As interest rates fluctuate and market conditions evolve, financial institutions are seeing shifts in their Economic Value of Equity (EVE). But are these improvements the result of strategic decisions, or are they merely a function of external forces? Understanding the key drivers behind EVE fluctuations is critical for making informed financial and strategic decisions. The … Continued
Q: When the Fed has significantly cut rates, how many times has the yield curve shifted in parallel? A: ZERO! What does this mean for you? In a world filled with uncertainty, this is one thing you can count on. So, don’t rely solely on parallel shifts in the yield curve when modeling. Expand your … Continued
In the continually evolving landscape of finance, growth is not just a goal, but a necessity for survival and prosperity. Financial institutions operate in highly competitive environments where growth not only helps to ensure but also signifies relevance and progress. Not all growth strategies are created equal, and some may prove harmful if not guided … Continued
Great news! The elevated rate environment provides financial institutions (FI’s) an opportunity to take advantage by putting new assets on their books at higher rates as existing lower yielding assets roll off. By itself, this helps improve their net interest margin (NIM). However, the other side of the balance sheet is also adjusting to higher … Continued
6 minute read – Strategic plans are all about possibilities, but the possibilities for risks to get in the way are also part of the equation. Knowing that there are risks and knowing that they can impact financial performance means that choices must be made. Those choices are better made after reaching as much clarity and … Continued
6 minute read – For many C-Suites, discussions around loan and deposit pricing, and funding strategies are now beyond the short-term band-aid. Leadership teams are expanding their views to grapple with the inevitable – What may the future hold when our shorter-term funding band-aids peel off? There is no one answer to this question. That … Continued
5 minute read – It’s no surprise that borrowings have increased significantly over the last year. With non-maturity deposits shrinking, institutions have been filling the gap with borrowings. As more borrowings are being added and used more actively, it is important to keep a few points in mind. * First, borrowing strategically can … Continued
4 minute read – Unprecedented. We hear this word used every day. However, if you are a student of history, you know that there are no new stories and we’ve read a version of this story before, except now it has new economic twists and technological turns. The questions being asked, and the assumptions being … Continued
4 minute read – Risk often comes in pairs, and right now, interest rate risk (IRR) and liquidity risk are the dynamic duo putting pressure on financial institutions’ balance sheets. In looking at paths to address these risks, the options don’t always look that great. In some cases, they may create other issues with earnings … Continued
6 minute read – Most financial institutions have, for many decades, utilized a strategy of lagging deposit rate increases when market rates rise. However, with the increased competition for deposits at a time when it has never been easier to move funds, this strategy could potentially prove costly in the long run. When determining your … Continued
