Asset liability management (ALM) is a balancing act for Bank Boards and Management teams. Loan growth is on the rise. Many banks are still looking for yield in their investment portfolio. And economic changes, local or national, can impact the liquidity of an organization. Regulatory agencies have noted increasing liquidity stress in community banks.
ALM is also impacted by today’s higher capital requirements and added buffers for Tier 1 and Total Capital levels. These regulatory guidelines coupled with recent loan growth has caused many banks to increase their reliance on non-core and wholesale funding sources. The use of non-core sources can be part of an ALM strategy but, it also increases risk including potential concentrations of funding sources and an increased risk for contingency funding. Effectively managing the capital and liquidity can determine the ultimate success of an organization.
How can we help?
We will evaluate the ALM strategies, policies, and procedures of the bank with consideration of your organization’s risk tolerances and regulatory guidance. We assess potential opportunities to increase core funding sources and fee revenue while also evaluating improvements to overhead expenses– all while keeping an eye on Capital levels.
A robust asset liability management system should follow the strategic goals of the Board and manage liquidity and capital risk. It provides the structure and funding sources for daily operation, and stress scenarios that may benefit from contingency funding plans.
At Bank Strategic Solutions, we provide an assessment of the interest rate risk within the organization including comprehensive analysis of earning assets, economic value of equity and the potential impact to net income. We use a regulatory framework to analyze interest rate risk, evaluate gap models, and provide an understanding of the overall impact of the risks and regulations of the current industry.
Asset Liability Management related services include the following:
- Interest Rate Risk Analysis
- Earnings at Risk & Economic Value of Equity (EVE) Assessments
- Contingency Funding Planning
- Liquidity Risk Evaluations
- Policy & Procedure Reviews
- Third-Party IRR Reviews
Our comprehensive services feature sensitivity reporting, early warning indicators, and evaluation of your company’s potential gap risk so that you can effectively manage the assets and liabilities of the organization.
Questions about what we can do for you?
Bank Strategic Solutions has the tools and industry expertise to assist your bank. Let us help
you manage risk so you can focus on maximizing performance.