I recently finished reading a report published by Invictus Consulting Group, LLC, a bank management consulting firm located in NYC. The report touched upon 11 subject areas of interest to all bank CEOs and CFOs. I have created a three part posting to cover the critical takeaways I derived from the report.
• Part One: Regulatory, Compliance and Cybersecurity
• Part Two: Balance Sheet Risk Management
• Part Three: Board of Directors’ Topics
I encourage you to download their full report, 2016: A Regulatory Outlook. Invictus is doing some great work in the bank industry.
Part Three: Board of Directors’ Topics
Management and Board Issues:
• Management succession and retaining key staff is a key risk.
• Finding and keeping a qualified board of directors continues to be a challenge for community banks.
• FDIC is updating its video training series including topics such as vendor management and interest rate risk management. They are also putting together a new practical handbook for directors.
• Invictus references a few other resources and training programs: FDIC Director Resource Center; Federal Reserve’s Bank Directors Desktop; and Office of Comptroller of the Currency conducts works shops. BankBosun Note: ABA, ICBA, SNL and state banking associations offer conferences and workshops.
• A survey of community banks found that the hypothetical compliance cost could be $4.5 billion a year.
Strategic and Capital Planning:
• OCC will have specific focus on strategic planning, succession planning and capital needs planning.
• OCC has indicated that the development and implementation of a strategic plan will be its first supervisory priority.
• Take a look at FDIC’s Summer 2015 Supervisory Insights article written by the FDIC’s policy staff at the division of risk management supervision.
• OCC is recommending in their Fall 2015 Semiannual Risk Perspective publication a disciplined approach to identifying opportunities and measuring and managing risk.
Mergers and Acquisitions:
• There was only one new bank chartered in 2015
• As of the 3rd quarter 2015, 224 banks had merged.
• Pre-filing your proposed acquisition can speed up approval.
• State and Fate of Community Banking is an interesting read, exploring the impact of the regulatory burden on industry consolidation from the Harvard Kennedy School. BankBosun Note: Stay tuned for a BankBosun podcast on this paper.
See Part One and Two for continued analysis of the Invictus Report.