2nd & 3rd
 Quarter
2019

ISSUE
No. 18

  IZALE Financial Group eNews
STAY INFORMED WITH IZALE
 
Temperatures and leaves are falling here in the Midwest as Autumn arrives. There is something about the 'back to school' mentality after Labor Day that no matter how many years it has been since we were in school, I get excited. The end goal, graduation would be when things really got good.

It is like my apple trees...the applesauce I made over Labor Day weekend was well worth the effort to care for those trees. My family and I get to enjoy the gifts of the harvest for as long as they last. The truth is at IZALE education is the main approach we embrace to serve our clients best, for it is what helps to make decisions that last. We engage and guide our clients to make wise and effective choices for their future planning and profit. Our goal is for them to be able to enjoy the harvest from their career efforts for as long as they will last.

In this eNews Taylor Advisors one of our trusted sources of financial news shares an article on the FDIC and Cap Rates. This summer the DCUC (Defense Credit Union Council) for credit unions who serve our military and their families was in Chicago for their annual gathering. One of our team, my brother Chris, is retired military so it is near and dear to serve these folks. Drawing from my breakout session at the DCUC, I'm sharing my insights on executive and retirement benefits for credit unions which, not surprisingly, are almost the same for banks.
Labor Day Weekend Fun with the CEO of IZALE
 
All of us at IZALE look forward to helping you as the year will su ddenly slide into the holiday season before we are ready. For some of us football, autumn foliage, and enjoyi ng our garden's harvest can make this a favorite time of year. Speaking for my elite team, we love what we do so any time of year, is a good time for us!

Let us know if we can educate you and your people. We make learning fun!
 
Sincerely,
 
Scott Richardson, Brenda Haag, Bruce Barge, Chris Richardson, Deb Hardimon, Fannie Mae Pantaleon, Gary Wilberg, Jeff Prescher, Joe Tripalin, Patrick Costello and Phil Aderton
 
Dep osit Diaries:
FDIC Cap Rates Revisited
from IZALE Partner Taylor Advisors    
 
Back in the summer of 2018, we published "Deposit Diaries: FDIC Rate Caps and Hidden Liquidity Risk" outlining the flaws of the FDIC's national rate calculation and the liquidity traps inherent in the interest rate cap restrictions.  Since then, liquidity has become a key focus for regulatory examinations, specifically as it relates to Contingency Funding Plans and stress testing.  At well-capitalized institutions, examiners have been quick to identify funding concentrations in high-rate deposits and to question stress testing assumptions for high-rate deposit run-off and the feasibility of utilizing national market deposits (e.g. Qwickrate, National CD Rateline, etc.) in times of stress.  Recently, the FDIC published a Notice of Proposed Rulemaking outlining potential changes to the calculation of the national rate and adjustments in the determining criterion for the rate cap.  

Some key highlights from the FDIC's proposal are outlined below:  
  • New methodology for national rate based on average deposit rates weighted by domestic deposit share vs. the current method based on an average of all domestic branches
  • National rate cap would be higher of the following:
    1. National rate + 75 basis point
    2. The 95th percentile of the national rate
  • Local rate cap exception would be streamlined and allowed to be 90% of the highest rate in-market for each deposit product
Taylor Advisors' Take:
While not perfect, we view this proposal from the FDIC as a shift to a more 'common sense' approach in managing the interest rate cap restrictions.  This proposal would provide meaningfully more latitude for deposit rates within the national rate cap by using the 95th percentile and simplifies the process by which banks calculate a local market rate cap.  While this proposal does not entirely eliminate the liquidity trap posed by interest rate caps, it does go a long way in providing regulatory relief to less than well capitalized institutions and eases liquidity stress testing assumptions for well capitalized banks.  Banks have a 60-day window to voice their opinions to the FDIC.
 
Compliments of:
 
Contact one of the IZALE team help your with your risks and rewards!   
Click to Register now for upcoming "How to Pay Your CEO" Webinars with IZALE's Partner BalancedComp
How To Pay  
Your CEO

It is time to assess what worked in 2019 and plan for 2020. Learn the current trends to attract, retain and reward your people. The financial industry must stay up to date as our business climate is subject to consumer pressures not just the changes in the ways business is conducted as technologies continue to transform the experience of the end user. Though our model, business-to-business sounds like it transcends the individual's needs, the truth is a company is only as good as the people who do the jobs that produce it's products or services. We will keep bringing financial institution's boards the current insights to hiring or keeping the talent...the people...that create success.
Executive Benefits for Credit Unions:  Do You Understand Your Options?
 
Achieving your mission is not possible without the right leadership. You can lay out a compelling vision and foster a culture that encourages and motivates people to action. Culture alone, however, may not be enough. To attract - and keep - the highest performers you need to assemble a total compensation package that addresses both short-term and long-term needs for income.

Short-term compensation - the base salary and bonus - help fuel today's lifestyle. It's important to benchmark those regularly and there's a best practice to doing that; that is a subject for another article.

Only relying on current cash compensation, however, is risky as there's always a bigger checkbook elsewhere. Every employee, especially an executive, needs to plan for the day when current income ends (retirement). Including elements of long-term compensation helps then to both retain and reward your key people. These elements are generally referred to as executive benefits.

Only after you pinpoint the amount of an executive benefit should you then consider what form of benefit to provide. There are three general forms each with its own advantages and disadvantages. Here are examples of how three DCUC members deployed benefits that work for them.
 
 
 
By Scott Richardson, CEO IZALE Financial Company
White Paper Shared at the 2019 Defense Credit Union Council Annual Conference in Chicago August 18-21
 
click to visit now
IZALE WEBINAR W.O.W.S. ANYTIME!

Have you visted our online learning Video Library? We created a place for you to go 24/7 to discover more about the expert services we provide at IZALE. Current titles include:  The Art & Science of Executive Benefits, Demystifying BOLI with separate video tutorials for Banks and Credit Unions, and Split Dollar Loans.
Upcoming Events

10/23-25     Indiana Credit Union League 85th Annual Convention      Indianapolis, IN

10/16     How To Pay Your CEO with BalancedComp     Webinar

11/13     How To Pay Your CEO with BalancedComp     Webinar

12/9     CBAI Directors Conference     Springfield, IL

12/18      How To Pay Your CEO with BalancedComp      Webinar
Thanks for your time & attention. We understand the value of both! ~ Your Friends at IZALE Financial Group
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