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Home Federal Bank partners with Abrigo experts for core deposit analysis

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Answering core questions with Abrigo

Home Federal Bank of Tennessee’s long relationship with Abrigo began when they started using Farin, an Abrigo legacy brand, for their ALM model in 2010. After Farin became part of Abrigo, the bank continued using Abrigo products and services.

CFO Andrew Harper is proud that each team member can specialize in one role without donning too many hats. Home Federal’s utilization of Abrigo Advisory Services is one way the bank has saved Harper’s team time, enabling them to focus on their areas of expertise.

Home Federal decided to run a core deposit study when interest rates rose mainly to understand how their customers were reacting to rising rates and confirm that their model's assumptions were correct in terms of beta and lag. They also performed a prepayment study to see how quickly the fixed-rate loans on their books were prepaying. These insights were essential to the bank’s new loan loss reserve standard, which requires them to estimate the life of loans and project losses over those estimated lives.

 

“It's easy to do these studies because Abrigo has all our account history. We know the examiners and regulators have confidence in our model, and we've always found the people we work with to be
knowledgeable, professional, and responsive to what we need.”
Andrew Harper, Chief Financial Officer, Home Federal Bank of Tennessee

Leveraging Abrigo for peace of mind

For banks like Home Federal that developed their own loan loss calculation, a prepayment study can be a helpful, budget-friendly tool for doublechecking assumptions. And understanding core deposits can help banks manage those deposits and better understand their customer base. Harper would encourage financial institutions considering portfolio analysis to seek out a well-established vendor with industry-specific knowledge.

“Unless you have the time and resources to hire people with years of experience, you need to find a company like Abrigo that can provide you with that experience,” Harper advised. “It’s helpful to have support that can confirm your assumptions are correct in your model.”

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