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6 ways you can use call report peer analysis effectively

Sep 04, 2023
By: Robert H. Zondag

For many in financial institutions, call report peer analysis is a familiar tool that often goes overlooked. But for new leaders in the industry, it’s one that could be crucial in understanding their financial institution’s performance.

Analyzing your financial performance compared to peers helps you discover weaknesses and identify the opportunities and threats you face from a rapidly changing financial services marketplace — all of which is critical to formulating your institution’s strategy.

A competitive analysis can help you learn the ins and outs of how your peers work and identify potential opportunities where you can out-perform the market. It also enables you to identify internal as well as external trends and ensure your institution is consistently meeting — and exceeding — peer standards.

Here are six ways you can start using call report peer analysis more effectively:

1. Identify the right metrics to evaluate

For many institutions, call report analysis focuses on traditional measures, such as return on equity, return on assets or efficiency ratio. However, to leverage the analysis more effectively, review the data that drives those topline measures.

Evaluate how you compare to peers in occupancy expense, funding mix or overhead expense growth rate. By reviewing the causal ratios, you can discover where your institution is doing well, where you need to improve and which trends you need to get ahead of.

2. Seek appropriate peers

For many call report peer analyses, a traditional local peer group or regulatory peer group is used. To better leverage the data, seek a more appropriate peer group.

Look for one that better mirrors your balance sheet, type of lending conducted, ownership structure and revenue sources (non-interest income). By choosing a more focused peer group, these institutions will provide a better picture of how you compare based on the same available resources such as capital and people.

3. Determine which data points are worth investigating

Oftentimes, call report analysis is reviewed and no actionable results are developed.

In looking at your peer analysis, consider what data points you could be leveraging to improve performance. These aspects could be items such as loan or deposit pricing. You could also look at off-balance sheet services such as trust or insurance, delivery strategies or product mix.

4. Document your research

After completing your investigation, make sure your further research is documented so that you can use it to develop action items from the analysis.

For the greater team, comparison charts and graphs are useful to help visualize your position in relation to your peer group.

5. Execute the changes

Once you have your action items, identify which departments or teams in your institution will be responsible for them. Accountability eliminates the time and effort you spend on distracting activities and other unproductive initiatives.

When you make people accountable for their actions, you’re effectively teaching them to value the analysis, time and research completed. And when done right, accountability can increase your team members’ skills and confidence to move performance.

It’s also important to ask your team to articulate what is needed to support better performance.

Should your institution improve the type or pricing of your deposit accounts, or is your clients’ digital experience your main challenge? Could you achieve a better ROI on your marketing budget by investing in a more capable CRM for better lead management? Asking these types of questions to your teams will help you better identify productive solutions.

6. Track your results

Continuous improvement is just that: continuous.

For financial institutions, performance is easily measured quarterly by repeating the peer analysis. Evaluate whether your performance improved compared to peers and determine why or why not. Then continue the iterative process.

How Wipfli can help

Improve your financial institution’s profits with Wipfli. Our experienced team maps your information flow and value stream processes to help you find new ways to reduce costs and position your institution for continuous improvement. Contact us to learn more about how we can help you transform your financial performance.

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Robert H. Zondag, CTP
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