INSTRUCTIONS FOR LIQUIDITY ANALYSIS TEMPLATE:
Definitions:
“LOANS” includes all loan balances at each month end including credit card loan amounts.
“SHARES” includes all member share balances (shares, drafts, IRAs, MMDAs, certificates) at each month end and excludes all borrowed money and non-member amounts.
“ASSETS” is stated assets at month end net of Allowance for Loan Losses.
“AVAILABLE FUNDS” is the total of monies, at each month end, that were immediately accessible to fund liquidity needs without penalty or loss of principle.
Instructions:
Complete the first three columns. The next four columns will calculate for you. Scan down the “% Change Core Liquidity” column to determine your credit union’s largest negative percentage. This indicates the amount of cash, as a percent of assets, used in any given month to fund member needs-share withdrawals and loan funding. Add 2% to 3% to your largest negative percentage as an extra cushion, remove the negative sign, and replace the “9%” in the next to last column with your percentage.
If you chose not to complete the “Available Funds” column for prior periods, we do encourage you to complete it on future input. This will aid the credit union in monitoring policy compliance. With “Available Funds” inserted, the template monitors whether the credit union has less than the minimum acceptable level of cash indicating non-compliance or extra amounts that can be moved to higher yielding investments.
Benefits:
--This template allows your credit union to use historical information to set n appropriate minimum acceptable level of monthly liquidity and this information should be included in the ALM Policy.
--It allows the credit union to monitor monthly compliance with this minimum acceptable amount.
--It may alert the credit union to the “seasonality” of liquidity needs to assist in setting up a more efficient investment ladder.
--It helps to spot trends as liquidity needs change.
--Once historical data is input, a few moments each month keep the analysis current.
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