Photo Above: Current KBA Chairman Mike Ewy, Community State Bank, Coffeyville, KS.
The Wichita Marriott Hotel was the location for the 2021 Economic & Risk Management Conference Nov. 3–4. With many CEOs, CFOs and investment bankers on hand, the program provided high-level and timely bank development and planning information. KBA Chairman Mike Ewy, Community State Bank, Coffeyville, welcomed attendees, thanked conference sponsors, and gave special recognition before introducing the first keynote speaker, economist Chris Kuehl with Armada Corporate Intelligence.
In his talk titled, “Navigating the Post-Pandemic Economy: New Worries with the Relief,” Kuehl discussed that as we have emerged from the pandemic nightmare – to a degree – we face new challenges. Some sectors of the economy are still having issues, including travel, manufacturing, and entertainment, to name a few – but the overall economy model is predicted to experience growth. Further, he explained the lack of job seekers and how this affects our industry and the entire labor market. Lastly, he shared how the just-in-time model we have all grown accustomed to is broken. With supply chain issues, people and companies are hoarding products to make sure they have what they need, causing others to go without.
“Data Break: What’s my Risk?” was presented by Dr. Robert Minniti. Cyber fraud is growing. In 2020 alone, 791,790 incidents totaled $4.2 billion in losses. Minniti broke down the Internet Crime Complaint Center’s (ICS3) top four schemes: phishing, vishing, smishing, and pharming, and the impact a breach can have on a financial institution. He shared some very eye-opening examples of how extremely vulnerable we are and how easy it is for cybercriminals to obtain personal information off the dark web.
Following lunch, the conference had three options for breakout sessions that included:
- “ALCO & Balance Sheet Management in the Era of COVID-19”
Al Forrester, FICAST/Empyrean Solutions - “The Economic Factors Influencing Interest Rate Risk”
A.W. Spellmeyer, First Bankers’ Bank - “Internal Audit’s Role in Risk Management”
Janice Harden, Wipfli
In the day’s final session, “2021 Economic Forecast – The Light at the End of the Tunnel,” K.C. Mathews, UMB, provided a hopeful economic forecast. We are coming out of the tunnel; economic activity will naturally moderate as the cycle matures. We think GDP will end the year around 6% and slow to 4% in 2022.
Historic cycles may give us some clues to the future. While this cycle is a bit unique due to the pandemic, nevertheless, since WWII the average cycle has lasted 54 months. With that in mind, the current cycle could be moving into its last two-thirds. History tells us that equity performance moderates in the last two-thirds of the cycle, yet returns have been far superior to bonds and cash.
We may see some slowdown in the data as the economy deals with the delta variant, shortages, and inflation. Offsetting these issues: continued strong demand for goods, lean inventories, and low borrowing costs will support GDP growth. We are in the Great Recovery phase, and it will continue into 2022.
Day two of the conference began with Sean Payant, Haberfeld’s session, “Upside Down Thinking on Efficiency: Change Your Priorities to Change Your Results.” Financial institution executives spend considerable time thinking about strategies to improve efficiency to improve overall profitability. Often, this includes a focus on expense reductions. “Once a financial institution can no longer materially improve its efficiency ratio by further reducing costs, what’s next?” asks Payant. He then shared his thoughts on a solution. Rather than focusing on reducing expenses, focus on increasing core/PFI customer relationships. The majority of banks could significantly increase core customer acquisition if they put the energy effort and budget toward this goal. In the end, you will make more money, AND your efficiency ratio will improve.
Jackson Hataway, Missouri Bankers Association, presented a talk on “Competition and Success in a New Landscape.” Banks and new competitors are entering markets and business areas they have previously been unwilling to undertake. There is a lot of new penetration into verticals or geographies that were already owned by banks OR that banks felt like they could not get. Hataway emphasized how banks need to consider how this impacts their competitive stance and what it will mean about their subsequent growth efforts.
The conference closed with an inspiring presentation, “Brace for Impact,” by Dave Sanderson. When U.S. Airways Flight 1549, or “The Miracle on the Hudson,” ditched into the Hudson River Jan. 15, 2009, Dave Sanderson knew he was exactly where he was supposed to be. The last passenger off the back of the plane on that fateful day, he was largely responsible for the well-being and safety of others, risking his own life in frigid water to help other passengers off the plane. Sanderson thought only of helping others despite the hazard to himself and emerged from the wreckage with a mission: to encourage others to do the right thing. In his stirring presentation, Sanderson shared the story of Flight 1549, revealing the inner strength it took to make it through the day and how teamwork, leadership, and state management can help overcome any obstacle.
Mark your calendars for next year’s conference: Nov. 2–3, 2022, in Manhattan.
Thank you to this year’s sponsors:
Gold: CalTech, FHLBank Topeka, Graduate School of Banking at Colorado, KBA Insurance, Inc., KBA/NBA Schools of Banking, Mammoth Creative Co., UMB.
Silver: BOK Financial, Central States Capital Markets, Cornerstone Advisors, Country Club Bank Capital Markets Group, IntraFi Network.
Bronze: Bankers’ Bank of Kansas, Commerce Bank, Complete Compliance, Cox Business, FHN Financial, INTRUST Bank.
