Thursday October 25, 2018
101 Mall Blvd., Monroeville, PA
REVIEW AND REGISTER
To review program details and register by mail, please download the REGISTRATION BROCHURE
To register online, please complete the ONLINE REGISTRATION FORM
8:30am: CURRENT ENVIRONMENT
• Regulatory Overview
• Business Cycle Trends & Impact on Pennsylvania Banks
• Interest Rate Forecast – Fed has become more aggressive in 2018
• Liquidity Management – Liquidity is shrinking on bank balance sheets as rates
10:00am: REFRESHMENT BREAK
10:15am: MANAGING BANK RISK
• Interest Rate Risk – A greater regulatory concern in 2018
• Modeling IRR – Validating assumptions is key concern of examiners
1:00pm: MANAGING ASSETS IN THE CURRENT ENVIRONMENT
• Funding growth for 2018 – Liquidity Management
• Investment Options on a Flattening Yield Curve
• Residential lending is a challenge and this will continue
• Managing concentrations in CRE lending
MANAGING LIABILITIES IN THE CURRENT ENVIRONMENT
• FHLB Strategies for Lengthening Liability Duration
• FHLB Strategies for Matched Funding
• Deposit Strategies: Moving customers from large savings pools to CDs
• Challenges Facing ALCO In 2019
BEST PRACTICES IN ASSET/LIABILITY MANAGEMENT
This annual seminar program will focus on the critical issues bank ALCOs will face in 2018 through 2019. Economic data has been more and more positive in the 1st half of 2018. 1st quarter GDP growth was moderate at 2.2%, but forecasters are more optimistic for the 2nd and 3rd quarters due to the 2017 tax bill and its impact on consumer spending and business investment. Consumer spending was solid in the 2nd quarter and consumer confidence is positive. The unemployment rate is 3.8% and wages are beginning to rise. The housing market is strengthening along with the labor market. All of this activity is moving inflation rates above 2%, a level desired by the Fed. All of this positive news bodes well for bank lending, but should be a caution sign for liquidity management.
The most important variable for the ALCO to focus attention is shortterm interest rates. The Fed moved rates up three times in 2017. We have had two 25 basis point increases in 2018, an after the June meeting the Fed suggested that they will likely increase rates in September and December. We are expecting a 2.50% Fed Funds rate in December, and 3.25% in December 2019. This is beginning to put pressure on deposit pricing, and this upward pressure will continue through 2019.
The seminar will focus on regulatory concerns with commercial lending, liquidity management, and interest risk management. Liquidity and interest rate risk management will be a major concern for your ALCO through 2019. The program will conclude with asset and liability decision making in 2018 into 2019. As loan demand increases, investments have become less of a priority, but investment portfolio strategies continue to be an essential element of ALM. Liability management has not been a significant concern over the last nine years, but it will be the focus in 2018 and 2019. Deposits strategies to cope with a rising rate environment need to be developed in the near term. We will also explore wholesale strategies involving the FHLB advances and brokered CDs.
ABOUT THE SPEAKER
Dr. James Clarke is the Principal of Clarke Consulting, a Villanova, Pennsylvania firm specializing in ALCO issues and strategic planning for community banks. Jim has lectured on asset/liability management at the Stonier National School of Banking sponsored by ABA, the Southwest Graduate School of Banking, the New England School of Financial Studies and Connecticut School of Banking. He conducts ALM seminars for many state associations, and for Risk Management Association (RMA) and Financial Managers Society (FMS). Jim also conducts board education programs on ALM for a number of state associations. In 2016 through 2018, Jim spoke at the Connecticut, Maine and Pennsylvania Association of Community Bankers conventions and number of director conferences. Dr. Clarke is on the Board of a community bank, and is a Director of an investment company. Jim is also on the Editorial Board of the RMA.
WHO SHOULD ATTEND
CEOS, CFOs, COOs, Investment Managers, ALCO Committee Members, Directors, Lenders, Risk Managers and all involved in ALM.
CONTINUING EDUCATION CREDIT
Attendees of this course are eligible for up to 5 hours of CPE. PACB is an approved provider for continuing education by the PA State Board of Accountancy.
A block of rooms has been reserved the DoubleTree, 101 Mall Blvd., Monroeville, PA. Please contact the hotel directly at (412) 373-7300 for reservations. Please mention the PA Association of Community Bankers to secure the group rate.