Independent ALM Review, Second Opinion Analysis & Backtesting

Brick & Associates offers all three of the different types of ALM Validation.  These are an Independent Review, a Second Opinion Analysis, and a Backtesting Exercise.  Examiners frequently require credit unions to receive or perform at least one of these forms of validation in an attempt to verify the reasonableness of your ALM results.  The cost of an Independent Review, a Second Opinion and Backtesting depends on the size and complexity of your institution.  Call us to talk about your needs and to get a quote.

Independent Review

An Independent Review is the review of your recent ALM results and assumptions with an assessment of their reasonableness and suggestions to be considered. Some Backtesting exercises may be possible with an Independent Review but it will depend on the ALM Reports and Bond Accounting Reports that the CU supplies to Brick & Associates. Ask Brick & Associates about this service.

Second Opinion ALM Analysis

A Second Opinion ALM Analysis is where our firm would produce an ALM analysis using the CU/ALM-ware System as a second opinion of the CU’s IRR. This can be done using the CU’s own assumptions or using the assumptions that Brick & Associates believe are reasonable. Second Opinions can be informative, particularly for CUs that have a complex balance sheet. IRR results are highly dependent upon many assumptions. If the assumptions are different in the Second Opinion Analysis than the CU is used to reflecting this will likely cause different ALM results. Risk measures are affected by both market-driven forces and assumed managerial behavior in response to those forces. It is important to periodically re-examine the reasonableness of these assumptions. A Second Opinion Analysis can assist in this process.


Backtesting is another form of an ALM validation that we may combine with a Second Opinion Analysis and our Independent Review.  Backtesting is done to verify the reasonableness of the ALM projections and some of the assumptions. Ask Brick & Associates about this service.

ALM & Key Ratios Reports

  • ALM Executive Summary
  • NCUA’s NEV Supervisory Test results & Risk Thresholds
  • ALM Assumptions Report
  • Non-Maturity Share (NMS) Premium Report
  • ALM Terminology & Definitions Report
  • Contingency Funding Stress Tests Report
  • Baseline Contingency Funding Test Report
  • Financial Statement with concentrations shown different ways
  • No Shock Investments by Maturity/Call Distribution
  • Shocked Investments by Maturity/Call Distribution
  • Member Certificates Maturity Distribution
  • Borrowed Funds by Maturity/Call Report (if applicable)
  • Current Market Value (NEV) Report
  • Shocked Market Value (NEV) Report
  • 5-Year Income Simulation Report
  • Average Life/Prepayment/Yield Report
  • Schedule A Diagnostic Report
  • Liquidity Reports
  • Historical Non-Maturity Share Decay Rates (if data is provided)
  • Historical Key Ratios Report
  • Peer Group Ratios
  • 9 Historical Key Ratios Graphs

Second Opinion ALM Analysis includes

  • NEV analysis, NCUA NEV Supervisory Test, 5-year Income Simulation, Contingency Funding Stress Tests and many more reports
  • Historical Key Ratios Analysis with Peer Group Comparison & 9 graphs
  • Non-Maturity Share (NMS) Valuation assumptions
  • Conference call where Brick’s staff will explain the results to the ALCO or Board
  • Ramp or Immediate shock tests for Income Simulation (8 different shock tests run automatically)
  • Optional Historical Decay Analysis to determine historical average maturities of NMS
  • Extensive review or write-up

Considering a Second Opinion ALM Analysis?

Contact Brick & Associates to learn more!

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