By Cynthia Walker, CEO, Mark H. Smith, Inc.


What Can MHSI Do For You?

A particular advertising campaign created by UPS sticks in my mind as a successful campaign. I easily recall and still reference the tag line “What can Brown do for you?” As clients of Mark H. Smith, I would like to reinforce to you the services we provide and “What MHSI can do for you.” I’ve recapped below a list of the many services we provide to our customers. Many of you are aware of these services, but sometimes as I talk with clients, they realize they may not be fully utilizing the resources we offer.

IRR Analysis – The ALMPro Report measures interest rate risk using income simulation and NEV analysis. Gap analysis is also contained within the report. We offer several levels of analysis from ALMPro Classic through ALMPro Premier based on the credit union’s asset size, complexity, and other needs. Our web site details the various levels of service we offer. As your needs grow or change, please contact us and we can help you explore our other options. We have multiple options to serve small to large, and simple to complex institutions.

What-if Scenarios – Our ALMPro Report service includes up to 2 what-if scenarios. A what-if scenario can be helpful as you explore new business lines, product offerings, and shifts in the balance sheet. A what-if scenario may also include adjusting the assumptions for non-maturity shares to evaluate the impact to IRR if share behaviors change.

Loan Turnover Calculations – Loan turnover or prepayment assumptions are important when modeling interest rate risk. The assumptions need to accurately reflect current credit union prepayment trends and also how payments may change in different rate cycles. We can help our clients calculate current loan turnover by loan type. We will also help calculate contractual maturities for loan types to assist in making assumptions in the up-rate scenarios. This is included in the ALMPro service.

ALCO Consulting – MHSI staff are available for discussion prior to or during your ALCO meeting to help you interpret and understand the ALMPro Reports. We have exceptionally friendly and qualified staff to assist you.

Board Meeting Consulting – If you would like a MHSI staff person to participate in board meetings or if you would like to schedule a time to discuss the report in preparation for the board meeting, please call or email one of us.

Training Through Webinars and Seminars – We have a very full schedule over the next 6 months with online webinars and live seminars. The training schedule is available on our web site. I encourage the management team, ALCO, and board members to utilize this resource.

One-on-One Training – As team members and board members change, it is often helpful to schedule some one-on-one training to review and discuss your credit union’s ALMPro Report and the concepts of interest rate risk. GoToMeeting is a very valuable tool that we have available.

Policy Review – As the credit union’s balance sheet composition shifts, net interest margins and ROA change, and economic and regulatory environments evolve, the policies need to be reviewed periodically for relevancy. We will assist in the review of your current ALM, IRR, Liquidity, and Contingency Funding policies as part of our service.

Regulatory Questions and Responses – Regulatory scrutiny of interest rate and liquidity risk has increased in the last few years. As we have adopted more realistic assumptions for non-maturity shares, the oversight agencies may take exception. We are always available to assist with responses to their comments and findings. We will also help our clients develop an appropriate action plan if necessary to address items of concern. Unlimited phone support is part of our service.

Trade Organization Meetings – If you are affiliated with a trade organization and are looking for a guest speaker, we are very interested in these opportunities. We bring over 30 years of experience in the credit union industry and interest rate risk analysis to the table. Please keep us in mind.

Optional Fee-Based Services

Liquidity Analysis – The ALMPro Report offers static liquidity ratio analysis as a part of every report. We also offer expanded liquidity forecasting in a base case, a moderate stress, and a severe stress scenario. As loan portfolios grow, investment portfolios and cash reserves recede, and deposits fluctuate, a cash flow projection may become a valuable tool in business planning. We offer this service at an additional fee.

Executive Summary – The executive summary is a written recap of the ALMPro Report. The executive summary is prepared by a senior analyst and contains an economic update, an explanation of the dashboard, and the results of the ALMPro Report in an easy-to-understand format. Many credit unions have found this to be helpful for boards and ALCO committees, and it can bolster meeting minutes.

Regulatory Package – The regulatory package analyzes the results of the ALMPro Report running multiple alternative non-maturity share assumption scenarios. Given the current prolonged low interest rate environment and the possibility that the nature and behavior of non-maturity shares may change from historical data, additional interest rate risk stress scenarios provide the end user with a variety of results and empower the end user to make well informed decisions when evaluating IRR. We have also found this to be helpful when addressing regulatory issues and questions.

Deposit Study – A deposit analysis studies the behavior of non-maturity shares over time and provides institution-specific results needed to accurately measure and manage interest rate and liquidity risk. As a credit union becomes larger and more complex, a need for a deposit study may increase. With increasing complexity the regulatory focus will also increase and some of their concerns may be addressed with a deposit analysis. A full deposit study includes decay, beta and lag, surge shares, non-interest expense, and a present value for multiple rate scenarios.

Beta and Lag Analysis – The beta or rate sensitivity is derived from the historical rate paid by the credit union. It displays the percentage that deposit rates adjust per a given change in interest rates. The lag also defines the timing of the credit union’s response to a rate change. This is an option for customizing some of the model inputs for non-maturity shares at a cost less than the full deposit study.

As you can see from the list above, Mark H. Smith, Inc. offers a wide variety of services. We have staff with extensive industry experience and we work very hard to provide our clients with exceptional value and outstanding customer service. If you have questions, comments, or suggestions for improvement, please do not hesitate to reach out to me or one of our highly trained staff.