Program Overview

This annual program will focus on the critical issues bank ALCOs are facing in the 2^nd Quarter of 2024 and what we anticipate for the remainder of the year. As we manage 2024, it may be helpful to reflect on the events of the last twelve months. In 2023, we experienced a continued Fed increase in short-term interest rates, which by mid-year was resulting in the most competitive deposit pricing market we had experienced in decades. This resulted in the loss of deposits among many banks, and to compound the problem, we experienced a reversal of the COVID inflow of deposits. Many banks experience serious liquidity problems (post the March regional bank crisis) that linger into 2024. Also, interest rate risk has become a problem for many banks. Banks that were traditionally asset-sensitive experienced liability sensitivity.

As we consider managing the balance sheet in 2024, inflation appears to continue to decline, and the Fed will likely lower short-term rates by the second quarter. Look at economic forecasts and notice that only 20% of economists are forecasting a recession, down from 80% four months ago. Commercial loan demand in 2023 was better than expected but will likely decline moderately into 2024. Residential mortgage lending is an important business line for many in New England, origination volume has been very low. Most banks are well capitalized and credit quality is relatively strong entering 2024. The immediate challenge is managing liquidity and interest rate risks in a high-rate environment, but this should be less of an issue by the third quarter.

Many of us will have to rebuild our loan-to-asset ratio and net interest margin in 2024. The pandemic had a significant impact on bank margins. Those banks focused on residential mortgage lending will continue to struggle with volume. However, on balance, asset/liability management should be less of a challenge in 2024.

Workforce Training Fund Program

The Best Practices in Asset/Liability Management is eligible for the Express Program as part of Massachusetts' Workforce Training Fund Program.

The Workforce Training Fund Express Program assists companies in addressing their staff training needs by providing access to grants. To receive the grant, banks need to complete a short online application to request grant funds. Grant recipients with under 100 Massachusetts employees may receive full reimbursement of the cost of training upon completion of an approved course, up to $20,000 per calendar year. Financial institutions with over 100 Massachusetts employees are now encouraged to submit General Program applications. The deadline to apply for the grant is 21 days before the program begins.

The Course ID for the BSA Fundamentals Workshop is #C-8735. Mass Bankers strongly urges you to complete the process as soon as possible to ensure that your application is approved in time. For more information or to apply, visit the Workforce Training Grant Express Program site. Please note that your bank must have a Certificate of Good Standing. Click here to request one.