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Event Name:Basics of Liquidity- What is it? What Risks Does It Contribute to Your Capital Plan & Funding Needs?
Date:Tuesday, March 21, 2017 2:00pm CDT
Presented By:Farin & Associates
Panelist(s) Info: David Koch - President & CEO, Farin & Associates  (Bio)

Dave Koch is an industry lecturer and consultant for the financial institution industry. He has delivered educational programs for national and state industry trade groups, in addition to several Federal Home Loan Banks and Corporate Credit Unions. He serves on the faculty of the Graduate School of Banking at the University of Wisconsin and has served as faculty of the CUNA Management School in Madison WI. Since joining Farin in 1993, Mr. Koch has been a frequent speaker on asset/liability and interest rate risk management to financial executives across the country. In addition to the speaking roles, Mr. Koch consults with financial executives to help find creative solutions to their business challenges.

Credits:Earn up to 2 hours of CPE credit.


Regulatory concerns over liquidity have heightened after the financial crisis of 2009. During that crisis, many institutions lost access to funding sources due to many contributing factors, that ultimately led to mergers and failures. While such an extreme situation is rare these days, liquidity remains among the most important factors in managing a financial institutions growth and profitability. Liquidity limits how fast an institution can grow assets. Loan growth rates in robust economies have traditionally outgrown deposit growth rates, putting pressure on institutions to find ways to increase funding sources, often using wholesale of “non-core” funds. These sources carry “credit risk” much like a loan customer in that the continued availability depends on the institution’s credit worthiness.

In this session we will define two items often confused for one another, liquidity and funding. We will discuss the regulatory and institutional approaches for measuring liquidity and discuss what factors are key in managing uses of various sources. Factors such as seasonal patterns for loans or deposits growth, or the types and structures of loan and investment choices impact the overall liquidity levels. Understanding the difference between liquidity and funding needs requires a set of tools that not only look at the current position, but analyzes the trends and patterns over time.
From this we will outline an effective approach to measuring liquidity risk that outlines potential contingencies plans based on your institutional risk profile.

Learning Objectives

After attending, participants should be able to discuss and apply the following:

  • Describe a true functional definition of liquidity
  • Discuss the difference between Asset Based & Total Liquidity
  • Identify causes of Liquidity risk in their institutions
  • Understand the approach and limitations of regulatory liquidity measurements
  • Describe the use of common new regulatory measurements for liquidity
    • Asset Based Liquidity Ratio – The Liquidity Coverage Ratio
    • Regulatory liquidity assessment tool – The Net Stable Funding Ratio
  • Assess their institutional risk using
    • The Basic Liquidity Ratio (BLR)
    • Develop a cash-flow based liquidity measurement process
  • Define alternative “stress tests’ based on historical trends and current market risks

Who Should Attend
This session is intended for individuals with a basic understanding of the income at risk measurement process but looking for more in-depth understanding of the changing measurements and required assumptions. This includes: ALCO Members, CFO’s, Controllers, CEO’s, Accounting / Finance Professionals and those wanting a better understanding of new Regulatory requirements on Interest Rate Risk

Level: Basic to Intermediate
Prerequisites: Basic ALCO Foundations or equivalent knowledge of ALCO process
Advance preparation: None
Field of Study: Specialized Knowledge
Instructional Method: Group Internet Based
Fees Include: One phone and one internet connection for the live presentation. Handouts and other resource material for attendees. Unlimited access for your organization to the recording of the seminar presentation for 90 days after the conclusion of the program.

Farin & Associates is registered with the National Association of State Boards of Accountancy as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses. Complaints regarding sponsors may be addressed to: The National Registry of CPE Sponsors, 150 Fourth Avenue, North, Suite 700, Nashville, TN 37219-2417 Web: