THE CEO CORNER – Why Strategic Planning is So Important to Community Banks

FDIC statistics show that many community banks have earnings difficulties. I suspect that a good number of these banks are attempting to get to safe ground and are trying to avoid regulatory criticism.

They are falling victim to the utility school of bank management, which says that you accept slow or low growth, pay a modest dividend and wait till this regulatory cycle ends. The problem with doing that is many banks won’t survive to see the next cycle. 

Others are spending money and precious management time on the wrong processes and programs. Unfortunately, there are some institutions that are now beyond repair and whose only hope is to be sold.

The cost component cannot be left out of the analysis: It is the number one killer of most failed businesses, and banks are no exception.

The Invictus approach to this new banking environment is efficient, focused, and calibrated to maximize a bank’s returns, while minimizing costs and aligning the regulatory compass. Banks are spending money to comply, but are they getting the desired result?  The old way of dealing with regulatory change is the wrong way. These regulations are here to stay, and you can’t jaw bone your way out.

The regulatory discussion must include not only capital and credit, but also improve earnings.

Management and their respective boards must be willing to demonstrate that they are prepared to make the right strategic decisions to chart a new course for their banks.