Volunteers often have little or no training in asset/liability management (ALM), and as one of the most complicated areas in the credit union to understand, ALM results must be presented in a meaningful way.
That’s why, when reporting this information to the board, ALM results should be:
So says “Reporting ALM Results to Directors,” a white paper from the CUNA CFO Council.
Many volunteers find it difficult to understand ALM because:
Presenting ALM findings
Experts suggest that ALM reports should contain five sections to facilitate understanding and information sharing:
Optional reporting is also a consideration. Information can be added to or substituted for a model set of reports as included in the appendix.
Such information might include net economic value, Treasury yield curve, list of assumptions, balance sheet date, income statement, yield report, and CAMEL ratio.
ALM reporting may be sufficiently completed if done quarterly. Typically, it’s an agenda item four times per year and is presented at a regular board meeting.
The report suggests an annual session to provide more in-depth examination of ALM issues. It may be advisable to bring in a third party to deal with ALM education.
Reporting of ALM results is an evolutionary process and, at some point, reporting may be changed to adapt to the board’s needs and preferences. Initially, the idea is to begin with a basic set of reports that present results succinctly and simply.
Ultimately, directors are responsible for the credit union’s well-being and should participate in ALM policy making and strategy formation.
“Reporting ALM Results to Directors” is available on the CUNA CFO Council’s website.