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Asset Liability Management (ALM)

What is asset liability modeling?

Asset liability (A-L) modeling is the process by which a model simulation of a credit union’s financial statements under multiple interest rate scenarios is created with the intention of using that model to discover true exposure to interest rate risk.

Why is asset liability modeling important?

The information gained from A-L modeling allows credit unions to determine whether or not their balance sheet can withstand unfavorable market conditions and stay the course. A-L modeling, or income simulation, is an ongoing process in which credit unions continuously seek to understand their net risk position and the sources of that risk.

Who does asset liability modeling help?

A-L modeling allows CEOs, CFOs, regulators, and other credit union leaders better understand their credit union’s risk exposure. It enables them to identify and act upon performance opportunities and potential risk threats in both the short- and long-term. Once areas of progress/concern are singled out, re-structuring for optimal performance on both sides of the balance sheet can be implemented.

Why QuantyPhi?

As a wholly-owned CUSO of Corporate Central Credit Union, we know credit unions. We know how to build A-L forecasts that pave the way for continuous, safe, forward progress. Our A-L modeling techniques are time-tested, leading-edge practices, and they address all NCUA 12-CU-11 requirements. QuantyPhi can show you how to create A-L models that keep risk exposure within acceptable limits while maximizing opportunity in both good times and bad.

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