Time to start planning for next year


The days are getting shorter, the nights are getting cooler, and the leaves are changing color.  This means that fall is here, and you have pulled out your favorite college or NFL team gear.  This, also, means that it is time to start planning for next year.  Most of our clients are experiencing better asset quality and improved earnings.  However, earnings are only improving because of the decreased losses in the loan portfolio.  The biggest challenge our customers are facing now is how they can improve their margins. 


Before the Fed dropped rates to zero, banks were able to manage the margin by either dropping deposit rates a little or increasing loan rates a little.  With deposit pricing near zero and the highly competitive market for loans, banks need to be looking at their balance sheet a little differently than before to find a few more basis points to get that Earnings component back to a 1 or a 2.  As a former examiner, I have seen many asset liability reports.  Most of those reports use your general ledger data and aggregates the information to perform the analysis.  While this method will often check the regulatory box for interest rate risk, this method doesn’t give you the specific detail of your balance sheet to find those few basis points of margin.  To be able to find those opportunities within the balance sheet, you need to analyze each loan, investment, deposit, and borrowing.  In addition, assumptions need to be developed based on accurate and timely data.


Here at AMG, we specialize in analyzing your specific information and returning it to you in a way to help you find those few basis points.  We focus on data input and assumption development.  The output is only as good as the input.  Our reports have a built-in deposit study that gets updated with every run of the model.  The results of this assumption development are also stress-tested to provide a range of results should you experience behaviors different than you are currently experiencing.  In addition to the deposit information, we analyze your loan portfolio down to the loan number.  This analysis allows us to give you reports about how you are pricing your loans to help show you if you are missing any opportunities in pricing.  We also break down the variable loan portfolio to show you how and when you will be able reprice that segment of the portfolio.  This information allows you to be more proactive in managing your balance sheet to start expanding your margins.


Because of how we gather your data, our BancPath® report is highly effective at managing interest rate risk.  In addition, we are able to provide you reports that include the loan pricing, investment management, and deposit pricing.  We also provide the sensitivity analysis of your assumptions.  We do not break out these reports or charge more for them; they are all included in the same fee.  Additionally, our reports “check” all the boxes in the interest rate risk guidance, with the exception of the independent review (which no model provider can include if they are generating your results).  If you want to find out more about how we can help you start expanding your margins, email Aaron at or call (800)226-1923.