Charles Potts: Measuring high performance

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By Charles Potts, ICBA

What constitutes a high-performance, innovative community bank? As an industry, we rely on financial metrics to define success, but numbers tell only part of the story. As we consider the broader context, I’d like to pose a question of my own: How should community banks gauge progress as they move into the future?

Quantitative metrics such as return on assets (ROA), return on investment (ROI), loan performance, low default rates and others are critical in assessing a bank’s performance. But they aren’t enough. We must also consider the qualitative nature of high-performing, innovative banks.

I’ve found four characteristics that help cultivate a culture in which high performance and innovation can flourish.

  • A visionary, fully engaged board and CEO, through a shared vision, well-thought-out plan and mutually aligned objectives, will move the bank forward in today’s technology-driven world. Visionary leadership creates a culture that stimulates and fosters innovation and broader, more diverse income streams.
  • A culture of service. Community banks that prioritize service and focus on the customer experience position themselves well for the future. That internal culture of service generally flows outward into the community, as seen by our members’ heavy involvement in local events and important business networks like the local chamber of commerce or fundraising initiatives.
  • Community investment. By nature, community banks strive to address the financial needs of their community, offering small business loans to local businesses and personalized loans to individuals. Also high on the priority list are investments in relationship-building, not only with local businesses and business leaders, but with individuals, too.
  • Compliance. Community banks with a heavy compliance focus operate their bank in a solid, fiduciary manner. They understand how compliance supports quality products, services and relationships, and they have the ability to put the pieces together to foster high performance and innovation.

A defining characteristic that overarches all these points is knowing when to say no. Community banks that routinely perform and innovate understand their strengths, what they’re good at and what to avoid. For example, a community bank that specializes in small business lending won’t be dazzled by an out-of-market commercial product.

ICBA’s role from an innovation perspective is to ensure community banks have access to the same tools, services and capabilities available to larger financial service providers. To make that happen, we need your input. Share with us your challenges and business objectives, and we’ll work with you to find suitable companies that fit your requirements. Together, we can make sure we’re crafting purposeful solutions and options for your community bank that position you to move forward in the decade ahead.

Charles Potts ( is ICBA senior vice president and chief innovation officer