Given financial institutions are all about risk, it’s not unusual for a commercial or retail bank CFO to emerge from the risk function. In 2010, Chikako Tyler joined California Bank & Trust as a real estate analyst in special assets. She then moved on to roles of increasing responsibility in regulatory risk, enterprise risk management and credit risk.
Tyler was named CFO of the San Diego-based bank (an affiliate of Zions Bancorporation) in 2018. Her approach to the CFO job incorporates her prior CB&T responsibilities, which included close work with the sales and operations teams. As CFO, she’s now focused on the bank’s future: revenue, asset and customer growth. While CB&T is affiliated with publicly held Zions, its leadership team sets the regional bank’s objectives and strategy.
In an interview with KuehneroHebert, Tyler explains the attentiveness needed to lead finance in a trust-based business.
How does your broad experience at CB&T assist you in the finance chief role?
My varied background has helped me identify and hire the right key players. For example, hiring a senior sales manager and operations manager will provide the additional skills and knowledge I need to bridge gaps in my expertise.
Because I set the strategic initiatives with the CEO, I can clearly articulate the bank’s goals and the “why” behind what we are asking of those teams to meet our goals.
Leading sales teams also gave me a new perspective on the bank’s financials—to look at expenses across the organization and determine what an investment in growth opportunities is versus a true expense that needs managing.
As a CFO responsible for driving growth, how do you decide whether to invest in new technologies or expand into new markets?
We start with understanding where the organization fits within the industry. For example, we are a “fast follower” of new technologies that support future efficiency and heightened risk management. As such, we are unlikely to be leaders in new technology [adoption]. Our tech investments come from the necessity of keeping up with the industry.
On the other hand, entering new markets is a decision that we fully determine [on our own] as a part of our strategic initiatives. We look at total market opportunity, in-market competitors, future growth potential and alignment with the bank’s strategy and culture.
Because we are a relationship bank—a business built on trust—it’s critical to identify key leaders in the new market that will drive growth in alignment with our goals. That ensures continuity for customers and after-acquisition synergies. A great example is our recent announcement to acquire four branches of FirstBank Coachella Valley [in a region just east of Palm Springs].
What metrics do you prioritize when assessing the bank’s (1) financial health and (2) growth potential?
There are financial metrics unique to banking that every well-managed bank measures: efficiency ratio, return on assets, tier 1 capital and leverage ratios. The more interesting question for a bank CFO is how to measure growth potential. The bank has to be financially strong to invest in future growth, but how do you optimize every dollar of investment?
We model, the best we can, the growth options for an acquisition or entry into a new line of business or market. We move forward with opportunities with the highest long-term returns [over five to seven years]. Other banks may choose to maximize short-term gains, but they are usually looking to sell themselves. Our goals are to grow steadily for long-term success.
With inflationary pressures and market volatility persisting, what strategies does the bank use to mitigate risk?
We have a strong asset and liability management team. We model interest-rate volatility and manage our balance sheet to withstand reasonable volatility. [For example,] we ladder securities and buy derivatives to ensure earnings stability. Our strong credit risk management team monitors and stresses our loan portfolio against market volatility.
From the business perspective, we monitor employee pay and product pricing to ensure they are competitive in our markets, as day-to-day inflation impacts employees and customers. Technical financial risks are monitored and mitigated, as are the business operations and the business’ human side. We don’t exist without our outstanding employees and loyal customers.
