Asset/Liability Management


Listen in as our analysts discuss an array of topics that may be affecting your institution, including recent market movements and industry-wide commentary. These briefings can serve as educational tools for both boards and management.

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February 12, 2019 —This week Jamie Sumner, chief analyst, reviews the performance of the Community Bank Benchmark group for the 4Q 2018. Overall, the benchmark’s return on average assets declined by 8 bps. This decline was primarily due to the increase in noninterest expense. Increases in the level of noninterest expense to average asset ratio often occur in the 4Q due to year-end bonuses and other year-end expenses. Net interest margin increased by 1 bp over the past quarter as the yield on earning assets expanded at a slightly faster pace than the cost of funds. Generally, 2018 was a strong year for community banks.

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January 22, 2019

January 22, 2019 —This week Jamie Sumner, chief analyst, reviews the December 2018 ISM Index which pointed to continued growth but at a slower pace. Both the Manufacturing and the Non-Manufacturing indices declined but remain above 50. Additionally, Jamie reviews the movements in the PPI and CPI which both pint to a pull off in inflation compared to mid-2018 levels. These trends are consistent with the trend in the 5-year, 5-year forward inflation expectations. The pull off in inflation expectations is one component behind the reduction in the 10-year Treasury yields. Lastly, Jamie reviews the GDPNow which estimates the 4Q GDP growth at 2.8% as of January 16th. However, no additional updates have been provided due to the lack of data availability as a result of the government shutdown.

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January 8, 2019

January 8, 2019 —This week Jamie Sumner, chief analyst, reviews the December 2018 Employment Report along with the U.S. Treasury Curve and the Fed Funds Probability chart. Overall, December was a strong month producing 312,000 jobs with a good degree of diversity in the types of jobs created. Furthermore, the report showed that the average hourly earnings saw a 3.15% increase over the past year. This marks the third consecutive month with a year over year increase greater than 3%. Lastly, Jamie covers the movements in the 10-year UST and the implied probabilities of the Fed Funds rate throughout 2019.

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December 04, 2018

December 18, 2018 —This week Jamie Sumner, chief analyst, reviews the CPI index which continues to show moderated inflation numbers, especially when compared to pre-2008 figures. Retail sales continued to be strong in November, with a year over year change of 4.2% and a month over month change that came in above expectations. Jamie also reviewed the movement in the 10-year UST yield over the past year, which hit a high of 3.24% in November. However, Jamie anticipates that the 10-year UST will be volatile over the next year, but will continue to come back to a trading range of 2.85-3%. As for the Fund Funds rate, it is expected that the Fed will increases rates on the 19th. However, the market is suggesting that the likelihood of a rate hike in 2019 is less than 40%.

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December 04, 2018

December 04, 2018 —This week Jamie Sumner, chief analyst, reviews the slight changes in the second estimate of the 3Q GDP along with the advance inventories number of October, which point to a continuous replenishment of inventories. Furthermore, Jamie reviews the October construction spending report which showed a slight pull off. Lastly, Jamie discusses the treasury curve.

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