Plansmith Blog

Product Profitability and Funding

Posted by Sue West on 8/7/23 12:04 PM

As increased competition and consolidation challenge the financial industry, your business must continue to adapt using strategies for success, not unlike those of other businesses.

Manufacturing and retail have long used product management techniques to meet competitive pressures for pricing, product planning, and growth strategies. If financial institutions are to survive and prosper in this highly charged competitive environment, management must understand and control all components of profitability. Margin and equity risks have been addressed using regulatory rate shock methodologies, as well as recommended and required stress testing of the loan portfolio, including loan losses. Product profitability combines these concepts with an often-overlooked element of cost – overhead.

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Planning: Many Aspects, One Purpose

Posted by Sue West on 7/17/23 11:01 AM

I’m often asked, “What are the differences between a plan, a budget, forecasting, reforecasting, what-ifs, and stress testing?” Although some of the actions are similar and often intermingled in conversation, it’s their purpose that defines them. If you’re a client, most even involve similar keystrokes using your Plansmith software navigation; yet each plays a unique role within your organization’s total planning process. Let’s discuss.

Budget

To start, everyone’s familiar with a budget, but let’s make sure we see it for what it really is. A budget is a prediction or forecast of a financial position at a set time in the future, typically one year. A budget represents a desired financial outcome and requires consent by your board of directors. Most often a Budget is primarily thought of as cost allocations, but when combined with ideas regarding new business, you will often hear it referred to as a Plan. Once approved, the Budget Plan never changes. It is ‘set in stone’ for the duration of your selected time period.

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Control Performance: Best Practices for Financial Institutions

Posted by Sue West on 5/15/23 12:23 PM

A common misconception is that planning is an annual event. Budgeting: setting targets and allocating expenses; true, but what happens next? As life goes on, rates fluctuate, new opportunities for growth appear, and your ever-changing customer expectations must be managed. Your budget, as it was initially locked in, must die and be reborn accordingly.

There are several ways to get a better handle on your financial future and get your plan back on track to meet your goals.

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The Importance of Experimentation in Financial Institution Planning

Posted by Sue West on 5/1/23 1:00 PM

For many, the art of planning feels counterintuitive, as its core is not accounting-based as much as it’s a sociological experiment. We use a planning model to simulate the environment and measure the ramifications of change on the balance sheet. However, the real test is anticipating the resulting business hinging upon your customers’ changing needs.

You hear over and over again that the one thing you can always count on is change. Change is what you hope for as a financial intuition. It’s what drives business and profits. Rate change, as we all know, can be one of the most volatile components of your business, and at the same time, the very heart of banking itself.

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Asset Liability Management and the Link to Bank Failures

Posted by Dave Wicklund on 4/5/23 1:13 PM

It was only two months ago we released a blog discussing the critical role that liquidity management will play in 2023. Fast forward to now, and two financial institutions have been closed due to, at least in part, funding imbalances – the first banks in three years to fail. Although liquidity and interest rate risk often take a backseat under stable economic conditions, times like these require you to take an in-depth look into your asset liability management program to ensure you have a plan to both meet funding needs and stay in compliance with regulatory expectations.

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Why Choose Plansmith for Your Budgeting and Forecasting Needs?

Posted by Megan Plis on 3/6/23 1:36 PM

With the increasing number of financial planning software options available, it can be difficult to determine which one is the right fit for your organization. That's why it's essential to consider several key factors before making a decision. In this blog, we'll examine how Plansmith's planning suite stands out from the competition and why it could be the perfect choice for your financial institution.

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Liquidity: Read all about it!

Posted by Dave Wicklund on 2/6/23 11:44 AM

What do a massive uptick in deposits, a possible impending recession, and a tremendous hike in interest rates have in common? Absolute potential for wreaking havoc on your institution’s liquidity position. One unplanned or mismanaged situation could mean falling out of policy limits, or worse.

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Welcome Peter How, Planning Advisor!

Posted by Sue West on 1/10/23 10:20 AM

Join us as we welcome our newest Planning Advisor, Peter How! At Plansmith, we’re excited to have such an experienced community banking veteran on staff. Read on to learn about Peter’s career and how his background will add value to our clients’ planning experience.

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CECL 2023: Where Does Your Financial Institution Stand?

Posted by Brett Hendricks on 1/3/23 3:26 PM

Easily, the hottest regulatory topic of the past seven years is CECL. On top of the long-term lead up, the regulations and deadlines have changed so many times that many institutions hoped the requirement would disappear altogether. However, as of January 1, 2023, CECL is a reality. So, how confident are you in the solution and CECL reporting tools your bank or credit union have decided to implement?

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Three Most Frequent Pitfalls of Interest Rate Risk Management Programs

Posted by Dave Wicklund on 12/1/22 2:42 PM

Establishing and maintaining a sound interest rate risk (IRR) program is crucial to ensure proper balance sheet structure and comply with Regulatory expectations. During my 20+ years as a senior FDIC examiner, I routinely saw organizations experiencing issues with their ALM/IRR practices, ranging from loose misunderstandings of the guidance to critical errors that put the health of the organization at risk. Unfortunately, in my current advisory role, I see the same issues all too often.

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