The ALM class is broken down into “two topic areas” that will cover the following: Interest Rate Risk and Liquidity Risk. With historic low interest rates appearing as if they may move upward this year, both interest rate risk and liquidity risk in the credit union balance sheet may be im- pacted. This seminar briefly reviews the basic concepts of interest rate risk and liquidity risk and then addresses the most current aspects of these two basic risks.
- Program level: Basic
- Prerequisites: not required for this program
- Preparation: no advance preparation is required
Morning Session: ALM Update: Interest Rate Risk
On Sept. 30, 2012, the NCUA’s final rule requiring some federally insured credit unions to develop and adopt a written policy on interest rate risk (IRR) management and a program to effectively implement that policy as part of their asset liability management responsibilities. This course introduces the concept of IRR in the credit union balance sheet. We will explore the most com- mon form of balance sheet IRR and present the two most common approaches to estimating and managing this risk.
With interest rates remaining at historic lows but poised to increase in 2014 based on the Fed’s intentions, we will present a current economic outlook and scenarios in which rates may increase. We will focus on strategies to increase loan yields as rapidly as possible while holding back on interest and dividend increases for deposits using segmentation strategies.
After Lunch Session: ALM Update: Liquidity Risk
This course serves as a refresher to liquidity management, with an emphasis on traditional mod- els. By attending the program, participants will gain a basic framework to serve as a guide for developing and revising their own liquidity policy, including liquidity and funding principles and standards.
NCUA has recently completed its final rule on liquidity risk which impacts all federally insured credit unions. In this session, we will review the rule and demonstrate methods to implement the rule at your credit union. Sample liquidity risk policies and contingency funding plans will be presented. The liquidity risk rule is effective for most credit unions on March 31, 2014.
Speaker: Mark H. Smith
Mark H. Smith comes to this meeting with 37 years of experience in the credit union system and related financial services industry. His experience includes Credit Union Regulator at the Utah Department of Financial Institutions, As- sistant CFO at a Utah-based community bank and CEO of a mid-sized Utah credit union.
In 1983, he founded Mark H. Smith & Company, CPAs, an auditing and con-
sulting firm which performed supervisory committee examinations and CPA audits for credit unions and community banks throughout the Western United States.
In 1990, he was appointed to a three-year term as a member of the Credit Unions Committee of the American Institute of Certified Public Accountants.
In 2010, Mark H. Smith Incorporated provides ALM services including interest rate risk and liquidity risk analysis and consultation to almost 300 credit unions in 40 states.
Mark is an accomplished public speaker and has received high praise for his ability to explain complex subjects like ALM in a simple and understandable format.