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Published by fmsdesign, 2018-06-08 10:13:45

Community Mindset: Bank and Credit Leadership Viewpoints 2018

COMMUNITY MINDSET
Bank and Credit Union Leadership Viewpoints
2018


2 Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org

Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org 3
TABLE OF CONTENTS
Executive Summary 4 Big Picture: The State of the Industry 5 Strategic Headwinds: Confronting Challenges 6 The Quest for Growth 8 In The Thicket: The Staying Power of Branches 9 Money Talks: Profitability Analysis 10 Keeping Up With the Joneses: Focus on Competitiveness 12 Cost and Risk Management 14 The Road Ahead: Succession Planning and M&A 16 Methodology 18 About FMS 19


EXECUTIVE SUMMARY
For the second consecutive year, FMS surveyed 400 senior executives from community banks and credit unions to get their thoughts on the most imposing challenges and the top strategic priorities facing their institutions.
SUSTAINED OPTIMISM $
Community bank and credit union leaders were largely upbeat about the state of their industry in 2017, and an ever-improving economy in 2018 has done nothing to diminish that enthusiasm.
How are they positioning their institutions to best capitalize in this environment?
FOCUS ON GROWTH $
Led by technological innovation, many of the same growth priorities from 2017 dominated respondents’ strategic plans again this year, but every potential factor across the board saw an uptick in intensity this time around – including previously less-popular choices like M&A and branch expansion.
Where are the most promising opportunities?
PEOPLE POWER $
As institutions look to the future, they’re placing a renewed emphasis on appealing to younger people – both as future customers and future business leaders.
Where do they stand with the next generation, and what are they doing to better position themselves for the years ahead?
SH$IFTING TIDE OF REGULATION
While the top two challenges from 2017 – competition from other banks and credit unions and regulatory burden – once again registered as the most pressing items, far fewer respondents reported feeling overwhelmed or unduly put-upon by their regulatory obligations this year.
Is the burden finally starting to ease?
FOLLOW THE MONEY
With competition heating up throughout the industry, banks and credit unions are under more pressure than ever to understand exactly where their best opportunities to make money lie – a question that largely rests upon a dedication to robust profitability analysis.
How well are they doing in answering this question?
We invite you to view the data and find out the answers to these and other critical questions facing banks and credit unions in 2018. For more on the methodology of the survey, see page 18.
$
4 Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org


BIG PICTURE:
THE STATE OF THE INDUSTRY
Overall, community institution leaders are fairly upbeat about the state of their industry, with 65%
of respondents across both banks and credit unions feeling either very or somewhat optimistic in the current environment (Figure 1). Meanwhile, just
19% of survey participants expressed any degree of pessimism, although the outlook was slightly less rosy among institutions in the $500 million to $1 billion asset range, where those negative feelings crept up in 22% of respondents.
While that 65% is very much in line with the 70% of respondents who carried similar views in 2017, the level of enthusiasm between the two years seems to have skewed slightly upward, with a 6% year-over- year increase in the “very optimistic” category for 2018 and a 9% decrease in the “somewhat optimistic” category.
Also fairly consistent from 2017 to 2018 were some
of the reasons respondents cited for their optimistic or pessimistic opinions of the industry. For those with an optimistic outlook, the top three reasons underpinning
that view were the perceived strength of the economy (14%), a sense of business consistency (12%) and excitement surrounding customer service and/or new products (10%) in their institutions. On the flipside, those with a pessimistic outlook most commonly pointed to regulations (8%) and the political climate (8%) as their most pressing concerns.
BIG ASSETS, BRIGHT OUTLOOK
The larger the institution, the rosier the outlook on the industry amid survey participants, with the percentage of respondents expressing a “very optimistic” opinion jumping above 46% for those with assets of $2 billion and beyond – compared to 37% for all respondents.
As one respondent put it in summing up his optimistic outlook on the industry in general and his own institution in particular: “Our customers are enthusiastic and the market looks good.”
FIGURE 1: OPINIONS ON THE CURRENT STATE OF THE INDUSTRY
Very optimistic Somewhat optimistic Very pessimistic Somewhat pessimistic Neutral
37%
9%
28%
17%
10%
Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org 5


STRATEGIC HEADWINDS: CONFRONTING CHALLENGES
Even as bank and credit union executives maintain a generally upbeat attitude about their industry, a number of regulatory, economic and competitive pressures continue to bear down on their institutions – perceived challenges that have remained fairly consistent from 2017 (Figure 2).
Once again, perceived regulatory burden and competition from other banks and credit unions
stood out as the two most significant concerns among survey respondents. Although they flipped positions from 2017 – with competition taking the top spot
and regulatory burden dipping to number two – these remained the two issues clearly considered “extremely
challenging” or “fairly challenging” by most survey participants.
Among the remaining nine potential challenges presented to respondents in both years, there was little movement from 2017 to 2018, with slight upticks noted only in the areas of credit risk (53% see as extremely or fairly challenging in 2018 versus 48% in 2017) and competition from fintech and other non- traditional competitors (52% in 2018 versus 48% in 2017). One notable exception to this year-to-year consistency was the 50% of respondents in 2018
who saw non-interest income as extremely or fairly challenging – an increase of 7% from 2017.
FIGURE 2: GREATEST CHALLENGES FACING INSTITUTIONS
Respondents were asked to indicate how challenging they felt each of eleven issues were to their bank or credit union. The graph below represents the percentage who rated the issue in question as either “extremely challenging” or “fairly challenging.”
Competition from other banks and credit unions Regulatory burden
Attracting new/younger customers Interest rate environment
Credit risk
Competition from fintech and other non-traditional competitors
Cost management Technology
Attracting and retaining staff Non-interest income Attracting deposits
60% 58%
55% 53%
53% 52%
51% 50% 50% 50%
49%
0 10 20 30 40 50 60
6 Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org


Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org 7
DEEP DIVE: CHALLENGES
BURDEN IN HAND?
Despite checking in as only the second biggest challenge among the eleven presented to respondents (compared to holding the top spot in 2017), regulatory burden clearly continues to weigh on the minds of bank and credit union executives. Even as this concern remains relatively steady among banks and credit unions, however, recent efforts by regulators to incrementally roll back crisis-era requirements in the wake of an
improving economy seem to be achieving their desired effect.
For example, 71% of respondents in this year’s survey consider their regulatory burden to be reasonable or
manageable – up from just 53% in 2017. Further, the number of respondents who consider their regulatory
burden to be “a little too heavy” was down by 13% from 2017 to 2018, while the number who described their
burden as “overwhelming” was down by 6% over the same span. With major changes to Dodd-Frank coming
in after the close of this year’s survey, it stands to reason that regulatory burden will continue to fade as a top
challenge going forward.
ASSET-SIZE OUTLIERS
challenging” or “fairly challenging” by most survey participants.
Regardless of title or institution type, most respondents were fairly consistent as a group in their opinions across all eleven challenges presented in the survey, but there were a few significant variations to be found in terms of asset size:
Credit risk was viewed as a bigger challenge among institutions in the $500-999 million and $5-9.99 billion groups than the overall pool of respondents.
These same two asset groups ($500-999 million and $5-9.99 billion) also rated regulatory burden as a bigger challenge than their fellow respondents.
The largest asset grouping in the survey ($5-9.99 billion) was the most likely to see the threat from fintech and other non-traditional competitors as fairly or extremely challenging, coming in 12% higher in this area than the full survey.
CECL: SEIZING THE DAY
While not specifically offered as a potential challenge, there’s little doubt that every bank and credit union executive in the survey is feeling the heat of FASB’s impending Current Expected Credit Loss (CECL) standard. The good news is that most of their preparations seem to be largely on track.
As the deadlines for implementation bear down, more than half of the respondents (56%) surveyed believe
that their institutions’ CECL preparations are “orderly and right on schedule,” while an additional 29% believe preparations are “somewhat disjointed, but proceeding well.” This represents a considerable improvement over 2017, when only 46% of survey participants considered their preparations to be right on track. Meanwhile, just 2% of respondents in 2018 have yet to get a meaningful start on their CECL prep – down from 7% in 2017.
As for how these institutions are accommodating for the data and forecasting requirements of the new standard, 57% of respondents are relying on an in-house model or spreadsheet, 33% are working with a vendor model and 10% have yet to make a modeling decision.
Once again, perceived regulatory burden and
competition from other banks and credit unions stood out as the two most significant concerns among
survey respondents. Although they flipped positions
from 2017 – with competition taking the top spot
and regulatory burden dipping to number two – these
remained the two issues clearly considered “extremely


THE QUEST FOR GROWTH
Every institution prizes growth, and though there are many ways to get there, most survey respondents were drawn to a few common themes. From a list
of ten choices, technological innovation emerged as the favorite, with three out of four (75%) participants identifying it as a very or somewhat important factor for growth. This view of technological innovation was a carryover from 2017, when 73% likewise saw it an important element for their institution’s growth.
In general, there seemed to be a sense of increased urgency across this entire question in 2018, with a higher percentage from the year before seen in every category. While some factors rose by only a few percentage points, others rocketed up significantly (Figure 3).
While some growth factors experienced significant rises from last year, they nevertheless still wound up at or near the bottom of the list in 2018. For example,
pursuing M&A remained second to last on the list in this year’s poll, even as it saw a rise of 12% in the number of respondents rating it as a very or somewhat important growth factor in 2018. Likewise, adding branches found itself on the bottom of the list for the second year in a row, but while in 2017 less than
half of respondents thought it was very or somewhat important, now 62% see its value.
Elsewhere on the list, attracting and retaining talent jumped from 68% in 2017 to 75% in 2018, reflecting the struggles of institutions amid a tightening labor market. Meanwhile, adding or expanding wealth management offerings saw a leap from 60% in
2017 to 73% in 2018, showing just how seriously institutions are taking the pressure to expand their business models to include new, more personalized services that go beyond the transactional offerings of the past.
FIGURE 3: FACTORS IMPACTING GROWTH
Respondents were asked to indicate the importance of ten factors to the growth of their business. The graph below represents the percentage who rated the priority in question as either “very important” or “somewhat important.”
Technological innovation Growing the commercial loan portfolio Adding new products / services Attracting and retaining talent Cost containment Growing the consumer loan portfolio Getting more from the investment portfolio Adding / expanding wealth management services Pursuing M&A Adding branches
2017 2018
7375 7072
69 68
74 75
68 71 67 72
66 60
54 47
74 73
66
62
8 Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org
0 10 20 30 40 50 60 70 80


IN THE THICKET:
THE STAYING POWER OF BRANCHES
It’s tempting to view branches as dinosaurs – endangered and soon to be extinct. But the more apt comparison might be radio shows or paper books. People still want free shows to listen to and stories
to read, and while they’re increasingly getting them from other sources like podcasts or e-readers or apps on their phones, many people still love the analog experience. Likewise, many people still like the idea of walking into a “real” bank to take care of their financial affairs.
Perhaps that’s why survey respondents continue to take pride in their branch networks. Almost three quarters of them (72%) said that their institutions were keeping up with the competition when it came to branch delivery, and nearly half (48%) were satisfied with their branch networks as they were.
These types of attitudes may help explain the reluctance to give up on physical branches as a viable delivery channel. Beyond that 48% who are happy with the current size and capability of their branch networks, 38% are looking to expand or add branches, up slightly from 36% in 2017. And only
15% want to close or consolidate branches in 2018, down from 18% the year before (Figure 4).
In addition to adding new branches, many respondents are looking to make their current branches better – 73% are planning to revamp their branches with cutting-edge features and new ways to appeal to customers. The most popular among these potential upgrades are interactive tellers and physical redesign, with 40% of respondents looking to these technological additions – up from 33% and 24%, respectively, in 2017.
Given the renewed interest and investment in
the branch, it is perhaps not surprising to see a corresponding change of tone regarding how important physical branches are to an institution. When asked if adding branches is important to their institution’s growth, 62% of respondents said yes. While that number was still only good enough for last place among ten potential growth factors in terms of importance, it nevertheless represents a 15% increase from 2017, when less than half of respondents viewed branches in such a positive light.
FIGURE 4: PLANS FOR BRANCH NETWORKS
Maintain current network size 48%
Add branches 38%
Close or consolidate branches
15%
Most likely to close/consolidate:
$1-1.9b asset group
Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org 9
Most likely to maintain:
Most likely to add:
$5-9.99b asset group
$2-4.9b asset group


MONEY TALKS: PROFITABILITY ANALYSIS
Many of both the biggest challenges and the greatest opportunities for growth that banks and credit unions are facing in 2018 – from deposit strategies and the quest for income to digital banking and the ability to attract and retain new customers – can be tied back in one way or another to the concept of profitability. Yet despite the many foundational ways in which
it touches the business, not every institution has a firm grasp on how best to measure and analyze its profitability – or, in some cases, even the desire to bother doing so.
When asked about the priority of profitability analysis in their institutions, 37% of survey respondents deemed it something that is “performed and discussed, but only occasionally tied to major decisions,” while
one-third (33%) said it is “significantly relied on for strategic decisions” and slightly more than one in five (22%) said it is “performed, but not closely scrutinized” (Figure 5).
These responses get to the heart of what many industry experts feel is the true value of profitability analysis – not only that it is performed, but the extent to which it is utilized throughout the institution. Tellingly, those 33% of respondents who noted that profitability analysis is significantly relied upon
for strategic decisions represented a diverse cross- section of institution types and asset sizes. In other words, profitability analysis isn’t just something for the big banks – it is, rather, a question of priority and commitment, regardless of size.
FIGURE 5: THE PRIORITY OF PROFITABILITY ANALYSIS
Performed and discussed, but only occasionally tied to major decisions
Significantly relied upon for strategic decisions
Performed, but not closely scrutinized
No formal process for measuring profitability
37%
33%
9% 22%
10
Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org


Those respondents with a formal process in place to measure profitability do so for a variety of distinct dimensions, the most common of which are customer, line of business and product (Figure 6). While analysis by channel and officer are less popular across
the board, they are inordinately favored by those institutions in the $1-1.9 billion and $2-4.9 billion asset categories. Customer analysis, meanwhile, is the
overwhelming favorite among measurements for the $5-9.9 billion set.
In analyzing any of these profitability dimensions, 60% of all institutions utilize funds transfer pricing (FTP), while another 33% have plans to use FTP at some point in the future.
FIGURE 6: MEASURING DIMENSIONS OF PROFITABILITY
5%
Do not analyze profitability for specific dimensions
60
50
40
30
20
10
0
58%
50%
48%
37%
27%
Customer
Lines of business
Product
Channel
Officer
Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org 11
YE OF LITTLE FAITH
For those institutions not performing profitability analysis (9% of survey respondents do not have a formal process in place, including 23% from the $500-999 million asset size) or performing an analysis that does not measure for specific profitability dimensions (5% of those respondents with a formal process in place), both data challenges (37%) and a lack of resources (13%) are seen as common impediments.
41%of institutions without robust profitability analysis cite limited
perceived value as the main reason for not having a strong process in place
However, many of the respondents in these groups are being held back from a robust profitability process by limitations that have less to do with technology, financial wherewithal or manpower, but rather by a lack of institutional belief in the
process – 41% of these respondents cited limited perceived value in their institutions and 9% blamed a lack of support for the practice throughout the organization.


KEEPING UP WITH THE JONESES: FOCUS ON COMPETITIVENESS
How do bank and credit union leaders think their institutions stack up to their peers in several key areas?
Survey participants believed they were most competitive when it came to cybersecurity, with 78% saying they were keeping up with the competition in this area (Figure 7). On the other end of the spectrum, data analytics came in last among six categories, with only 70% of respondents believing their programs were keeping up with their peer institutions.
Overall, most respondents seemed to believe they were delivering in these key areas. However, a deeper dive into the data tells a different tale for a few groups. For example, in all six of the areas surveyed, the smallest institutions ($200-499 million) were the least likely to consider themselves competitive, while the largest institutions ($5-9.99 billion) were most likely to consider themselves competitive in all six areas.
Nowhere is this disparity more dramatic than when it comes to appealing to younger customers. Only 61% of the smallest institutions thought their appeal to the younger generations stacked up – and almost one in four (23%) thought they were being outperformed
by their peers in this area. On the other end of the spectrum, 87% of institutions in the largest asset group felt confident that their organizations were as attractive to young customers as their fellow banks and credit unions.
But asset size wasn’t the only area where there was
a clear divide. Banks were more likely to consider themselves competitive than credit unions across
all six areas as well, with the most significant split unfolding in the area of digital banking – here,
77% of banks saw their digital banking program as competitive, compared to only 68% of credit unions.
FIGURE 7: COMPETITIVENESS IN SEVERAL KEY AREAS
The percentages represent the number of survey participants who considered their institutions to be either very or somewhat competitive with their peers in the designated competencies.
Cybersecurity Digital banking
78% 75%
Payment technology 74% Appeal to younger customers 73%
Branch delivery Data analytics
72% 70%
12
Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org
0 10 20 30 40 50 60 70 80


Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org 13
DRAWING THEM IN
Attracting younger customers and employees may be more difficult for certain groups, but an institution is sure to face long-term struggles if they’re not adding Millennials and Generation Z to their payroll and customer base. And it’s only getting more difficult to pull in those young people – 55% of respondents said they found it challenging, compared to 51% in 2017.
The good news is that very few respondents thought their institution was doing a terrible job of appealing to younger customers. Even the smallest institutions, who worried they weren’t keeping up with their peers in terms of attracting young people, believe that by and large they’re still doing a good job of at least trying to reach out. Yet while institutions in the $200- 499 million and $1-billion-and-up asset ranges were boasting an average of 83% of respondents feeling
FIGURE 8: CONFIDENCE IS KEY
confident in their appeal to younger customers, those in the middle ($500-999 million in assets) had only 62% of respondents saying they were attractive to young people, and almost a third (32%) claiming neutrality – not unsuccessful, but not really successful either (Figure 8).
A clue appeared when respondents were asked what they were doing to appeal to young people. The most popular option overall was offering mobile and online banking options (19%), followed by competitive incentives and benefits (12%). But in that $500-999 million asset group, most of the eggs were in one basket – a third of respondents held out mobile and online banking options as their main offering to the younger generations. It seems that the other asset sizes, with their more diverse strategies, are possibly doing a little bit more to – and therefore doing a bit better in – actually appealing to young people.
When it came to respondents’ rating their own confidence in their appeal to younger customers, the middle was a tough place to be. Only 62% of respondents in the $500-999 million asset range said they were sure they were appealing to the next generation, compared to 83% from the largest ($1 billion+) and smallest ($200- 499 million) asset groups.
83%
$200-499m and $1-9.99b
62%
$500-999m


COST AND RISK MANAGEMENT
Cost and risk are integral challenges of the business for every institution, which is why managing both are among every institution’s top concerns. How are they doing in these areas?
Just over half (51%) of survey respondents identified managing costs as a challenge in their institutions, while 24% indicated they don’t have a problem with it – leaving another quarter (25%) neutral on the subject. So even though cost management may be on the radar of many leaders, it doesn’t necessarily register as one of their biggest problems. In fact, cost management ranked seventh out of eleven challenges we asked our respondents to rate – far below higher-priority issues like competition and regulation.
Similarly, cost containment registered only eighth out of ten factors for growth; even so, 71% of respondents deemed it either very or somewhat important to their institutions’ growth. Banks were more likely to see cost containment as crucial to growth than were credit unions (73% for banks versus 64% for credit unions), with the smallest institutions ($200-499 million) the least likely to find it important.
How do respondents actually plan to cut costs? Similar to 2017, most still plan to improve efficiency through technology, while far fewer plan to renegotiate vendor contracts or cut branch expenses (Figure 9).
In the area of risk, meanwhile, improving risk management topped technological to-do lists in both 2017 and 2018, with 80% of respondents in this year’s survey seeing it as an important priority. But technology isn’t the only way leaders at banks and credit unions are looking to address risk in 2018.
While the survey methodology was slightly adjusted from 2017 to 2018, the results suggest respondents have maintained similar outlooks from one year
to the next. In both years, information security/ fraud prevention led the pack, followed closely by regulatory compliance (Figure 10). These came in ahead of the less urgent but still important goals
of improving credit underwriting practices and establishing or improving ERM (enterprise risk management).
FIGURE 9: OPPORTUNITIES FOR COST MANAGEMENT
Improve efficiency through technology Cut branch expenses
Renegotiate vendor contracts
13% 18%
69%
14 Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org


FIGURE 10: RISK MANAGEMENT PRIORITIES
100
80 60 40 20
0
81%
76%
73%
72%
Information security/fraud prevention
Regulatory compliance
Improve credit underwriting
Establish or improve ERM
Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org 15
THE IMPORTANCE OF TECHNOLOGY
For the second year running, technology was not only the most important factor for institutional growth but also the most crucial to cost management. And in terms of top technological priorities, improving fraud and risk management again led the pack, just as it did in 2017.
What has changed in 2018, however, is the technology institutions report that customers are using the most. While online banking use has fallen from 41% in 2017 to 29% in 2018, mobile banking has risen from 23% to 30% (Figure 11). Mobile and online banking are also the areas where institutions are most likely to invest their technological resources, with 30% of respondents saying mobile banking was the area that had received their greatest amount of investment over the past year.
Respondents are also more open to partnering with fintech companies in 2018, with 67% identifying
such partnerships are important – up from only 49% in 2017. Further, only 20% of respondents see fintech companies as just competitors, while 32% see them as potential partners and 48% say they can be both.
FIGURE 11: TECHNOLOGY USAGE
50
40
30
20
10
0
Online banking Mobile banking
41%
29%
30%
23%
2017
2018


THE ROAD AHEAD:
SUCCESSION PLANNING AND M&A
Succession Planning
As Baby Boomers near retirement and a robust employment market offers bright executives more choices and flexibility in their career choices, succession planning has suddenly emerged as an even more critical piece of the strategic puzzle for banks and credit unions. Fortunately, most of the leaders in the survey have seen these developing trends and have taken the appropriate steps to set their institutions
on a solid path for the future. Almost two-thirds of respondents (61%) say they have a strong plan in place for succession of key upper management and board positions, while around one-third say they are actively working toward a plan (Figure 12) – numbers that are largely in line with 2017.
In terms of asset size, those institutions in the $500- 999 million range are more likely than their peers to be in the process of still getting their succession plans together (39%), as opposed to already having a strong plan in place (51%). This is a slight shift from 2017, when it was the smallest institutions in the survey
($200-499 million) that had the most work to do in
terms of succession planning. Mergers and Acquisitions
The deal-making among banks and credit unions heated up a bit in 2017 – both in terms of mergers that actually got done, as well as the serious discussions of possibilities that took place in many offices and board rooms – and this increased activity was reflected in the views of institution leaders on the subject of M&A.
While only 54% of respondents in 2017 considered pursuing M&A as a very or somewhat important factor for institutional growth, that number jumped to 66% in this year’s survey. Further, the percentage of respondents who said they are not currently pursuing M&A dropped by eleven percentage points from 2017 to 2018 – largely on the strength of a 10-point year- over-year jump in the number of institutions looking to be prospective buyers in the next 12-24 months (Figure 13).
FIGURE 12: THE STATE OF SUCCESSION PLANNING
9%
Strong plan in place
In the process of formatting a plan 31% No plan
61%
16 Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org


FIGURE 13: THE STATE OF M&A PLANNING
50
41%
2017
2018
30%
30%
40 30
40%
20%
24%
20 10
10%
7%
0 Not pursuing or fielding any M&A
opportunities at this time
Prospective buyer
Prospective seller
Considering a move within the next 3-5 years
Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org 17
MAKING THEIR MOVES
As M&A activity heats up, which institutions are most likely to be looking for potential deals?
Institutions in the $2-4.9 billion asset range will be looking to grow, with 52% expecting to be prospective buyers in the next 12-24 months – compared to just 40% among all respondent groups
Institutions in the $1-1.9 billion asset range will be looking for suitors, with 33% expecting to be prospective sellers in the next 12-24 months – compared to just 24% among all respondent groups
Institutions in the $500-999 million asset range will be sitting on the sidelines, with 47% not pursuing or fielding any M&A opportunities at this time – compared to just 30% among all respondent groups


METHODOLOGY
In late January and early February 2018, FMS surveyed 300 senior executives from banks and 100 from credit unions. Among the 400 total respondents were CEOs (36%), CFOs (29%), controllers (23%) and board members (12%) – 81% of whom were between the ages of 25 and 44.
Participants came from all over the United States, and from institutions with asset sizes ranging from $200 million to $9.99 billion (14%).
FIGURE 14: TITLES OF SURVEY PARTICIPANTS
CEO
CFO Controller Board member
36% 29%
12% 23%
FIGURE 15: ASSET SIZES OF SURVEY PARTICIPANTS
$200 million - $499 million
$500 million - $999 million
$1 billion - $1.99 billion
$2 billion - $4.99 billion
$5 billion - $9.99 billion
14% 22%
23% 23%
20%
18
Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org


ABOUT FMS
Founded in 1948, FMS came to be when a group of Chicago controllers formed the Society of Savings and Loan Controllers, a 501(c)6 not-for-profit association. The Society became an affiliate of the United States League of Savings Institutions a few years later and was officially renamed the Financial Managers Society in 1982.
In 1990, after serving savings and loan financial officers exclusively for 42 years, FMS disaffiliated from the United States League and began to serve financial personnel not just from savings and loans, but also from community banks, thrifts and credit unions.
Celebrating its 70th anniversary in 2018, with a continued emphasis on first-class education and community- building, FMS today thrives as a professional membership organization with close to 1,600 professional members from banks, thrifts, credit unions and vendor partners from across the country.
Learn more at FMSinc.org.
©2018
All rights reserved. No part of this report may be reprinted or reproduced in any form or used for any purpose other than educational without the express written consent of FMS.
Financial Managers Society | Community Mindset: Bank and Credit Union Leadership Viewpoints 2018 | FMSinc.org
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1-800-275-4367 | Fax: 312-578-1308 [email protected] | FMSinc.org


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