Regulators expect banks and credit unions to maintain adequate levels of liquidity. They must meet both expected and unexpected cash flow and collateral needs without adversely affecting daily operations or financial performance. Read the blog to learn how to evaluate cash flows in and out of your institution in order to manage liquidity and meet all regulatory requirements effectively.
Many institutions have a natural hedge to changing interest rates: their non-maturity deposits. But as the last few years have shown, non-maturity deposits can fluctuate dramatically in a short timeframe. Core deposit analysis can address several challenges associated with developing assumptions for non-maturity deposits. This last blog of the ALM 101 series explains how improved assumptions allow management to improve models and fund institutional assets appropriately with non-maturity deposits.
Across the banking industry, views on the importance of regularly conducting a core deposit study vary greatly. Many financial institutions update their study every four to five years. Others are on top of the data every year. This blog dives into the reasoning behind such a variation in approaches and how financial institutions can become more strategic about utilizing the wealth of information that a good core deposit study can uncover. From updating assumptions in the ALM process to product development, leveraging your institution’s study results can improve risk management. For more analysis of core deposits for risk management and loan growth, stream this webinar.
While bankers might have hoped the close of 2021 would also bring an end to the low yields, financial institutions continued to face the of both challenging rates and the pandemic. As a result, effective loan pricing is more imperative than ever for banks and credit unions. This blog analyzes the relationship between margins, cost of funds, and performance. It also explains four factors behind lower yields at some institutions. Finally, the blog describes options for institutions when net interest margins are squeezed. For more on banking in a rising rate environment, watch this panel discussion.
Loan betas, or how rates for new and repriced loans will act as interest rates rise, are critical ALM inputs for net interest margin forecasts. In prior rising-rate environments, inaccurate loan betas have led to net interest margin gains falling short of ALM model projections. Read the blog to learn about the many factors contributing to this phenomenon and what experts predict for the future.