November/December 2014
Wisconsin Community Banker
17
Liquidity Planning
Strategic Planning
Regulatory Assistance
Stock Valuations
Capital Markets
Expansion
De Novo Bank Charters
Internal Audit
Information Technology
Recruitment
Human Resources
Lending Loan Review
Compliance
Policy Development
Young & Associates, Inc.
Bankers Working For Bankers
800.525.9775
periods is just the start. Document the number of accounts
at the beginning and end of a period plus corresponding
balances in the analysis in order to help determine decay
rates. Banks should also account for surge balances in these
calculations.
On the asset side of the ledger, growing concentrations in
negatively convex securities, notably mortgage and agency
step‐up securities, will likely receive enhanced scrutiny.
Banks should identify the securities with the most risk
while quantifying how future cash-flow and market value
changes would impact liquidity and capital levels.
Vary Scenarios to Identify and Quantify Risks
Your current customers are most responsible for the rate
risk position you are in today. As such, it is important to
understand where the risks lie within your current balance
sheet.
Future growth can mask risks, and often you can’t grow
fast enough to offset the existing interest rate risk. Scrutiniz-
ing your potential rate risk over a variety of realistic rate
and balance sheet mix scenarios is expected by regulators:
• What happens if loan or investment prepayments slow
dramatically as rates rise?
• What level of deposit migration would be tolerable
before rising deposit costs require the bank to take correc-
tive action?
• At what point would you entertain longer-term whole-
sale funding to mitigate rate risk?
• What future margin impact will ARM structure loans
have during their adjustable period?
• What is the risk to loan portfolio performance from
decreasing debt service coverage ratios in a rising rate
environment?
Finally, remember to consider:
• What happens to your net interest income if rates are
not higher in 2016? This question would have been a great
one to ask every year since 2009.
Reach the authors and The BOSC Institutional Strategy
Group (BOKF, NA/BOSC, Inc.) at 866.440.6515.
Anchor Launches IPO
MADISON—A year after its recapitalization and fresh from
the lifting of its final regulatory action, AnchorBancorp, the
parent company of AnchorBank, launched an initial public
offering of 371,959 shares of stock. The shares came from
both the company, which offered 250,000 shares, and stock-
holders who offered 121,959 shares.
The IPO price was $26 per share and the shares were
traded on the NASDAQ Global Market under ABCW, the
symbol that the company used prior to bankruptcy in 2013.
Hoping to raise between $4.3 to $5.7 million to be used
for general corporate purposes, the company raised $10
million. Anchor BanCorp is the third largest bank head-
quartered in Wisconsin with 54 locations.
