Presenters: Darryl Mataya, Abrigo
Market rate uncertainty, credit risk concerns, and borrowers wanting longer-term loans are just some of the pressured facing financial institutions today as they look for quality lending opportunities to support overall margin levels. Risk avoidance, or improperly assessing those risks can lead to suboptimal loan yields and margins in the years ahead. Of worse, insufficient earnings to cover the real risks and costs of decisions implemented. Too often, loan pricing discussions focus on metrics and approaches that ignore the realities of the moment. Pricing a loan in times of tight liquidity and high demand is very different than when the financial institution is flush with liquidity.
In this session we will outline why many approaches to pricing fail by starting out with the wrong pricing approach. Instead, we will present a pricing approach and analytical framework that adapts to conditions, assesses the risks and costs, and provides the foundation for “relationship pricing”.
- The two primary measures to assess loan pricing profitability
- How to integrate internal costs of lending into the pricing equation
- The impact of balance size, amounts drawn on lines, and other critical assumptions to overall profitability
- Best practices approach to assessing funding costs for new loan offerings
- How to compare different loan terms and options to find the “most profitable” options under different markets
- How to incorporate other relationships into an overall relationships profitability view
Target Audience: CEOs, CFOs, ALCO members, controllers, chief risk officer, chief retail, funding officers