Insights

Guest Post: Second Quarter Economic Update by Dorothy Jaworski

July 9, 2012 | Uncategorized

Second Quarter Surprises We received two big surprises at the end of the second quarter — one from Washington and one from an ocean away. On June 28th, the Supreme Court upheld the Affordable Care Act as constitutional, calling penalties on individuals for failing to purchase health insurance a “tax.” This decision sets in motion […]


Random Stuff About Me

July 3, 2012 | Uncategorized

A tweep of mine, Ken Mueller (@kmueller62), posted an interesting bio-post titled “Random Stuff You Should Know About Me” on his Inkling Media blog. I saw his reference to it on Twitter, I read it, I enjoyed it, so I decided to copy it… with Ken’s blessing of course. A key benefit of blog writing […]


How stable are your deposits?

June 26, 2012 | Uncategorized

I am attending the Financial Managers’ Society (FMS) Forum in Las Vegas this week. The Forum is chock full of education opportunities for banking finance professionals. One session caught my attention. The tandem speakers taught the audience about going “long”, or at least longer, in their investment portfolio and minimizing risk. One of the underlying […]


Data Driven Strategy

June 17, 2012 | Uncategorized

You recently read an excellent book on strategy. Your financial institution faces challenges… economy is crawling at road-kill pace, customers struggling to remain current on loans, regulators breathing hot and heavy down your neck. You need to assemble the team, assess your situation, chart your course. So you schedule a strategic planning retreat. Your strategy […]


Grow or Die. Really?

June 5, 2012 | Uncategorized

Grow or die. Acquire or be acquired. Build it or kill it. And so go the banking platitudes. Now, perhaps those that invoke these phrases have strategies that compel them to grow. Shareholder value, so the logic goes, is created if I grow my balance sheet 10% per year and my earnings, because I’m realizing […]


Sweat the big stuff: Interest Rate Risk

May 30, 2012 | Uncategorized

I have been thinking about interest rate increases for some time now. The Fed lowered the Fed Funds rate to a target of 0 – 25 bps in December 2008. Since that time we all knew that the next move would be up, and pundits have been predicting the “when” like sportscasters predict the next […]


Banking School: The ivory tower could be yours.

May 21, 2012 | Uncategorized

I am sitting at Gate 124 in Orlando waiting for my ride home from a long journey. Prior to Orlando, it was Dallas. In Dallas, I taught bank profitability and strategic planning at the ABA School of Bank Marketing Management. The school is a two year program designed to transform up-and-coming marketing professionals into well […]


Risk Adjusted Return on Capital (RAROC) for Financial Institutions

May 8, 2012 | Uncategorized

How do you measure the profitability of lines of business, products, or customers? The simplest form is in dollars. But does that measure the profits against the investment required to generate those profits? For example, the riskiest banking products most likely deliver the greatest dollar profits, all other things being equal. At least until the […]


Is branch profitability out the window?

May 2, 2012 | Uncategorized

About 10 years ago my firm analyzed the hundreds of branches in our profitability database to determine exactly what is “critical mass”. We sorted by pre-tax profit contribution as a percent of branch deposits, and further sorted by “direct” profits and “fully-absorbed” profits. The results were not surprising to me. In order to be profitable […]


Strategic Management of the IT Function

Most bankers would intuitively agree that information technology (IT) is a strategic function in the banking industry.  It is increasingly important to interact with customers over the web and via mobile applications.  The amount of technology needed to support even traditional banking functions like branching and lending is growing continuously.  The chart to the right […]