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As Congress and the banking regulatory agencies work to implement the Dodd-Frank Act and other measures to avoid another banking crisis, the cost of operating a financial institution continues to escalate. After the Great Recession ended in 2009, many institutions took steps to reduce expenses to meet the economic and fiscal challenges of the jobless economy.
However, despite those expense reductions, the cost structures of many smaller community-oriented institutions are still not positioned to survive an extended period of slow economic growth, and persistent credit problems and the low interest rate environment will continue to put significant pressure on interest margins. In addition, the competition for small business lending is heating up to the point where institutions may need to take on more risk to gain market share. Also, income from fee increases is under public scrutiny, making it difficult for institutions to find ways to generate more income.
This perfect storm – increasing regulatory compliance costs together with significant pressures on interest and fee income – is leading institutions to the conclusion that they must take more aggressive action to stay in business. For those institutions that would like to survive current conditions and plan for future growth, reorganizing for profitability may be the only alternative left to consider.
This eBook provides insight into the process that institutions can follow to prepare for the future through benchmarking, restructuring and process reengineering.
Gary M. Deutsch is the founder and president of BRT Publications LLC. BRT develops research, education and training materials to help industry professionals effectively manage risks while complying with laws and regulations. Gary has trained thousands of financial institution professionals in all aspects of risk management and has written numerous books in the U.S. and Europe on topics such as credit risk, internal audit and compliance with Generally Accepted Accounting Principles. Gary has extensive risk management and internal audit experience through his association with financial institutions of all sizes as well as through his role leading the KPMG financial institution consulting practice in the Mid-Atlantic region. Gary is a licensed CPA in Maryland and has a B.A. in accounting and an MBA in finance from Loyola University Maryland. He has also achieved the Certified Management Accountant, Certified Internal Auditor and Certified Bank Auditor designations. See all works by Mr. Deutsch