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Excel Bank gains interest rate risk management expertise with Abrigo

Excel Bank, a small commercial bank in Southern California, has navigated various economic cycles since its founding in 2005, including the current challenging interest rate environment. With a team of around 40 full-time employees, the bank focuses on commercial real estate and deposit products in the Beverly Hills community. Excel Bank prides itself on its cohesive finance and accounting team. The small but efficient team of four has created a stable and efficient work environment over the past five years.

Despite its stability, Excel Bank faced challenges in managing interest rate risk effectively and sought a more current framework for its ALM model. The bank's previous interest rate risk model, which had been used for over a decade, was becoming outdated and limited in its capabilities. Excel’s EVP and Chief Financial Officer Hrach Kahwajian recognized the need for a more robust and dynamic model to address the bank's specific requirements and satisfy regulatory expectations. While they had considered using ALM software instead of running a model themselves, Kahwajian felt it would be a good learning experience to set up a new model and have an advisor walk his team through it. Kahwajian also sought advisory expertise to help his team fully understand their model.

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"If you're not careful, an in-house model after a while can become just an exercise that you run every quarter to check a box and satisfy auditors. It has been a huge help to have an advisor to help us see how our model fits into a bigger picture and understand what we need to keep doing."
Hrach Kahwajian, EVP and Chief Financial Officer, Excel Bank

The solution: A modern ALM model with advisory support

After evaluating several vendors, Excel Bank chose Abrigo for its comprehensive model and experienced advisors. It was a bonus that the bank had used Abrigo in the past for deposit studies and is currently using Abrigo’s anti-money laundering software, BAM+. When it came to technical expectations, Excel required non-parallel yield curves, the ability to include off-balance sheet items, and a dynamic model to replace their previous static balance sheet model.

Abrigo catered to those specific needs, and the advisory component could help the team facilitate internal discussions and decision-making. Having an industry expert on hand will also help Excel Bank’s ALCO and board set realistic thresholds and policies tailored to the bank's unique situation. That valuable expertise was the clincher for Excel when choosing Abrigo.

Changing the game

Excel Bank's decision to partner with Abrigo has not only resulted in a more advanced interest rate risk model but has also provided the bank with expert guidance and training. The model has exceeded their expectations, and the support from Abrigo's advisors, particularly Dave Koch, has been instrumental in the model's successful implementation and ongoing management. Excel Bank looks forward to continuing its partnership with Abrigo, providing feedback to improve its processes further, and reaping the benefits of a more robust interest rate risk management framework.

"We wanted advisors with experience behind our model who could teach us the ins and outs of it. And we got that with Abrigo."
Hrach Kahwajian, EVP and Chief Financial Officer, Excel Bank

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