Freezing Rain in the Forecast
Jan 24, 2017
1 min read
I am sitting here this wintry evening as I write this blog, debating whether I should go home or stay at work for a while. You see, there is a storm coming, with snow or freezing rain forecasted. Would it be better if I stayed here until the salt trucks come out or try my luck now?
All of this pondering about the rain got me thinking about liquidity—shareholder liquidity to be exact. (Okay, it may be a stretch, but I had to get there somehow.) Regardless of what type of weather we may be having, we have seen stockholder liquidity issues become a bigger issue and a contributing factor in the recent acquisition market. Without a liquid market in which shareholders can sell their stock if they want to, there is a higher probability the bank may be sold. While that may satisfy the needs of a few shareholders, it may not be the best answer for all of them.
So how do we ensure adequate liquidity for our shareholders? There are many answers, all of which should revolve around the overall strategic direction for your institution. Liquidity should always be a discussion item at your strategic planning meetings, but it also needs to be monitored. If you see potential issues, there are many ways in which shareholder liquidity can be addressed (including a sale of the institution). But rather than waiting for a sale, each institution should address liquidity proactively so it is not forced into something that was not in the best interest of the institution and the majority of its shareholders. If you want to discuss liquidity options further, contact your relationship executive, who can help you with alternatives or ideas.
I think I will try to get home before more freezing rain comes.
All of this pondering about the rain got me thinking about liquidity—shareholder liquidity to be exact. (Okay, it may be a stretch, but I had to get there somehow.) Regardless of what type of weather we may be having, we have seen stockholder liquidity issues become a bigger issue and a contributing factor in the recent acquisition market. Without a liquid market in which shareholders can sell their stock if they want to, there is a higher probability the bank may be sold. While that may satisfy the needs of a few shareholders, it may not be the best answer for all of them.
So how do we ensure adequate liquidity for our shareholders? There are many answers, all of which should revolve around the overall strategic direction for your institution. Liquidity should always be a discussion item at your strategic planning meetings, but it also needs to be monitored. If you see potential issues, there are many ways in which shareholder liquidity can be addressed (including a sale of the institution). But rather than waiting for a sale, each institution should address liquidity proactively so it is not forced into something that was not in the best interest of the institution and the majority of its shareholders. If you want to discuss liquidity options further, contact your relationship executive, who can help you with alternatives or ideas.
I think I will try to get home before more freezing rain comes.
