Fisher ALM Advisors — CORE SERVICE
AL MOdeling
Service
Our AL modeling service simulates cash flows under various rate scenarios to forecast Net Interest Income, Net Income for 2 years, and Economic Value of Equity, Liquidity, Concentration, and actual vs. policy guidelines ensuring the credit union maintains liquidity and capital stability.
Quartlerly Opinion ━━
A Partner,
Not A Vendor.
When it comes to risk measurement, Fisher ALM Advisors separates itself from the competition by offering custom service to each client. We have never considered ourselves a vendor, but rather a business partner serving each client one at a time. We are proud to be a professional advisor that works closely with management.
The Fisher ALM AL Modeling is a validated cash flow model that uses detailed credit union data files or 5300 data, we run a complete ALM Risk Measurement Package. The model measures liquidity, concentration, rate, market value and average life information. The client can also get Liquidity Proforma Reports upon request that includes growth and stress measurement for an additional fee.
The package report for management and the regulator includes the following:
Model Assumptions
- Current Pricing
- Decay Factors
- Prepayment Tables
- Discount Rates
- Basis Pricing on Nonmaturing Shares
- Detailed Modeling Starting With Your Beginning Balances and Rate
- Weighted Average Rate & Remaining Term
- Detailed Shock Analysis for the follwing scenarios: Flat, Up 100-400, Down 100-300
- Actual forecast Results Compared with Policy Guidelines
The detailed report package is prepared for credit union management and the regulators. Pay particular attention to the report called “Guideline Summary Report”. This report is specifically designed for the board to cover their specific responsibilities.
AL Modeling Service FAQs
DO NOT DELETE
Does the model account for credit risk?
No, we rely on credit specialists to develop and measure credit risk through a separate loan policy.
What is the importance of The Assumptions in modeling?
Models are only as good as their assumptions. We develop cash-flow design under seven rates scenarios quantify non-contractual behaviors, such as loan prepayments and deposit decay rates, to ensure the simulation reflects actual member behavior.
How often should model assumptions be updated?
Assumptions should be reviewed annually or whenever there is a significant shift in the economic environment or the institution's balance sheet composition.
What is the difference between Static and Dynamic modeling?
Static modeling looks at the current balance sheet "as is," with no balance sheet growth while Dynamic modeling incorporates projected new business growth and budget forecasts to predict future risk.
How do you ensure the model's data integrity?
In preparing the model input data we reconcile the information with that of the balance sheet provided. We encourage the client to perform data scrubbing and reconcilement to ensure the core system data matches the financial statements, preventing "garbage in, garbage out" results.
Can the model assist with Liquidity Stress Testing?
Yes. The quarterly report package provides a static gap for the flat rate scenario. Additionally, we can provide a detailed liquidity analysis including growth for each of the rate scenarios.
How are the results used by the ALCO?
The Asset Liability Committee (ALCO) uses model reports to quantify liquid, rate, market and concentration risk measured against policy guidelines. With this information the ALCO can determine whether loan and share pricing needs to be modified. It also provides the necessary information for proper management of the investment portfolio.
TESTIMONIAL
What Clients Say
TENDTO Credit Union has partnered with Fisher ALM Advisors for over 10 years for our ALM modeling needs, and we couldn’t be more satisfied with the relationship. Their team consistently delivers accurate data, timely responses, and exceptional service. Most importantly, the NCUA has been very pleased with our overall process and reporting. In our experience, their pricing and level of service are among the best in the industry. I would highly recommend them to anyone looking for ALM consulting.
Wade Brink
CFO
Tendto Credit Union
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