Overcome challenges
FNB found itself in a pretty strong position during the toughest period of the economy. Superior credit quality metrics, flexibility and a conservative investment policy helped FNB refocus their attention to areas where growth could be possible.
“Because we were a true plain, vanilla commercial bank, we were able to ride through [the recession] with less disruption in our own balance sheet, and ultimately, that resulted in better earnings throughout the period,” Delie says. “We have a fairly conservative investment policy, so we didn’t get caught up in some of the toxic investments that others got tied up with. That gave us a little more flexibility.”
Delie and his management team had the insight to forecast for a declining loan demand and prepared themselves for what would need to happen to change their approach.
“We had the challenge of growing our balance sheet during a period when outright demand was diminishing,” Delie says. “There were challenges on many, many fronts and they weren’t just challenges for FNB, they were challenges for everybody in the marketplace.
“You need to challenge your employees to think about ways to continue to generate revenue even during a very difficult period. You need to be upfront and honest and communicate very well with your employee base. You need to understand what your clients’ needs are as you move through that cycle.”
Sometimes customer needs will change, so be willing to adapt. This requires a collaborative management team.
“You can’t have silos within your company,” Delie says. “Everybody has to be working together to drive shareholder value and to focus on the bottom line. You can’t have one division just focused on what they do exclusively. They have to be communicating with the other areas.”
During a time when companies see their most important lines of business diminish or even disappear completely, they have to quickly respond. Companies must look at alternative ways to stay in business.
“As commercial clients manage their finances through the cycle, I would stress that cash is king, liquidity is very important,” Delie says. “During periods of time when the economy is contracting, good companies reduce inventory levels, they build their cash position, they delay (capital expenditure) spending and they manage their balance sheet appropriately. I think that if a company is struggling, that should be their focus. Their focus should be to drive liquidity.”
