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Asset Liability Modeling (ALM)

Asset liability (A-L) modeling is a financial model designed to help you understand the financial impact of many events. QuantyPhi’s goal is to help you understand the changes in your financial statements as interest rates change so that you can adjust your risk exposure to avoid unpleasant surprises. 

How Can QuantyPhi Help Your Credit Union?

QuantyPhi knows how to build A-L forecasts that pave the way for continuous, safe, forward progress. Our A-L modeling techniques are time-tested, leading-edge practices that address all NCUA 12-CU-11 requirements. We can show you how to create A-L models that keep risk exposure within acceptable limits while maximizing opportunity in both good times and bad.

What are the Benefits of Asset Liability Modeling?

A-L modeling is the process by which a model simulation of a credit union’s financial statements under multiple interest rate scenarios is created with the intention of using that model to discover true exposure to interest rate risk.

A-L modeling allows CEOs, CFOs, regulators, and other credit union leaders better understand their credit union’s risk exposure. It enables them to identify and act upon performance opportunities and potential risk threats in both the short- and long-term. Once areas of progress/concern are singled out, re-structuring for optimal performance on both sides of the balance sheet can be implemented.

The information gained from A-L modeling allows credit unions to determine whether or not their balance sheet can withstand unfavorable market conditions and stay the course. A-L modeling, or income simulation, is an ongoing process in which credit unions continuously seek to understand their net risk position and the sources of that risk.

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