Balance Sheet Management with Investment Consulting

The Bank:

Taylor Advisors began working with Heritage Bank (Erlanger, KY) in the 1st quarter of 2011 in the areas of balance sheet management and investment consulting.

The Challenge:

In addition to desiring help to streamline the ALCO process, Heritage bank was facing challenges with its investment process. Among these were a lack of expertise in investments and fixed income securities, low portfolio yield ranking in the 5th percentile among peer per the FDIC’s Uniform Bank Performance Report, little independent analysis of investment strategies, and difficulties with liquidity assessment.

The Solution:

Taylor Advisors spent time with the management team to initially revise the liquidity process, including the policy and tools. Next, we worked with the bank to formulate a strategy with detailed sector and asset allocation recommendations, and appropriate risk guidelines to assist in purchasing securities. The bank still maintained trade execution and purchase documentation responsibilities.

The Outcome:

During our quarterly balance sheet management meetings we focused on helping the bank take advantage of growth opportunities in the market without compromising the risk positions such as capital, liquidity, interest rate risk, and regulatory examinations.

A Word from the Client:

“I was working for the bank as commercial lender and was promoted to President of the bank. I didn’t know much about bond trading at the time, so I went to a talk about bond trading. Todd Taylor was speaking at the seminar and said, ‘Most banks promote their commercial lender to run their bank, but commercial lenders don’t know about bond trading.’ And I thought that at any moment, a spotlight was going to shine on my face. So I went up to him after and said, ‘I’m your poster child.’

I asked Todd Taylor to help us with our investments and teach us more about our own portfolio so we could have better earnings out of our portfolio and better diversification out of the portfolio as well – and he’s achieved all that and more. We’ve set up a subsidiary of the bank to allow us to do investments in instruments that weren’t really open to us before; that was something we’d never looked at or approached in the past. He’s also helped us with our ALCO packages reporting that we provide to our Board of Directors on the investment portfolio and all the measurements we have in the portfolio and liquidity measurement. The reporting package Taylor Advisors provides to us is essential in our board reporting. Our bank, when we compare ourselves to peer groups, has better earnings, shorter duration in our portfolio and less market risk. We’re very pleased with that. I want to add that in addition to Todd, the team of people at Taylor Advisors are all individually incredibly impressive. They are the smartest. I don’t know where he finds them all, but as a whole, I think they are a tremendous team to help a bank of any size accomplish what they need to accomplish with their balance sheet management.” -Lytle

For details on the performance of Taylor Advisors’ investment advisory clients, please contact us at at or 502-412-2205.