<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=1490657597953240&amp;ev=PageView&amp;noscript=1">
Request A Quote
4 min read

Are you a bull or a bear, and how will it impact your planning for 2020 and beyond?

Featured Image

Regardless of their viewpoints on capital recovery, now is the time for banking leaders to reevaluate their planning strategies.   

In a recent Fortune survey, 55% of corporate executives said they expect to return to 2019 capital spending levels sometime in 2021. Forty-five percent expect it to be 2023 and beyond. Despite their opposing outlooks for capital recovery, banking leaders coming out of the mindshare grab of COVID-19 and PPP loans now need to get their teams aligned around adjustments, priorities and focus areas. 

Community-based institutions have unique circumstances (and personal viewpoints) that impact how they see the world in the future and what planning will look like for them. The “bulls” expect to see returns to 2019 levels in six to 12 months while the “bears” have a longer, 18 to 36-month horizon. 

It all comes down to the shape of the recovery. At the start, everyone was hoping for a “V” shaped recovery. As this pandemic continues, more and more people are predicting a “U” shaped recovery with a long trough. The doomsayers are screaming for everyone to be on the lookout for an “L.”

Whether they take a bull or bear view of the current economic situation, bank executives should be asking themselves these key questions as they reevaluate their planning for 2020 and beyond:

  • What adjustments do we need to make over the next 18 months and beyond to remain competitive?
  • How should we be thinking of investments in our channels – digital, branch, contact centers, ITMs – in the future?
  • How do we elevate our credit and operational risk visibility to ensure capital preservation and demonstrate strength to stakeholders?
  • Are there growth opportunities that would make sense for us to consider at this time – such as entering new markets/M&A?
  • How do we safely and productively get back to work for our customers, members and employees?

As bank leaders get back into the planning game, we suggest taking the following steps:

Strategic Planning

Now is not the time to throw out your existing strategic plan. Instead, it’s the perfect time to revisit it! Chances are, the core of the plan – your mission, vision business model and values – holds good no matter what. Reviewing the priorities in the context of where you currently are is fair game. Conduct event-driven scenario planning based on multiple scenarios.

With the cost of funds so low right now, no one is talking about a deposit gathering strategy, so that is something to toss unless you need capital. Now that the PPP frenzy is over, get ahead of your next loan opportunity and start managing your portfolios. Where will you see TDRs emerge? What businesses need capital in the interim?


Assess your current channels priorities and investments. Elevate priorities that support digital, automation and customer experience. This would include looking critically at your overall channel strategy and how you go to market in the future. Balance near-term revenue replacement initiatives with longer-term growth strategies. Don’t be afraid to stop or suspend initiatives that don’t help to stabilize revenue or control expenses over the next 18 months.

Can your institution use COVID-19 as the excuse you need to shutter non-performing branches? If so, just like a good billiards shot, you’ll need a “leave” to ensure retention of your best customers from those locations. Do you have transactional data to know what merchants will still need a physical location for their daily activity? Will an ITM or ATM be enough to retain customers?

Risk Management

Risk management was never out, but the level of investment and emphasis we saw during the early part of the 2008-2009 crisis lessened during the past four to five years. Regulators are now ramping that back up, and model risk management focused on portfolio risk is going to top the list.

Right now, we are seeing increases from 100%-300% on provision and reserve amounts citing qualitative factors. Do you know which loans will end up as work-outs post-COVID? Major retailers have announced closings of 8,700 locations in the United States since the start of the pandemic. Are any of those on your strip mall tenant lists?


Be M&A ready. Capital will be king! For those with the fortitude and capital, there will be M&A opportunities. 

Regulators will amp up their safety and soundness game in early 2021, especially for the institutions with Texas ratios out of line. Is it better to pay dividends or do stock buybacks now? Will that earn you favor with those same regulators?

Getting Back to Work

Be hyper-sensitive to your community. Customers and employees need to know they are in a safe physical environment, so a safe workplace is going to be the theme for at least the next 12 months. In addition, more and more CEOs are being asked to comment on diversity and other issues via social media that they might not have had to earlier.

More states are grappling with the idea of slowing down reopening or pulling back on reopening phases in place. Relief funding has helped so many weather the COVID-19 storm thus far, but already we are seeing delinquencies and write-offs on commercial real estate, commercial and industrial and consumer loans eclipse 2012. If we go into reverse, will there be more relief funding to offer more forbearance so we kick the can a few more quarters?

* * *

Whether an institution is a bear or a bull depends on its local economy, community’s health, capitalization, loan portfolio mix, customers/members and risk appetite. We encourage all banking executives to ask their senior leadership teams these same questions in the next management meeting to begin the dialogue as to how financial institutions can help their communities and employees in the next 18 months.

If your executive team is struggling with these issues, join Onker Basu and John Meyer on July 23 for “2020 Planning and Beyond: Are You a Bear or a Bull?,” a live webinar during which they’ll dig deeper into this topic.
Click here to register.

17 min read

Fintech Deals to Watch: Back to School

Most fintech companies are fine, but they’ve stopped blowing off econ class for mimosa brunches. The energy and...
4 min read

Bye, Bye Airline Miles and Cash Back

Gonzobankers might want to warn their customers that their credit card rewards may go away because the merchants’...
9 min read

Banking’s Hard Fork in the Post-Neobank Era

Delivering a better customer experience is not the only way for banks to gain a competitive advantage in this...