Plansmith Blog

Key ALM/IRR Activities to Perform in 2020

Posted by Dave Wicklund on 4/22/20 9:09 AM

Given the historic low U.S Treasury rate environment and the recent 150 basis point near-immediate drop in rates, we’re expecting an increased regulatory focus on interest rate risk (IRR) and liquidity management.

It’s no doubt that financial institutions will see pressure to not only reforecast their 2020 budgets, but also to run future IRR shocks and more custom “what-if” scenarios as part of their regular IRR modeling program. Liquidity management and stressed-scenario cash flow modeling are also more important now than ever.

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Surge Deposits: R.I.P. (2018-2019)

Posted by Dave Wicklund on 4/8/20 10:57 AM

For the past ten years or so, surge deposits have been a material issue in asset/liability management. At the time of, and following the 2007-2009 Great Recession, the banking industry saw a substantial influx of deposits as real estate and equity investors liquidated positions and sought safe places to store their money and ride out the storm. The impact of this flight to safety was compounded by Government sponsored initiatives such as the Transaction Account Guarantee (TAG) Program and increases in Federal deposit insurance levels.

As a result, banks experienced significant deposit growth, and while these surge deposits would have normally been seen as a good thing, the near evaporation of loan demand left many banks with far more deposit dollars than they could effectively put to use. In turn, market liquidity levels skyrocketed, but margins were compressed. For the purpose of this article, we’ll refer to these funds moving from real estate, equities, or any other investments into the banking system as Type I Surge Deposits.

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Communicate Your Numbers Like a PRO!

Posted by Jennifer Mello on 3/4/20 11:16 AM

I know my numbers, but how do I communicate them to others within my organization?

It’s a valid question that Plansmith fields regularly from our clients. We’ve got some answers for you.

Everyone relates to numbers, no matter who you're talking too, but not everyone reads them in the same way. So how do you make the most out of your conversations with everyone who needs to relate to the same numbers?

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The 4 Big Backtesting Questions Revisited

Posted by Dave Wicklund on 2/5/20 2:50 PM

As we move into a new year, you may still be working on a few of those items you didn’t quite get to in 2019. And for a lot of our clients, one of those items is often backtesting. Given all the confusion surrounding backtesting, it can be pretty easy to keep pushing it to the bottom of the “to-do” list.

So, we thought it might be a good idea to dust off a blog I wrote back in 2015 to jump start your 2020 so you can get one more thing crossed off your list. In that blog, we looked at a few of the most common questions we get on backtesting. Specifically, we discussed who should do it; how often it should be done; what period should be covered; and if you need to backtest just model results, or also key model assumptions.

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4 Reports for Analyzing & Understanding IRR

Posted by Dave Wicklund on 11/18/19 1:48 PM

Knowing and understanding your organization'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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The Real Reasons to Outsource Your IRR

Posted by Dave Wicklund on 10/15/19 11:01 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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What is Managing Your Own IRR Really Costing You?

Posted by Dave Wicklund on 4/10/19 10:53 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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A Response to the FDIC: Brokered Deposits and High-Rate Deposits

Posted by Dave Wicklund on 3/20/19 11:17 AM

As you may have seen, in February we did a webinar on recent changes in the way Regulators are evaluating funding risk and the new measurements they are using to assign the “L”-Liquidity rating. As we noted, their focus has been on brokered deposits, “potentially volatile funding sources,” and “high rate deposits.” We pointed out numerous weaknesses in the way these funding sources are being assessed and limited.

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Is Compass Advanced Coaching Right For You?

Posted by Karen How on 1/24/19 12:22 PM

As Plansmith’s Director of Client Education, I’m often asked which continuing education programs should I attend and why? 

One of my favorite courses that I always recommend is our Compass Advanced Coaching event. Don’t let the title scare you, it’s a great fit for a wide variety of experience levels.

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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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