33RD

CONFERENCEA N N U A L

B A L A N C E S H E E T M A N A G E M E N T

JUNE 5 -6 • 2017MARRIOTT LONG WHARF • BOSTON, MA

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M&A from a Buyer’s and Seller’s PerspectiveThis session, presented by Fred Price, will focus on both sides ofthe current M&A environment. He will be looking at buyers’concerns of pricing, market reception and integration as well assellers’ concerns of pricing, process and communication. Whatmakes deals come together and what makes them fall apart?The regulatory process will also be discussed as it impacts deci-sions by both sides of a transaction. The quantitative measuresused in M&A will be discussed alongside the equally importantqualitative concerns.

The Ins and Outs of Succession PlanningThe Boomers are retiring at an alarming rate, and someone isgoing to have to take over for them unless the plan is to sell ormerge your organization. Even if a merger is part of your plan,isn’t it far better to negotiate from a position of strength thanfrom one of weakness and desperation? In this session, KeithHughey will look at how you can successfully approach succes-sion planning. In the process, he will share some tales of howother organizations have addressed the issue – for better orworse.

Funding Strategy & Game PlanningRegulatory focus on liquidity management is always intense,but even more so when changing business environments ele-vate risk concerns from hypothetical to real. In recent years,many financial institutions have harvested surplus liquidity thatgrew during the financial crisis and increased their use of “non-core” funding sources. Because of this, regulatory expectationshave been intensifying around the subject of funding strategiesand contingency planning. Utilizing a case study approach, DCGwill focus on recent exam sentiments around funding issues,policy considerations and best practices for both operating andcontingency liquidity management. Don’t let suboptimal fund-ing planning present a roadblock to your institution’s regula-tory relationships and/or strategic growth goals.

Credit Union ALM Strategies in a Fed TighteningCycleMargins are finally improving after rates increased dramaticallyin November, while funding costs remain largely unchanged –for now. Meanwhile, unrealized losses in the investment portfo-lio have resurfaced, the “new” NEV Supervisory Test is wreakinghavoc for many and regulatory scrutiny is increasing across theboard and will likely intensify ahead. The solutions and answersto these concerns are simple – the key is in knowing where tolook and how to present the information. In this session, DCGwill discuss the next critical and most often overlooked step –utilizing that same information at ALCO to facilitate meaning-ful discussions that will impact strategy and ultimately the prof-itability of the institution.

Strategic Benefits of Capital Planning &Credit Stress TestingCapital planning is no longer an exercise reserved for troubledinstitutions or growth-oriented companies. It has become thefoundation for effective enterprise risk management wherebyinterest rate risk, liquidity risk, credit risk and operational riskcan simultaneously be evaluated under normal operating condi-tions, as well as under stress. In this session presented by DCGrepresentatives, participants will gain insight into how adoptionof this capital-oriented risk management framework is support-ing true holistic risk assessment, dynamic capital/contingencyplanning and providing strategic advantage to institutions overcompetitors who think they can continue to survive on tradi-tional profit planning and budget exercises.

New Hedge Accounting Standard Overviewand Impact on Financial InstitutionsThe FASB released an Exposure Draft on September 8, 2016, to better align economic results of an entity’s risk managementactivities with its financial reporting. David Sweeney andEri Panoti will cover overall changes to the standard, cash flowhedging simplifications and the most significant changes whichare related to fair value hedging. The proposed changes willimpact not only existing hedging strategies but also createnew hedging opportunities that will allow risk managementdecisions to be less dependent on accounting rules. Prime-indexed loans and pooling of fixed-rate assets or liabilities aresome of the strategies that will be discussed in more detail.

Municipal Market – Current Status and DynamicsThis session will address the current status of the municipalindustry, identifying the key components that impact supplyand demand, yield/price direction, credit pressures and regula-tory concerns. Thomas Doe will utilize MMA’s unique data sets,intimate market knowledge and experience with regulators toinform session participants of the current industry and marketcontext.

The Power of Data AnalyticsEvery financial institution is expected to develop institution-specific assumptions for its risk models. But are you getting themost out of your studies? This session by DCG will take a deeperdive into data analytics and customer behavior patterns to gobeyond the basics of assumptions studies and integrate theanalysis into all areas of the ALM process. Get an inside look atDCG’s data tools (Deposits360° and Prepayments360°) to seehow diving into your data can not only defend your risk posi-tion, but also provide the platform to make better decisions.

CONFERENCE SESSIONS

KEYNOTE ADDRESS Monday will feature a general session with Joe

Sullivan, the CEO and Founder of Market Insights.As a consultant, author and professional speakerwith more than 20 years of experience, the themesof growth, organizational alignment and passioncan be found throughout Joe’s work. His companyis a consulting firm with expertise in delivery systemplanning and branch evolution, strategic planning,branding, marketing and culture transformation.

ECONOMIC UPDATE Leading off Tuesday’s program will be a general

session conducted by Chris Low, Chief Economistfor FTN Financial. Chris has more than 25 years ofexperience tracking U.S. and global economies,financial markets, central banks and fiscal policy, aswell as six years of experience as a money manager,giving him a unique ability to distill economic eventsinto information useful to investors.

Buying & Selling Branches and Deposits: WhichDeals Make Sense?In this session, Aaron DiRusso will focus on the pros and cons of buying and/or selling branches. Topics covered will includedeposit premiums paid, alternative transaction structures, com-petitive factors, customer retention, balance sheet managementstrategy and funding mix considerations.

Bond Portfolio Management in a Changing InterestRate EnvironmentYields have risen. Gains are now losses. Fundamental politicalchange is upon us. From interest rates to tax regulations, uncer-tainty now presides. In this session, John Fielding Myers andAndre De Araujo Jorge will explore recent developments infixed income and introduce a new approach to understandingbond portfolios, an approach that can enhance performancewhile alleviating regulatory concern and cultivating more effec-tive communication with board members. What if you couldquantify that your portfolio’s unrealized loss would shift backto a gain in 24 months due solely to the passage of time?

Capital Strategies for Community BanksMost community banks wrestle with developing the rightcapital solution to best meet their needs. Bob McPhersonwill bring clarity to the various capital alternatives available tocommunity banks. He will provide an overview of capital rules,related implications and double leverage, discuss tier-1 vs. tier-2capital alternatives and address strategies for mutual institu-tions. Bob will also explain what investors are looking for anddiscuss recent developments and the relative cost-benefitdynamics of the capital choices and credit ratings available tocommunity banks.

CECL or “How I Learned to Stop Worrying andLove a New ALLL Model”Last June, FASB issued the final accounting standards updatefor CECL – the largest change to accounting methodology in thehistory of banking. While the implementation deadline may bea couple years away, the preparation must begin now. Fromnew ways to adjust historical losses to new calculations for thelife of loans, CECL offers many challenges for banks of all sizes.During this session, Deb Evans and DCG will cover what youneed to know to get ready for CECL: current supervisory viewsof CECL, how CECL will impact your capital, comparison ofallowance approaches before and after CECL as well as dataand technology requirements.

Risk/Return Trade-Offs in Balance SheetManagementThis session is an introduction to balance sheet manage-ment issues and risk/return trade-offs. Subjects discussedwill include fundamental banking concepts in perspective,sources of balance sheet risk, discussions of value versusincome protection, regulatory perspectives on risk/returnand recent industry issues.

Measuring and Managing Interest Rate RiskThe Fed is communicating a heightened degree of infla-tionary concerns fueled by improvements in the labormarkets, as well as the pro-growth policies of the newPresidential administration. The probability for higherrates is increasing, so time is running out for bankinginstitutions to fully understand the factors that may influ-ence margin volatility and balance sheet performance.This session will offer you the tools and know-how toconstruct an effective interest rate risk managementprocess, which will in turn help your institution betterunderstand which actions (or inactions) are best suited tomitigate rising rate risks. We will discuss measurementtechniques (net interest income simulation and economicvalue of equity) and display a comprehensive approach torisk analysis and decision making.

Measuring and Managing Liquidity Effective liquidity management can result in increasedincome, greater control over funding costs and improvedregulatory exams. Subjects discussed will include liquiditymeasurement and management approaches, strategies toimprove liquidity, marginal cost of funds analysis, strate-gies for controlling funding costs, an overview of fundingalternatives for community banks and requirements for acomprehensive liquidity management process.

Developing & Documenting BSM Strategies(Case Studies)This popular topic includes a separate two-hour “handson” session using case studies from actual banks. The firstportion of this two-part session will discuss strategy for-mulation and documentation including such subjects assetting strategy objectives, determining potential risk/return trade-offs and tracking results. Strategies discussedwill include lending, investments, deposit pricing, alterna-tive funding sources and the use of “off-balance sheet”hedging instruments. During the second portion of thissession, attendees will be provided the opportunity towork through two case studies in detail. This is a greatopportunity for exchanging ideas and approaches andanalyzing “what-if” scenarios.

DCG Mobile AppThe DCG app will give you access tothe agenda, presentations and otherconference-related materials before,during and after the conference.

The app will be available oniTunes and Google Play.

CORESESSIONS

The following sessions are the equivalent of afull-day seminar on balance sheet management.

They are intended to create a base for first-time attendeesor serve as a refresher series for past attendees.

EARLY REGISTRATION DATERegister by April 7 and save!DarlingConsulting.com

Preparing for $10 Billion and Beyond As banks and credit unions approach and exceed $10 billion inassets, there are heightened expectations regarding financialand operational risk management. While many organizationsare notionally aware of several of the changes expected, thedegree of change and the effort required to successfully developthe practices needed are often underestimated. During this ses-sion by DCG, participants will gain tremendous insight into howto best prepare for becoming a “DFAST” organization, how tocontinue to evolve the key risk management practices oncethere and how to drive greater strategic performance.

Optimizing DFAST Modeling (Panel) Since the introduction of Dodd-Frank Act Stress Testing (DFAST)in 2012, organizations have struggled to develop and maintaina modeling and governance framework that has effectively andconsistently met regulatory expectations. Leading organizationsare evolving and now successfully capitalizing on this exerciseand contributing towards improving strategic risk managementand financial performance. A panel of subject matter expertsfrom several DFAST institutions will share their insights andaddress questions related to data collection, in-house vs. out-sourced model development, documentation and governanceevolution, regulatory communication/feedback and gettingstrategic value from stress testing.

Model Risk Management – Practitioners’ Insights Since the release of the regulatory guidance on model risk man-agement in 2011, organizations are actively transforming andrefining their model risk management processes as regulatoryexpectations and industry practices continue to evolve andgrow. During this session, John Perez of Webster Bank and aDCG MRM expert will help participants gain insight into thelatest trends and expectations in model risk management andemerging practices being implemented by progressive organiza-tions. Key areas of focus include model inventory (and modellife cycle) management, effective documentation and communi-cation, growing use of “Governance, Risk and Compliance”(GRC) systems, comprehensive model performance assessments,effective challenge of vendor models and how to successfullyleverage external validation resources.

Best Practices for Building Accurate Models The consequences of using deficient models have never beengreater. With results impacting regulatory reporting and evenpublic disclosures, poor model development can quickly lead toadverse financial and reputational costs. During this session,DCG’s leading model developers and validators will share theirbest practice insights for building an effective model develop-ment framework that fosters accurate models. Key areas of focusinclude the role of model developers and functional businessunits, evaluating statistical techniques, measuring model per-formance (and validity) and effective data management.

Expanding Role of the ALM Model (Panel)The ALM model is increasingly being used in support of severalfinancial performance and risk-related activities includinginterest rate risk, liquidity (stress testing and Liquidity CoverageRatio), budgeting and forecasting, capital and strategic plan-ning, profitability and credit stress testing (i.e. DFAST/CCAR).Use within more complex modeling frameworks like liquidityand credit stress testing has illuminated the need for thoughtfulenterprise-wide design. Experts from Empyrean, FIS Risk andPerformance (BancWare) and ZM Financial Systems will providetheir industry insights into the expanding role of the ALMmodel, how organizations are optimizing its use for more complex modeling and avoiding pitfalls and performance challenges.

Effective Challenge – Beyond the ValidationWhile a key component of effective challenge is validating thetechnical elements of financial and operational risk models, itdoesn’t start or end there. Executing a successful effective chal-lenge framework requires sufficient understanding and criticalcontributions from each line of defense: model developers/own-ers, model risk management, audit and the board of directors.DCG’s MRM experts will provide their insights into the roles andresponsibilities each stakeholder has in the effective challengeprocess, common impediments and pitfalls to avoid and strategicbenefits that can be realized.

Fun with Statistics – What Executives and Non-Statisticians Need to KnowUse of statistical modeling has become commonplace in thebanking industry – models used for stress testing, credit deci-sioning, behavioral modeling and operational risks rely increas-ingly on advanced quantitative approaches. As our dependenceon these models for strategic decision making grows, so doesthe need for stakeholders to understand the basic conceptsbehind the math. One of DCG’s expert quantitative risk special-ists will provide participants with an insightful perspective oncommon statistical approaches used today in an easy-to-under-stand way.

Capitalizing on Stress Testing and Gaining StrategicAdvantage Financial institutions routinely stress test various aspects of theirbalance sheet and business activities including interest rate risk,liquidity, credit and operational risks. These exercises are oftenmanaged and performed independent of one another by differ-ent areas or committees of the organization using varyingscenarios, modeling methods, assumptions and risk assessment/governance frameworks. This session, presented by DCG’s stress-testing experts, will provide actionable ideas for developing acentralized stress-testing framework and insight into how pro-gressive organizations are leveraging stress testing strategically.

MODEL RISK MANAGEMENT &VALIDATION SESSIONS

This track provides insight on the challenge of building and maintaining an effectivemodel risk management process at your institution.

We will also share insights into advanced modeling (such as DFAST/credit stress testing) from our horizontal perspective.

ANDRE DE ARAUJO JORGE is ManagingDirector of Fixed Income Capital Markets atRaymond James. Over the past 15 years, hehas worked closely with community banks todevelop fixed income and asset liability poli-cies and management tools. He is currently amember of Raymond James’ fixed incomesales team. He is a co-creator of RaymondJames’ pCR® analysis.

AARON C. DIRUSSO is a Senior Vice Presi-dent at Raymond James. He joined RaymondJames in 2006 and is a member of the firm’sfinancial services group where he leads theWest Coast depository practice. He has over15 years of experience as a banker and advi-sor, principally serving executive manage-ment and boards of directors of banks, bankholding companies and thrift institutions.Aaron has significant experience in mergersand acquisitions, public offerings, strategicadvisory and private placement assignments.

THOMAS G. DOE is President and Founderof Municipal Market Analytics, Inc. Foundedin 1995, Municipal Market Analytics (MMA)is the leading independent research firm inthe municipal industry. Since 2012, MMA’sPortfolio Credit Benchmark (PCB) has con-ducted more than 1,000 bank portfolio creditreviews that have successfully passed regula-tory examinations. Thomas has ad dressed allthe leading groups in the municipal industry,has served as a resource to the financialmedia and served as an MSRB board member.

DEB EVANS is the CFO of Bay Banks ofVirginia, Inc., holding company for Bank ofLancaster, in Kilmarnock, Virginia. Shejoined the company in September 1999.Deb’s prior career was in manufacturing asan engineer, cost accountant and financialanalyst. She holds a BSME from KetteringUniversity (formerly General Motors Insti-tute) and an MBA from Yale’s School ofOrganization & Management.

KEITH HUGHEY has been a managementconsultant since 1977. For the last 20 years hiswork has focused on assisting clients withtheir strategic planning, issues of corporategovernance, succession planning, manage-ment and leadership development, organiza-tional vitality and human systems. He is theauthor of the widely-read weekly e-letterMonday Morning Musings, a noted speaker,guest lecturer and faculty member at theSouthwestern Graduate School of Bankingat SMU.

ROBERT MCPHERSON is a ManagingDirector at StoneCastle Partners, LLC with35 years of experience in business, bankingand securities law. Previously, he was execu-tive vice president and general counsel ofNBC Capital Markets Group in Memphis. At

NBC, he supervised participation in 18 banktrust preferred pools and debt offerings andmanaged a $350 million warehouse line.Bob obtained the OCC’s first approval for abank dealer to underwrite and deal in trustpreferreds. He completed the BAI GraduateSchool of Bank Financial Management atVanderbilt University in 2002. He was aregional attorney for the FDIC and a lawclerk for the OCC.

JOHN FIELDING MYERS is Vice Presidentof Fixed Income Capital Markets at RaymondJames. He has worked with depository port-folio managers for seven years, focusing onanalytics and sector allocation. He is currentlya member of Raymond James’ fixed incomesales team having previously worked in aresearch role. He is a co-creator of RaymondJames’ pCR® analysis.

ERI PANOTI is Director of Accounting Advi-sory at Chatham Financial serving financialinstitutions clients. She consults clients onaccounting for both balance sheet risk man-agement strategies and customer hedgingneeds. Prior to joining Chatham, Eri workedat KeyBank in Cleveland where she focusedon accounting policy for derivatives andhedging as well as SEC reporting.

JOHN PEREZ is Vice President of ModelRisk Management at Webster Bank, wherehe is committed to providing clear, concise,complete, timely and accurate model gover-nance, controls and validation informationto bank management and regulators. Johnhas 15 years of experience in developing,validating, using and teaching about mathe-matical models across various technical disci-plines in both industry and academia.

FRED D. PRICE is a Founding Principal ofSandler O’Neill + Partners, L.P. and a mem-ber of the firm’s executive committee. Fredis extensively involved in the firm’s capitalmarkets and advisory activities and providessenior oversight to the firm’s client supportservices and other business affairs. He ini-tially developed and managed the asset/lia-bility, financial strategy and balance sheetmanagement client support services for thefirm.

DAVID J. SWEENEY is Managing Directorleading Chatham Financial’s Balance SheetRisk Management and Chatham InvestmentAdvisors. Prior to joining Chatham, Davespent 14 years with Ernst & Young servingfinancial services clients across the U.S. andEurope and served as Treasurer and ChiefInvestment Officer at two community bankswith assets between $3 billion and $5 billion.

GUEST SPEAKERS

Darling Consulting Group isthe recognized leader inproviding balance sheet riskmanagement analyses,strategies and solutions to theU.S. banking industry. DCGprovides independent strategicALM consulting, model riskmanagement and validation(including DFAST), educationand decision-making supporttools (liquidity stress testing,deposit and loan analytics andcredit stress testing) to over600 financial institutionsnationwide. In these capacities,DCG serves a broad array ofcommunity banks and creditunions, as well as many of thecountry’s 100 largest banks.

Register today atDarlingConsulting.com

$1,375 per personby April 7, 2017

$1,475 per personafter April 7, 2017

Sunday & MondayEvening Receptions

We welcome you & your gueststo the following social events:

• Sunday Cocktail ReceptionMarriott Long Wharf

6:00 – 9:30 p.m.

• Monday Cocktail ReceptionNew England Aquarium

6:00 – 7:30 p.m.

• Monday Lobster BakeMarriott Long Wharf

7:30 – 9:30 p.m.

260 Merrimac StreetNewburyport, MA 01950

June 5-6, 2017MARRIOTT LONG WHARF

BOSTON, MA

EARNUP TO

13 CPECREDITS!

Darling Consulting Group, Inc. is registered withthe National Association of State Boards ofAccountancy (NASBA) as a sponsor of continuingprofessional education on the National Registryof CPE Sponsors. State boards of accountancy havefinal authority on the acceptance of individual

courses for CPE credit. Complaints regarding registered sponsorsmay be submitted to the National Registry of CPE Sponsors throughits website: www.nasbaregistry.org.

HOTEL RESERVATIONSFor hotel reservations, please contact the Marriott directly at617.227.0800 and use room rate group code: DCLDCLA. You canalso visit their website at www.marriott.com/boslw.

When making your hotel reservation with the Marriott, please besure to identify yourself as a “Darling Consulting Group ConferenceAttendee” to guarantee the preferred room rate. Rooms are avail-able on a first-come, first-served basis.

BOSTON MARRIOTT LONG WHARF 296 State Street • Boston, MA 02109

All room reservations for this conference are on a space-availablebasis. The rate of $325 per room per night is subject to 14.45%Massachusetts tax.

For additional information regarding this conference, contact us at978.463.0400 or email conference@DarlingConsulting.com.

WHO SHOULD ATTENDThis information-packed, two-day conference offers timely insightinto managing your institution’s balance sheet in this challengingenvironment. Educational sessions and interactive forums, rangingfrom basic through advanced, are designed to generate compre-hensive and lively discussion about balance sheet risk management,model risk management and validation processes. Directors, CEOs,CFOs, CROs, risk managers, DFAST managers, model developers,model validators, senior management and analysts will benefitfrom this popular Group-Live conference. Attendees are eligiblefor up to 13 CPE credits. No prerequisite and/or advance preparationis required.

DATE AND LOCATION: JUNE 5-6, 2017Boston Marriott Long Wharf • 296 State Street • Boston, MAThis two-day conference takes place Monday 8:15 a.m. to Tuesday3:15 p.m. The Marriott Long Wharf is just one block from FaneuilHall/Quincy Market and the heart of Boston’s financial district. It isapproximately two miles from Logan Airport . Please contact hotelfor directions 617.227.0800.

CANCELLATIONSConference registration fees are refundable only for cancellationsreceived in writing by May 19, 2017. No refunds will be made afterthis date. Prior to May 19, 2017, refunds are subject to a $100 can-cellation fee. Substitutions may be made at any time; please adviseus in advance. For more information regarding refund and/or pro-gram cancellation policies or other concerns, please contact ourconference staff at conference@DarlingConsulting.com or by calling978.463.0400.

CONFERENCE INFORMATION

Register at DarlingConsulting.com