a whole to consider the skill sets needed for the board to be effective in today’s environment. For example, does the board have a director with a solid understanding of technology and its impact on the financial services industry? Are there any board members with compliance experience in a regulated industry? Does the board have depth in any areas such as financial literacy, in order to provide successors to committee chairs when needed? Do you have any directors who graduated from high school after 1985?
  • Develop a matrix. Determine the gaps in your board’s needs by first writing down all of the skill sets required for an effective board, and then chart which of those needs are filled by current directors. Then discuss which of the missing attributes are most important to fill first. In particular, consider whether demographic changes in your market will make recruiting a diverse and/or female candidate a priority.
  • Determine the best approach to assessment. Engaging in an exercise of skills assessment will often focus a board on which gaps must be filled. It can also focus a board on the need to assess individual board member performance. Many boards are not prepared to launch into a full peer evaluation process, and a self-assessment approach can be a good initial step. Prepare a self-assessment form that touches upon the aspects of being an effective director, such as engagement, preparedness, level of contribution and knowledge of the bank’s business and industry. Then, have each director complete the self-assessment, with a follow-up meeting scheduled with the chair of the governance committee and lead independent director for a conversation about board performance. These conversations are often the most impactful part of the assessment process.

In addition to assessing the human capital needs of the board, several other topics should be raised in most board assessments.

  • Communication between management and the board: As demands on the board change, providing directors with the same board packets and agenda as ten years ago may not make sense. Soliciting thoughts on how the content and presentation of board materials could be more helpful and whether the board’s agenda should change is a good exercise for any institution.
  • Buy, sell or hold? While strategic matters are best addressed through group discussion, gauging directors’ views on the strategic direction of the institution can also help shape the tenor of the board’s future discussions. Understanding individual directors’ justifications for a potential sale as part of the assessment process may allow for solutions short of a sale of the bank.

Board assessments are a key component of a healthy board environment, as they can provide management and the board with insight into the true feelings of the board of directors on a variety of issues. Careful evaluation of which assessments to utilize and the timing in doing so can allow a board to better adapt to a rapidly changing marketplace.

What to Look for in Your Next CEO: Part I


bank-ceo-10-1-15.pngSelecting a chief executive to lead your institution is a bank board’s single most important responsibility. Everything flows from this decision, including the bank’s strategy, reputation, the ability to attract critical talent, investor and employee confidence and the credibility of the board itself. Selecting an underprepared or inadequate leader—no matter how well liked or how long employed—can quickly send a bank in the wrong direction.

The list of optimal skills required in a bank CEO today could easily include dozens of items. Here we will highlight ten technical skills that we see as “must haves.” Next month, we will highlight ten leadership competencies and attributes which will complement the qualifications below.

Experience Working with Regulators
Regulatory relations were barely on the radar screen for bank leaders a decade ago, unless the bank was in trouble. However, in today’s altered regulatory climate, the ability to forge a positive working relationship with a bank’s varied regulators has become a critical element of success.

Balance Sheet Management Experience
The extended low interest rate environment has put pressure on bank spreads like never before. With interest rate risk and margin pressures on the front burner, CEOs need to understand the construction of their balance sheet, including capital strategy, more deeply than before.

Commercial Credit Skills
You can never have too much credit skill in a bank, in our opinion. Credit quality issues will quickly turn a good bank into an underperformer. The path to the CEO’s desk still goes through the commercial lending area more often than any other area.

Experience with Corporate Governance
Boards are under increased scrutiny from investors, customers, regulators, communities and even employees. CEOs need to appreciate the pressures facing directors (even for privately held and mutual institutions), and respect the ongoing challenges facing the board.

Technology Savvy, Including Evolving Channels
Technology in banking has moved from the back office to the front lines. Understanding how the rapidly shifting technological landscape is impacting the industry—and how to respond in real time—has become a vital ingredient for ongoing success.

A New Perspective on Risk Management
In the good old days, risk meant credit, fraud or simple liability for slip-and-fall accidents. Nowadays, this category has broadened to include cybersecurity, counterparty risk, compliance issues, legal challenges and more. Being able to identify and triage the bank’s risk factors is more important than ever.

Marketing and Social Media Knowledge
As mentioned, technology has become a front-line channel for growth. The integration of social media with technology has changed how many banks must go to market, build brand awareness, drive engagement and respond to customer needs. CEOs need to be plugged into these shifts, even if they are not active themselves on social media.

Exposure to Fee-Based Lines of Business
Given the decline in interest margins, boosting fee revenue appears to be on almost every bank’s strategic planning agenda. Even for banks with a low percentage of fee-driven revenue, CEOs need to explore alternative ways to grow the top line.

Transaction and Integration Experience
Many banks that never previously considered a transaction are now exploring all options, including acquisitions, mergers of equals, branch sales and purchases and fee business acquisitions. Exposure to the transactional arena has become more critical, as has the ability to successfully integrate post-transaction. Otherwise, the value derived from “doing a deal” may not be achieved.

Strategic Planning Skills
Everyone seems to have a plan, but how real and achievable is it? A CEO’s ability to craft a meaningful path forward and drive the plan’s execution has become a differentiator for successful banks.

There is no perfect template of skills which will guarantee success, particularly in the pressure-filled and constantly evolving banking industry. However, finding a CEO with a foundation grounded in these ten industry skills will increase your bank’s odds of surviving and thriving.

Regulatory Scrutiny Focuses on Inadequate Strategic and Capital Planning


capital-planning-9-24-15.pngOnce again, regulators are zeroing in on inadequate strategic and capital planning processes at many community banks.

The Office of the Comptroller of the Currency (OCC) listed “strategic planning and execution” as its first supervisory priority for the second half of 2015 in its mid-cycle status report released in June. That echoes concerns from the latest OCC semiannual risk perspective, which found that strategic planning was “a challenge for many community banks.”

FDIC Chairman Martin J. Gruenberg said in May that regulators expect banks “to have a strategic planning process to guide the direction and decisions of management and the board. I want to stress the word ‘process’ because we don’t just mean a piece of paper.”

He said that effective strategic planning “should be a dynamic process that is driven by the bank’s core mission, vision and values. It should be based on a solid understanding of your current business model and risks and should involve proper due diligence and the allocation of sufficient resources before expanding into a new business line. Further, there should be frequent, objective follow-up on actual versus planned results.”

In writing about strategic risk, the Atlanta Federal Reserve’s supervision and regulation division said that “a sound strategic planning process is important for institutions of all sizes, although the nature of the process will vary by size and complexity.” The article noted that the process “should not result in a rigid, never-changing plan but should be nimble, regularly updated (at least annually) and capable of responding to risks and changing market conditions.”

Given economic changes and increased market competition, community banks must understand how to conduct effective strategic planning. This is more important now than ever, says Invictus Consulting Group Chairman Kamal Mustafa.

The smartest banks are using new analytics to develop their strategic plans— not because of regulatory pressure, but because it gives them an edge in the marketplace and a view of their banks they cannot otherwise see, Mustafa said.

Strategic planning is useless without incorporating capital planning. The most effective capital planning is built from the results of stress testing. These critical functions—strategic planning, capital planning and stress testing—must be integrated if a bank truly wants to understand its future,” he said.

He advises banks to use the same fundamental methodology for both capital planning and strategic planning, or else they will run the risk of getting misleading results. This strategy is also crucial in analyzing mergers and acquisitions.

OCC Deputy Comptroller for Supervision Risk Management Darrin Benhart also advises community banks to use stress testing to determine if the bank has enough capital. “Boards also need to make sure the institution has adequate capital relative to all of its risks, and stress testing can help,” he said in a February speech. “We also talk about the need to conduct stress testing to assess and inform those limits as bank management and the board make strategic decisions.”

Why Your Bank Should Have a Capital Plan


strategic-planning-7-24-15.pngThree significant events have altered expectations for capital plans. First, as of January 1, 2015, banks need to comply with the new BASEL III capital requirements, including the new “capital conservation buffer.” Second, regulatory authorities now view strategic planning and capital planning as risk appetite and risk mitigation documents, respectively. Finally, the demise of the market for trust preferred securities has reduced the ability to raise just–in–time capital, which was a prevalent concept from 2005 to 2009.

Every board should ask the hard question of whether or not the depository institution has sufficient capital to (1) address BASEL III regulatory requirements, (2) navigate the current economic environment, and (3) implement the desired strategic plan for the depository institution. If the answer is no, management should focus on how much capital is needed, and the board and management should determine the sources for funding those needs.

Even if you currently have a capital plan, it may not “chin the bar” with the regulators. Traditional two–page or five–page capital plans are falling short of what regulators expect to see in capital plans. Such plans are now becoming much more robust and are truly a management planning tool rather than simply something that is “nice to have.” A strong capital plan is a critical document, as it ensures that there is enough fuel to drive the bank’s strategic plan and ensures that there is adequate insurance against the bank’s risk profile. Every depository institution, even healthy depository institutions, should have a comprehensive capital plan that dovetails with its strategic plan and its enterprise risk management plan.

The regulatory agencies are clearly steering institutions away from the concept of just–in–time capital that resulted in many depository institutions finding trouble in 2008 and 2009. Some regulators have even hinted that a comprehensive capital plan may soon be an integral part of the safety and soundness examination process, perhaps showing up as an element in the capital or management component of the CAMELS–rating system. Some of our clients have already received questions in this regard in light of upcoming regulatory examinations, so it is likely a trend that will only continue to become more frequent and ultimately a requirement.

The breadth and depth of a comprehensive capital plan will, of course, depend on the risk profile of the depository institution. While there is no magic outline for a capital plan, almost all capital plans should have a few critical components: (a) background on the depository institution’s strategic plan, operations, economic environment and current capital situation, (b) tolerances and triggers, (c) alternatives for available capital, (d) perhaps a dividend policy and (e) financial projections.

The tolerances and triggers may be the most important part of the capital plan, as this is how the institution will avoid needing just–in–time capital. The identification of tolerances and triggers operate as an early warning system to alert management that capital may become stressed in the near future. Careful planning should take place when considering what the tolerances and triggers will be, as these are the key drivers in making the capital plan a true planning tool.

In summary, capital planning is an important, if not necessary, tool for any depository institution, regardless of condition. There is a growing sea change in how the regulators view the necessity of a capital plan, and a growing expectation that every depository institution have a viable capital plan. It is important to note, however, that there is no one–size–fits–all capital plan that can be pulled off of a shelf as a form document. Instead, the plan should be carefully considered and evaluated, either as part of the institution’s strategic plan or as a separate plan working in tandem with the strategic plan. Finally, after it is prepared, the capital plan cannot simply sit on the shelf, but should instead be treated as a living, breathing document that will need to be revised as the economic and regulatory environment, risk profile, strategic direction and capital resources available to the institution change over time.

Ownership Succession for Family-Owned Banks: Building the Right Estate Plan


4-15-15-BryanCave.pngFor a number of community banks, the management and ownership of the institution is truly a family affair. For banks that are primarily controlled by a single investor or family, these concentrated ownership structures can also bring about significant bank regulatory issues upon a transfer of shares to the next generation.

Unfortunately, these regulatory issues do not just apply to families or individuals that own more than 50 percent of a financial institution or its parent holding company. Due to certain presumptions under the Bank Holding Company Act and the Change in Bank Control Act, estate plans relating to the ownership of as little as 5 percent of the voting stock of a financial institution may be subject to regulatory scrutiny under certain circumstances. Under these statutes, “control” of a financial institution is deemed to occur if an individual or family group owns or votes 25 percent or more of the institution’s outstanding shares. These statutes also provide that a “presumption of control” may arise from the ownership of as little as 5 percent to 10 percent of the outstanding shares of a financial institution, which could also give rise to regulatory filings and approvals.

Upon a transfer of shares, regulators can require a number of actions, depending on the facts and circumstances surrounding the transfer. For transfers between individuals, regulatory notice of the change in ownership is typically required, and, depending on the size of the ownership position, the regulators may also conduct a thorough background check and vetting process for those receiving shares. In circumstances where trusts or other entities are used, regulators will consider whether the entities will be considered bank holding companies, which can involve a review of related entities that also own the institution’s stock. For some family-owned institutions, not considering these regulatory matters as part of the estate plan has forced survivors to pursue a rapid sale of a portion of their controlling interest or the bank as a whole following the death of a significant shareholder.

To preserve the institution’s value, significant shareholders should consider the regulatory and tax consequences associated with their estate plans. Here are some issues to consider:

  • Combined family ownership interests. A significant shareholder should consider not only her own stock ownership, but also that of her immediate family, when determining if any bank regulatory issues may apply. For purposes of the various statutory thresholds for determining control, ownership of immediate family members, including grandparents, siblings, and children, can be aggregated, leading to unexpected presumptions of control.
  • Types of estate planning entities. For many larger estates, a variety of estate planning vehicles can be involved, including revocable and irrevocable trusts, testamentary trusts, family partnerships, charitable trusts and other charitable entities, such as private foundations. However, federal regulations only provide a narrow “safe harbor” from the requirements of the Bank Holding Company Act, which has led to a number of estate planning structures being unexpectedly classified as bank holding companies.
  • Impacts to S corporations. Many family-controlled banks have elected to be taxed as S corporations in order to allow the institution’s earnings to be distributed to shareholders more directly. Estate planners should consider any barriers to transfer under an applicable shareholders’ agreement, especially if the owner contemplates transferring stock to an entity that is an ineligible shareholder under S corporation rules.
  • Corporate governance issues. Individuals that own a controlling interest in a financial institution should consider the impact of his or her death on the governance of the institution until the estate is settled and the shares transferred to new owners. If the controlling shares are unable to be voted due to an estate or trust dispute, governance tasks for the bank, such as holding an annual meeting or approving a merger, can be held in limbo. As a result, the appointment of capable and responsible executors and trustees is a critical step in any estate plan.
  • Strategic planning. Significant shareholders should consider the desires of the next generations when formulating an ownership succession plan. While some family members may have a desire to manage the bank in the future, others may simply desire liquidity or have other investment goals. Considering these desires and determining how an estate plan may affect the strategic plan of the institution can preserve value for the controlling family, the institution, and minority shareholders.

Family-owned financial institutions are built over a lifetime and the regulatory and tax issues associated with an ownership transfer can be mitigated with careful planning. Regardless of whether a family intends to transition active management to the next generation or to simply pass down the full value of their shares to their relatives, constructing a plan that considers the family’s goals, in addition to regulatory and tax matters, is essential.

How Not to Waste Your Time in Strategic Planning


1-28-15-Naomi.pngBank boards are starting to take strategic planning seriously. The industry has returned to a modest level of profitability, and the boards at many small banks are wondering what the future holds for their institutions in an age of low interest rates and high levels of government regulation.

For many, the 4 percent or 6 percent return on equity that their bank promises to earn is not enough. Or perhaps the board managed to survive the financial crisis and many members are now ready to cash in their shares. Whatever the cause, more boards are asking about the value of remaining an independent entity versus selling or acquiring another bank, said investment bank Austin Associates Managing Director Craig Mancinotti, a speaker at Bank Director’s Acquire or Be Acquired Conference Tuesday in Scottsdale, Arizona. More than 800 people attended the three-day conference at The Phoenician hotel.

One of those who attended the conference is Arthur Johnson, chairman and chief executive officer at United Bank of Michigan in Grand Rapids, Michigan. Johnson is interested in starting a formal strategic process, with an independent moderator and an in-depth assessment of what the board’s goals are, now that many members of the closely-held bank board are over the age of 60. Most of the bank’s ownership lies with one family.

“I think the process has to become a little more formal than it has been in the past,’’ Johnson said. “I have a way of taking over meetings. Everybody knows my opinion counts but I have a hard time not letting my views come out first.”

When Austin Associates moderates a strategic planning retreat, each member of the board fills out in advance a brief S.W.O.T. analysis of the bank, which stands for strengths, weaknesses, opportunities and threats. Each member also lists the critical strategic issues facing the bank. To find out exactly what the board thinks and wants, Mancinotti recommends that management be excluded from the strategic planning sessions. Management’s input is still sought outside the sessions, but a director-only strategic planning session “is the best way to have unfiltered opinions,’’ he said.

As an introduction to the strategic planning retreat, Mancinotti gives a 30-minute to 45-minute overview of the economic and M&A environment, and he compares the bank’s performance to peers. That’s important so everyone is on the same page as to how the bank is performing. The board strategic planning session usually lasts six to eight hours, with a focus on developing key strategic priorities that management can then turn into a detailed action plan. The bank might need only two or three action items under each strategic priority, and all the different department heads should be involved in developing the action plan.

In order to make the goals a reality, the board should provide direction to management on how often, and when, management should report back to the board with progress toward the action items. It might be several times per year. “We are a big believer in reviewing [your strategic plan],’’ said Richard Maroney, Jr., managing director at Austin Associates in Toledo, Ohio. “You shouldn’t come up with a three-year plan and not look at it again for three years.” 

The bank’s M&A strategy should be a part of the strategic plan, and regulators should be informed in advance of the bank’s strategy. Regulators, just like shareholders, don’t like to be surprised. That should make the M&A approval process smoother.

If an acquisition is your goal, an investment banker can help the board identify a list of potential targets. Not all banks use an outside advisor for help with strategic planning, fearing that the advisor’s views will color the outcome. But regardless, the chief executive officer, not an investment banker, should make the first contact with potential targets and begin informal discussions. In fact, the board should understand that its role in the M&A process is to guide strategy, not initiate negotiations outside the board room.

Another good practice is to conduct a training session for the board to prepare for M&A. Is your board ready if it got an offer tomorrow? What if your number one target suddenly becomes available? An investment banker should be able to walk you through a hypothetical scenario. 

“You could waste a week just figuring out who has the authority to start the discussion,” Maroney said. “The first thing you should ask is: Are we ready to do M&A? What holes do we need to fill to be successful?” 

In the end, strategic planning can be a useful and productive exercise, as long as there is follow up and management knows to take the planning document seriously. 

Strategic Thinking: It Has Never Been More Critical


5-19-14-wipfli.pngStrategic planning has never been more critical to the continued success of any financial institution. After all, the financial services environment continues to be extremely challenging, and these are no ordinary times. Many institutions are thinking about a rebirth in strategy as they get back to the basics and focus on their core business model. As you approach your forthcoming strategic planning initiatives, you will need to focus on several external and internal themes that demand attention and require ongoing, fluid strategic solutions.

Key External Themes to Keep in Mind

  1. A “wave of consolidation” is expected to accelerate. If your financial institution is going to be a survivor, how will you compete successfully? What does that portend for strategy?
  2. The core business model should be examined to decide what strategies will maximize shareholder value and ensure a return on investment. There is a limit to how far expense reduction and recapturing loan-loss provisions can boost industry earnings. At some point, profitability must come from the ability to grow revenue. Margin is not likely to come roaring back, efficiency ratios have remained relatively flat and the increasing regulatory burden and new delivery channels have added to expense. The supposed lower cost of electronic/mobile delivery has not hit the bottom line.
  3. The ultimate challenge is to identify the source of tomorrow’s profitable growth. What markets are growing? Which niches within those markets should the bank target? What are the habits of your customers? What role should technology play?
  4. Regulatory reform has changed the game. At the end of the day, it’s still about our ability to manage risk within a complicated, complex web of regulation.
  5. A distinctive competitive advantage needs to be ensured. Simply put: Why do customers choose your bank?
  6. The key to success is to focus and to prioritize. Reaffirm what your institution does really well and build the strategic direction on core foundational strengths and on the most significant opportunities. Motivated execution of strategic priorities equates to sustained bottom line performance. Implementation and execution of a well-developed strategic plan will significantly enhance earnings.

Key Internal Themes to Keep in Mind

  1. Strategic planning should result in sustained bottom line performance and should be the highest yielding annual investment a financial institution makes.
  2. The planning process has a defined purpose: To help an organization focus its energy on clearly aligned goals and to assess and adjust strategic direction as appropriate in a dynamic, rapidly changing environment.
  3. The process must be customized to meet the unique needs of each organization. A “cookie cutter” process or “glorified budgeting” meeting will not produce forward-looking strategies, nor will it maximize shareholder value.
  4. Strategic planning requires discipline and a focused, productive planning meeting where questions can be raised and assumptions tested. The leadership challenge is always about making choices. As we frequently say, “If you emerge from a planning session ‘exhausted…but invigorated,” you have likely had a successful session that propelled needed action and a renewed commitment to aligned results.
  5. Organizational structure needs review. Look forward, not backward. Pretend you are starting from scratch. Reaffirm what works and what does not work for your organization.
  6. Leadership does matter. In fact, it is all about the “M.” The quality of management is probably the single most important element in the successful operation of a financial institution. Proactively assess the talent within your organization. Develop a deeper culture of accountability that rewards implementation, execution and sustainable high performance.
  7. Board governance has never been more important. It has never been more challenging to find competent, qualified directors willing to assume the personal risk associated with being on a board.

The Outlook

All components of your strategic plan should align with the strategies the bank needs. Even if you have a well-crafted strategic plan, that is not enough. All critical issues must be addressed in an executable plan implemented within a well-led culture of accountability.

Difficult times can be an opportunity in disguise. On the other side of most challenges lie great opportunities. To survive and flourish, financial institutions must exploit the current opportunities—carefully, deliberately, and thoughtfully.

Making Outsourcing Work for Your Bank


With increased regulatory compliance demands, many financial institutions are looking to relieve the pressure by outsourcing their non-core functionality. In this video, Beth Merle of Sutherland Global Services provides insight into which services can be outsourced, how much banks can save and the best way to hold providers accountable.