Preparing for downturns is key in uncertain market, says finance expert

Written on Jul 13, 2017

By Jessica Salerno, OSCPA content manager

Omar A. Hinojosa HeadShotTo operate smoothly, financial institutions have to handle highly-sensitive and fast-changing information from their clients and the markets on a regular basis. This is something Omar Hinojosa, CFA, senior consultant, Taylor Advisors, Inc., understands well, and said he knows bankers and those at finance organizations have to be on their toes.

Hinojosa will present on “Understanding the Relationship of Credit Cycles and Interest Rates,” at the Financial Institutions Conference in Columbus on August 18. This general session will cover what data reveals about the relationship between interest rates and credit cycles, discuss steps to prepare for economic expansions and contractions and explore implications on scenario modeling.

Hinojosa said he hopes attendees leave his presentation with multiple takeaways, including  that a balanced rate profile probably will become more valuable in the future than one that is more volatile.

“A second one would be to get your board prepared for where you are in the cycle and what typically follows in the next three to four years,” he said. “That doesn’t mean something is going to happen. That just means if it does show up at least everyone in the board meeting has been thinking about it and putting plans in place to execute over time, as opposed to being reactive when it happens.”

The last thing Hinojosa said attendees remember is not to ignore the “down-rate scenarios.”  

“I know it’s less important today, but as you navigate through time that DOW 100 is going to become more valuable and you should pay attention to it and figure out ways you can capture the benefit of the rate risings,” he said. “If you are asset sensitive, begin to move your balance sheet to a more neutral position over the next few years leading into the end of the rate cycle because it will benefit you when rates drop.”

Sign up for the Financial Institutions Conference in Columbus or via webcast now!

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