Plansmith Blog

The Real Reasons to Outsource Your IRR

Posted by Dave Wicklund on 3/18/19 9:41 AM

As you grow, your organization has more and more things to manage.

  • Strategically, you’re working to find the right markets to penetrate with the ideal products and services.
  • Financially, you’re making sure your earnings are meeting or exceeding targets.
  • And organizationally, you’re looking for the right talent to expand and grow.

One thing you can’t ignore is the role Interest Rate Risk plays in the banking industry today.

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Understand the Behavior of Interest Rate Risk

Posted by Craig Hartman on 2/25/19 2:27 PM

The purchase of an asset liability management (ALM) system presents a problem to many bankers. Often the process begins with the creation of a checklist of features and functions then progresses to comparing vendors. The vendor with the highest "score" wins. While this may be a good start, there are dimensions to the problem that this ignores, specifically the quality and significance of the features identified.

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What is Managing Your Own IRR Really Costing You?

Posted by Dave Wicklund on 8/28/18 9:10 AM

Regulatory compliance costs are skyrocketing!

The focus of safety and soundness examinations continues to move towards asset/liability management and ensuring financial institutions are complying with the guidance issued in the last several years.

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Why Regulators Care About Surge Deposits (And You Should, Too!)

Posted by Dave Wicklund on 5/17/18 8:40 AM

So why do we keep hearing about “surge” deposits and how important it is to know if you’re holding any? Well, it might be because in the past 10 years, CD balances in FDIC insured institutions have fallen by $880 Billion; yes, that’s Billion with a capital “B.” And while that may be the bad news, the good news is that over the same time period, non-maturity deposits (DDAs, NOWs, Savings, and MMDAs) have grown by $5.9 Trillion (with a capital “T”).

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3 Key Components in Outsource IRR Analysis

Posted by Tom Parsons on 10/19/17 3:24 PM

The October 2017 issue of ICBA Independent Banker features Dave Wicklund and his views on selecting a service provider for outsourcing your IRR analysis. You can find the article on page 57.

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Forgotten Components of Interest Rate Risk at Community Banks

Posted by Craig Hartman on 9/26/17 6:30 PM
It is standard operating procedure for community banks to measure interest rate risk by shocking the balance sheet. The percentage change in the Net Interest Margin over several shock levels as an indicator of the severity of risk. While it can provide a clue to the potential loss in the margin, it by no means measures the true risk. The true risk is Equity loss. Equity doesn’t come from NIM but from retained earnings. So to truly measure risk to equity, we must use the entire P&L, not just net interest income.
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The Community Bank Strategic Planning Experiment: Using Your Model To Prepare for Rising Interest Rates

Posted by Sue West on 5/10/17 10:00 AM
Q: What makes an experiment successful?

A: Its failures.

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4 Reports for Analyzing & Understanding Your Bank's IRR

Posted by Dave Wicklund on 3/23/17 12:24 PM

Knowing and understanding your bank's risk position is important. Regulators expect you to keep a close eye on your IRR exposure and be ready for a rising rate environment.

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Surge Deposits: 3 Regulatory Expectations

Posted by Dave Wicklund on 2/1/17 8:01 AM

In the last 5-10 years, there's been a lot of growth in DDA, NOW, MMDA, and savings accounts. These deposits can provide a great low-cost funding base, but they can also draw attention at your next exam.

Examiners are looking closely at these surge deposit balances. Specifically, they're looking to see if you've considered surge deposits in 3 ways.

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Answered: Bankers' 5 Most Painful Questions about Backtesting

Posted by Dave Wicklund on 1/23/17 8:18 AM

Backtesting can be a painful topic for bankers. In this post, I'll answer the top 5 most common questions I hear about backtesting. I'll reference my first post, Independent Review, Model Validation, and Backtesting: Same Thing, Only Different, so you might want to revisit it before reading on. In that blog, we looked at the interrelationship of these three items and brought up a few questions on backtesting.

Specifically, we questioned 5 things: who should do it, how often should it be done, what period should be covered, do you need to backtest model results and assumptions, and why even bother if market rates really aren’t changing.

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