So how did you do on your New Year’s resolutions this past year? I truly worked to get a greater work-life balance, but as you all know, sometimes life does get in the way. So, I will repeat that resolution again for myself.
But as to you—how did you do on last year’s resolutions. As a reminder, they were as follows:
- RESOLVE to put significant planning and process time into implementing CECL.
- RESOLVE to increase independent (external or internal) loan review coverage to include some of those newer loans, pass loans with significant event risk, new loans from new officers, and floating rate loans that were borderline in lower rate environments.
- RESOLVE to be thoughtful and deliberate in the IT Strategic Plan and planning process.
These resolutions could be repeated this year and would still be a good way to improve your results and prepare your financial institution for what is to come in 2019 and beyond. CECL is one year closer (although we did get a one quarter reprieve). You should be well on your way to hopefully having comparable numbers on your allowance to inform your Board as to the impact of CECL on your financial institution. We are still hearing anecdotal evidence that credit standards are loosening, although noncurrent rates continue to decline, and net charge-offs are stable. But as always, we are hearing more and more of the “R” word in discussions with economists. Fintech is still the hot topic in our circles; continue to be thoughtful with your partners and IT practices.
Is there anything to add to these resolutions? I would certainly be remiss if I did not mention that liquidity is getting tighter and now would be a great time to evaluate your institution. So I would add that you should RESOLVE to review and evaluate your liquidity risk management processes and procedures and dust off and update your contingency funding plan. It is better to be overprepared than caught short—pun intended!
Strategically, we saw in our footprints a lot of merger activity and that will not slow down in 2019. Even if you have not updated your strategic plan AND succession plans, now would be an excellent time to do so. I recommend you RESOLVE to critically evaluate where you want to be and is it best for you to buy, sell, repurpose, or stay the same. Having an independent strategic planning process could really highlight and draw out the best approach for 2019 and beyond. Also, finding good people is getting harder and harder for all areas of your institution—perhaps the best person is truly already working for you. RESOLVE to really evaluate your talents within and be honest in evaluating gaps.
As always, January 1 brings time to reflect on what is past and a great wide-open horizon to improve the future. I congratulate you on your 2018 accomplishments and wish you well on a prosperous and calm 2019. And if we at Wipfli can help in any way to accomplish your resolutions, please do not hesitate to contact us.