ALM Modeling Considerations for Community Banks    
ALM Outsourcing Alternatives
March 2008  
In-House ALM Model
online ALMnetwork
Local ALM firms
National ALM firms
Responsiveness          
Capability to run "what if" scenarios on demand  
Run quarter‐end "what if" scenarios  
ALCO can design rate scenarios
  
ALM team develops tactics & strategies  
   
Key Assumptions  
Bank establishes rate/growth assumptions
 
Bank can review/change model assumptions in real‐time  
Realistic market rate/price assumptions  
Readily update market rates (on a daily basis)  
           
Model Capabilities          
Rate level shock analysis  
Rate level and slope change analysis  
Stochastic/Monte Carlo approach for option/valuation analysis  
Prepayment tables available  
Customized, scalable multi‐factor prepayment model  
Core Deposit sensitivity with betas & lags  
Advanced customized Core Deposit Response model  
Capability to model with aggregated data  
Capability to model at the account/CUSIP level ?  
Capability for "intelligent" aggregation  
Trading quality valuations  
   
Reporting          
Real‐time report set available  
Detailed report set available via pdf format  
Detailed report set available via Excel format  
Easy‐to‐read Executive Summary report set
  
Customized ALCO/Board reports available  
           
Data management          
Secure transfer/FTP of core system extracts
  
User‐friendly with most Core Systems  
Knowledge‐based data review  
           
Documentation          
Implementation and process documentation  
Readily available? Included in cost  
           
Staffing          
Experienced ALM professionals on staff  
Bank‐level treasurer/CFO produces reports (also @ out‐sourced)  
Bank‐level treasurer/CFO reviews reports (also @ out‐sourced)  
Staff depth?  
           
All‐in Costs          
Introductory ALM model    
*Intermediate ALM model (assumption for In‐house)    
Advanced ALM model    
           
   
   
 
 
 
 
 
 
 
 
 
 
© 2008 The ALM Network Ltd. All rights reserved.