---
title: Is Your Community Bank Ready For Rising Rates?
description: Is Your Community Bank Ready For Rising Rates?
image: https://blog.plansmith.com/hubfs/AreYouReallyReadyForRisingRates.jpg
---

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# Plansmith Blog

# Is Your Community Bank Ready For Rising Rates?

Posted by [Bill Smith](https://blog.plansmith.com/author/bill-smith) on 8/22/14 11:30 PM

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Lately I’ve talked to a lot of bankers who are actually looking forward to the inevitable rise in market interest rates. They believe that their institution’s net interest margin and profit will increase because that’s what their rate risk analysis is telling them.

But some of these institutions are in for a big surprise. Critical model assumptions can lead to major overstatement of margin improvement when rates increase. This is especially true when assumptions are developed on just historic analysis over the recent past.

Moreover, relying solely on regulator mandated static and parallel analysis may miss exposure due to balance sheet mix and uneven rate movements over the yield curve.

The only way to be sure that your bank’s exposure is under control is to expand your analysis to evaluate theses three exposures – key assumptions, non-parallel rate movements, and changes in balance sheet composition driven by customer behavior.

Adding these factors to your analysis does not have to be difficult or time-consuming.

 Topics: [strategic planning](https://blog.plansmith.com/topic/strategic-planning), [interest rate risk](https://blog.plansmith.com/topic/interest-rate-risk), [community bank](https://blog.plansmith.com/topic/community-bank), [community bank budget software](https://blog.plansmith.com/topic/community-bank-budget-software), [fintech](https://blog.plansmith.com/topic/fintech)

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