Plansmith Blog

3 Activities to Start ASAP this Fall

Posted by Sue West on 9/23/19 11:32 AM

Oh, Autumn. The changing of the leaves, the crispness of the morning air... and the crunching of numbers?

Yep. We're bankers. It's what we do. And fall, it's the perfect time for some of our favorite - and most crucial - banking activities.

Here are the 3 game-changing activities Plansmith recommends starting as early as possible in the fall:

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15 Ways an Outside Facilitator Can Save Your Next Strategic Planning Session

Posted by Kevin Stang on 7/24/18 3:01 PM

We’ve all been in meetings that weren’t exactly productive. You know how it goes…

  • The meeting begins with little to no agenda
  • You waste most of the time discussing off-topic subjects
  • Debates over seemingly meaningless items end up derailing progress
  • Someone ends up creating more questions than solutions
  • The meeting takes an hour longer than it was scheduled for
  • The team walks away with no clue what to do next
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5 Simple Tweaks to Build a Better Strategic Plan

Posted by Megan Plis Knapp on 7/20/18 3:23 PM

Only part of a successful strategic plan lies in the plan itself. A good plan, just like a recipe, is important. But any good chef will tell you, choosing the right ingredients is only half the challenge. The rest lies in executing the recipe properly.

So, how can your bank or credit union make a better strategic plan?

Here are some simple tweaks to the ingredients and execution of your strategic planning recipe.

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Bipartisan Banking: It's About Time

Posted by Sue West on 4/25/18 12:05 PM

I have been in the banking industry since 1979, and on March 22, 2018 I received a copy of something that I never thought I would see that made me say out loud, “It’s about time!”

It was a letter to Members of the Illinois Congressional Delegation. The content of that letter was to express strong support for bill S. 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act. What surprised me was that it was signed by the presidents and CEOs of 4 financial trade associations, comprised of both banks and credit unions.

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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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Learning to Lead: 5 Things a Leader Must Learn

Posted by Sue West on 12/28/16 7:56 AM

From my very first job at 15, I knew I had management potential. I was always able to coordinate a variety of projects at once. I often compare myself to a circus act. You know, the one that keeps the plates spinning on sticks at one time? Now known as "multitasking."

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Survey Results: Strategic Planning for Community Banks

Posted by Jim Fugitte on 7/21/16 2:21 PM

Most say strategic plans end up on the shelf!

Plansmith Corp. recently conducted a survey of CEOs and CFOs on the role of community bank strategic planning within their organization. It was not surprising to learn that 90% said they have a strategic plan, but a closer look revealed some interesting statistics on the implementation of their plans. 

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CEOs: 3 Thoughts on Strategic Thinking

Posted by Jim Fugitte on 6/8/16 10:00 AM

Compliance

The cost of regulatory compliance, declining product prices, and technological threats from new entrants all narrow the path to future profits. Even if the yield curve improves, these threats will force community banks to search harder to improve earnings. It can’t be done on the fly; only strategic thinking and careful planning in the context of your market and the opportunities available will be successful. Would you coach a Super Bowl team without a playbook? Probably not.

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Why Community Bank ALCOs Fail: Staffing the ALCO

Posted by Craig Hartman on 7/8/14 3:00 PM

There is an architecture design concept that says, "form follows function." Once the ALCO has determined what it must do, it must inventory the resources at hand as well as those necessary to make it successful. Among these resources are the men and women within your company whose abilities and perspective will contribute to achieving the goal. It is safe to assume that the general purpose of the ALCO is to control the behavior of the net interest margin by understanding and controlling the factors that affect margin.

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Why Community Bank ALCOs Fail: The Wrong Tools

Posted by Craig Hartman on 6/24/14 4:00 PM
Now that you have clarified your purpose , we can discuss using the right tools.

While "No pain, no gain" may be an effective strategy for muscle building, it is counter-productive in margin management. There are institutions that have an entire staff devoted to running asset-liability management systems only to finish in time for the ALCO meeting, only to begin all over again.

Just because we can use a computer does not make it useful. We are continually amazed by supposedly sophisticated systems that can require several hours to produce a single scenario. These models discourage creativity and thoughtful analysis. Models should shorten the time and data requirements for use otherwise; no one will want to use them.

Planning models are learning tools not predictors. The more scenarios investigated the more we learn about the behavior of our margin and our organization. Speed of operation is not just a convenience, but it encourages learning and allows us to sharpen our strategies. More importantly, speed allows continuity of thought when developing an idea. We get immediate feedback. A model must be efficient to be effective. We can take a good model right into your ALCO meeting and simulate new ideas on the fly.

Asset-liability management complexity increases inversely to the volume of data. Effective modeling systems actually generate their own input based on our assumptions using relationships. Prepayments, for example, should automatically adjust by the system for every change in the rate environment. Growth and seasonal distribution of new balances should automatically adjust as rates rise or fall to reflect customer behavior or competition. Models should reduce data entry, save time and give results that are more thorough.

When we speak of a models speed, it applies to more than just the computations. Speed, when communicating concepts are even more important to the strategy development. Graphics are the best way to transmit the issues and solutions quickly and clearly. These are not just time series graphs but rather behavioral graphs that become models to use to forecast and explain behavior. Behavior graphics lead naturally to action plans.

For example, behavioral analyses using multiple rate shock simulations allow us to describe a completed asset-liability management analysis into a quick and complete display or description of yield and margin behavior. Through graphs, we see both description of the problem and the solution simultaneously. No other format provides this prospective. Using these powerful tools, we turn complexities into simplicity.

At the risk of branded a heretic, let me say that the solution to margin management is not to be found in the accounting systems. Regardless of the linkages between general ledger, accounts payable, fixed assets, investments, loans, deposits and your asset-liability management system, the answer is not there. The data in your accounting system is the history. Bankers are often so rooted in their general ledger, that they mistakenly believe that they must pull data directly from the mainframe or they cannot do and effective job. Although that is comforting, asset-liability management and the ALCO must deal with the future, not the past.

Check back for the final part of this series, "Why ALCOs Fail: Staffing the ALCO" .
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