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.
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.
Contact Us Today
Expert Consultative Services For Bankers By Bankers