Examiners may ask a financial institution to get a second opinion ALM analysis. This can be informative, particularly for institutions with complex balance sheets. The Second Opinion ALM analysis offered by Brick & Associates provides insight into the Interest Rate Risk of the balance sheet and investment portfolio. It also gives management a perspective on Brick & Associates’ opinion regarding NMD valuation and the behavioral assumptions Brick & Associates would recommend in the current environment. Since risk measures are affected by both market-driven forces and assumed managerial behavior in response to those forces, ALM modeling results can differ depending on the underlying assumptions. It is important to periodically re-examine the reasonableness of these assumptions. Another benefit of the Brick & Associates’ second opinion in addition to the identification of potential problems is identifying ALM-related opportunities.
Reports Provided with Second Opinion ALM Analysis
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| Shocked VR Investments by Maturity |
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| Non-Maturity Deposit (NMD) Premium Report |
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| Shocked Member Certificates by Maturity |
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| 4 Contingency Funding Stress Tests |
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| Shocked Borrowed Funds Distribution |
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| 3-year Income Sim.- No Rate Change |
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| FR Investments by Maturity/Call Distribution |
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| NMD Decay Rate Table, if applicable |
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| Shocked FR Investments by Maturity/Call Distribution |
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| VR Investments by Maturity |
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| Member Certificates Maturity Distribution |
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| Borrowed Funds by Maturity/Call Report |
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| Current Market Value (NEV) Report |
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| Shocked Market Value (NEV) Report |
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| 5-Year Income Simulation Report |
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| Schedule A Diagnostic Report |
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| Average Life/Repricing Report |
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Services Included in Second Opinion
- ALM Analysis including NEV, Income Simulation, Four Contingency Funding Stress Tests & a Liquidity Analysis
- Historical Key Ratios Analysis Peer Group Comparison
- NMD Valuation Assumptions can be Brick & Associates’ Assumptions or the Institution can indicate Assumptions to be Used
- Information Regarding Behavioral Assumptions
- Conference Call to Assist in Interpreting Interest Rate Risk Profile
- Ramp or Immediate +300BP & when applicable, -300BP Shock Tests for Income Simulation
- Optional Historical Decay Analysis to Determine Historical Average Maturities of NMDs
Optional Education Opportunities
- Annual 2-Day Strategic Conferences*
* Strategic Conferences not included in Second Opinion fee.
The Second Opinion fee depends on the institution’s asset size and complexity.
Contact Brick & Associates for a quote at (800) 332-8188 or email us at staff@brickinc.com.
