Pub. 3 2014 Issue 9

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 8 T HE 2014 ECONOMIC OUTLOOK AND Investment Conference convened on Wednesday morning, following the highly energized 2014 mid- term elections. The Topeka Capitol Plaza Hotel and Maner Conference Center had been the primary location for the Republican watch parties and celebrations as the votes were counted and winners were declared. U.S. Senator Pat Roberts paid a surprise visit and stopped to address Kansas bankers before leaving the conference center the following day. The energy was palpable as attendees questioned how this election would affect the economy. KBA Chairman-elect Bob Leftwich opened the conference with a note of welcome before introducing Elliot Eisenberg, Ph.D., the first speaker of the day. Dr. Eisenberg kicked off the first session with a very high energy look at the economic and political forecast that included a few laughs. Noting that there is no inflation in sight, Eisenberg also speculated that the Federal Reserve will bring the C- economy to a B- economy by increasing interest rates slowly starting mid-2015 but inflation will still remain below 3.75 until the end of 2017. He also spent some time demonstrating that wages are only growing at the top levels so many middle income families are not purchasing homes or making other large investments with an apparent lack of confidence. There were a couple of key themes presented throughout the day that included the significance of interest rate risk and the role of ALCO. The slow growth in GDP and polarizing political horizon has dynamically altered this recovery from previous slow-downs. The last five years have been focused on regulations and new rules for banks of all sizes and the next five years will likely focus on compliance and legal risk. Frank Farone, Darling Consulting Group, provided a presentation titled “Empowering Your ALCO with Tools and Critical Information for Successful Strategy Development.” Farone spent considerable time going through the tools available to the ALCO including the gap report. With the awareness that “analysis paralysis” is always a danger, he set the course for focusing on a two-to-five-year strategy that focuses on what lies ahead rather than a historical review and to stress test assumptions regularly. His presentation suggested processes for when your tools disagree and ultimately delivered key tools for interest rate management. KBA’s EVP of Government Relations Doug Wareham gave a State Election Analysis. The presentation included the new breakdown of the Kansas Statehouse by party and he discussed key leadership positions that will be changing. Karl Nelson, KPN Consulting, presented his talk titled “Asset/ Liability Management in a Rising Rate Environment.” Karl addressed some of the points on ALCO that Frank Farone had covered but went into more detail on understanding the key rates that drive ALCO as well as the enterprise risk management process that manages inherent risk. Moving from a silo effect to a dynamic risk management program that encourages communication between silos is key to success. He delved into the role of management vs. the board in the ALCO process and declared capital as king. “Understanding Present and Future Regulatory Requirements for Community Banks” was the presentation given by Brandon Hall, BlackRock. Brandon broke down the financial regulatory reform pie and explained what is most relevant for community banks as Basel policymaking, Dodd Frank Act and Legislative Rulemaking as well as the U.S. Supervisory Agencies all enforce their own agendas. The emerging role of technology will likely play a large part in how branch banking fits into the financial industry with conversations that include bitcoin and Apple PAY. KBA’s 2015 Economic Outlook and Investment Conference is slated for November 4th in Wichita. ECONOMIC OUTLOOK & INVESTMENT CONFERENCE Steve White and John White, Farmers & Drovers Bank, Council Grove, listen to the spirited presentation by Elliot Eisenberg, economist.