Asset Liability Management (ALM) doesn’t have to be intimidating or confusing! We’re here to help you stop seeing ALM as a nuisance, and start seeing it as a critical tool to formulate intelligently planned growth strategies managed by periodic interest rate risk measurements.
Why It Matters
Having a full understanding of your ALM process is vital in today’s financial world. With a solid ALM process in place, you can measure the interest rate risk embedded in your balance sheet and determine the best approach needed to keep your credit union within ALM guidelines. And it’s not just about filing reports; regulators today insist that you have a well-rounded understanding of interests rate risk and are aware of the ramifications of all your decisions.
Let us support you making sense of it all. Regardless of size or complexity of your balance sheet, VolCorp offers the solutions you need to get you on track.
We utilize state-of-the-art software for full-service interest rate risk modeling on quarterly, semi-annual, and annual schedules. We’ll evaluate the risks in your financial structure and compare it with NCUA’s risk limit guidelines. We can also show you how, and why, the risk profile of your balance sheet changes over time.
Each ALM Report Contains:
- NEV (Net Economic Value) – Measurement of the difference between the net present values of your assets and liabilities using set interest rate shock scenarios, and taking into account the optionality of each interest bearing asset and liability instrument on your balance sheet (such as caps, floors, call features, and variable cash flows).
- NII (Net Interest Income) – A one-year snapshot of your credit union’s NII after the balance sheet has been subjected to regulated interest rate shock scenarios (keeping all other variables static).
- NCUA Interest Rate Guidelines – A calculation of your interest rate risk compliance compared to NCUA guidelines.
- NEV and NII Trends – A comparison of the results between the current and prior modeling periods and extrapolated trends.
- NMS (Non-Maturity Shares) – A graph showing NEV volatility profiles of NMS modeled at par, at par with beta sensitivity factors, and at final maturity.
- Peer-to-Peer Comparison – A summary of the key ratios and graphs showing your credit union’s position relative to your peers.
Our team of professional ALM analysts are here to guide you through all the ins and outs of your ALM process. We offer a variety of different consulting options.
- ALM Validation Service – A data simulation run of your balance sheet/financial structure on our ZMdesk software to independently produce interest rate risk measures for comparison to your own data output, thereby validating your overall software functionality and data simulation processes and results.
- Investment Portfolio Consultation – Whether you’ve conducted your own ALM review or used our reporting tools, our consultants will interpret the results and recommend courses of action that best balance your yield requirements with your interest rate risk profile (while staying within your risk tolerance parameters). Our consultants can also serve as an independent third party when you need information on a security (ratings, yield analysis, or other data). We can also test individual securities to analyze their impact on your NEV risk profile. All this will result in an optimal portfolio mix for your credit union!
- ALM & Investment Policy Design and Review – A professional review of your current ALM & Investment Policies, making any necessary revisions and ensuring your policy is up to date with real world risk management requirements and evolving NCUA regulations. If you don’t yet have a policy, we’ll partner with you to create one tailored to your individual credit union.
Seminars & Training
Get all the answers and education you need.
- ALM & Investment Seminars – No-cost “value-added” seminars given by expert instructors on a variety of topics relating to ALM and investments for credit unions. Check our website for upcoming dates.
- ALM & Investment Training – Our professional consultants are available to visit your credit union and train members of your staff and board of directors on the fundamentals of ALM and investment portfolio management. Training covers: a review of permissible investment types, including their rules and regulations; an overview of how different loan/share products and investment instruments impact the interest rate risk embedded on your balance sheet.