Liquidity Management

• Analyze current liquidity position

• Define and evaluate and funding requirements

• Identify future funding requirements

• Evaluate potential sources of funds

• Analyze present and future earnings potential

• Evaluate gap between maturities and/or interest rate change opportunities of assets and liabilities

• Evaluate and develop liquidity contingency plan

• Assess liquidity management on net earnings position

Asset Management

• Assess bank’s deposit structure and loan portfolio projections

• Assess deposit concentrations 

• Assess unused lines of credit and contingent liabilities

• Evaluate the impact of current and projected loan to deposit ratios

Liability Management

• Effects of yield spread by analyzing core deposits and purchased liabilities

• Identify and evaluate market conditions that may reduce the ability to attract deposits and borrowings at favorable terms

• Determine and evaluate asset/liability maturity and/or interest rate change opportunities distribution effect on interest rate risk

 

Policy/Management Reporting Systems

Safe and sound banking practice calls for the adoption of a policy statement defining liquidity needs, the processes of satisfying such needs and subsequent monitoring. This policy statement should describe the lines of authority, cooperation between units and responsible personnel. In addition, metrics need to be defined for required liquidity, limits and ratios. CMA Bank Advisors can assist banks by evaluating the adequacy of policies relating to:

• Ratio of loans to deposits

• Ratio of loans to capital

• Desired or targeted liability structure

• Acceptable level of liquidity vulnerable to concentrations

• Maturity limits for different types of liabilities

• Minimum requirements of liquidity necessary to maintain business continuity

• Ratio of pledged securities to total securities

• Management reports concerning the required components for liquidity decisions and monitoring results

• Written contingency plan

• Level of liquid assets

• Ability to liquidate loan and investment portfolios

• Appropriate level of term deposits and funding lines and determination of the appropriateness of committed funds lines