Financial Institutions

Friday, 10 January 2014

Tips for community bank strategic planning

Written by Rehmann Team

Why does one community bank survive and thrive while another fails? What techniques, processes and systems do successful community banks employ? What can you do to ensure your bank remains strong in its service to customers, stakeholders, employees and the community? Finding the answers to these questions starts with doing some homework, evaluating the current situation, anticipating future possibilities and developing a comprehensive strategic plan...

Thursday, 10 October 2013

Manage third party relationships to reduce risk exposure

Written by Rehmann Team

Increasing customer demand for convenience services, the proliferation of regulatory requirements and availability of innovative technologies mean that now more than ever, financial institutions must rely on the expertise of third-party vendors. While these vendors provide much needed services that offer solutions to a variety of challenges, risk must also be assessed. While day-to-day management of a product or service can be transferred to a third party, the responsibility for ensuring compliance cannot. A financial institution’s board of directors and senior management are responsible for managing activities of third-party vendors and identifying and controlling risks, just as if the activities were being handled in-house...

Thursday, 10 October 2013

Managing interest rate risk with EVE

Written by Rehmann Team

U.S. regulators and examiners continue to focus on interest rate risk and its management. The FDIC requires that a bank’s board of directors ensure management identifies, measures, monitors, and controls interest rate risk by implementing programs that include strategies, risk limits, and controls; risk identification and measurement; monitoring and reporting; and independent review...

Thursday, 10 October 2013

Are core deposits really core anymore?

Written by Rehmann Team

Core deposits that come from an institution’s principal, immediate market area provide the funds that enable an institution to make loans and invest in other income generating assets. Traditionally, most community-based institutions have not had access to alternative funding sources that are available to larger regional and national banks, making core deposits critical sources of stable, low-cost funding. However, in recent years many institutions have faced challenges in maintaining or growing core deposits. The advent of online financial institutions have, some argue, reduced the need for a bricks and mortar presence and heightened yield competition to capture deposits, especially certificates of deposit, from customers who are based virtually anywhere...

Thursday, 10 October 2013

Cybersecurity threats: is your institution vulnerable?

Written by Rehmann Team

In May 2013, hacktivists (hackers who do their computer dirty work for social reasons) announced OpUSA, an organized plan to hack into the computer and online networks of companies across the U.S., including financial institutions, and wreak havoc by phishing, perpetrating denial-of-service attacks and compromising data. In July 2013, about 50 financial institutions such as JPMorgan Chase, Bank of America, and Citigroup, participated in series of simulated cyber attacks, known as Quantum Dawn 2 and coordinated by the Securities Industry and Financial Markets Association (SIFMA)...

Thursday, 10 October 2013

Mobile banking threats, risk assessment and risk management

Written by Rehmann Team

Mobile banking meets consumer demand for convenience and the ability to bank on their own time, and on their own terms. It also opens the door for heightened risk and fraud. Two major risk factors are mobile users’ behaviors and their download of third-party applications. While the two most popular operating systems, iOS and Android, generally have robust security features, there are creative ways mobile devices and their users are being attacked: Malicious apps that users willingly download because they don’t realize that they are not “authentic” apps, but hacked copies loaded with malicious code...

Thursday, 10 October 2013

Smooth succession planning takes time, commitment

Written by Rehmann Team

Throughout the media we hear that there are plenty of unemployed professionals and executives; however, it is difficult to find well-trained talent with the depth and breadth of experience to run a community bank. Constant regulatory changes, increased pressure to meet capital and liquidity standards, focus on delivering returns to shareholders and a plethora of human resources, operational and industry issues make fulfilling this role a challenge even for the most seasoned bankers. Unfortunately, many training initiatives were stopped during the financial crisis, when banks eliminated formal programs to cut costs. CEOs may also be reluctant to retire, or remain in place out of a sense of dedication and desire to return a struggling institution to one of health and prosperity...

Wednesday, 03 July 2013

Basel III: a win for community banks?

Written by Rehmann Team

On Tuesday, July 2, the Federal Reserve Board approved a final rule to implement Basel III regulatory capital reforms and certain changes required by the Dodd-Frank Act (DFA).  The changes: Help ensure banks of all sizes maintain strong capital positions that will keep them viable during times of financial stress and severe economic downturns. Minimize the capital requirement burdon on smaller, less complex financial institutions while addressing capital requirement shortfalls in larger banking organizations that became apparent during the recent financial crisis. Although minimum requirements for both the quantity and quality of capital held by banking organizations will increase, nine out of 10 financial institutions with less than $10 billion in assets would already meet the common equity tier 1 requirements in the final rule, according to data from March 2013...

Friday, 28 June 2013

Interest rate risk and management responsibilities

Written by Rehmann Team

As community bank profitability remains under pressure, many bankers have branched out into new products to generate interest or noninterest income, lengthened asset maturities or increased assets with embedded optionality to generate positive earnings and satisfy stakeholders. These actions have also increased banks’ interest rate risk (and potentially credit, liquidity and legal risks, too) and underscored the need for comprehensive risk management programs. A bank’s management team must have in place effective interest rate risk exposure policies that allow a bank’s management team and board of directors to identify, measure, monitor and control interest rate risk exposures. These policies usually include these four elements: Board and Senior Management OversightA bank’s board of directors is expected to have working knowledge of the different types of interest rate risk, understand how business activities could create or change the bank’s exposure, and understand how risk measurement reports can be used to identify exposures...

While most bankers would agree that the recent recession and a heightened regulatory environment have delivered a double-dose of unprecedented challenges, a recently released study from the Federal Reserve Bank of St. Louis shows a surprising number of community banks not only survived the financial crisis—they thrived.  The St. Louis Fed’s Banking Supervision and Regulation department report shows that over 700 community banks were able to consistently deliver strong performances while others merely survived or failed...

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