Asset/Liability Management

HEAR WHAT THE S&B TEAM HAS TO SAY

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.

Watch the Latest Briefing

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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RECENT BRIEFINGS

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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November 20, 2018

November 20, 2018 —This week Jamie Sumner, chief analyst, reviews some inflation numbers which continue to show a modest level of inflation. Additionally, Jamie discusses the advance retail sales release for October which showed a higher than expected growth rate on total sales. However, auto and gas the rate of growth came in just under the expectation of 0.4% at 0.3%. With the recent fall in oil and gas prices, consumers should see additional money available for the holiday spending season. Have a wonderful Thanksgiving everyone!


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November 6, 2018

November 06, 2018 —This week Jamie Sumner, chief analyst, reviews the 3Q 2018 performance of the community bank benchmark group. Overall the benchmark group showed an improvement in ROAA of 4 bps to 1.18%. This improvement in ROAA stems from the widening net interest margin, which hit 3.84%, and the reduction in over provisioning expense, down over 3.5%. The increases in ROAA was complemented by an overall level of risk that has been somewhat stable throughout the past 12 months. An important item of note is that the growth in aggregated loans came in under 1% for the 3Q, a level not seen since 2013. Additionally, the level of cash-type deposits to total deposits fell for the second quarter in a row suggesting that these lower cost deposits could be moving into the CD portfolios.


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October 30, 2018

October 30, 2018 —This week Jamie Sumner, chief analyst, reviews the advance estimate of the 3Q 2018 GDP, September inflation and the current Fed Funds implied probabilities for the next 12 months. The 3Q GDP came in at a growth rate of 3.5%, which was slightly higher than the median forecast. The consumer segment continues to be strong. The strength in the consumer segment was c omplemented by the replenishment of inventories which contributed 203 bps to the overall growth rate. However, the next of exports and imports detracted from the growth rate by 178 bps, as the reduction in exports compounded the impact of the increase in imports. As for inflation, it remains in the target range. As such, the Fed Funds implied probabilities show two to three rate hikes over the next 12 months.


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October 09, 2018

October 09, 2018 —This week Jamie Sumner, chief analyst, reviews the jobs report for September and the ISM manufacturing and non-manufacturing reports. Overall, the big news was the 50k upward revision to the August jobs creation to 254k. However, for September the job growth was 121k jobs, the lowest since September 2017, which was low due to the impact of hurricane Harvey. Change in hourly earnings remained fairly steady at an increase of 2.8% over the past year, thus showing no significant jump in wages. Although, the unemployment rate did fall by two-tenths of a percent in September to 3.7%. As for the ISM indices, both the manufacturing and non-manufacturing indices point to continued expansion of our economy.


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October 02, 2018

October 02, 2018 —This week Jamie Sumner, chief analyst, reviews Fed Statement and newly released projections including the Dot Plot. Furthermore, Jamie compares the market’s implied fed rates with the dot plot to point out how different they are. Lastly, Jamie covers the inventories report which points to stronger than expected inventory builds and while overall construction spending was little changed from July.


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