▶ internal issues that could lead to negative news coverage; ▶ significant declines in overall deposits; and ▶ elimination of committed credit lines by counterparties. Intertwine CFP with Stress Testing Institutions should conduct stress tests regularly for a variety of institution-specific and marketwide events across multiple time horizons. Liquidity stress testing involves running various low-, moderate- and high-impact scenarios through the balance sheet to expose potential weaknesses or vulnerabilities. The results of stress tests should also play a key role in shaping the institution’s contingency planning. In short, liquidity stress testing exposes vulnerabilities and the CFP provides a roadmap to address them, ensuring the institution can weather the storm. Community banks must recognize that a robust CFP is not just a regulatory requirement – it is a strategic imperative. By proactively addressing liquidity risk through a well-prepared CFP, community banks can safeguard their stability, protect their depositors and continue serving their communities effectively. It’s never a bad time to dust off your current CFP and make some enhancements. It takes more than good intentions to transform communities. It takes capital, development capacity and trusted partnerships. During our 30+ years, we’ve delivered more than $10 billion in community impact. Overcoming challenges. Solving problems. Backed by a commitment to creating healthy communities that has never wavered. The Return on Investment: Safe, Affordable Homes. Healthy Communities. Better Lives. Transforming Communities. Transforming Lives. CINNAIRE.COM INVESTING IN HEALTHY COMMUNITIES FOR OVER 30 YEARS. Dale Sheller Associate Partner, Financial Strategies Group The Baker Group DSheller@GoBaker.com Dale Sheller is an associate partner in the Financial Strategies Group at The Baker Group. He joined the firm in 2015 after spending six years as a bank examiner with the Federal Deposit Insurance Corporation. Sheller works with clients on investment portfolio strategies, interest rate risk management, liquidity risk management and regulatory issues. The Baker Group is a Preferred Service Provider of the Indiana Bankers Association and an IBA Diamond Associate Member. MAY/JUNE 2024 37
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