The Financial Planning System at Louisiana National Bank

Abstract

In 1974 Louisiana National Bank designed and implemented a Financial Planning System. For the past five years, it has been the primary reporting, analysis, and decision support tool for the Budget Committee and the primary source of financial reports for the Board of Directors. Top management of the Bank believes that, as a direct result of the use of this System, Louisiana National Bank: 1. reversed a decreasing profit trend by increasing profits more than 92% in one year, 2. creatively managed the Bank’s liquidity during severe market pressures, 3. restructured the Bank’s asset/liability management policies to better align with newly perceived market and investment potential, and 4. sharply reduced the cost and management burden of reporting to regulators. In addition to the quantifiable benefits cited above, use of the System resulted in several other improvements, including 1. a reduction in the amount of time required to meet periodic management reporting requirements, 2. increased understanding of financial reports by the Board of Directors, 3. improved communications between Bank executives and regulatory examiners, and 4. a discipline and structure within which the Budget Committee could establish goals and action plans. The Financial Planning System supports financial decision making at both the tactical and strategic levels. It is an integrated system which includes reporting and analysis of historical data, long and short range forecasting, and modeling.

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