We measure and report interest rate, liquidity, and credit risks on an integrated basis providing our clients with a best of class solution and powerful tools to manage their business.
Why Choose Us
We believe that interest rate, liquidity and credit risk should be measured on an integrated basis and recognize a financial institution can implement multiple strategies to meet its risk management objectives. We focus on community financial institutions, and our ALM work is strongly informed by our other business lines. Our ALM input assumptions are based on the results from the hundreds of engagements we have undertaken since the firm’s founding in 2003. For example, our residential mortgage servicing rights valuations give us insights as to the rate that mortgage loans have and will prepay. Similarly, our mergers and acquisitions valuation engagements provides us with a nationwide view of vehicle loan performance and have done so for over a decade.
We believe that credit risk is the most critical because losses incurred on loans and investments have been key factors in banking crises and failures. Our credit risk engagements form the basis for our ALM credit inputs. We believe credit risk should be “built from the ground up” at the loan or cohort level. Our ALM input assumptions include both the incidence of expected default (conditional default rate or “CDR”) as well as the severity of the loss that will be incurred on a default.
We recognize that financial institutions can choose from a myriad number and type of vendors to help them manage balance sheet risk. Some focus on software solutions while others offer consulting advice.
Providers also often specialize – one type of software vendor offers credit loss estimates while ignoring interest rate risk. Another type focuses on interest rate risk management and considers credit risk at the aggregate level. Similarly, some advisory firms provide investment advice only, while others provide detailed advice on a single loan type – residential real estate or indirect auto.
Providers are also compensated in different ways. Software vendors often seek long-term contracts with onerous deconversion costs and investment advisory firms are generally compensated through commissions based on the sales and purchases of investments.
This array of options can make choosing a vendor a complex endeavor trying to identify expertise while being aware of potential conflicts of interest.
We are different. We help clients measure, monitor and mitigate balance sheet risk on an integrated basis. We consider credit, interest rate, and liquidity risk on a holistic basis and recognize a financial institution can implement multiple strategies to meet its risk management objectives. We charge a fee for our advice so we do not have a financial bias as to the solution(s) a financial institution opts to implement. We simply want what is best for our client.
Our Outsourced ALM Advisory Services Include:
We leverage the knowledge gained in our other business lines to provide superior ALM services by measuring and reporting the critical risks a financial institution faces – credit, interest rate, and liquidity on an integrated basis.
We help our clients to reach their goals by providing them with informed, objective advice regarding implementation alternatives.
We provide liquidity stress testing to our ongoing ALM clients because we believe credit, interest rate, and liquidity risk should be considered holistically.