Blog

Balancing Increased FTE Expense with Improved Process Efficiencies

Across various parts of the country, community banks and credit unions are experiencing massive overall growth. This has led to faster growth in return on asset ratios, higher net interest margins, and higher loan growth rates. Even with looming economic hurdles on the horizon and talks of an impending recession, executives at these community financial institutions are trying to strike the balance between managing the growth, maintaining operational efficiency, maximizing talent management, and navigating new employee hiring cycles. At an elevated level, let’s focus on this continuous attempt for community lenders to find the balance on these multiple fronts.

By Brian Ruhe, SVP, Business Development

Force-placed CPI insurance is frustrating, cumbersome, and expensive. Is there a better way to transfer the risk that CPI covers? A credit union executive recently shared the thought that “those expensive force-placed premiums just don’t feel right.” It was clear that the CPI (Collateral Protection Insurance) model of tracking insurance and then force-placing expensive insurance premiums onto their most vulnerable members did not sit well with her. She said, “there has to be a better way.” In the big business of CPI, it is rare that other alternative options are offered or even discussed by the big CPI vendors. Might the huge premium dollars of force-placed insurance be shielding more efficient and member-friendly solutions that exist out in the marketplace?

Support of their local communities has long been a focus of community lenders. Credit unions and community banks across the country are known for their reinvestment into the towns and cities they serve. Charitable giving can take a variety of forms – many times focused on causes and organizations unique to each area of the country. Especially during these difficult times surrounding the Covid-19 pandemic, support of these local organizations and charities is of the utmost importance. This fact has not been lost on credit unions and community banks, and many have stepped-up remarkably in this support during these challenging times. 

There has been plenty of discussion over the last many months about how the community banking world might look when we come out of this pandemic. Speculation and opinions are all over the board. The economic fallout is of great concern, and community lenders find themselves juggling priorities and recalibrating for the future. On the consumer-facing front, digital banking and technology are hot topics, ‘strategic innovation’ is a focus, and customer relief and mediation tactics are a balancing act. Inside the lending operations, there are concerns about PPP loan forgiveness, increased delinquency and default impacting collections staff, and continued remote workplace struggles with administrative workload balance adjustments across operational teams.

The COVID-19 pandemic has uprooted our way of life. The impact of this contagious virus can be felt through all aspects of our daily living. The public health crisis is of the utmost importance right now, there is no disputing that fact. But as our medical and scientific communities continue to develop therapies, vaccines, and public health solutions to combat the virus going forward, there comes a time to reflect on how the pandemic is impacting different segments of our lives and our economy.