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Asset Liability Management Solutions

Simple balance sheet management is a thing of the past. Today credit unions must continuously monitor and manage the risk to ever more complex balance sheets. Regulatory requirements continue to focus on preparing adequate assumptions, what if scenarios and risk mitigation analysis.

Credit union staff and boards are challenged by the need to devote increasing time and resources to ALM management while operating with limited resources. Vizo Financial exists to support your credit union with the resources and expertise you need. We have services to match the complexity of all credit unions.

ALM Direct - ALM Modeling Services

ALM analysis is time-consuming business, and the cost of hiring a full time ALM analyst can be more than your credit union’s budget can bear. Having a trusted resource to process your data and perform modeling frees your staff to perform other functions. But wouldn’t you like the convenience to test rate strategies or perform what-if scenarios whenever needed?

ALM Direct is an Internet-based solution that provides you with the advantages of both an in-house and outsourced modeling solution. We provide the processing of your data, delivery of your ALM reports and analysis of your results, which provides expertise to the modeling process. Because you have online access to the model, you have the in-house capability to update assumptions and perform “what if” income simulations as needed.

Our ALM analysts have expertise in ALM modeling and the dynamics of interest rate risk. Our team is available to help you, your staff, ALCO and board understand the risk in your balance sheet and how to manage it.

Benefits to Your Credit Union:

  • Model processing and report production.
  • Summary Analysis – a custom report prepared by experienced Vizo Financial staff to help you interpret model reports with an ALCO friendly format.
  • Stress Testing.
  • Forecast earnings under different business and market assumptions.
  • Assess long-term interest rate risk with net economic value analysis (NEV).
  • Comply with regulations for interest rate risk management.
  • Online access to your data, assumptions and reports.
  • Unlimited "what if "analyses.
  • Unlimited model support.
  • Optional custom liquidity reporting.

Features:

ALM Direct is a complete solution for all your Asset/Liability and earnings forecasting needs. Following is just a sampling of the presentation quality reports available:

  • Forecasted Income Statements
  • Net Economic Value of Equity
  • Repricing and Cash Flow Gap
  • Interest Rate Risk Compliance
  • Market Value vs. Book Value
  • Effective Duration and Convexity
  • Assumption Documentation
  • Sources and Uses Report

Since assumptions are a necessary part of the ALM and forecasting process, you need a tool that allows you to control those assumptions appropriately. ALM Direct allows credit unions to build various market scenarios under which they can model their balance sheet, income statement and net economic value of equity (NEV).

  • Level of interest rates
  • Slope of the yield curve
  • Prepayment sensitivity

ALM Direct enables you to define custom balance sheet growth and reinvestment rules. This allows senior management to forecast using different business strategies to see their impact on the bottom line. Using ALM Direct, credit unions can model unlimited “what if” scenarios.

  • Define growth as a target balance or forecast only the new volume
  • Reinvest cash flows and new money into user-defined instruments

Systems’ online ALM model. The model offers the following features.

  • Advanced instrument-level analytics.
  • Comprehensive reporting package.
  • Customized chart of accounts.
  • Full NEV, NI and NII simulation.
  • Transparent assumption reporting.
  • Income simulation available over a 1 to 15 year horizon.
  • Instantaneous and parallel rate shocks as well as lagged and parallel rate shocks, rate ramps and yield curve shifts.
  • NEV discounting to a yield curve (U.S. Treasury, LIBOR or FHLB curve).
  • Mortgage prepayment model or support of user defined prepayment tables.

As with any modeling solution, supplying accurate data about the instruments currently on your balance sheet is paramount. We make this process easy and transparent. You supply data files from your data processor and several simple Microsoft Excel templates. We upload the data into ALM Direct and process your data and reports. The reports are available for you to retrieve from the website.

ALM Model Validation Services

We offer two different levels of model validation depending on the need and complexity of the balance sheet being modeled.

A model validation strengthens reliance on the ALM model to help make sound business decisions and satisfies regulatory requirements. With a model validation, areas of potential weakness are identified along with recommended changes to improve the accuracy of the model and limit model risk.

Our service offers credit unions two levels of validation:

  • Model Validation - examines data inputs, assumptions, model processing, model reports, policies and ALM processes. The credit union receives a documented report of all findings and suggested recommendations. We also have an optional liquidity review that can be added to your validation.
  • Parallel Model Runs – The credit union’s data and assumptions are input and processed on a second model. The credit union receives a report comparing the output of both models.
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