Pub. 9 2014-2015 Issue 6

March/April 2015 21 Extraordinary Service for Extraordinary Members. C A P I T A L M A R K E T S G R O U P SINCE 1985, WE’VE DELIVERED THE FINANCIAL SERVICES community banks need. But only after establishing what they really want: a solidworking relationshipwith professionals who put people first. Call us to get started. • Portfolio Strategy, Sales and Service • Bond and Securities Underwriting/Trading • Comprehensive ALM and Derivatives Consulting • BancPath® and FlexLoan® via Asset Management Group Nebraska banks provide innovative financial solutions to the communities they serve. We are here to enhance your success. Loan Documentation and Negotiation Loan Participations Bank Mergers and Acquisitions Succession Planning for Owners Commercial Litigation Regulatory Consultation and Compliance Loan Default Remedies and Bankruptcy Representation Real Estate Purchase, Sale and Leasing General Business Representation Nathan J. Gurnsey (402) 437-8534 Andrew B. Koszewski (402) 437-8531 Frank J. Mihulka (402) 898-7413 Michael D. Matejka (402) 898-7409 Jill D. Fiddler (402) 437-8532 Daniel R. Carnahan (402) 898-7433 www.woodsaitken.com Omaha Lincoln Denver Jeffrey F. Caughron, chief operating officer/managing director of The Baker Group LP, has worked banking, investments, and interest-rate risk management since 1985 and currently serves as a market analyst and portfolio strategist. For more information, contact Caughron at (800) 937- 2257 or jcaughron@GoBaker.com. into enough detail to provide meaningful analysis. Data input should be checked to ensure accuracy when compared to source files or documents. This is the old “garbage-in, garbage-out” concern. As for key assumptions, an indepen- dent review should consider how reasonable and appropriate are those assumptions given the unique characteristics of the bank, its business model, its customer base, etc. For example, how competitive is our market and, therefore, how aggres- sively might we need to price and re-price loans or liabilities when rates move higher or lower? This must be reflected in key behavioral assumptions such as pricing betas or shift sensitivities. Finally, and very helpfully, the FDIC provides a sample step-by-step process for performing an in-house independent review of an IRRmanagement system. The article in Supervi- sory Insights provides a single page that lists 11 specific steps for management to use as a guide for designing an indepen- dent review. The publication and all of the IRR articles can be found on the FDIC’s website. 