Plansmith Blog

Craig Hartman

is the Founder & CEO at Plansmith.

Recent Posts

Go Beyond Just Budgeting: Build A Playbook & Control Your Results

Posted by Craig Hartman on 9/30/21 1:38 PM

Are you really planning, or are you just budgeting?

By this I mean, are you just filling out the numbers on a spreadsheet by trending? It is gratifying when all the numbers come together in a neat package showing expected growth and earnings for next year. Along the way there were probably many contributors who verbally expressed their goals and plans for the year. Then, once the budget is done, it gets presented to and accepted by the board. As each month passes, comparisons are made of the budget “predictions” to reality. Variances from “budget” are explained, and business continues. In essence, that’s budgeting.

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Turn Your Budget into a Plan

Posted by Craig Hartman on 1/15/21 12:04 PM

During the Middle Ages the town controller or accountant would show the citizenry how much was in the town’s “bouge,” a leather bag or wallet. With this knowledge, they would decide how best to spend it to cover the town’s expenses. Eventually, the term became the “budget” and was adopted by various enterprises to control expenses. Since not all expenses are immediate, the idea of forecasting revenues and expenses slowly entered the picture. However, expense control remained the primary objective. Hence the saying familiar to all of us: “That’s not in the budget.”

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How Will Rate Changes Impact Your Budget?

Posted by Craig Hartman on 3/11/20 9:48 AM

Everyone probably has their budgets in place for 2020 by now. And now comes along the Coronavirus and messes everything up. The Fed has already lowered rates by half a point. So, now you’re scrambling to figure out how this will impact your 2020 plans?

Seems like you have a few choices:

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Stop Budgeting and Start Planning

Posted by Craig Hartman on 1/17/20 9:16 AM

Most of us have been building annual budgets forever. First on paper spreadsheets, then with electronic spreadsheet like Excel, and now with software budgeting tools that amount to little more than more convenient spreadsheets. But a budget is typically all numeric built with trending and last year’s information. Usually the CEO provides a growth and earnings expectation and we build the budget to make the math work. If you have a system that can also provide rate risk analysis and draw detailed data from your core system, you really have a great system. So, what’s the problem?

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Understand the Behavior of Interest Rate Risk

Posted by Craig Hartman on 2/25/19 2:27 PM

The purchase of an asset liability management (ALM) system presents a problem to many bankers. Often the process begins with the creation of a checklist of features and functions then progresses to comparing vendors. The vendor with the highest "score" wins. While this may be a good start, there are dimensions to the problem that this ignores, specifically the quality and significance of the features identified.

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Another Great Year

Posted by Craig Hartman on 12/28/18 11:44 AM

Another great year has gone by, the stock market notwithstanding. With the number of banks and credit unions continuing to shrink, the cream is rising to the top. The quality of the remaining institutions is getting better.

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The Most Important Variance – Where You Will Be

Posted by Craig Hartman on 6/25/18 2:58 PM

I was playing golf the other day and, of course, while I’m playing I’m thinking about work, which is a bad idea since I should be concentrating on my game. But I’m always thinking about ways to make planning more effective. My thoughts today were on variance analysis. Everyone uses variance analyses in their board reports to check progress against plan and it is certainly a good check. At board meetings we review our current position relative to last month, year-to-date and last year-to-date, etc.

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Change Isn't What It Used To Be

Posted by Craig Hartman on 3/7/18 2:15 PM

Since the mid-1960s change has been a constant. The only real change is the rate of change. For years there have been predictions of shrinkage in the number of banks – the prediction is finally coming true. There has been a big change in the number of institutions (over 16,000 in 1972 to about 5,000 today). The environments they serve and the ways in which they serve has changed. Competition, consumer attitudes, market demographics, regulations, products, and technology have all had their impact.

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Forgotten Components of Interest Rate Risk at Community Banks

Posted by Craig Hartman on 9/26/17 6:30 PM
It is standard operating procedure for community banks to measure interest rate risk by shocking the balance sheet. The percentage change in the Net Interest Margin over several shock levels as an indicator of the severity of risk. While it can provide a clue to the potential loss in the margin, it by no means measures the true risk. The true risk is Equity loss. Equity doesn’t come from NIM but from retained earnings. So to truly measure risk to equity, we must use the entire P&L, not just net interest income.
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Planning Never Stops

Posted by Craig Hartman on 7/7/17 3:36 PM
Why is it that we, as humans, essentially plan every minute of every day, yet find it difficult to do similarly in our business?  We are planning, whether we realize it or not, while walking down the street.  We are looking ahead, anticipating other peoples' movements and planning our actions, albeit subliminally.  When we are driving, we constantly look ahead watching the cars around us and the road ahead.  Not only are we constantly planning but we do so to adapt to our environment and make course corrections to either avoid a problem or take advantage of changing circumstances.  In other words, planning never stops.
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