Plansmith Blog

Non-financial businesses ranging from the humble lemonade stand to the behemoth WalMart are easy to understand. The assets being transacted are, for the most part, quite tangible. It is easy to understand that something is manufactured, it is delivered to a retail place of business, it is stored in a warehouse as a portion of inventory, it is displayed on a shelf and it is ultimately purchased by people like you and me to put in a bag to take home. The equivalent chain of distribution can be identified in banking but there is one big difference that makes it all the more complicated. It is the fact that the product, being money in its many different forms, is not something you see, feel, taste, hear, or smell in any direct way.

If you are a parent, you use "what if" scenarios every day with your child. What if you get lost? What if you saved your allowance rather than spend it? What if your friends ask you to…? What if you study for that test? What if a stranger offers you a ride?

I would like to extend a sincere thank you to all of our clients and prospective clients that stopped by the Plansmith booth and took a few minutes to talk with me and my colleague, Ron Trice. In an era of endless emails, conference calls and web presentations it is always nice to put a face to a name and shake hands with all of you. If you didn’t come by the booth but happened to see the two tall guys in the loudest most obnoxious Hawaiian shirts ever - yes, that was us.

When I ask this of a financial institution, I usually receive balance sheets and risk reports. Most people immediately think ‘numbers’ when you mention planning. I challenge you to think differently, think communication. Tell me about your business.

Opening night featured a performance by singer Eddie Money, which literally had the Washington Convention Center "shaking to the beat of the night". Day two presented a strong stream of visitors to the many exhibitor booths spread out around the convention center floor. It was great to finally put a few client faces to the many voices that we speak to regularly. We met a number of new credit unions that were interested in our solutions for managing risk and active planning. It was fun being able to run our Financial Compass model for these individuals, right there on the convention floor. Some really seemed impressed by our ability to quickly provide a two and three year rolling forecast for their organization. Impressive perhaps, but after all, "the future is ours to see".

Last week we covered the first half of the OCC letter requesting information from client banks on their interest rate risk (IRR) model. Along with the letter, you may have run across some forms to be filled in with results from your model. This post and the accompanying webinar are meant to clarify the letter and terminology. Separately, but related, we have produced a video and guide for completing the OCC EV IRR Data Form for Financial Compass Clients (to be released soon).

A new request list and questionnaire from the OCC is making its way around the banking community and the NCUA has issued one of its own. Regardless of who you answer to, expect more scrutiny on your asset liability management (ALM) model. For some of you this might be "old hat", but we’ve fielded calls by clients asking for interpretation of the IRR Data Collection. So, Plansmitties, and even non-Smitties, take note: there is a letter with your name on it and we’re here to help.

I’m compelled to relate planning to everyday activity – after all, just because we are bankers, doesn’t mean we don’t experience life’s little pleasures (or displeasures) any more than, say, your average commuter. Today, while legally stopped in a left turn lane, waiting for traffic to clear before proceeding to Plansmith’s office, a man honked and gesticulated wildly because I didn’t pull into the intersection and ready myself for the turn. Never mind I couldn’t make the turn anyway. Conclusion: he didn’t plan well. If he was in a hurry, he should have planned to leave earlier, thereby beating me to the turn light where he, too, would sit and wait for traffic to clear. Maybe he took a different route from home, or maybe I did, causing this situation (I did stop at the dry cleaners – HA! solved).