Stabilizing Growth Through Strategic Planning and Risk Governance Overhaul

The client’s aggressive loan growth (29% in 2020, 19% in 2021, and 19% in 2022) contributed to declining capital levels. The bank’s total capital ratio, common equity tier 1 capital ratio, and leverage ratio decreased from 12.99 percent to 12.19 percent, 11.74 percent to 10.95 percent, and 8.5 percent to 7.73 percent, respectively, from 2022 to 2023. Over this same period, the cost of all interest-bearing funds increased from 0.51 percent to 3.45 percent, net interest margin decreased from 3.55 percent to 1.62 percent, and return on average assets decreased from 1.52 percent to 0.09 percent. Due to these significant challenges the client required a broad overhaul of the bank’s risk management framework, including its board oversight and governance protocols, and its liquidity, capital, interest rate, market, strategic, reputational, and operational risk practices.

RGP transformed the client’s outdated eight-page Strategic Plan into a comprehensive 120-page roadmap for stable growth. This new plan was grounded in a detailed assessment of national and local market dynamics, competitor analysis, customer feedback, and a thorough evaluation of operational, product, and staffing needs aligned with income targets. To strengthen risk governance, we introduced a new Risk Appetite framework with early warning indicators and action plans for threshold breaches. Sustainability was ensured by rewriting over 35 bank policies, updating Board and Committee Charters, drafting executive job descriptions, implementing a risk taxonomy and MIS solution, and clearly defining accountability across the three lines of defense. In partnership with the Chairman of the Board, RGP also conducted a formal assessment of the executive team’s capabilities and evaluated the Board’s composition and size to support stronger leadership and governance.

The bank returned to profitability with reduced capital, liquidity, & interest rate risk, driven by new products, branch expansion, & less reliance on brokered deposits. Enhanced risk governance brought the bank into compliance with 12 CFR §1.5, improving its regulatory profile. Leadership changes strengthened board oversight and regulatory engagement.