Independent Banker - August 2024 - 44

" JUST BECAUSE
YOU DON'T HIT
RECORDS EACH
AND EVERY YEAR
DOESN'T POINT TO
IMPENDING DOOM. "
-GREG NISKA, GATEWAY
COMMERCIAL BANK
compared to 1% or something else.
I believe they will want us to use
higher qualitative factors as credit
and economic conditions become
more challenging, and I think if we
have been consistent in the past
with moving them up and down
accordingly-and documenting them
appropriately-we should be able to
have agreement with our examiners
on our calculation.
fMike Gargaro: We just went
through an FDIC exam in December
2023, and examiners told us they've
seen a lot of different [CECL] models.
So, it's going to take a little bit of time,
I'm guessing, for them to understand
all the different nuances within
each model. We have 10 different
qualitative questions that we answer
each quarter, and we're still tweaking
some of the other factors-more so
than the qualitative ones-just to
maintain our level of comfort with
our reserve. I think most community
banks [I've talked with], with their
conservative nature, found that their
CECL calculation was a third to
half of what their current allowance
calculation was.
Q: How have you thought about
interest rate duration risk in
the past year, and how such
risk has generally affected your
decision-making about financial
accounting and regulatory
capital management?
fGargaro: Rates are going to go
up; they are going to go down. So,
we obviously try to manage this with
respect to our margin. Our loan
and investment portfolio are both
fairly diverse. We don't lend to large,
leased buildings with a bunch of
office space and typically don't lend
to large downtown areas. We're not
in those kinds of markets to have to
worry about that kind of product.
On average, we are able to re-price
about 25% to 30% of our loan yields
annually. So, there's good and bad
with that.
CFO Greg Niska (center) says
Gateway Commercial Bank's
success relies on staff like
credit analyst Elle Quitevis
(left) and president and CEO
James Christensen (right).
fDrentlaw: Unfortunately, almost all
community banks have experienced
increased duration risk as part of
our investment portfolios, since
rates went up so rapidly. The asset
liability committee is having a lot
more discussions about duration
risk and the maximum amount of
time we are willing to take on in
terms of maturities, as well as the
type of investments we are willing
to purchase that don't have as much
optionality risk.
fGreg Niska: I agree it has been a
challenge. On one hand, you wouldn't
mind extending the portfolio a bit
to lock in these higher yields for
longer. On the other hand, you want
to hold onto the liquidity to fund
loan demand and cash in on the high
44 // ICBA Independent Banker // August 2024

Independent Banker - August 2024

Table of Contents for the Digital Edition of Independent Banker - August 2024

Contents
Independent Banker - August 2024 - Cover1
Independent Banker - August 2024 - Cover2
Independent Banker - August 2024 - Contents
Independent Banker - August 2024 - 2
Independent Banker - August 2024 - 3
Independent Banker - August 2024 - 4
Independent Banker - August 2024 - 5
Independent Banker - August 2024 - 6
Independent Banker - August 2024 - 7
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