NOVEMBER 29, 2018
Be Prepared
By Mark Loehrke, Editor, Financial Managers Society

Be PreparedIn a recent FMS Quick Poll, we asked members what they thought the biggest story of 2019 would be for banks and credit unions. While you’ll have to wait until the January-February issue of forward to get the full results of that survey, we can let the kitty just ever so slightly out of the burlap here by reporting that more than a handful of respondents tabbed a potential recession as the headline to watch. 

They’re not the only ones, of course, reading the signs and speculating that the current nine-year economic expansion may be in its waning days as we head into the New Year. But even if the end of the line isn’t necessarily imminent, the growing buzz offers a timely reminder that now may be a good time to making sure your institution is prepared for the recession to come – whenever it ultimately comes. Here are a few ways to do just that:   

Get ahead of the economists
You’ll be two quarters behind if you wait for the official recession declaration, so keep an ear to the ground now and focus on what you’re seeing from your customers and your local economy.

Game plan a recession 
How will a recession affect your loan portfolio or your deposit base? Financial institutions already know the value of stress testing – this is where any preparations you’ve made in that vein will come in handy.

Shore up the balance sheet
While there’s certainly no need to panic at the first rumblings of a potential recession, there’s no sense in waiting until it’s too late to get the institution’s financial house in order.

Don’t be overconfident
Not only will some of your loyal customers or members likely leave during a recession (for a variety of reasons), it will probably be harder to find their replacements. That’s why now is the time to make sure your most profitable relationships are as solid as you think they are – to better increase your chances of holding onto them when the going gets tough.