About ALM Validations
Independent ALM validations performed by an industry veteran.
This practice is built on direct advisory work with more than 100 credit unions and banks across multiple states over 20 years.
Scope
What an ALM validation covers.
Data Integrity
A review of the data flowing into the model, including loan, deposit, and investment files. This covers reconciliation to the balance sheet and the segmentation decisions that determine how accounts are grouped for modeling.
Model Capabilities
An assessment of whether the model can measure the risks present in the balance sheet. This includes its handling of complex securities, optionality, non parallel testing, and the scenarios required by regulatory guidance.
Governance, Policies and Limits
A review of the ALM policy, risk limits, and ALCO meeting minutes. This addresses whether the policy assigns clear responsibility, whether limits are appropriate, and whether the minutes reflect substantive discussion of results.
Assumptions
A review of the assumptions driving model results, including betas, deposit retention, prepayment speeds, and replacement rates. The review covers both the reasonableness of each assumption and the support behind it.
Additional Reporting
A review of supporting reports used alongside the model, including back-testing, assumption sensitivity analysis, a core deposit study, what-if stress testing and other analyses that provide context for the standard output.
Other Considerations
A review of items that fall outside the categories above but affect the reliability of the ALM process. This includes documentation practices, internal responsibility for model maintenance, and the use of model results in decision-making.
Get in touch
Start a conversation about your next validation.
Tell us about your institution and the model in use. We’ll respond with a fee range and proposed timeline before any work begins.