Given that financial institutions are all about risk, it is not uncommon for CFOs of commercial or retail banks to emerge from risk functions. In 2010, Chikako Tyler joined California Bank & Trust as a real estate analyst for special assets. She then moved on to the role of increasing responsibility in regulatory risk, enterprise risk management, and credit risk.
Tyler was appointed CFO of San Diego-based bank (an affiliate of Zions Bancorporation) in 2018. Her approach to CFO jobs incorporates previous CB&T responsibilities, including close work with the sales and operations team. As CFO, she is currently focused on the future of the bank: revenue, assets and customer growth. CB&T is partnering with publicly available Zions, but the leadership team sets the objectives and strategies of the regional bank.
In an interview with Kuehnerohebert, Tyler explains the level of insight needed to lead funds in a trust-based business.
How will your broad experience at CB&T help you in your best financial role?
My various backgrounds helped me identify and hire the right key players. For example, hiring a senior sales manager and operational manager will provide you with the additional skills and knowledge you need to fill the gap in your expertise.
Having set up a strategic initiative with the CEO, you can clearly articulate the bank's goals and the “why” behind what these teams are asking to achieve their goals.
The major sales team also gave us a new perspective on bank finances. Look at the costs across your organization and determine the true costs you need to manage what your investments in growth opportunities are.
As a growth-driven CFO, how do you decide whether to invest in new technology or expand into new markets?
We start by understanding where an organization fits within the industry. For example, we are “first followers” of new technologies that support enhanced efficiency and risk management in the future. Therefore, we are unlikely to become leaders in new technology. [adoption]. Our technology investments come from the need to keep up with the industry.
On the other hand, entering a new market is a decision we will make entirely [on our own] As part of a strategic initiative. We are considering total market opportunities, market competitors, future growth potential, and integrity of banking strategies and culture.
As we are a relationship bank, a business built on trust, it is important to identify key leaders in our new markets. This ensures customer continuity and post-acquisition synergy. A great example is the recent announcement to acquire four branches in FirstBank Coachella Valley [in a region just east of Palm Springs].
What indicators do you prioritize when assessing (1) financial health and (2) growth potential for a bank?
There are bank-specific financial metrics, including all well-managed bank measurements, efficiency ratios, return on assets, tier 1 capital, leverage ratios, and more. A more interesting question for bank CFOs is how to measure growth potential. Banks must be financially strong to invest in future growth, but how can you optimize one dollar of your investment?
We do our best we can and model growth options for acquisitions or entry into new businesses or markets. We will advance the opportunity with the best long-term returns [over five to seven years]. Other banks may choose to maximize their short-term profits, but they are usually looking to sell themselves. Our goal is to grow steadily for long-term success.
As inflationary pressures and market volatility persist, what strategies do banks use to mitigate risk?
We have strong assets and liability management teams. We can model interest volatility, manage our balance sheets, and withstand reasonable volatility. [For example,] We buy ladder securities and derivatives to ensure revenue stability. Our strong credit risk management team monitors and highlights our loan portfolio against market volatility.
From a business perspective, we monitor employee pay and product pricing to ensure that we are competitive in the market as daily inflation affects our employees and customers. Technical financial risks are monitored and mitigated, as are the human aspects of business operations and business. It doesn't exist without good employees and loyal customers.
