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ALM

A collection of 12 posts

Preparing for Fall (And a Falling Rate Environment)

Preparing for Fall (And a Falling Rate Environment)

For many people, autumn is an enjoyable time of transition. I look forward to a lot of familiar facets of fall, like the cooler weather, the start of football season, major league baseball post-season and the kids returning to school, to name a few. But as the new season approaches,

The Importance of IRR Timing– How Credit Unions Are Facing Falling Rates

Money Management

The Importance of IRR Timing– How Credit Unions Are Facing Falling Rates

We’re all familiar with the adage, “timing is everything,” but when it comes to interest rate risk, that saying is especially true. Just like an inevitable scheduling conflict or a missed career training opportunity, think of interest rate risk as a measurement of a timing mismatch. As credit unions

ALM Risk in Focus

Money Management

ALM Risk in Focus

For those of you who need corrective lenses like I do – have you ever sat in the optometrist’s chair and struggled to decide which eye chart was more in focus? A or B, B or C? Sometimes, it is an obvious choice; then others, I feel that both are

Better Budgeting: Aim for the Moving Target

Money Management

Better Budgeting: Aim for the Moving Target

The market is uncertain, budgeting season is wrapping up and after all the iterations are complete, it leaves me to wonder…why do this at all? Why do we spend so much time getting the budget correct when there is so much uncertainty? The targeted growth could be wrong, the

Providing for Shade: 3 Concepts to Incorporate in Your ALM Modeling

Money Management

Providing for Shade: 3 Concepts to Incorporate in Your ALM Modeling

Warren Buffett once said, “Someone’s sitting in the shade today because someone planted a tree a long time ago.” As Buffet’s quote reminds me, I would much prefer to leverage the efforts by others who came before me to my benefit. It just makes sense, doesn’t it?

ALM Management: Less is More or More is Less?

Money Management

ALM Management: Less is More or More is Less?

Growing up, I frequently heard the famous quote from Ludwig Mies van der Rohe, “Less is More”. Maybe you did too. But for me, as a child, this phrase did not resonate with me. Why wouldn’t you put all the possible toppings on an ice cream sundae? It just

The Liquidity Awakening Has Begun

Money Management

The Liquidity Awakening Has Begun

The recent rate environment has done wonders for many sleepy ALM programs, waking them up and inciting a resurgence of focus in the way credit unions monitor the interest rate risk exposure on their balance sheets. After 10 years in a static rate environment, this demanding rate cycle has forced

The Ingredients for a Strong ALM Program

Money Management

The Ingredients for a Strong ALM Program

When’s the last time you baked a cake for a special occasion? Or tried your hand at a new recipe for dinner? Even if you’re a pro in the kitchen, chances are you still probably utilized some of the basic ingredients, right? Otherwise, you might run the risk

Goldilocks and the ALM Model

Money Management

Goldilocks and the ALM Model

Do you remember the story of Goldilocks and the three bears? You know, the one where a little girl happens to find the home of three bears in the woods. She goes inside and eats their bowl of porridge. One of the bowls of porridge is too hot; one is

Asset Liability Management: Interest Rate Risk Exposure Limits

Money Management

Asset Liability Management: Interest Rate Risk Exposure Limits

When a credit union comes to me regarding updating asset liability management (ALM) policy limits, one of my first questions to them is: what is your risk tolerance? More often than not, I get the response: we are not sure, what does the NCUA say?. While it’s definitely important

“Oh Bother,” Another Model Validation

Money Management

“Oh Bother,” Another Model Validation

Do you ever have quotes pop into your head that seem to just fit your situation? What about when the exam list or a model validation request makes its way to your inbox? I know what I hear it in my head, “Oh Bother!” I never fully appreciated this phrase

Broaden Your Perspective with Liquidity Stress Testing

Money Management

Broaden Your Perspective with Liquidity Stress Testing

“Because I said so.” Few phrases convey a universal response of utter dismay like this one. I remember vividly as a child hating this response and, like most children, vowed never to let those words escape my lips. Those same childhood memories influence our responses to this day and leave