Ask ALM First
What does the NCUA Advisory letter mean for Liquidity Risk Management
On Wednesday, January 17, the NCUA released an Advisory letter on Liquidity Risk Management. Liquidity remains a topic of discussion and increased focus given the reduction in on-balance sheet liquidity and competitive deposit environment the industry has experienced...
Which Hedging Strategies Can Help Manage a Rising Cost of Funds?
Finding cost-efficient sources of funding has become a growing challenge for financial institutions. Banks and credit unions have both seen accelerated deposit outflows as well as a substantial shift in funding composition from non-maturity deposits (NMDs) to term and...
How ERM Can Help Your Institution Avoid Flying Blind
Three of the four largest bank failures in U.S. history have occurred in the past 60 days. While Silicon Valley Bank, Signature Bank, and First Republic Bank had different reasons and conditions for failing, they all share one lesson: leaders of financial institutions...
How Can My Depository Navigate the Brokered CD Market?
As financial institutions continue to see deposits run off their balance sheets due to higher interest rates and inflationary pressures, many have begun to lean on a variety of wholesale funding options. With the cost of funds increasing across the board, it is...
Why is Now the Time to Consider MSR Hedging?
Many institutions have experienced significant increases in the value of their mortgage servicing rights (MSR) assets this past year, making MSR hedging a timely topic. MSR assets generally increase in value when rates increase due to slower prepayment speeds leading...
How Can My Credit Union Manage Volatility in its Pre-Funded Benefits Portfolio?
Total investments in pre-funded employee benefits programs have increased drastically as credit unions continue to navigate challenges in attracting and retaining talent amid rising benefits costs and tight labor market conditions. In 2021, total assets in pre-funded...
How Should My Depository Navigate a Tightening Liquidity Position?
Throughout the first half of 2022, many institutions have seen liquidity tighten due to increased loan demand and slower deposit growth. This has caused depository leaders to look for alternative ways to fund their balance sheet growth. The first step in liquidity...
How Can My Depository Add the Right Assets in Today’s Environment?
In June of 2021, the 10-year treasury sat just under 1.50% and mortgage rates were in the 3% range for many borrowers. Housing prices were soaring and financial depositories across the country were dealing with margin compression as investment options felt limited...
What Does the New Subordinated Debt Rule Mean to My Credit Union?
Subordinated debt is an unsecured loan issued by a depository institution that is treated as regulatory capital due to its subordination to all other creditors. Recent changes to the NCUA’s subordinated debt regulations, issued late 2021 and effective January 1 of...
How Should Credit Unions Prepare for the NCUA’s New “S” Risk Rating?
On October 21, 2021, the National Credit Union Administration (NCUA) Board approved the Final Rule that officially adds the Sensitivity to Market Risk or “S” component to the CAMEL rating system[1]. This rule is slated to take effect on April 1, 2022 and all...
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