The Daily Dividend

News, notes and insights from around the industry

NOVEMBER 22, 2017
Thanksgiving Hot Links
By Hilary Collins, Assistant, Publications and Research, Financial Managers Society

Thanksgiving Hot LinksThere’s a lot to be thankful for this November, and whether you’re stuffing a bird, running a turkey trot or both (hopefully not at the same time), it’s good to take a moment to be grateful. Then take another moment and stuff yourself with some Thanksgiving stories from around the industry – the turkey won’t be ready for another couple of hours anyway.

Take your bank on your holiday travels
Nothing throws a wrench into holiday travels more than banking issues. Whether your debit card isn’t working or there are some unfamiliar purchases showing up on your account, you have to waste your vacation time trying to find a local branch or waiting on hold with the call center. Umpqua thinks maybe a new BFF can help.

Speed up your Black Friday shopping
The throngs hitting the shopping malls and retail giants like WalMart and Target are excited to save some money – but they could also be saving time. The United States is lagging behind European countries in implementing instant payment systems. Are we just a slower culture? Those shoppers huffing and puffing in a mad dash for the discounted HDTVs probably beg to differ.

Small Business Saturday follows Black Friday
While Small Business Saturday generated $15.4 billion for small businesses last year, it’s hard to deny that traditional retail is suffering. So maybe this is a good time to assess the challenges that community institutions and their fellow small businesses share and consider some new ways to help each other out.

Happy Thanksgiving!

NOVEMBER 21, 2017
Turning Digital into Dollars
By Mark Loehrke, Editor, Financial Managers Society

Turning Digital into DollarsOne of the primary benefits many institutions hope to see from technology is a reduction of costs, whether through greater efficiencies or reduced overhead. 

Cost-cutting is, of course, a great way to boost the bottom line. But the potential of modernization and digitalization is so much bigger that companies that don’t work harder to get more out of their technology are probably leaving significant money on the table. The focus instead should be on finding and executing digital initiatives that stand to have the greatest impact on revenue growth, such as those that unlock new value, build pricing power, improve segmentation and help sell better. 

And the responsibility for finding these opportunities lies largely with the CFO. While working in close cooperation with IT and various stakeholder groups to make sure the technology does what it needs to do and ultimately serves the customer well, it is nevertheless up to the CFO to determine where the potential untapped value lies within the institution and to steer any digitalization efforts to where they can do the most profitable good.

NOVEMBER 20, 2017
Getting the Board on Board with Cybersecurity
By Hilary Collins, Assistant, Publications and Research, Financial Managers Society

Getting the Board on Board with CybersecurityWhile an institution’s board of directors may occasionally be seen as a weak link where cybersecurity is concerned, it also has the real potential to be a positive force in these efforts. The Harvard Business Review shares some actions boards can and should take to protect their organizations.

Bring security executives to the table
Considering the impact of a potential breach, community institutions would benefit from an ongoing dialogue between security executives and the board, as both stand to benefit from hearing how strategic and cybersecurity plans interact in the bigger picture. Similarly, security executives should be in on talks about new products and services from the beginning, since building in protection as a tack-on final step or in hindsight can be a huge mistake.

Bring cybersecurity to all employees
Everyone from the teller line on up can benefit from ongoing training in how to prevent breaches and protect customers, including real-life examples of how a breach would play out. Turning a scary concept into a solid reality will make sure that actual incidents can be handled quickly and calmly. Board members can also contribute by making sure the institution’s plan for such incidents is thorough, clear and fully understood throughout the organization.

Create a culture of safety
A good cybersecurity program can seem expensive and time-consuming, but that’s nothing compared to the cost of a breach. The board, in cooperation with executive management, can make sure that the corporate culture values protecting both the institution and its customers over quick gains and shortcuts.
NOVEMBER 17, 2017
Friday Hot Links
By Hilary Collins, Assistant, Publications and Research, Financial Managers Society

While planning ahead for a short week and a long holiday weekend, here are a few industry stories to help fill your down time.

Making your website your top referrer
In the recent shift to mobile and online banking, the focus has rightfully been on the customer experience and convenience. But if that’s where your institution’s fine-tuning stops, you could be selling yourself short. Understanding how to optimize internet and search traffic could mean that your website isn’t just pleasing existing customers, but charming new ones.

Questioning online lenders
Research from the Cleveland Fed has prompted criticism of online lenders for not paying enough attention to their customers’ welfare. Traditional lenders are supposed to not only look at the probability of losses, but how well-suited the loan is for a particular customer – something that online lenders may be ignoring altogether.

Shopping risks
Online holiday shopping is prime time for cyber threats, as employees use work emails, corporate cards and recycled passwords. Nip the problem in the bud with some timely training.

Preparing for change in 2018
A balanced foundation can help your institution navigate the choppy regulatory waters of the coming year. By simplifying your processes and policies, taking a closer look at risk and reward and bringing governance, risk and compliance advisors to the table, you’ll be in a good place to take on whatever the future holds.
NOVEMBER 16, 2017
When Mergers Fail
By Hilary Collins, Assistant, Publications and Research, Financial Managers Society

when mergers failA new study from Cass Business School and Intralinks analyzed over 78,000 international M&A transactions over the past 25 years to try to find out why some mergers and acquisitions fail while others succeed. While the average failure rate over the course of the study was 5.7%, it was up to 7.2% last year – the highest percentage since the crisis of 2008. 

The M&A experts surveyed blamed the high failure rate of 2016 on the shaky environment politically and economically, but there also a number of more general ways to predict failure. Though there were dramatic differences in failure rates between countries, regions and industries, the study pointed out several significant predictors of failure across the board:

The absence of a punitive fee for a failed deal 
Called a break fee or a target termination fee, the acquirer must pay the target if the merger fails – when this fee was present, the odds of failure dropped by about 12%.

The size of the parties 
There are many ways in which the size of either party can impact a deal – in general, the bigger the target, the higher the likelihood of failure; the smaller the acquirer, the higher the likelihood of failure.

The target’s perception of the initial bid
If the target perceives the overture as unwelcome or downright antagonistic, most deals will not close.

The number of legal and financial advisors the acquirer retains
The higher the number of advisors, the less likely a deal is to fail – adding a financial advisor reduced the likelihood of failure by 11.5%, and adding a legal advisor reduced it by 8%.

Of course, this survey doesn’t tell the whole story – there are differences between private and public companies, industries, regions and more. Nevertheless, it does provide some worthwhile food for thought for any organization considering M&A as a strategic possibility.  
NOVEMBER 15, 2017
FMS Webinar: How to Implement CECL Using Excel
By Mark Loehrke, Editor, Financial Managers Society

fms webinarIt’s probably safe to say that as most folks gather around their holiday tables this Thanksgiving, FASB’s Current Expected Credit Loss standard (CECL) is unlikely to make the short list of things for which to be grateful.  

A lack of enthusiasm for CECL won’t stop it from coming, however, which is why FMS is inviting you to a post-holiday feast of practical advice and guidance in our upcoming webinar, How to Implement CECL Using Excel. Join Ryan Abdoo of Plante Moran on November 28th to learn how to get past the discussion phase in your institution and start looking at potential Excel-based options for actual implementation.  

As always, this webinar is complimentary for FMS members, so be sure to reserve your spot now. (Not a member? Join today!)  
NOVEMBER 14, 2017
Fifteen Years Later
By Mark Loehrke, Editor, Financial Managers Society

One of the big trends in popular music in recent years has been veteran bands going back to revisit a seminal album from their discography and play it in its entirety in concert. 

Perhaps this wave of nostalgic rockers was the inspiration for John Behof of Performance Trust to dig into his archives to unearth a paper he wrote for FMS back in 2002 on the Ten Biggest Mistakes Portfolio Managers Make. Unfortunately, however, this discovery turned out to be not just a pleasant blast from the past for John, but a reminder that many of those mistakes he was writing about fifteen years ago are, in many cases, still being made by community institutions today.

That’s why he decided to revise his original paper for a special 15th anniversary edition featuring present-day commentary on what he believes has – and hasn’t – changed over the ensuing decade and a half. Whether you’re concerned your institution may be making some of these now-classic portfolio mistakes or you just love a good throwback from the not-so-distant past, it makes for a fascinating read in 2017. 


Mark Loehrke
Editor and Director, Publications and Research

Danielle Holland

Autumn Wolfer
Director, Membership and Marketing

Hilary Collins
Assistant, Publications and Research