From our Chairman
A Triving Bank Starts With
How are you doing? It’s a simple question, but it’s a loaded one. Right now if someone responds with “Fine,” I bet there’s more behind that “Fine.”
J.R. Buckner, MBA Chairman
First Federal Bank of Kansas City
If that “Fine” is a customer response, it may be one masked by apprehension. Rising prices for groceries and gas affects all of us, and many worry each day about how they will afford to put food on the table or fill up the tank just so they can go to work. Tey may be fearful of a recession and how much more their wallets can take.
If a banker tells you things are “Fine,” that banker most likely has concerns that keep him or her awake at night. Staffing shortages, increasing regulatory burdens, the constant changes in the tech and payment landscape, cryptocurrency, employee morale, competition — that’s just a small list that may keep a banker tossing and turning at night.
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mobankers.com
As the scripture says, “Do not worry about tomorrow, for tomorrow will worry about itself.” Worrying doesn’t do us any good, but planning does. Some of these worries are beyond our control. However, we have any number of tools at our disposal to prepare our staff, customers and balance sheets for the worries that are within our control, and that starts with effective strategic planning.
Given all the turbulence currently facing us, I can’t think of a more important time in recent history where we should all evaluate our strategic planning processes. Strategic planning is the highest form of risk management we can engage in to ensure we are moving forward and anticipating potential challenges we may encounter. Tere are a number of risks — interest rate risk, economic, social, regulatory, liquidity, reputation and earnings
— that I believe strategic planning can help us address. Here’s just a sampling of current situations.
Business
As 2022 comes to an end, I am reminded of our forward interest rate projections from a year ago. Te consensus then was a 25-basis point move from the Fed, which they may quickly step back if the economy showed signs of weakness. We were using terms like “transitory” to describe inflation. Today, we’re using “persistent” inflation.
We will likely see a 4% Fed funds rate or higher in my opinion, and there is a growing consensus that yields could remain high for an extended period of time with a flat or inverted yield curve. Tis will place significant pressure on our margins and liquidity as we will now have to compete with treasuries and institutional money market rates.
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