Bank restored from CAMELS 5 to a 2
Team effort included diligent leaders and management consulting practice
CASE STUDY |
Located in the heart of the Midwest, this nearly 140-year old community bank has been the financial cornerstone of its region for well over a century. Locally owned and operated, the bank today, with nearly $250 million in assets, employs more than 40 people with several branch locations and specializes in farm and lake home loans. In addition, recently, it was instrumental in loaning funds for leasing space to a new manufacturer to the area which offered 150 new jobs. The bank stands as a pillar of stability and support to its community.
The 2008 financial crisis hit many community banks hard. This Midwestern bank was not immune. Like so many financial institutions during that time, the bank was challenged with financial instability and unfavorable ratings from examiners, with a dismal CAMELS 5 ranking. Many banks during that volatile time were faced with selling or merging with other institutions, or worse, closure. The bank's leaders felt the heat of the times but were determined to save their bank. Failure was not an option for this foundational institution to a community already hit hard by tough economic times.
Enter RSM's team. With decades of experience serving over 2,500 financial institutions, RSM has seen its fair share of troubled banks. This bank was certainly in their own kind of trouble with regulatory issues, mortgage-related challenges and overall fiscal solvency.
While admittedly the bank was struggling, the RSM professionals were encouraged by the leaders' commitment to righting their ship. Upon meeting with the bank leadership, the team worked immediately with the board and regulators to address the bank's toughest issues. It took a concerted effort, from financial modeling and pricing studies to risk advisory and loan review. In addition, the bank required technology installations and training. Through it all, the RSM team worked hand-in-hand with the bank's leaders and employees.
After nearly three years of RSM consultants and bank personnel working side-by-side, the bank achieved favorable ratings from examiners and is now in a secure place with a CAMELS 2 ranking.
The list of project achievements is lengthy and critical to the bank's success. Important milestones achieved with RSM's advisory help included:
- Redesigning the bank's organizational structure and changing several key reporting relationships
- Providing management and board-level coaching in terms of best practices and general management
- Assisting in reviews of all major policies and procedures
- Implementing new customer communication devices such as an electronic newsletter
- Implementing electronic statements saving over $100,000 in postage-related expenses annually for the last two years
- Revamping the credit files to a more industry standard approach
- Designing and implementing a new process to control technical exceptions
- Designing and implementing new processes to improve the identification and reporting of troubled debt restructurings
- Recommending new pricing strategies that have substantially impacted net earnings (over $100,000) for the last three years
- Assisting in installation of several key technology systems, including a new loan origination system and a new account opening system
- Introducing SharePoint to the organization, which is now used as the bank's intranet platform
- Dramatically changing the loan culture and processes associated with lending
- Assisting in overhauling their entire human resources function, including job descriptions, pay scales and periodic reviews
- Assisting in overhauling the special assets function