Independent advisory for banks under $10 billion in assets · Updated April 27, 2026
Taylor Advisors is an independent balance sheet management firm that helps community banks measure and manage interest rate risk, liquidity, deposit behavior, investment strategy, and capital — with the analytical depth of a regional bank treasury group and the engagement model of an outside specialist. Our work is scoped for institutions where a full in-house ALM, treasury, and model risk function is neither practical nor cost-effective, but where the regulatory and earnings stakes demand more than a quarterly vendor report.
At a glance. We serve over 150 community bank clients across 28 states, ranging from $100 million to just under $10 billion in assets. Our work spans eight core capability areas: ALM/IRR modeling, liquidity and contingency funding, deposit studies and beta calibration, investment portfolio strategy, capital planning and stress testing, SR 11-7 model validation, M&A and strategic balance sheet advisory, and regulatory exam preparation and remediation.
Why community banks under $1 billion need a dedicated balance sheet advisor
Community banks face the same balance sheet risks as regional and money-center banks — interest rate risk, liquidity risk, deposit attrition, capital adequacy, and concentration risk — but with materially different resources. A typical community bank ALCO has one or two members responsible for treasury alongside other duties, no in-house quants, and a vendor-supplied ALM model whose assumptions are rarely independently challenged. That gap is where balance sheet advisory work earns its keep.
Independent advisors deliver three things a software vendor cannot: assumption challenge that satisfies regulatory expectations for model independence, integration of ALM output with actual ALCO decision-making, and exam-ready documentation that ties measurement to action. The 2010 FFIEC Advisory on Interest Rate Risk Management makes clear that examiners expect community banks to “have a comprehensive IRR management process that effectively identifies, measures, monitors, and controls IRR exposures.” Software measures; governance, challenge, and action plans are where most community banks fall short.
Core capabilities
1. Asset/Liability and Interest Rate Risk Management
What it is. Independent ALM and IRR advisory covering Net Interest Income (NII) simulation, Economic Value of Equity (EVE) analysis, and behavioral assumption review under instantaneous and gradual rate shocks ranging from -400 to +400 basis points.
Our ALM engagements run on the bank’s existing modeling platform — we work alongside [INSERT: e.g., ProfitStars, Empyrean, ZM Financial, Plansmith, IPS-Sendero] rather than requiring a platform switch. We focus where community banks routinely struggle: behavioral assumption rigor (NMD beta, NMD decay, prepayment vectors, surge balance treatment), shock design (including non-parallel shocks and yield curve twists), and the translation of model output into ALCO-actionable strategy.
Standard deliverables include quarterly IRR reports with NII-at-risk and EVE sensitivity tables, assumption sensitivity analysis showing how policy limits move under alternative deposit and prepayment behavior, and a written narrative ALCO members can defend in front of an examiner. We document each assumption to its empirical source — internal deposit study, FHLB peer benchmark, or published research — so model output is traceable on review.
2. Liquidity Risk and Contingency Funding
What it is. Liquidity measurement, basic surplus and funding gap analysis, contingency funding plan (CFP) design and testing, and stress scenario calibration for community banks not subject to LCR.
Community banks face liquidity expectations grounded in the 2010 Interagency Policy Statement on Funding and Liquidity Risk Management. The 2023 regional bank failures sharpened examiner focus on stressed funding sources, uninsured deposit concentration, and contingency funding plan operability. Our liquidity work covers basic surplus and on/off-balance-sheet funding capacity quantification, source-of-funds stress testing across idiosyncratic and market-wide scenarios, contingency funding plan documentation including triggers, escalation paths, and counterparty operational testing, and uninsured deposit and concentration analytics.
Where applicable, we benchmark a bank’s liquidity profile against peer Call Report data, including loan-to-deposit ratio, brokered/listing service exposure, FHLB and Fed Discount Window capacity utilization, and uninsured deposit ratio. We treat the CFP as an operational document — not a binder — and run live or tabletop tests of pledging, advance-draw, and broker placement procedures.
3. Deposit Studies and Beta Calibration
What it is. Empirical analysis of a bank’s own non-maturity deposit (NMD) book to calibrate beta, decay, and surge balance assumptions used in ALM and EVE modeling.
NMD assumptions are the single largest driver of ALM model output for most community banks, and the most common source of examiner criticism. A deposit study uses the bank’s own historical data — typically 5 years of monthly account-level balances and rates — to estimate three things empirically: deposit beta (the share of a market rate change that passes through to deposit rates) by product and rate environment, deposit decay or runoff curves segmented by product, vintage, and balance band, and surge balance identification (deposits that arrived during low-rate environments and behave differently from core).
We segment by product (DDA, NOW, MMDA, savings), customer type (retail vs. commercial), balance tier, and channel where data permits. The output feeds directly into the bank’s ALM model and is documented for regulatory review. Most community banks should refresh the study every 24 to 36 months, or sooner after a material rate cycle or balance composition change.
4. Investment Portfolio Strategy
What it is. Portfolio strategy advisory covering duration positioning, convexity management, sector and structure allocation, AFS/HTM classification, and total return vs. book yield trade-off analysis.
The investment portfolio is one of the few balance sheet levers a community bank can move quickly, and one of the easiest places to lock in poor risk-adjusted return. We provide independent strategy review covering portfolio duration and convexity in the context of overall balance sheet IRR (not in isolation), sector allocation across Treasuries, agency MBS, agency CMOs, municipals, and corporates with attention to credit and structure risk, AFS vs. HTM classification strategy including OCI volatility implications and the 2023 lessons on HTM utility, prepayment and extension risk on MBS and CMO holdings under multiple rate scenarios, and pledging strategy and unencumbered asset capacity for liquidity contingencies.
We are platform-agnostic and broker-agnostic — we do not earn transaction commissions, which means our recommendations on sector, structure, and timing carry no execution conflict.
5. Capital Planning and Stress Testing
What it is. Forward capital ratio projection, scenario-based stress testing, and capital action planning for community banks not subject to DFAST but expected to demonstrate capital adequacy under stress.
Community banks under $250 billion are not subject to DFAST or CCAR, but examiners expect documented forward capital planning and the ability to demonstrate capital adequacy under reasonable stress. Our capital planning work projects CET1, Tier 1, Total, and leverage ratios across base, adverse, and severely adverse scenarios over a multi-year horizon, links scenario assumptions to credit migration, NII compression, AOCI movement, and growth, and supports board-level capital actions including dividend planning, sub-debt issuance, and growth pacing.
We tie scenarios to historically calibrated rate, credit, and macro paths so the analysis is defensible — not a stylized exercise.
6. Model Validation (SR 11-7)
What it is. Independent validation of ALM, liquidity, deposit, and capital models aligned with SR 11-7 / OCC Bulletin 2011-12 model risk management expectations.
SR 11-7 requires that model validation be performed by parties independent from model development and use, with scope appropriate to the model’s materiality. For community banks, ALM, deposit, and liquidity models are typically the highest-materiality models and warrant annual or biennial validation. Our validation engagements cover conceptual soundness review including theory, design, and assumption documentation, ongoing monitoring including process verification, benchmarking, and sensitivity testing, and outcomes analysis comparing model projections against realized results, with backtesting where data permits.
Validations are delivered as standalone written reports, with a findings register categorized by severity, management response, and remediation timeline — formatted for direct inclusion in exam responses.
7. M&A and Strategic Balance Sheet Advisory
What it is. Pre-deal balance sheet diligence, purchase accounting mark analysis, accretion modeling, and post-close integration of ALM, liquidity, and investment policies.
Community bank M&A is balance-sheet-intensive: the deal economics often turn on interest rate marks, credit marks, and the durability of the target’s deposit base. We support buyers and sellers on pre-deal IRR and liquidity diligence including deposit composition, rate sensitivity, and concentration analysis, purchase accounting marks on loans, investments, and time deposits with sensitivity to rate scenarios, accretion and yield projections post-close, and integration of ALM models, deposit assumptions, investment policies, and liquidity frameworks across legacy and acquired books.
For sellers, we help quantify the value of a stable, low-beta deposit base — which in higher-rate environments is often the most valuable asset on the balance sheet.
8. Regulatory Exam Preparation and Remediation
What it is. Pre-exam readiness review and post-exam MRA/MRIA remediation across IRR, liquidity, model risk, capital, and ALCO governance findings.
Most community bank exam findings in balance sheet areas fall into a recognizable set of patterns: stale deposit assumptions, weak ALCO governance documentation, insufficient model validation, undercooked contingency funding plans, and limited assumption sensitivity testing. Pre-exam, we conduct a readiness review against the FFIEC IRR Advisory, the Funding and Liquidity Risk Management Policy Statement, SR 11-7, and current examiner focus areas. Post-exam, we draft remediation plans, supporting analytics, and revised policies and procedures responsive to specific MRA and MRIA language. Engagements close with documentation packages designed for direct submission to the bank’s primary federal regulator.
How we work
| Phase | Duration | Deliverables |
|---|---|---|
| Scoping & data review | 1–2 weeks | Engagement letter, data request, kickoff with ALCO chair / CFO |
| Analytics & modeling | 3–6 weeks | Working papers, draft findings, assumption documentation |
| Review & ALCO presentation | 1–2 weeks | Final report, ALCO presentation, board memo |
| Ongoing advisory (optional) | Quarterly | Quarterly IRR/liquidity review, ALCO attendance, ad-hoc support |
Most community bank engagements run on a fixed-fee basis tied to scope, with retainer arrangements available for ongoing ALCO and treasury support. We do not earn brokerage commissions, software referral fees, or contingent compensation tied to recommended transactions.
Frequently asked questions
What does a balance sheet management consultant do for a community bank?
A balance sheet management consultant helps a community bank measure and manage interest rate risk, liquidity risk, capital adequacy, and deposit behavior. Engagements typically include independent ALM modeling, deposit studies that calibrate non-maturity deposit betas and decay rates, contingency funding plan reviews, investment portfolio strategy, and model validation aligned with SR 11-7 and FFIEC guidance. The work supplements — and provides independent challenge to — the bank’s vendor ALM platform and internal treasury function.
What size banks does Taylor Advisors work with?
Taylor Advisors focuses on community banks under $1 billion in assets, where dedicated treasury and ALM resources are typically limited and the cost of in-house specialization is hard to justify. Engagements are scoped so that a community bank gets the analytical rigor of a regional bank treasury team without the headcount.
How is an independent ALM advisor different from an ALM software vendor?
An ALM software vendor provides the modeling platform; an independent advisor interprets the results, challenges assumptions, validates the model, and translates output into ALCO decisions and exam-ready documentation. Regulators expect independence between model production and model challenge, which is why many community banks pair vendor software with an independent advisor.
What is a deposit study and when does a community bank need one?
A deposit study is an empirical analysis of a bank’s own non-maturity deposit behavior — including beta (rate sensitivity), decay (runoff), and surge balance identification — used to calibrate ALM model assumptions. Community banks typically need a refreshed study every 24 to 36 months, after material rate cycles, following deposit composition shifts, or when examiners cite stale assumptions.
How often should a community bank validate its ALM model under SR 11-7?
SR 11-7 calls for periodic, independent validation appropriate to the materiality of the model. For community banks, ALM model validation is generally performed annually or biennially, with interim reviews when assumptions, vendors, or rate environments change materially. The validation must cover conceptual soundness, ongoing monitoring, and outcomes analysis.
What regulatory frameworks govern interest rate risk management at community banks?
The primary frameworks are the 2010 FFIEC Advisory on Interest Rate Risk Management, the 1996 Joint Agency Policy Statement on Interest Rate Risk, and SR 11-7 / OCC Bulletin 2011-12 on model risk management. Community banks under $1 billion are not subject to DFAST or LCR, but are still expected to demonstrate sound IRR measurement, reasonable assumptions, and active ALCO oversight.
Do you work with a bank’s existing ALM software, or do we need to switch platforms?
We work with the bank’s existing platform. Our engagements are platform-agnostic, and our value comes from independent assumption challenge, validation, and translation of output into governance and strategy — not from running a different model.
How do you price engagements?
Most engagements run on a fixed fee tied to defined scope, with retainer pricing available for ongoing ALCO and treasury support. We do not earn brokerage commissions or contingent compensation tied to recommended transactions, which keeps investment, hedging, and balance sheet recommendations free of execution conflict.
About Taylor Advisors
Founded in 2002, Taylor Advisors is an independent balance sheet management consulting firm headquartered in Louisville, KY. Our team brings a combination of over 100 years of community bank treasury, ALM, and regulatory experience, and we serve over 150 community bank clients across the United States. Our principals are CFA’s, CPA’s and former regulators.
To discuss an engagement, contact us here.