What questions should you consider before a capital raise?

Raising capital can be as much an art as it is a science. There are many factors to consider when deciding to raise capital such as the size of your institution, is your bank publicly traded or privately held, do you want to raise capital using debt or equity, if debt will it be senior debt or subordinated debt, and is raising capital cheap or expensive in the current environment? Before you do anything here are five questions your bank should consider before conducting the capital raise. 1) What are our strategic goals, and how do shareholder expectations shape our capital decisions? 2) How resilient is our capital structure across different interest rate scenarios? 3) What is the true cost of capital, and how can we offset it through improved performance? 4) What forms of capital are realistically available for our business model and profile, and who are the right investors or partners? 5) When is the optimal time to raise capital? This episode reviewed an article from Bank Director titled “Five questions every bank should answer before raising capital.” A link to the article is included below. Link: Five Questions Every Bank Should Answer Before Raising Capital | Bank Director