My ALCO Meeting Is Broken: Four Steps to Rebuild
- Joe Kennerson
- 1 day ago
- 4 min read
“My ALCO meeting is broken.”
It’s what we hear quite frequently from bankers.
Not, “My ALCO report.” Not, “My standing with regulators.”
It’s the ALCO meeting that’s broken. The statement is generally followed up with comments such as “stale,” “backward looking,” “check-the-box,” or “a meeting that people don’t really look forward to.”
How can this be? ALCO meetings were created to attack the most pressing issues in bankers’ businesses, and there is an awful lot happening right now. Think about just a few things that are top of mind for so many…
The most competitive deposit environment in modern banking history
A banker’s yield curve that hasn’t seen 100 bps of positive spread in four years (5Y Treasury less Fed Funds)
A liquidity environment turned upside down by Fintechs, BaaS, Stablecoins, and a massive intergenerational wealth transfer
Does that sound stale to you?
“Checking-the-box” may work for a while. Margins are drifting higher as low-coupon loans cycle through and loan yields rise. But a broken ALCO will not cut it in the long run. Particularly for community banks and credit unions, where margin means so much when competing with larger institutions.
It’s understood that this unproductive meeting was not by design, especially with valuable talent in attendance. So how did it break? We need to get to the core of the issue:
Too much information
Too many scenarios
Scattered data with no storyline
Too many pages in tiny font
So, what can an ALCO do? The next big balance sheet surprise may be right around the corner. How can you rebuild an ALCO meeting to be forward-thinking and strategic?
Here are four steps to get started.
1. Start with the story
As a sports columnist for my college newspaper, the editor-in-chief would always tell our staff, “Don’t bury the lede.” Then why do so many ALCO meetings begin with dense economic updates that were already read by attendees earlier in the morning? Instead, open with the banking issues that are emerging, and how your ALCO is going to compete.
For example, one key issue driving ALCO storylines today is the spread on growth: liquidity premium is at a high and loan spreads are tightening. For DCG clients, this ALCO story typically covers the institution’s liquidity philosophy, tests wholesale funding comfort, takes a deep dive on deposit product positioning, and ultimately engages the lending team on why it’s critical to maintain discipline on loan pricing.
As DCG’s founder George Darling would often ask us, “What are the three key issues we need to tackle at this ALCO meeting?” The meeting should be a storyboard that covers those issues.
2. Transform the data
Go to a banking conference today, and you’ll run into 50 vendors looking to help with ‘data analytics.’ If you look closely, their offering is (more often than not) simply a repackaging of existing data.
In a rebuilt ALCO meeting, the analytics must be transformed to drive decision-making. For example, interest expense is the biggest expense on the income statement. Every basis point counts, and bankers need to understand the true cost of growing deposits. The analysis below is a live example from a recent ALCO meeting. This client used DCG’s Deposits360°® analytics software to help capture the cannibalization trends and quantify the marginal cost of funds of a premium MMDA product vs CDs, showing a huge cost advantage on the MMDA side.
Source: Darling Consulting Group, Deposits360°®
The result? The ability to let data tell the story and help fine tune the deposit strategy to focus on the most cost-effective growth avenue. Basis points saved.
3. Simplify the deck
This is an art form. DCG’s consulting team’s goal is to make the complex simple for our 375 ALCO clients on a quarterly basis and throughout the year. But it’s easier said than done. Start here… of the 25+ interest rate risk scenarios you run, what are the three or four you should focus on for your conversation? Then ditch the 100+ page ALCO report and focus on a strategy deck of 40 slides or fewer.
4. Engage
It’s the goal for any meeting. How productive can an ALCO meeting be if the front lines aren’t engaged in conversation? More and a wider variety of people should be involved in the discussion, particularly market leaders, senior lenders across collateral classes, and marketing. DCG ALCO meetings have increasingly become “standing room only” with the goal of having a united balance sheet strategy vision for the whole organization.
For example, having discipline on loan credit spreads will mean so much more when the lending team can see the true cost of raising liquidity today and understand the growth impact to liquidity and margin risk. Hint: A strong ALCO education foundation is critical for market leaders to understand their business impact to the risk profile. Associates from all disciplines and all levels will foster broader dialogue, deeper engagement, and a more productive meeting.
It’s quite easy and cheap to check-the-box on ALCO these days. But are you leaving basis points on the table by doing so? The industry is changing fast. Opportunities can appear and disappear quickly. Transforming from a stale ALCO meeting into a Profit Center will be a critical competitive advantage.
What’s it worth for you to fix a broken ALCO?
ABOUT THE AUTHOR
Joe Kennerson is a Managing Director at Darling Consulting Group. In this capacity, he works directly with financial institutions by providing solutions for their asset/liability management process in the areas of interest rate risk, liquidity risk management, ALM modeling, regulatory compliance, and executive-level education. He is a frequent speaker and author and directly advises clients in all aspects of ALM.
Contact Joe Kennerson at jkennerson@darlingconsulting.com or 978-499-8150 to work collectively to transform your ALCO.
© 2026 Darling Consulting Group, Inc.
