Jeff Judy

Jeff's Thoughts - January 19 , 2011

Keeping Score

There are plenty of people keeping score on the performance of your bank. Shareholders, regulators, and competitors are all keenly interested in the results you are achieving.

Naturally, your bank's leadership, the Board and the Executive Team, should also be keenly interested in keeping score. At the very least, you want to know what your investors and regulators and competitors know about your bank.

More fundamentally, of course, good management requires measurement of outcomes. And if you are setting strategies for your bank's future success, you will want to check some benchmarks and milestones along the way to see if you are headed in the right direction. It would be particularly good to know how you are doing compared to, 1) banks similar to yours, and 2) your own past performance.

That's why I am mystified at how little attention the management at some banks pays to their Uniform Bank Performance Report (UBPR), prepared by the Federal Financial Institutions Examination Council (FFIEC, see www.ffiec.gov ). When I begin consulting work with a new client, this is one of the first places I go to get a snapshot of their performance. Yet when I arrive at the bank, they seem to be making little use of this report.

I cannot help but think that if this were a privately produced product, with some marketing behind it, it would sell like hotcakes. Consider some of the features of the UBPR:

As I say, this would be a great product to buy, much less to get as a government service (which we pay for through various fees, to be sure). But some banks aren't "buying," it seems.

I would recommend that every Board incorporate explicit discussion of the UBPR into their routine review of their progress toward their goals. Its consistent, uniform approach to handling the numbers, the regulatory perspective, the immediate peer group comparison, and the low expense and ease with which it is obtained all argue strongly for its regular inspection.

Am I saying the UBPR is perfect, or all you need? Of course not.

But let me suggest that you prick up your ears if you hear too many objections, from management, about paying close attention to the UBPR. When you get a lot of excuses about why the UBPR numbers "do not apply" to your situation, or are misleading, or don't really mean anything, your staff may be sticking their heads in the sand.

Regardless of how you would like to be judged, you will be measured against your UBPR by regulators, competitors, and stakeholders. Take advantage of this excellent management tool to help you refine your strategies and reach your goals.