Managing Liquidity and Profitability in Today's Environment

posted on Wednesday, August 26, 2020 in Advances

As we began 2020, many of us found ourselves planning for tight liquidity conditions and continued robust loan demand. As we pass the halfway mark of 2020, changes in the social and economic conditions are challenging us on both sides of the balance sheet. Now flush with excess liquidity, interest rate levels that offer little opportunity for generating spread, and the continued presence of COVID-19 poses an unfamiliar level of uncertainty altering expectations for 2020 and beyond.

Despite these challenges, institutions must continue to balance long-term earning needs vs. short-term profit opportunities. This 75-minute webinar, presented by the FHLB Des Moines and Dave Koch of Abrigo, delivers relevant and timely information on how to cope with the challenges of balance sheet management and profitability.

The session begins by examining recent industry performance results showing declining profits and dissect the cause and areas of focus to consider including:

  • Growing profitably in this yield curve
  • Effective Asset Liability Management (ALM) reporting for current risk levels
  • Identifying the right measures for ALM
  • Meeting customer demands for long-term, fixed rate loans – Should/can it be done?
  • Balancing net-interest margin stability vs. opportunities for non-interest income opportunities

Next we dig into liability options with a discussion around the use of various wholesale alternatives, including brokered CDs, FHLB Des Moines advances, etc. We tackle the notion of keeping “dry powder reserves” for future needs by looking to match today's needs with the risks of the strategies. We also explore the use of “blended funding” and other advance options like forward starts to help mitigate the concern over funding stability and margin management.

Throughout the session we present asset and funding strategies to show how to evaluate the different options available at your financial institution.

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