ALM+
Sophisticated and Robust
ALM+ was developed for complex credit unions that need a very comprehensive ALM solution. It is our most sophisticated and robust ALM solution and is a cost effective way for credit unions to access the upper tier of ALM modeling as well as high caliber expertise. By utilizing ALM+ and its Bancware ALM4 platform, members with more complex balance sheets can benefit from Southeast Corporate's expertise, experience and a high powered, industry leading ALM model. ALM+ allows members the option of receiving fully customizable model assumptions and ALM reports without the headache (or cost) of setting up in-house continuous model management.
More Accurate Modeling
Through Bancware, ALM+ uses a stochastic modeling process with a trinomial lattice for market value modeling which adds a tremendous amount of accuracy over a static model. In a static term structure model, rates are flat through the planning horizon. A trinomial lattice allows rates to change in one of three directions at each point in time. In other words, at each point in time rates can go up, down, or stay the same. For balance sheets with path dependent options such as mortgages, stochastic modeling is a much better process because each point or "node" on the lattice will dictate a different behavior. This type of modeling is a much more real world evaluation technique. If your credit union has an investment portfolio that includes mortgage backed securities or collateralized mortgage obligation fixed income products, stochastic modeling could be a great benefit.
Features
- Provides scenario-dependent evolution of various results, including interest income/expense, balances, market values, net interest income and net economic value sensitivity, cash-flows and gap profiles.
- Allows quantification of the market value changes of assets, liabilities, and economic value of capital resulting from interest rate movements.
- Allows flexible definitions of business assumptions.
Benefits
- Understand the impact of market changes on the balance sheet more clearly to make better informed business decisions
- Fully quantify potential impacts of interest rate fluctuations on future earnings and cash flow streams
- Measure interest rate risk inherent in the balance sheet from the economic value perspective.
Models & Forecasting
- Option Adjusted Spread Calculations
- Lattice based Net Economic Valuation
- Net Interest Income Forecasting over a 24 month horizon
- Net Interest Income sensitivity in shocked scenarios
- Non Maturity Deposit modeling
Reporting
The ALM+ offers customized analytics and reporting. Its analytics include interest rate risk reporting of Net Interest Income, Net Economic Value (NEV), Duration and Gap reporting. Both a written report and a soft copy of the information are available. This will enable credit unions to customize the data for presentations to different user groups and use the data for detailed analytics. The ALM+ process can provide a variety of ALM based services in addition to the Interest Rate Risk reporting.
For more information and to discuss finding the right ALM product for your credit union, contact Trey Rudder, Southeast's VP of Interest Rate Risk Assessment at 800-342-0203 Ext.4035.
