--- title: Plansmith Blog (19) description: (19) --- [CALL TOLL-FREE 1-800-323-3281](https://www.plansmith.reachproductions.net/project/call-toll-free-1-800-323-3281/) [![Plansmith](https://blog.plansmith.com/hs-fs/hubfs/Plansmith-Logo.png?width=764&height=135&name=Plansmith-Logo.png "Plansmith")](https://www4.plansmith.com) - Solutions - [Budgeting](https://www4.plansmith.com/budgeting/) - [ALM](https://www4.plansmith.com/alm) - [ALM Advisory Services](https://www4.plansmith.com/alm/advisory-services/) - [CECL](https://www4.plansmith.com/cecl/) - [Strategy](https://www4.plansmith.com/strategy/) - [Market Intelligence](https://www4.plansmith.com/market-intelligence/) - Products - [StrategyGPS](https://www4.plansmith.com/strategygps/) - [Compass](https://www4.plansmith.com/compass/) - [BankersGPS](https://www4.plansmith.com/bankersgps/) - Resources - [Blog](https://blog.plansmith.com/) - [Videos](https://plansmith.wistia.com/projects/7qemazkqii) - [Compass Tutorials](https://info.plansmith.com/compass-tutorials) - [Lunch N’ Learn](https://info.plansmith.com/lunch-n-learns) - [Webinars](https://www4.plansmith.com/webinars/) - [About](https://www4.plansmith.com/about/) - [Schedule A Discovery Call](https://www4.plansmith.com/contact-us/) - [CALL TOLL-FREE 1-800-323-3281](tel:8003233281) # Plansmith Blog ## [How Much Risk Can Your Community Bank Afford?](https://blog.plansmith.com/how-much-risk-can-your-community-bank-afford) Posted by [Bill Smith](https://blog.plansmith.com/author/bill-smith) on 4/1/15, 11:30 AM - [Tweet](https://twitter.com/share) [![HowMuchRiskYourBankAfford.jpg](https://blog.plansmith.com/hubfs/HowMuchRiskYourBankAfford.jpg)](https://blog.plansmith.com/how-much-risk-can-your-community-bank-afford) Risk is inevitable in banking, in fact it’s what makes banking profitable. The question is how much risk is acceptable. Recognizing that existing techniques of measurement were sometimes misleading and arbitrary, Plansmith developed a simple calculation called ‘Margin Risk Tolerance’ that defines how much risk each bank can take. Despite the wealth of banking information Plansmith has at hand, we believe risk relates to the individual community bank, and cannot be measured to any peer standard or magic number. Margin risk tolerance calculates the minimum net interest income and net interest margin necessary to maintain continuing operations. Minimum margin consists of two basic components: 1) earnings needed to maintain an acceptable capital ratio and pay dividends, and 2) earnings needed for overhead. [Read More](https://blog.plansmith.com/how-much-risk-can-your-community-bank-afford) ## [Independent Review, Model Validation, and Backtesting for Community Banks](https://blog.plansmith.com/independent-review-model-validation-and-backtesting-for-community-banks) Posted by [Dave Wicklund](https://blog.plansmith.com/author/dave-wicklund) on 3/16/15, 2:30 PM - [Tweet](https://twitter.com/share) [![IRModelValBacktesting.jpg](https://blog.plansmith.com/hubfs/IRModelValBacktesting.jpg)](https://blog.plansmith.com/independent-review-model-validation-and-backtesting-for-community-banks) In our ever increasing efforts to educate and inform, our marketing department here at team Plansmith has been on me to contribute to our Blog. Quite frankly, I’m not really a "blog" guy, but for those of you that know me, I’m not short on opinions either. So, given that I sit here stuck on a plane for a few hours, this seems like a good time to take a shot at it. [Read More](https://blog.plansmith.com/independent-review-model-validation-and-backtesting-for-community-banks) ## [Community Bankers, There's Room For Improvement](https://blog.plansmith.com/community-bankers-theres-room-for-improvement) Posted by [Bill Smith](https://blog.plansmith.com/author/bill-smith) on 3/2/15, 5:30 PM - [Tweet](https://twitter.com/share) [![TheresMoreRoomImprovement.jpg](https://blog.plansmith.com/hubfs/TheresMoreRoomImprovement.jpg)](https://blog.plansmith.com/community-bankers-theres-room-for-improvement) Most community bank and credit union boards and executives spend a lot of time looking at past performance data. But many only look at projected data once a year at budget time. Seems backwards to me. As George Bush (the older one) said, "The past is over". The future is unlimited. We can do nothing to change what has happened, but we can do anything to change the future. [Read More](https://blog.plansmith.com/community-bankers-theres-room-for-improvement) ## [Social Media 101: How to Get Your Community Bank Started](https://blog.plansmith.com/social-media-101-how-to-get-your-community-bank-started) Posted by [Danielle Slowey](https://blog.plansmith.com/author/danielle-slowey) on 2/17/15, 4:30 PM - [Tweet](https://twitter.com/share) [![SocialMedia101.jpg](https://blog.plansmith.com/hubfs/SocialMedia101.jpg)](https://blog.plansmith.com/social-media-101-how-to-get-your-community-bank-started) Although social media has been around for a while now, business profiles are still relatively new. Many financial institutions are still finding their way to the social media arena. As social media keeps growing in popularity, it is important that financial institutions climb on the bandwagon as well. [Read More](https://blog.plansmith.com/social-media-101-how-to-get-your-community-bank-started) ## [The Benefits of Using Social Media for Community Banks](https://blog.plansmith.com/the-benefits-of-using-social-media-for-community-banks) Posted by [Danielle Slowey](https://blog.plansmith.com/author/danielle-slowey) on 2/2/15, 1:00 PM - [Tweet](https://twitter.com/share) [![BenefitsofUsingSM.jpg](https://blog.plansmith.com/hubfs/BenefitsofUsingSM.jpg)](https://blog.plansmith.com/the-benefits-of-using-social-media-for-community-banks) Social media is booming. Period. [Read More](https://blog.plansmith.com/the-benefits-of-using-social-media-for-community-banks) ## [Interest Rate Risk Is A Community Bank Behavioral Problem](https://blog.plansmith.com/interest-rate-risk-is-a-community-bank-behavioral-problem) Posted by [Craig Hartman](https://blog.plansmith.com/author/craig-hartman) on 1/20/15, 2:00 PM - [Tweet](https://twitter.com/share) [![IRRBehavioralProblem.jpg](https://blog.plansmith.com/hubfs/IRRBehavioralProblem.jpg)](https://blog.plansmith.com/interest-rate-risk-is-a-community-bank-behavioral-problem) Gap, beta-adjusted gap, duration and even basic budgeting models only frustrate, confuse and even mislead the financial institution’s asset liability management committee (ALCO). Detailed gap analysis, fiddling with the distribution of savings balances and even calculating the duration of equity does not lead to better margins, nor do they mitigate rate risk. [Read More](https://blog.plansmith.com/interest-rate-risk-is-a-community-bank-behavioral-problem) ## [Community Bankers: The Most Popular Posts of 2014](https://blog.plansmith.com/community-bankers-the-most-popular-posts-of-2014) Posted by [Danielle Slowey](https://blog.plansmith.com/author/danielle-slowey) on 1/5/15, 1:30 PM - [Tweet](https://twitter.com/share) [![MostPopularPosts2014.jpg](https://blog.plansmith.com/hubfs/MostPopularPosts2014.jpg)](https://blog.plansmith.com/community-bankers-the-most-popular-posts-of-2014) Happy one year anniversary to Sparks from the Anvil! There has been a great response to the blog, thanks to all of you. [Read More](https://blog.plansmith.com/community-bankers-the-most-popular-posts-of-2014) ## [2014: Plansmith's Year In Review](https://blog.plansmith.com/2014-plansmiths-year-in-review) Posted by [Danielle Slowey](https://blog.plansmith.com/author/danielle-slowey) on 12/19/14, 10:00 AM - [Tweet](https://twitter.com/share) [![YearInReview.jpg](https://blog.plansmith.com/hubfs/YearInReview.jpg)](https://blog.plansmith.com/2014-plansmiths-year-in-review) 2014 has been a busy year at Plansmith! We have made some great updates to our products, added some wonderful clients to the Plansmith family, and have been busy keeping up-to-date with the latest regulations and changes in the banking world. [Read More](https://blog.plansmith.com/2014-plansmiths-year-in-review) ## [The Future Risk in Community Banking](https://blog.plansmith.com/the-future-risk-in-community-banking) Posted by [Craig Hartman](https://blog.plansmith.com/author/craig-hartman) on 12/8/14, 10:30 AM - [Tweet](https://twitter.com/share) [![TheFutureRisk.jpg](https://blog.plansmith.com/hubfs/TheFutureRisk.jpg)](https://blog.plansmith.com/the-future-risk-in-community-banking) Since the introduction of the venerable GAP analysis in the mid-1970s, risk management has continued to evolve. It has moved from the basic mismatch of rate sensitive assets and liabilities to more sophisticated techniques – such as prepayment modeling, rate change betas on non-maturing deposits, and rate shocking with parallel rate shifts and non-parallel rate shifts. Then mark-to-market analysis of the balance sheet and the impact on equity was brought in with the attendant benchmarks. These are all interesting measurements of the company’s risk at a point in time. It’s like glancing at your car’s dashboard. [Read More](https://blog.plansmith.com/the-future-risk-in-community-banking) ## [Community Bankers: Year-End is Almost Here!](https://blog.plansmith.com/community-bankers-year-end-is-almost-here) Posted by [Sherri Scott](https://blog.plansmith.com/author/sherri-scott) on 12/1/14, 10:00 AM - [Tweet](https://twitter.com/share) [![YearEndIsAlmostHere.jpg](https://blog.plansmith.com/hubfs/YearEndIsAlmostHere.jpg)](https://blog.plansmith.com/community-bankers-year-end-is-almost-here) Whether your year-end is calendar or fiscal, there are a few things you can do to make the future-you happy. Examiners and auditors thoroughly enjoy marking off their-checklist of items to review and criticize. Most times the request letters ask for the same documents year-after year. Create an exam folder complete with instructions for yourself for the following year. 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