Explore the critical role of asset/liability and liquidity management (ALM) in supporting the financial stability of community banks and credit unions. Our whitepaper highlights how sound ALM practices help institutions optimize profitability while safeguarding liquidity during both stable and stressed market conditions.
Key Insights:
- Strategic ALM Framework: Align funding strategies with risk capacity, appetite, and regulatory requirements.
- Liquidity Risk Management: Establish internal governance through ALM Committees (ALCO) to oversee funding decisions and contingency planning.
- Interest Rate Risk Mitigation: Balance short- and long-term funding to manage volatility in funding costs and profitability.
- Stress Testing & Reporting: Regularly assess funding needs, maturity mismatches, and cash flow projections to ensure resilience.
- Transparency & Compliance: Maintain clear reporting frameworks that support regulatory requirements and informed decision-making.
By implementing robust ALM policies, community banks and credit unions can enhance their resilience, navigate market fluctuations, and maintain long-term financial health.