STRATEGIC PLANNING: KEYS TO A KICK BUTT Visit with American Bankers Association –EVP Cam Fine...

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Transcript of STRATEGIC PLANNING: KEYS TO A KICK BUTT Visit with American Bankers Association –EVP Cam Fine...

  • STRATEGIC PLANNING: KEYS TO A KICK BUTT PLAN

    December 2, 2016

    John C. Donnelly

    Andrew C. Christians, CFA

  • WHY DO STRATEGIC PLANNING?

  • 3WHY DO STRATEGIC PLANNING?

  • 4

    People in any organization are always attached to the obsolete - the things that should have worked but did not, the things that once were productive and no longer are.” ― Peter F. Drucker

    WHY DO STRATEGIC PLANNING?

  • 5

    Walking / Talking

    Education

    Occupation

    Marriage

    Family

    Retirement

    Estate Planning

    PERSONAL STRATEGIC PLANNING

  • 6

    First Customers

    Add Products

    Time

    C o

    rp o

    ra te

    B u

    si n

    e ss

    P la

    n

    Start/ Inherit Company

    Expand Plant / Branches Acquire

    Businesses

    Pass Company to Next Generation,

    IPO, Sell or Merge Company

    Volunteer / Philanthropy

    CORPORATE STRATEGIC PLANNING

  • 7FORCES OF CHANGE

    OLD NEW

  • 8FORCES OF CHANGE

    OLD NEW

  • 9

    2009 15.8 million/mo. ---

    2008 50 million ---

    2006 317 million 30

    2007 700 million 31

    2004 1.8 billion 29

    COMPANIES THAT DID NOT EXIST A FEW YEARS AGO

    Source: Payscale.com

    # OF USERS AVG. AGE OF EMPLOYEEYEAR EST.

  • CORPORATE STRATEGIC PLANNING – THE PROCESS

  • * And made popular by Lee Iaccoca

    11CORPORATE STRATEGIC PLANNING

  • 12

     Use an outside facilitator (be wary of investment bankers!)

     Off site (go off site)

     Plan overnight with dinner / golf / recreation

     Bring in outside speakers

     Have a very tight agenda

    PLANNING PROCESS - DONNELLY PENMAN OBSERVATIONS

  • 13

     Full Board planning session in Washington D.C.

     Tour and visit Federal Reserve, Deputy Director in the Board of

    Governors Room

     Visit with American Bankers Association – EVP

     Cam Fine of ICBA presented to the Board

     Tour of new branch office

     Guest speakers:

     Technology expert

     Economist

     Investment banker

     Student loan expert

    JOHN DONNELLY’S CAROLINA PREMIER BANK BOARD RETREAT

    CASE STUDY: CAROLINA PREMIER BANK BOARD RETREAT

  •  This is not just a budgeting meeting

     30,000 ft. issues:

     Independence vs. consolidation

     Capital planning (more on this later)

     Financial objectives

     Regulatory issues

     Technology

     New products and markets

     Succession

     Review progress of last years plan

     Executive session (no management in room!)

     CEO cannot dominate the meeting!

    14THE PLANNING PROCESS – OTHER OBSERVATIONS

  • 1. Having a plan simply for plans sake.

    2. Not understanding the environment or focusing on results.

    3. Partial commitment.

    4. Not having the right people involved.

    5. Writing the plan and putting it on the shelf.

    6. Unwillingness or inability to change.

    7. Having the wrong people in leadership positions.

    8. Ignoring marketplace reality, facts, and assumptions.

    9. No accountability or follow through.

    10. Unrealistic goals or lack of focus and resources.

    Source: Forbes Magazine

    1510 REASONS STRATEGIC PLANS FAIL

  • STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

    Respected in community

    Regulatory sanctions Acquire or merge Regulation / CFPB

    Well capitalized Low capital Higher interest rates Predatory pricing

    High valuation Little or no liquidity in stock

    Dodd Frank reform Technology/ cyberspace security

    Diversified revenue stream

    No succession plan Establish new divisions

    Millennials

    Strong core deposits No strategic plan Republican Congress/White House

    Lack of succession

    Strong management High employee turnover

    Hire talent from M&A displacement

    Fintech

    16STRATEGIC PLANNING SWOT ANALYSIS

  • Constituents

    Customers

    ShareholdersEmployees

    17STRATEGIC PLANNING CONSTITUENTS

  • Constituents

    Customers

    ShareholdersEmployees

    Employees

    18STRATEGIC PLANNING: EMPLOYEES

  •  Review performance of:

     Key managers (CEO)

     CEO (Executive Session)

     Board of Directors (360°)

     Review org. chart

     Review depth chart at each senior position

     Review compensation incentive plans

    19STRATEGIC PLANNING: EMPLOYEES

  • 20STRATEGIC PLANNING: EMPLOYEES

    ESTABLISH HIRING CRITERIA

     Hire from within

     “Lift” from outside

     Have a “Culture Statement”

     Establish Loyalty Programs

     Stock Ownership Programs

     Employee Perks

     Vacation Package

     Maternity Leave

     Work from Home

     401-K Match

     Sabbatical

     Community college

     Non-bank experience

     College degree

     MBA, CPA

     Previous bank experience

    ATTRACTING/RETAINING

    REQUIRE CONTINUING ED.

     Banking school

     Professional Certifications

     CPA, CFA, CFP, etc.

     MBA or graduate degree

     Continuing Ed. Programs

  •  Strong leader

     Clear reporting channels

     Clear goals

     Accountability

     Reward accomplishments

     Camaraderie

     Relaxed dress code

     Wellness program

     Money, Money, Money

    Source: Fortune Magazine

    21FORTUNE MAGAZINE 100 BEST PLACES TO WORK

    WHAT CAN WE LEARN?

  • Customers

    22STRATEGIC PLANNING: CUSTOMERS

    Constituents

    Customers

    ShareholdersEmployees

  •  Do we have a specific game plan to attract customers?

     Target criteria:

     Geographic area

     Customers by revenue

     Industry types

     Calling program and monitoring

     Trade convention schedule

     Marketing plan (print, email, LinkedIn)

     Annual / semi-annual customer event (i.e. golf outing)

    23STRATEGIC PLANNING: CUSTOMERS

  • 24STRATEGIC PLANNING: CUSTOMERS

    LOANS

     Chief Deposit Officer

     Treasury management

     Remote capture

     Mobile banking / app

     Courier services

     Pricing models/disciplines

     Transactions vs.

    relationships

     Industry specializations

     Flexible lending policies

     Creativity

     Service, Service, Service!

    DEPOSITS

  • Shareholders

    25STRATEGIC PLANNING: SHAREHOLDERS

    Constituents

    Customers

    ShareholdersEmployees

  • 26

    Maximize earnings Conservative lending

    Maximize ROE Maintain “well capitalized” status

    Pay cash dividends Preserve capital for “a rainy day”

    Grow assets Reduce reliance on C&D and CRE

    Maximize shareholder value Run a safe and sound organization

    SHAREHOLDER OBJECTIVES VS. REGULATOR OBJECTIVES

    SHAREHOLDER OBJECTIVES REGULATOR OBJECTIVES

  • 27

    ALI VS. SONNY LISTON YOUR BANK

    Age 22 ROAA 1.0 – 1.2%

    Height 6’3” ROAE 8.0 – 12.0%

    Reach 80” Classified Assets / Equity +

    ALLL Under 30%

    Weight 210 Fee Income / Total Income 25% - 40%

    Record 19 – 0 Efficiency Ratio 55% - 65%

    FINANCIAL MEASUREMENT – WHAT ARE YOUR GOALS?

  • BOND BANK EQUITY BANK

    Year Started Older Newer

    Shareholders Legacy First generation

    Inside Ownership Low Moderate to High

    Loan to Deposit Low High

    Last Equity Raise Never, distant past During or after Credit Crisis

    Succession Plan Limited or None Yes with recent change

    Dividend Yes Maybe

    ROAE Under 8% Greater than 8%

    ROAA Under 1.0% Greater than 1.0%

    Board Composition Older, unitary Younger, diversified

    Risk Profile Low Low to Moderate

    Valuation Below Book Value Near or slightly above Book Value

    28WHAT TYPE OF BANK ARE YOU?

  • $0

    $1,000,000

    $2,000,000

    $3,000,000

    $4,000,000

    $5,000,000

    $6,000,000

    $7,000,000

    $8,000,000

    $9,000,000

    $10,000,000

    $11,000,000

    $12,000,000

    $13,000,000

    $14,000,000

    $15,000,000

    $16,000,000

    $17,000,000

    $18,000,000

    Total Assets ($000s)

    Founded as First of

    Michigan Bancorp, Inc.

    Dave Provost

    joins as CEO

    Mortgage Banking Dept. started;

    FDIC approves business plan;

    $12mm capital raise

    Completes 2 FDIC-assisted deals;

    Completes first unassisted acquisition

    $400mm capital raise;

    Completes 2 FDIC-assisted deals;

    CFO, COO, CCO Hired

    Completes First Place Bank

    acquisition via 363 Sale in

    Bankruptcy Court

    Completes Michigan Commerce