Asset-Liability Management

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ALM is a subject that has constantly evolved over the years.  It is expected that the knowledge level of the credit union personnel responsible for ALM evolve as well. ALM is a process and involves more than simply reporting on ALM result or just having an ALLL Policy

Here are some key points to remember relative to ALM:

  • ALM is the process of coordinating actions to control the credit union’s risk and reach it financial goals;
  • Every action taken by the credit union sooner or later affects the ALM position;
  • Good ALM measurement and management processes are a must;
  • The ALM Policy sets the guidelines for the ALM process including key measurements; and
  • The “red zone” shows whether the credit union is in compliance with these measures.  If not, take action.

ALCO and the board should be aware of ratios or trends that may signal an existing or potential problem by analyzing the past, present, and future direction of the credit union.

ALCO should be alert for the appearance of “red flags”, investigate their sources, and if necessary, develop action plans to address the issues.

Asset-Liability Red Flags: More

The Future of Online Banking-Online Financial Management

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Banks and credit unions continually assess new online services to offer their consumers and members.

One of the newer online services is online financial management (OFM). Online financial management allows users to:

1) aggregate their financial accounts in one place;

2) have their transactions automatically categorized;

3) establish and monitor a budget; and

4) set financial goals and track their progress.

It’s been unclear whether online financial management’s capabilities would resonate enough with users to make them a more avid users of their primary financial provider’s online banking site.

OFM represents possibility the next evolution of online banking.  It’s about putting the consumer in control of their finances without any software to install or information to download.  OFM enables its users to see trends in their spending and even find ways to save – regardless of how many accounts they have or with what financial institutions.  OFM allows users to manage financial accounts from thousands of financial providers – including their credit cards, loans, deposits, investments, utility bills, etc. – all in one place.

More than 2 million people have already turned to third-party Web sites for personal financial management tools. According to Forrester Research, 8 out of 10 consumers would prefer to manage their finances at the place they trust most with their personal financial data – their financial institution.

OFM empowers consumers to manage their money with easy-to-use tools and automatic updates.  The product drives customer satisfaction, leading customers or members to log into your Web site more often, recommend your institution to friends and family, and adopt other online banking products.

Small Business Solutions:

With 27 million small businesses generating annual sales of $2 trillion, this segment offers significant revenue potential. In fact, because of their specific business needs, one small business is, on average, at least twice as profitable as two consumers.  Many OFM providers offer tools for small businesses.  Tools they need – and want – so they can better manage their business.

This blog entry you have just read was written by Edward Lis who is a former senior executive of three different credit unions. If you enjoyed this article I encourage you to learn more about Edward by visiting or by calling 518-420-2108.

Fin-lit rules effective January 2011

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NCUA rules that require credit union directors to have or gain an understanding of  “basic finance and accounting practices” will come into effect on Jan. 27 2011

Earlier in December 2010, the agency introduced and approved a proposal that requires credit union directors to not only carry out their duties in good faith, but also have or gain an understanding of “basic finance and accounting practices.”

SAFE Act registration

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The NCUA expects the initial period for federal registration of residential mortgage loan originators under the SAFE Act to begin around Jan. 31 and end around July 29.

The SAFE Act, or Secure and Fair Enforcement for Mortgage Licensing Act of 2008
– requires all mortgage loan originators to register on the Nationwide Mortgage Licensing System and Registry. The registry website is up now and provides information about the registration process, including what credit unions can do prior to the registration period to facilitate the process.

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