City Holding Company as a Strong Community Bank - Research Proposal Example

National National Considered as one of the most profitable openly traded banks located in the United s Holding Company was included in the American Banker Association’s (ABA) Top Performer for two consecutive years. Provided with its continued development, the company was noted to be expanding and growing, while still upholding its identity as a strong community bank. City Holding Company is a West Virginia corporation that could be located in Charleston, West Virginia. The company is a multi-bank holding company that offers expanded financial products and services both to local businesses and consumers. By means of its banking offices in West Virginia, Kentucky and Ohio, the Company is able to offer credit, deposit, investment advisory as well as insurance products and services to its customers. City Holding Company is the parent company of City National Bank of West Virginia. The company in line with this also works with City Insurance Professionals, an insurance agency that provides a full array of insurance products and services. Situation Analysis Assessing the position of company necessitates the discussion as well as examination of the firm’s strengths, weaknesses, opportunities as well as threats. In this light we take into consideration that the strengths and weaknesses of the firm would be based on the conditions of the firm internally while the firm’s opportunities and threats would be based on the placement of the firm in its external environment as well as the dealings it is engaged with. City National 2 One of the key opportunities that are evident for the firm is that when it comes to answering to local demand, the retail division of the firm was the first in their markets to establish and launch an innovative checking selection for individuals who happened to have their past challenges when it comes to running their accounts. Bounce Back Checking is for individuals who have been rejected and taken the opportunity to open a checking account. This particular option is intended for those individuals who are seeking to a fresh start. The company assists these individuals by providing them the necessary guidelines when it comes to learning responsible banking practices together with the aim of moving them to a traditional checking account. Apart from this, the company was also able to generate its own opportunity when it instigated the Community Hero Checking. This particular program honors current and retired military personnel, firefighters, police officers, medical professionals and teachers by offering them special account benefits. Different from the majority of interest-bearing accounts, Community Hero has no minimum balance requirements as well as monthly service fee. During the event of signing up for Community Hero Checking, the bank renders a financial contribution to an associated nonprofit organization in behalf of the account holder’s honor. Aside from this, the company also has other popular products like that of adjustable rate mortgages, competitive fixed-rate mortgages, and business checking. The company’s home equity program features no closing costs and low rates. Since the company also possesses important resources such as strong earnings, significant capital and considerable talent, it could be noted to be in a positive position when it comes to expanding further its existing geographic, product and customer boundaries. City National 3 At present the bank has expanded into Wal-Mart Supercenters in various locations, providing greater ease for customers. The nature of the company which is a community bank translates to its purpose of supporting the community financially. The firm essentially provides its share openhandedly to the United Way and other community causes. During the year 2004, the company was honored with the Governor’s Service Award for programs such as its “Adopt a West Virginia Service Member”. This program was aimed at assisting individuals and groups communicate with and send care packages to U.S. military service members. The programs initiated by the company prove to be an advantage such that the programs cater specifically to individuals and probable customers. The image of the company is positively reinforced to customers. However in relation to opportunities for the company, there are also threats in the external environment that could influence the position and business transactions of the company. One of the identified threats in this field of banking is capturing the promise of the customer. Increasing the share of wallet from existing customers has turned the order of the day. Having learned from failed Customer Relationship Management projects, banks are presently focusing more on targeted technology investments and high-quality service. City National 4 Offshoring also proves to be a threat for banks nowadays. Locating operations in lower-cost locations, like in areas outside or far from the company’s geographic cover could prove to be complex. Dramatically diminishing the operating costs while maintaining quality, takes some time before substantial benefits could be realized. As in the present case, there is the implementation of the Basel II Capital Accord. Leading banks are expected to be well in progress when it comes to their preparation with this particular regulation. The new requirements are a catalyst for banks to improve their credit and operational risk management processes. The preparation for such regulations and the monitoring entails several resources to be spent. In relation to this, there is also the mastering of the regulatory changes counting Basel II, International Financial Reporting Standards, the Sarbanes-Oxley Act, and anti-money laundering legislation. A comprehensive approach can better ensure compliance and control costs. Another issue that could be considered as a threat to the company is the advent of the IAS 39: The Challenge of Fair Value Accounting. Even though the rules have not yet been finalized, banks in Europe and several parts of the world are required to adopt International Financial Reporting Standards. The impacts of such would be extensive, affecting information systems, credit assessment, and business operations. In line with the opportunities and threats that were identified, the company’s strengths and weaknesses would also be identified. Part of the company’s strengths could be drawn from its corporate governance. City National 5 For one the superiors of the company are notably highly qualified and are deliberated in the most extensive manner. In facilitating the corporate governance of the company, City National has its Governance and Nominating Committee Charter. The Governance and Nominating Committee is essentially chosen by the Board of Directors to perform several functions. For one they are in charge of recognizing and determining individuals qualified to become board members. The committee is also given the task of selecting as well as endorsing the director nominees for the next annual meeting of shareholders; and it also supervises governance matters. Individuals who are part of the committee also undergo proper screening. The Committee is comprised of not fewer than three directors, all of whom fulfill the description of “independent” under the listing standards of The Nasdaq Stock Market (Nasdaq). The Committee members who are appointed by the Board are entailed to be removed by the Board in its judgment. The strength of the company comes in its organization and the systematic arrangement of things as well as the delegation of tasks. For example, the Committee has the authority to allot any of its responsibilities to subcommittees as the Committee that they may believe appropriate, provided the subcommittees are composed entirely of independent directors. Also the committee is heavily set to take care of the matters of the company. The company sees to it that is evaluates every so often the adequacy of the Company’s conflict of interest policies. Another is that it also considers other corporate governance and related issues as well as management public policy issues that may affect the Company. City National 6 More importantly the company also gets information from management that the policies included in the Code of Conduct and it sees to it that the regulations are understood and implemented. In relation to the strengths, however one of the deemed weaknesses for banks such as City National is that companies like it should uphold building confidence that goes beyond compliance. As the custodians of societal savings, banks are always accountable to the highest standards of conduct.  In the current environment, in which the confidence of key stakeholders has been shaken, banks always have to recognize and stick to best practices, regardless of minimum regulatory requirements. This is hard to implement and monitor for all branches of the bank. The key to such challenges to the bank is the maintenance of a strategic focus. At the same time as the majority of the banks have a strategic view; few have a clearly declared their governing objective or a formalized strategic plan to attain it. Delivering sustainable economic value would necessitate constant and consistent focus on performance standards by senior management. References: “Top Ten Global Banking Issues for 2004: Global Banking Industry Outlook,” Deloitte Touche Tohmatsu, 2004. “City National: Investor Relations,” SNL Financial, 2008. “City Holding Company: Governance and Nominating Committee Charter,” City Holding, 2008. “City Holding Company Announces Record Quarterly Earnings Per Share,” City Holding Company, 2008. “Corporate Governance,” City National Bank, 2008. Read More