Best Community Banks Association (BCBA) has joined Pepperdine University as a Research Partner on the 2014 Pepperdine Private Capital Markets Project.
This important national study is used to provide capital markets insights to businesses and funding providers about current cost of capital trends.
We are particularly looking for survey responses from community banks that provide senior or junior lending to private companies. Follow the link below and on the second page of the survey select the type of capital provider that most closely represents your bank’s primary funding activity.
Please take a few minutes and visit the Pepperdine research site to participate in the survey, which is open online until October 31st.
All survey responses are held in the strictest of confidence and only aggregate results are reported in the study.
Survey participants will receive a complimentary early release of the comprehensive report on the survey before its public release in November.
Findings from the previous reports have been reported in The Wall Street Journal, New York Times, Venture Beat, Times, peHUB, TechCrunch and many other media outlets. Since 2009, thousands of capital professionals and business owners representing every market type and more than 60 countries have downloaded Pepperdine’s research.
You can learn more about the Pepperdine Private Capital Markets Project and access last year’s report at http://bschool.pepperdine.edu/privatecapital .
You can learn more about the Best Community Banks Association at http://BestCommunityBanks.org
Echo Partners is a proud supporter of both the Best Community Banks Association and the Pepperdine Private Capital Markets Project.
Photo provided by AJ Cann
On Friday October 17, the FDIC was named receiver for NBRS Financial (MD).
A link to our bank rating report is shown below.
As is typical, an examination of the financial position of this bank indicates well below normal capital levels and generally above normal noncurrent loans.
You can learn more about our bank ratings system, including video tutorials, on our website.
Photo provided by Nina Matthews Photography
Last week Comptroller of the Currency Thomas Curry addressed the value of strategic planning in today's community banking environment. And while his remarks were delivered to a group of minority depository institutions, they are absolutely relevant to all community banks.
Read the full text of Curry's remarks here.
Low growth, a tepid and uneven economic recovery and margin pressures all combine to make strategic planning more important than ever. Strategic planning helps identify:
- Who you are
- Your strengths and weaknesses
- What you can realistically accomplish
- What success should look like
As Curry notes, sustaining your mandate and existing profitability will likely require some difficult trade-offs.
Use strategic planning to answer:
- Where are we now?
- Where do we want to be?
- How do we get there?
- How do we measure our progress?
- What adjustments are required to meet our goals?
There are many tools available to help. Some are simple while others are more complex. Curry recommends you select tools that make sense for your bank.
The OCC goes as far as suggesting creative solutions, such as cost sharing or other collaborative approaches among financial institutions to help community banks achieve greater cost efficiency.
Let me know your unanswered question concerning strategic planning.
Photo provided by Nomadic Lass.
With 4 of the 5 sessions complete in our inaugural community bank summit, I can tell you it's been a big success.
We've had over 300 community bankers on each session tuned in for a unique series of timely and on-point workshops covering almost every aspect of ALCO risk management.
Our guest faculty has really opened up for the community banking community. Personalized answers from the experts to specific bank questions has over-delivered, practically turning the workshops into a complimentary consulting call.
But now, it's time to plan our follow up summit, tentatively scheduled for late October. And this is where I need your help.
Please click the blue button above and tell me what topics you most want to see in the follow up summits. You'll know you're in the right place when you see the green check mark.
With your help, we can make the next summit even bigger, better and more in line with your needs. Thanks again.
Photo provided by Oliver Tacke
On September 16 Doreen Eberley, Director of the FDIC Division of Risk Management Supervision, testified on the status of community banks to the Senate Committee on Banking, Housing and Urban Affairs. You can read the full text here.
Here are a few highlights on the importance of community banks:
- While accounting for only 14% of industry assets, community banks account for 45% of all small loans to businesses and farms.
- Almost 20% of all U.S. counties would have no physical banking presence at all if not for community banks.
And a few updates (most obvious to us) about community bank financial performance:
- Net interest income has been squeezed.
- Regulatory expenses have increased.
- Traditional community banks (relationship lending funded by stable core deposits) performed well during the banking crisis
- Fast growth, risky assets and volatile funding were associated with higher rates of failure.
Current financial performance illustrates these points:
- Community bank loan balances grew 7.6% in the past year, outpacing the 4.9% industry growth.
- Over 75% of increase in small loans to business was driven by C&I and nonfarm, nonresidential RE loans.
- Community bank NIM was 3.61%, 46bps above the industry average.
- Noninterest income and noninterest expense were both down at community banks.
- Community bank profitability increased 3.5%, less than the industry overall 5.3% growth.
- Over half (57.5%) of community banks reported higher earnings than a year ago
- Community banks experiencing losses fell to 7.0% from 8.4% of all community banks
The community bank supervisory approach was also discussed. The FDIC emphasized that they tailor the supervisory approach to the size, complexity and risk profile of each bank, using the following factors:
- Pre-examination planning
- Extended safety and soundness examination intervals (over half community banks on 18 month schedule)
- Off-site monitoring and early warning associated with rapid loan growth and unusual levels or trends in...
- Problem loans
- Investment activities
- Funding strategies
- Earnings structure
- Capital levels
I'd encourage you to give it a read and to send a note to your Senator (and House members too) letting them know how you feel.
When I was in elementary school, I loved the fill-in-the-blanks worksheets we used to use. Something about writing the answers down helped me burn them into my brain.
We can do the same thing with ALCO and asset liability management. Here's a quick preview.
- ALCO is a ______ ______, not a regulatory compliance tool.
Or maybe this one.
You can get these answers and much more from Darling Consulting Group's Mark Haberland next week in our online community bank risk management summit.
Sign up here for all 5 sessions.
Here's another one.
- Critical model assumptions should be ______ ______ regularly.
Maybe you already know the answers to these questions. If so, you're doing great.
But if you want to be sure, and if you want to learn more, sign up for our online training. It's free to all community financial institutions.
The training starts Monday Sept 15, so don't delay. Our nationally recognized faculty has a great program waiting for you.
Photo provided by Chris Yarzab
If you've followed me for any length of time you probably know that I'm a big fan of model validation. In fact, I've written about it almost a dozen times recently.
And as much as I value model validation and its underlying components, there are a few aspects of model validation that I can't fully capture. I worked in a large bank, I've built a lot of models and I help community banks now. But I've never been a bank CFO and I'm not a CPA or auditor. And they have a lot to say about the nuances of model validation.
But what if I could get a nationally recognized CPA and bank CFO to give you the scoop on model validation? Wouldn't that be valuable to you?
The best news is that's exactly what I've done. Paul Allen of Saltmarsh CPAs is going to be our guest expert to give us those insider views on model validation.
Paul is not only a respected CPA, but he has been the CFO of 2 community banks. So he knows this topic like the back of his hand. And he'll be sharing it with us next week during our 5-part online workshop series.
The series is free to all community banks. We just ask 2 things.
- Community bankers only. No consultants or vendors.
- Use your bank email address to register.
Get ready to take notes. When Farin speaks on NMDAs, community bankers listen.
Funding mix has systemically changed from time deposits to NMDAs as community banks have worked hard to reduce COF. Yet this shift raises more questions.
- Will depositors act in the future like they have in the past?
- Can we accurately model our NMDAs?
- Will these low cost funds stick?
- What if they don't?
Dave Koch of Farin & Associates, guest presenter for the upcoming Best Community Banks Risk Management Summit, answers these and other questions in his fast-paced training.
Get the details and sign up here.
Photo provided by Ken Bosma
Our new training workshop series is getting started with a blockbuster ALCO and asset liability agenda September 15 - 19.
Click to learn more.
Join me as we host some very special guest expert instructors. In fact, our faculty is a veritable "Who's Who" of interest rate risk, including:
- Dave Koch of Farin Associates
- Mark Haberland of Darling Consulting Group
- Paul Allen of Saltmarsh CPAs
Our topics include almost every important and timely ALCO issue on your to-do list including...
- Interest Rate Risk Peer Data
- Model Validation
- Deposit Analytics and Core Funding
- ALCO Strategies for Success
- IRR Contingency Planning
You can imagine what you might be charged for 5 days of content and expertise like this. But here's the best news. We're all working together on a mission to help community bankers and we're going to bring this important workshop series to you at no charge.
That's right. It's free to attend all 5 live sessions.
So bring your management team and your directors.
There are just 2 requirements.
- Community bankers only. No consultants or vendors.
- You must register using your bank email address.
Also, seats are limited so sign up soon.
Click to learn more and to register for this groundbreaking multi-day ALCO training event.
Please let me know if you have any questions.
Photo provided by Ramesh NG
Over the past few months I've had the opportunity to deliver live training workshops to over 1,000 community bankers nationwide. And I've personally seen just how hungry community bankers are for good quality training.
In fact, I've had several bankers ask me about training topics just this week.
Well, here's a special "heads up" for you. I'm working on a great training workshop series including...
- Important and timely items of interest to community bankers
- Highly recognized expert faculty from throughout the industry
- Tips, tricks and pointers you can use in your bank
- Board of Directors training topics
- All content and no selling
Our first workshop session is going to focus on risk management, specifically interest rate risk and asset liability management. And we'll have the best experts and authorities in the business as our distinguished faculty.
Subsequent series will focus on...
- Investment portfolio management
- Stress testing
- Capital planning
- Loans and deposits
- Strategic planning
- Performance improvement
- And so much more!
I'll have more on the workshops soon.
Until then, please let me know if you have any particular workshop topics you might want to see covered.
Photo provided by Ramesh NG