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For most banks, hiring consultants is an expensive luxury. But Michigan banks that belong to the Federal Home Loan Bank of Indianapolis (FHLBI) have one great advantage: free financial consulting from the Bank's specialists.
Because the FHLBI has a very limited customer base, insured depositories in Michigan and Indiana, it has a strong selfinterest in seeing its customers grow and profit. According to Martin Heger, president and CEO, "We recognize the importance of our members' success. Only through their success will we be able to achieve our aim of improving the public's access to economical housing finance. Therefore, we organized a planning and consulting (P&C) division in late 1995 to assist members in improving their financial performance."
P&C's creation pooled some of the FHLBI's diverse talent base for use by members. Bob Ott, a Ph. D. economist with expertise in portfolio and risk management, was chosen to lead the group. Jim Eibel, a former strategic and financial consultant, was given the charge of managing the consulting process. Picked to man the hardware and software was Chuck Rainey, a U.S. Naval Academy graduate and an economist with a solid technical background. In 1996, the demand for P&C's services led to the addition of Tracy Norris, a CPA with seven years of bank auditing experience.
The group's efforts have grown enormously over the past two years as more institutions have taken advantage of this service. P&C's work usually centers around helping members evaluate financial strategies. The consultants do financial projections and analysis, quantifying information to help the institution make better decisions about strategy and funding. They can provide opinions on the risk/reward tradeoffs of particular strategies, such as new product development, balance sheet restructuring, portfolio management, investment analysis, and stock buy backs. P&C is closely allied with FHLBI's marketing effort and the consultants often work with calling officers to offer choices of action to a member.
Education is also a major function. The group regularly addresses boards and ALCOs on financial strategies and risk management. "We've conducted sessions on issues as diverse as the use of derivatives and dividend policy, as well as on our meat and potatoes issues like growth strategies and liquidity management," explained Ott.
Ott and Eibel have also been featured speakers at...