Our Consulting Workshops are 1 ½ day intermediate-level sessions, presented with an interactive and hands-on team approach. The Workshops are aimed at management teams interested in collaborating on revising processes and strategies. Given the cross-discipline nature of the Workshops, the team will ideally include the CEO, CFO, Senior Lending Officer, and Senior Retail Officer. Attendance by key decision makers is important, as a primary focus of the workshops is applying a number of intermediate to advanced concepts taught at the workshop in developing capital plans, performing credit stress tests, making loan pricing decisions, developing funding strategies, and making changes to the institution’s ALCO process. Additional senior management team members are welcome and encouraged to attend.
The objective of the Workshops is to deliver a combination of education, modeling, and consulting that moves attending institutions in the direction of deploying strategies which will help improve the performance of their institution.
We will focus on current issues, analysis techniques and decision making tools.
Rather than load a complete Asset/Liability model, we ask for your results (ALCO package) from the A/L model you are currently using.
We’ll discuss your ALCO package results with you, possibly make a few recommendations, and will take your paper output as an input into the workshop’s decision making framework.
The Farin Consulting Workshop series is comprised of mini-workshops, each with an education component and an interactive modeling component.
•Capital Planning – We built Capital Speedboat to model the phase-in of the proposed Basel III capital regulations. While the final form of these regulations and effective date are yet to be determined, much of what is in the proposed regulation is already being enforced in the field. We will load your data into Capital Speedboat , assess the impact of the regulations on your compliance, and experiment with growth, dividend, and earnings assumptions to build a framework to set goals for asset, loan and deposit growth. You will leave with a copy of the Capital Speedboat model, including the results of your work, as a starting point to building a capital plan.
•Credit Stress Testing – On October 18, 2012, the OCC issued its guidance on Community Bank Stress Testing, wherein they laid out a simple approach and recommended you get started. We will provide you with a modified version of the OCC stress testing model that will allow you to drill down into additional detail. During this session, we will discuss what the OCC refers to as ’top down stress testing’, and we will run scenarios for your shop, testing the effect on income and capital. Results will be communicated to Capital Speedboat and used as an input to setting your capital goals. You will leave the session with a copy of the stress test model containing your data, and your copy of Capital Speedboat will incorporate the results of the stress testing into your capital goals and capital plan.
•Loan Pricing – We will discuss using a loan pricing model as a tool in evaluating which of your loans are well or poorly priced. We will use our LoanEdge™ Pricing Model to evaluate a variety of loans and deals based on the information you bring with you to the session. We will also run loans through the model that involve “stepping outside the box”. The objective will be to develop strategies to help you grow your loan portfolio with profitable loans. You will have free use of LoanEdge™ for 90 days after the workshop.
•Core Funding Strategies for Rising Rates – Developing effective pricing strategies for a rising rates environment requires effective use of segmentation strategies and a focus on marginal cost as a decision tool. The lecture portion will focus on how to run segmentation strategies as well as on the use of marginal cost as a decision tool. We will work with you on using the Farin Marginal Cost Worksheet to model rising rate strategies for your shop. You will leave with a set of actionable strategies, as well as a copy of the Farin Marginal Cost Worksheet used in running your scenarios.
•Upgrading Your ALCO Process – Most institutions use their ALCO process to develop analysis of interest rate risk and liquidity risk called for by the regulations. The next logical step in the ALCO process is to use it as a decision making process that optimizes the relationship between risk and return. We will discuss how to install a dynamic ALCO process. Note: This is the only portion of the consulting workshop that does not have a hands-on component, because you already have a model. The hope is that if we lay out a dynamic ALCO framework, you will take the concepts and apply them when you get home.
Some of the mini workshops focus on planning and decision-making, while others focus on process.
Takeaway objectives include:
1. A solid running start to a capital plan that hits targets set by the proposed Basel III capital regulations. A set of long-range capital goals and the mix of earnings, growth, dividend (stocks), and any actions needed to hit your capital goals within a reasonable time frame.
2. A completed top down stress test at the call report level. An understanding of top down and bottom up stress testing. A stress test model that allows you to drill down beyond the call report level. A direct tie between the results of the stress test and the capital buffers you need to establish in capital planning to meet the requirements laid out in the Basel III proposed capital regulations.
3. An understanding of the four approaches used in assessing profitability of loans. A solid strategy for growing the loan portfolio with well priced loans, targeted at meeting the loan growth goals that are developed in the capital plan.
4. An understanding of the use of segmentation strategies and marginal cost in making deposit pricing decisions. A core funding strategy that focuses on managing your cost of funds in the next rising rate environment.
5. An understanding of the tools used in implementing dynamic ALCO analysis. A blueprint for returning home and turning your ALCO process into a more effective decision making tool.
Program Prerequisites: None
Program Level: Intermediate to Advanced
Advanced Preparation: Upon Registration you will be guided with materials that are necessary to provide for the workshop.
Registration Fees & Information:
$5,000.00 for 1 and 1/2 days at FARIN’s offices in Fitchburg, Wisconsin.
*FARIN CLIENT DISCOUNT* $4,500.00 for 1 and 1/2 days at FARIN’s offices in Fitchburg, Wisconsin.
Workshop fees include registration for 4 individuals, program materials, and lunch for both days. Attendees are responsible for the cost of their transportation and hotel accommodations.
Please call to register:
Marketing & Education Manager
Farin & Associates, Inc.
2924 Marketplace Drive
Fitchburg, WI 53719
608-661-4208 / 800-236-3724 x4208