A Capital Plan developed with the assistance of FORVIS outlines a Client’s current capital position, expected capital needs, and alternative strategies to maintaining regulatory capital ratios at acceptable levels. Understanding near-term and long-range capital needs is an essential component of planning. Our capital planning service incorporates quantitative and qualitative assessment of core operating earnings, growth targets and liquidity needs to help a Client develop strategies consistent with their risk tolerance and their need to maintain regulatory requirements.
The Capital Plan provides information to the Board of Directors to assist in making decisions related to managing the Client’s capital structure. The Capital Plan considers the Client’s financial condition and performance, regulatory requirements and their present operating environment, including, but not limited to:
- Baseline scenario over a multi-year time horizon
- Dividend and share repurchase capacity
- Acquisition capacity using various forms of consideration
- Alternative capital contingency plans
- “Stress” test (or scenario analysis) and the impact on capital from credit losses and earnings risk components that may arise from margin compression, among other factors
The Capital Plan should ultimately support and be congruent with the Client’s overall Strategic Plan.