Plansmith Blog

Uncertainty and volatility seem to be the only consistent elements concerning the post-COVID economy. So, how do you adequately measure the financial impact today’s economic landscape will have on your business? By utilizing a true planning model.

A professional forecasting platform for Budgeting and ALM/IRR adapts to changing conditions. As it is relationship-driven, it can be set to react to environmental changes, including rates. As the rate environment shifts, so should your balance sheet growth and product mix. Planning models help you test the impact of such changes and measure results in minutes, not hours.

For the past few years, I’ve written about the varying circumstances surrounding Surge Deposits. From “the death of” to the “resurgence,” it seems to be a consistently hot topic – this year, with a slight twist. While previously keeping a close watch on the influx of demand deposits, we’re now seeing increased pressure on funding flowing either from non-maturity deposits (NMDs) into higher costing CDs, or out of financial institutions all together. 

Before we get further, if you haven’t yet read my other blogs discussing Surge Deposits, or could use a refresher, click here to do so.

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.

While the economic environment continues to shift from the effects of COVID-19, financial institutions aren’t out of the woods. As 2022 heats up into the summer months, inflation, rate increases, and an overall sense of uncertainty loom over markets. So, how do you begin to measure the financial impact today’s economy will have on your business? By utilizing a true planning model.

A professional forecasting platform for Budgeting and ALM/IRR adapts to changing conditions. As it is relationship-driven, it can be set to react to environmental changes, including rates. As the rate environment shifts, so should your balance sheet growth and product mix. Planning models help you test the impact of such changes and measure results in minutes, not hours.

The Fed has officially raised rates, with the intention of continuing to do so several more times this year. What does that mean for your financial institution, and how will it affect your Budgeting and ALM/IRR programs in 2022? Let’s focus on a few areas of concern, specifically Financial Reporting, Strategic Decision Making, and Board/ALCO oversight.

Is IRR and Liquidity Cash Flow Model Outsourcing Right for You?

That is a question a lot of CFOs and Presidents struggle with. Here at Plansmith, it really doesn’t matter to us whether you run the model yourself, or you outsource it to us. In fact, we have many clients on both sides of that fence, and even some that do a little of each. We just want you to be comfortable with whichever option you choose, be confident in your model results, and be sure your ALM process will pass the test at regulatory exams.

Given the current low-rate environment, I’ve again been getting some questions on “negative rates” and the impact they would have on financial institutions, and more specifically interest rate risk modeling. We’ve all heard about negative rates in Japan and parts of Europe, so it would seem reasonable to wonder about the impact that negative rates could have here in the U.S.