Second Opinion ALM Analysis & Independent Review

Examiners often require a credit union to have an ALM validation performed to verify the reasonableness of your ALM results.  This is in the form of a Second Opinion or an independent review.  Both of these are conducted by Brick & Associates.  Call us to talk about your needs and to get a quote.

Independent Review

An Independent Review is a 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 provides to Brick & Associates. Ask us about this service.

Second Opinion ALM Analysis

In a Second Opinion ALM Analysis, our firm produces an ALM analysis using the CU/ALM-ware System.  This can be done using your own assumptions or those that Brick & Associates believes 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 differ in the second opinion from those used by the CU, this is likely to 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

Backtesting is another form of an ALM validation that we may combine with a Second Opinion Analysis and our Independent Review.  This depends on the particular ALM system and the availability of the necessary data.  Backtesting is done to verify the reasonableness of the ALM projections and some of the assumptions. Ask us 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!

Get in touch »