But lets face it, given the economy, delinquencies and shrinking margins, the more intelligently we can discuss our balance sheet, the more effective our marketing efforts will be to the institution's bottom line. And the more effective our marketing is to the bottom line, the more we can justify larger budgets (or salaries!!!)
Some Balance Sheet issues to consider:
- What is the bank's margin (essentially, the difference between what you earn on loans and what you pay on deposits)?
- What percentage of your deposits are in Time Accounts (CDs)? What does the maturity cycle look like?
- Does the institution have a positive or negative Gap (If Fed rates drop tomorrow and your deposits reprice - what will it do to the bottom line)?
In short, are you needing deposit or loans? Should those loans be fixed or variable? It directly ties to what your department needs to be promoting to your customers.
Finally, if you're not on your institution's ALCO committee, ask to sit in every so often. You'll gain a much greater understanding for why upper management may ask you to change directions every couple of months.
If you need more "ALM 101" try:
- Take advantage of education opportunities through the ABA or CUNA
- Take your CFO out to lunch
- Call MarketMatch and let us help (sorry had to get a sales plug in)
Have a great July 4th weekend.
Take care,
Eric
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