Why Use Derivatives & Balance Sheet Hedging?
There are multiple assets competing for a spot on an institution’s balance sheet, and interest-rate risk shouldn’t be grounds for exclusion. Instead, meet the demands of your market, and then manage the interest-rate risk through our proven hedging solution. Derivative hedging techniques can help your institution retain core, longer-duration assets by managing the interest-rate risk that accompanies them. With a robust risk management process, your institution can improve its safety and soundness and help broaden the spectrum of products and services offered.
Choosing ALM First
ALM First provides:
- Proven Expertise: Our team of experts has deep experience utilizing derivative hedging for both banks and credit unions. In addition, we work with financial institutions on successful hedging strategies, and we participated in the NCUA Derivatives Pilot Program. ALM First also played an instrumental role in the final 2014 regulation.
- Turn-key Hedging Solution: Our expert guidance, analysis, and industry experience enables us to effectively utilize hedge instruments and reduce interest rate risk for our clients. We offer a turn-key hedging solution including consulting and advisory services.
ALM First’s Derivatives and Hedging Expertise
ALM First’s team of experts will work with you to:
- Develop strategies to optimize your risk profile through hedging with derivatives
- Provide education and training
- Navigate the regulatory approval process
- Establish relationships with counterparties
- Execute transactions without bias
- Monitor, analyze, and report hedge positions on an ongoing basis
- Implement hedge accounting
- Protect against unlikely events and outlier interest rate scenarios
- Increase net interest margin stability
Additional Advantages with ALM First
Avoiding sectors or specific assets is usually a sub-optimal approach to risk management when compared with hedging. By managing your risk more effectively through hedging with derivatives, your institution can benefit from:
- Enhanced income (rates are lower relative to term borrowings)
- More capital efficiency
- Sophisticated, detailed analytics including performance feedback loops and comprehensive monthly reports
- Trusted operations, monitored collateral, confirmed trades, and counterparty credit analyses
- Decreased interest-rate risk and credit risk (gains are collateralized)
- Greater liquidity