Pub. 3 2012 Issue 3

www.wvbankers.org 22 The economy has prevented banks from increasing interest rates on the lawyer trust accounts. Representatives of the State Bar, members of the Supreme Court – including Chief Justice Menis Ketchum, Justice Margaret Workman, Jus- tice Robin Jean Davis, and Justice Thomas McHugh – and Supreme Court Administrator Steve Canterbury met with members of the Board of the West Virginia Bankers Associa- tion in December and January to discuss IOLTA. Because of declining interest rates, IOLTA grants to the seven public interest legal organizations have dropped steadily over the last four years. In 2008, $510,000 was disbursed, com- pared to $411,953 in 2009; $401,996 in 2010; and $342,487 in 2011. Of the 2011 funds, $22,347.30 went to the West Virginia CASA Network to be split equally between its 13 programs, which serve 30 counties. “It may seem like a little bit, but for me it covers my liability insurance and two or three pay checks,” said Rhonda Stubbs, Executive Director of A Child’s Place CASA in Brooke and Hancock Counties. Unlike most other grants she receives, IOLTA funds are not restricted. “We always know when we get an IOLTA check we can take care of what we really need to take care of.” The success of the IOLTA program is due to West Virginia banks. “They have made it run 50 times more smoothly than it would have run had they not been so cooperative,” DiSalvo said. “We really want to tip our hats to them.” Court Administrator Canterbury has been on the IOLTA Advisory Committee for six years. “One thing has remained consistent and strong: The bankers’ commitment to working with the Bar and the Court to help people in West Virginia. Better than anybody else, bankers understand how interest rates directly affect the day-to-day lives of all of us,” he said. “Nowhere is that relationship clearer than with litigants – especially children and the elderly – who don’t have money to resolve their legal problems and who find help from one of the recipient agencies. “I know that every member of the Court with whom I’ve worked has praised and believes in the work of IOLTA,” Canterbury said. “And that work would simply not be pos- sible without the consistent commitment of the banking community.” Q looking at long-term performance rather than getting mired down in “inconsequential stuff.” Risk measurement and reporting. In the area of market (interest rate) risk management, national regulatory agencies have recently placed considerable attention on methods of quantifying risk positions using techniques more advanced than gap. Examiners have been encouraging institutions to look at income simulation and economic value of equity shocks as possible improvements in measuring earnings and capital at risk to changing interest rates. This is a mere microcosm of a bigger issue. At least annually all committee, board and management reports, and key policies should be assessed to determine if they remain adequate to meet the or- ganization’s changing risk profile, competitive position, and business strategies. Many organizations formally perform these assessments as part of their strategic planning process as the direction of the organization changes. Becoming action-oriented and profit focused. Every com- mittee should conclude with questions such as: What should we do differently? How can we make a wider margin/more profit commensurate with our risk tolerance? Are we taking too much risk? Are we taking too little risk? What alterna- tive strategies should we model? How will the new strategies change our risk profile? How much in incremental earnings does the transaction generate in the near term but how much capital or earnings do we place at risk over the long term? Summary and Conclusion If our A/L committee meeting serves only to hand out re- ports, why do we need to meet? Because the regulators say we do? I would rather see a community-based institution meet quarterly and really dig into strategy alternatives than meet every month and do nothing. Engage your ALCO mem- bers to bring fresh ideas to the meetings and be prepared to actively discuss the bank’s financial strategy options. Become action oriented. Never tolerate indifference. Institutions that think creatively and keep a long-term stra- tegic focus will improve their chances of being among the shrinking number of financial organizations that continue to perform well when the economic conditions aren’t so favor- able. Your A/L management function should become one of the engines for profit enhancement. Be the one to breathe new life into your A/L committee! Q Q IOLTA — continued from page 19 Q Asset/Liability — continued from page 20 For more information, contact Ed Krei at The Baker Group: 800-937-2257, www. GoBaker.com, or email: ekrei@GoBaker.com. The Baker Group LP is the sole authorized distributor for the products and services developed and provided by The Baker Group Software Solutions, Inc.