Asset liability management (ALM) is a balancing act for bank Boards and Management teams. A robust asset management system should address liquidity and capital risk and follow the strategic goals of the organization. An ALM program 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 ALM program including an evaluation of strategies, interest rate risk, policies, and procedures with consideration of your organization’s risk tolerances and regulatory guidance.
Changes in interest rates are weakening the earnings of loan and investment portfolios. This puts loans and/or deposits to competitors when they are most needed. An annual review of the investment needs and strategies of the bank as rates change can ensure an organization’s goals match the current economic environment.
An independent Interest Rate Risk assessment does more than identify risk, it will help you achieve profitability and financial health while meeting regulatory and audit expectations. Our IRR assessment includes a comprehensive analysis of earning assets, the economic value of equity, potential gaps that can impact net income. We also provide strategies to manage the risk and protect the bank’s Capital and Liquidity.
Economic changes, local and national, can impact the liquidity of an organization. Regulatory agencies have noted increasing liquidity stress in community banks while setting higher capital requirements for Tier 1 and Total Capital levels.
Effectively managing the Capital and Liquidity determines the ultimate success of an organization. Institutions are increasingly relying on non-core sources as part of a liquidity strategy. Addressing the underlying risk is essential for a healthy institution. Liquidity management includes monitoring potential concentrations of funding sources and preparing for contingency funding needs.
We identify risks to capital, assess potential opportunities to increase core funding sources, fee revenue, and limit overhead expenditures to provide innovative solutions that protect and improve your profitability.