RankingBanking Web Pageturn - Flipbook - Page 30
28
How the Best
Banks Manage
the Balance Sheet
By Kiah Lau Haslett
T
hroughout
most
of
2021,
Federal Reserve Chair Jerome
to stay. And, they believed, the response to bring it
down would be dramatic.
Powell asserted that inflationary
“We never know the magnitude of the rate in-
pressures in the economy were
crease,” says Li Yu, chairman and CEO of the tra-
“transitory.” Pandemic-induced
ditional commercial bank, which had $6.4 billion
shifts in consumption and sup-
in assets at the end of 2022. “But we believe that
ply chain snarls, he said, were
[staying] asset sensitive going forward is the best
responsible for pushing prices up
protection against the higher rate environment.”
— with the consumer price index up 7.0% yearover-year in December 2021.
The bank avoided making fixed, lower-rate loans,
which meant spending more time working with
In Los Angeles, executives at Preferred Bank
current and prospective borrowers to put together
weren’t so sure. They saw how inflation impact-
deals, passing on credits and scrutinizing under-
ed the bank’s Main Street customers throughout
writing. Loan officers saw their loans refinance out
2020 and 2021, and they suspected it was here
of the bank.