Washington DFI Releases Strategic Planning and Budgeting Guidance

The Washington State Department of Financial Institutions recently released DCU Bulletin B-13-18 to address strategic and operational planning.

Strategic plans, business plans and budgets are essential tools that help a credit union’s board of directors and management identify, measure and monitor short-term and long-term financial and operational goals and targets. These tools enable a credit union to maintain a well-thought-out focus, make sound decisions and identify risks or weaknesses within its operations.

While the Bulletin was released specifically for Washington state-chartered credit unions, the information contained in the bulletin is valuable for any credit union regardless of charter.

During their safety and soundness examinations, Division of Credit Unions (DCU) examiners identified common weaknesses which may impact the usefulness of strategic plans, business plans and budgets:

  • Inconsistency and/or lack of continuity between the strategic plan, business plan and budget. Examiners found some budgets, including pro forma balance-sheet projections, that were not consistent and/or lacked continuity with the same-year business plan goals; 
  • Goals and actions that were not specific, realistic or measurable, and that lacked target dates;
  • Plans that did not focus on a credit union’s most important financial and operational needs; 
  • Plans that lacked specific objectives to make the credit union stronger;
  • Plans that appeared to be a mirror copy of the prior year;
  • Plans that lacked detail and accountability; 
  • Budgets that were not supported by realistic key financial and operational elements; and
  • No balance-sheet forecast to support the budget.

DCU also provided insight into key elements that sound strategic planning should incorporate:

  • Financial goals; 
  • Operational goals;
  • Projected growth of assets, deposits and loans;
  • Acquisition, implementation and use of technology; 
  • Timeframes for achieving the stated goals and objectives; and
  • An assessment of the credit union’s current competitive and operational environment, and an evaluation of its external and internal factors, such as regulatory issues, membership base changes, and competition.

And business plans should have the following elements:

  • Specific objectives;
  • Actions/steps to take to accomplish the priority issues and to achieve objectives; and 
  • Timeframes in which to complete the actions and to achieve the business plan goals.

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance.