Liquidity Analysis and Reporting February 25, 2010 Quick | Convenient | Cost-Effective | Online Learning Insert speaker logo here www.fmsinc.org | 800-ASK-4FMS Liquidity Analysis and Reporting Jerry Boebel, CFA ProfitStars [email protected]Quick | Convenient | Cost-Effective | Online Learning www.fmsinc.org | 800-ASK-4FMS Objectives • Define liquidity • Current trends • Evaluate traditional liquidity analysis • Consider a new approach – Better liquidity and NIM management – Meet changing examiner expectations
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• Essential to compensate for expected and unexpected balance sheet fluctuations and provide funds for growth
• Liquidity risk occurs when you are not able to obtain funds at the optimal price within a reasonable time period to meet obligations as they become due
Cash & Due 23,591$ Overnight Borrowings 27,122$ Interest Bearing Balances 1,486 Other Borrowings Due <30 Days -
Fed Funds Sold - 10% of CDs Maturing <30 Days 22,016 Investment Securities 216,061 10% of Jumbo CDs Maturing <30 Days 6,400 Less Pledged to Borrowings (131,664) 5% NMD Runoff (Worst Case) 19,545
Residential Mortgages 165,858 Total Needs 75,084
Less Pledged to Borrowings (127,880) Loans Held for Sale 28,355 Basic Surplus 120,770
Saleable Loans (cc, student) 20,047 Total Surplus (w/borrowings) 235,770
Brokered CD Capacity 75,000 Total Assets 1,053,690
Lines of Credit 40,000 Liquidity Ratio 11%
Liquidity Sources 310,854 Liquidity Ratio (incl. borr. cap.) 22%
• Separate internal liquidity sources from external sources– Makes it easier to do scenario testing– Examiners wish to focus on your internal capabilities
• Use your budget projections that are built into your ALM model
Step 1: Compile Realistic Numbers• Cash & Due is not completely liquid• Determine true asset sale/pledge values– Show at current market values– Haircuts often apply for pledging– Many loan types require time to liquidate
• Accurately reflect borrowing capacity– FHLB or Corporate CU lines should be questioned– FHLB-required stock purchases should be netted– Brokered deposits take several days to settle
The Financial Managers Society, Inc. is the only individual membership society exclusively devoted to serving the needs of finance & accounting professionals from financial institutions. Our more than 1,500 members are CFOs, controllers, CEOs, COOs, treasurers, investment officers and internal auditors from banks, thrifts and credit unions.
FMS offers career-enhancing education, targeted news and research, national leadership opportunities, a voice in shaping regulations and accounting principles and connections with other industry professionals.
MissionThe mission of the Financial Managers Society is to enhance the professional development of financial personnel within financial institutions.
The Society accomplishes this mission by: •Offering premier education and information to members and others within the financial services industry regarding accounting, financial management, regulatory, operational, auditing and other industry issues.
•Providing various forums for the exchange of information and practical applications.
•Articulating industry and member concerns to regulatory and accounting policy-setting bodies.
•Providing members with opportunities for technical, personal, and leadership growth and development.