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Market Intelligence

 Supports Asset Liability Management

If you’re a funding professional at a bank, thrift or credit union, you’re in the business of managing risk. Financial institutions must deal with risk in a variety of forms, including risk associated with liquidity, interest rates, credit, operations and even fraud.

Over the years, FHLBank Pittsburgh has offered members value-added credit products and services to help with the Asset Liability Management (ALM) process. In just a few months, the Bank will introduce its latest innovation designed to help members effectively manage interest rate risk:  funding analytics. Modicus is powered by ZM Financial System, Inc.'s ZMdesk product.

Modicus Is Easy to Use
Modicus – from the Latin meaning “risk within boundaries” – is a complimentary online financial modeling application offered to FHLBank Pittsburgh members. The easy-to-use, Web-based application offers sophisticated analyses of market value, earnings and total return of various strategies using FHLBank advances to fund selected asset example transactions. Users can choose from hundreds of pre-loaded par bond investment examples and, in turn, analyze funding these potential asset purchases with the complete range of FHLBank advances – from traditional fixed and floating rate advances to option-embedded structures.

Modicus is Robust
While a key design feature is its ease-of-use, Modicus offers robust analytical capabilities. After choosing a specific asset example and the desired funding mix selected to support it, users can analyze how the combination performs under various market environments and stress tests. In just minutes, Modicus provides model results on net income and spread, market value and duration and total return – all outputted to Excel spreadsheets for easy download.

Modicus Supports ALM
Furthermore, Modicus gives users the ability to select from among significant stress scenarios of the past, so institutions can understand the potential impact of their trades. As a supplement to your institution’s existing ALM models, Modicus serves as an important analytical and educational tool for determining how to use FHLBank advances to best meet your strategic goals.

Modicus will be released this fall as part of an updated version of FHLBank Pittsburgh’s secure, transactional Web site, Bank4Banks^®. Look for additional details on training opportunities related to Modicus during the fourth quarter of 2007. For more information on this valuable analytical application, contact your Relationship Manager, or call Dawna Heinauer at 412-288-7314 or Marshal Auron at 412-288-7336.

“Modicus” is a service mark of the Federal Home Loan Bank of Pittsburgh.

“Bank4Banks” is a registered trademark of the Federal Home Loan Bank of Pittsburgh.