ALM:  A resource overlooked

The term “stable environment” is seldom heard now in conversations related to the world of banking.  Whether it’s adjusting operations due to pandemic restrictions, dealing with staffing shortages due to a low unemployment environment, managing an investment portfolio when the yield curve is inverted, or controlling a margin after unprecedented rate hikes by the FED to combat inflation, external changes have created new environments for banker’s to navigate.

What about future?  In February of this year, the Congressional Budget Office (CBO) came out with their 2024-2034 Budget and Economic Outlook.  Many of the numbers were sobering.  However, when it comes to interest rates, the projection are for a return to a more normal shape with longer term rates falling within 4-5% range.  How will your bank fair if this is what would come to pass?  If this is you’re your expecting, what kind of rate change would cause you a problem and how?

Asset Liability Management (ALM) systems are designed to address these types of rate shift questions.  But because they isolate the exposure of interest rate movements, ALM is often viewed as the compliance tool that is reviewed quarterly.  Remember those other external factors?  What about your strategic plan and how that comes into play?  The good news is that some of today’s ALM systems can bring those perspectives in as well.  One of the leading systems is Bankers’ Banks ALM Driver program.  Residing within the Risk Management Solutions division, ALM Driver incorporates the whole picture of your bank’s reality and brings the power of Bankers’ Bank’s resources and perspective of community banking.

With the instrument level information from your Core, the ALM system contains the foundation for understanding a world of possibilities.  But this is the very reason why many banks don’t use the system beyond the compliance aspect.  The future is uncertain, so how can a banker reasonably use this without getting bogged down or ending up with so much information it’s basically unusable?  A few key steps should be taken to get more out of it for you.

Bankers’ Bank’s ALM Driver solution is about looking beyond compliance measurement, to look dynamically at your information so you can better understand both the risk and the possibilities in the future.  Please contact our ALM Driver team for more information at