Capital Planning

Capital Planning

Capital is the lifeblood of every successful community bank.  It can be defined as the margin to which its creditors would be protected should an institution be forced to liquidate. A bank’s capital protects depositor funds, determines how much it can loan and can also be a very important tool for business growth and expansion. Community banks do not have free reign over the use of their capital, as regulators require a certain amount be held in reserve in order to shield customers from financial loss. 

Regulatory agencies do not allow community banks to rely solely on the FDIC to safeguard their customers’ money and require a front line of defense at the bank level. This protection is one of the main roles of capital.  The amount of capital that a bank needs to hold in reserve varies based on each institution’s unique financial portfolio.  While there are minimum standards set by regulating authorities, the exact amount of capital funds to be reserved can be determined by each community bank’s specific circumstances.   

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Decades Of Banking Experience

The founders and managing partners of Artisan Advisors have many years of firsthand knowledge and experience as C-Suite level bank executives and have served as community bank presidents and board members. We have been involved extensively in capital reserve portfolio and data assessments, as well as the calculations needed for regulatory approval.  We are uniquely qualified to help community bank executives properly devise a strategy for setting capital reserve funds.

Data – The Foundation Of Capital Reserve Calculations

No two community banks are going to have the exact same capital reserve requirements. This is based on the fact that every banking institution has its own particular financial portfolio. The experts at Artisan Advisors will comprehensively review your community bank’s financial data, which will provide insight into all aspects of the organization’s business position.    


Following this assessment, we can offer the following services

  • Develop a fresh methodological strategy for capital reserve calculation.
  • Assist your team in their own reserve evaluation process.
  • Review reserve calculations currently in place.
  • Conduct a thorough assessment of reserve formulas rejected by regulators.

It is critical for any community bank to use their institution’s capital as efficiently as possible, while always remaining compliant with regulations. You can count on the highly experienced banking professionals at Artisan Advisors to provide valuable insight into helping your institution develop a strategy for capital reserve planning, based on your own unique circumstances.

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