One of the many lessons of the economic downturn is how rapidly conditions can change. With this mind, the 17th Bank Executive Survey will take the pulse of bank CEOs and CFOs quarterly, rather than annually.
Conducted May 4 through May 24, 2010, the third installment of Grant Thornton and Bank Director’s 17th Bank Executive Survey shows a resurgence of optimism. Although financial institutions do not expect progress overnight, many are hopeful about the months ahead, evidenced by a vast improvement in outlook and stabilization of hiring. Here are some findings from this quarter and past quarters:
- 33% of bankers said it was very likely that their bank would go to the market to raise capital in the next 12 months (22%) or has already successfully gone to market to raise capital (11%).
- Banks could be bolstering capital in preparation for any new financial reform rules.
Economic outlook, hiring expectations - June 2010
- 45% the economy to improve over the next six months, a vast improvement over how bankers felt six months ago, when only 24% expected the economy to improve.
- One-quarter say they will increase hiring, up from 18% in December 2009.
- More than one-third (35%) expect their local economy to improve over the next six months, compared with 22% in December.
Audit committee concerns, chief risk officers - April 2010
- 71% of public institutions have a chief risk officer, up from just 40% of public institutions who reported they had one three years ago.
- Only 32% of private institutions have a chief risk officer.
- 82% respondents believe the recent credit crisis has increased their risk as audit committee members.
- Monitoring enterprise risk management (ERM) was audit committee members' biggest fear.
- Most audit committees are extremely confident (57%) or confident (33%) that their audit committee has the ability to challenge management when necessary without creating conflict.
Executive compensation, government intervention and risk - February 2010
- 96% of bank executives oppose the government's role in setting compensation parameters.
- Almost two-thirds (61%) do not believe the requirement to evaluate compensation will reduce excessive risk-taking.
- Only 21% plan to change their pay program over the next 12 months to reflect current and proposed legislation.
- 52% indicate they intend to make changes to their bank's existing risk management programs.
Failed bank acquisitions and plans for growth - February 2010
- 62% are interested in exploring a failed bank acquisition.
- More small banks (46%) report they are interested in being bidders on failed banks than large institutions (36%).
- The majority (75%) say their banks plan to achieve growth in the next 12 months by increasing deposit share.
Outlook on the economy, expected loan losses - January 2010
- 80% feel that the U.S. economy will either improve or remain the same in the next six months, compared with last year, when 86 percent of bankers were pessimistic about the state of the U.S. economy.
- 82% say that the number of people their bank employs will either increase or remain the same in the next six months.
- The majority reported that they expect to see the most loan losses in their commercial loan portfolios – commercial loans (17%) and commercial real estate loans (55%).
