System Overview

Top Previous Next

Financial institutions use asset/liability analysis as a management tool to determine their financial positions. The Federal Banking agencies emphasize the importance of having appropriate board and senior management perform oversight and extensive risk management. These increased regulatory demands require management to develop a system for monitoring and reporting interest.

Managing your interest rate risk has become much easier with IRR-Solutions® II, FinSer's advanced PC-based interest rate risk management software. Advances in technology have not only increased our capability to perform more detailed analyses, it has also made the handling of host data and assumptions much simpler.

IRR-Solutions® II provides valuable insight into the earnings power and interest rate risk structure of your institution, and is a powerful tool to maximize shareholder value. It gives you invaluable ways to formulate and test strategic options in such areas as Loan Pricing, Deposit Pricing, New Product Offerings, and Investments. And, IRR-Solutions® II has extensive capabilities to generate budgets and track actual versus budget performance in various time periods.

IRR-Solutions® II gives you

•	An easy to navigate account structure with a Windows® Explorer-type interface.

•	Extensive capabilities to generate budgets and tracking budget performance in various time periods.

•	The ability to change rates over time and project income in changing rate environments.

•	Highly flexible assumption assignment options geared to the structure and requirements of your institution.

•	The ability to review results at any subtotal level, with drill-down capability down to individual application items.

•	Advanced Reporting capabilities with built-in graphics, including export to common desktop applications.

Data Capture

A seamless interface to the host system is the key to providing efficient and accurate information. With virtually no effort on the part of the user, IRR-Solutions® II captures all required item detail information into a PC database modeled after the unique general ledger structure.

Advanced Income Shock Simulation

Our Advanced Income Shock Simulation module, a powerful component in IRR-Solutions® II, shows future earning potential in seven user definable rate shock environments.

With Advanced Income Shock Simulation, you can:

•	Adjust balance sheet volumes through time using a variety of growth methods.

•	Set assumptions at any level in your chart of accounts, all the way down to a single item.

•	Enter prepayment speeds by scenario to accurately model varying cash flows in different rate environments.

•	Use full account detail in non-interest income and expense accounts.

•	Perform "what-if" analysis.

•	Perform back testing of the model

Budgeting

IRR-Solutions® II incorporates tools which facilitate the development of budgets, based on your balance sheet and non-interest income and expense projections.

Budgeting gives you:

•	Ability to change rates over time.

•	Ability to copy rates from a shock scenario for the initial budget simulation setup.

•	Ability to enter comment to document your reasons for change.

•	Ability to set a checkpoint for growth and restore the growth assumptions.

•	Budget variance and related reports

Liquidity

The Liquidity module provides for flexible and customizable liquidity reporting. Results include production of:

•	Liquidity and Dependency ratios for the current month. A separate report maintains historical ratio data.

•	Sources and Uses report of Projected Volumes

•	Sources and Uses report of Projected Available Funds.

In addition to the pre-configured ratio components, users have the ability to define components and ratios based on their specific institution needs and configurations.

Advanced Economic Value of Equity (EVE)

Another key element in IRR-Solutions® II is our Advanced Economic Value of Equity (EVE) module that models the net change in the economic value of the balance sheet in seven different rate shock scenarios.

Again, the key to accuracy of the model lies in the ability to access and utilize all of the host item detail information.

Advanced EVE provides:

•	Calculation of true present value using full cash flow detail on each application item.

•	Ability to set assumptions at various levels in your chart of accounts.

•	Ability to set prepayment assumptions in different rate environments.

•	Reporting Capability for SFAS 107 in a +/- 0 rate environment.

Reports

IRR-Solutions® II has comprehensive modeling and reporting. Stratifications of items by balances and rates, through Static Gap analysis, to Shock Income simulation, Budgeting, and measurement of Economic Value of Equity.

Reporting can be based on a variety of parameters, driven by time frames and selective reporting of your chart of accounts.

Reports can be configured into relevant groups to give you maximum flexibility in meeting your reporting needs. The ability to export to standard desktop applications provides further flexibility.

Parameter Setup

The Param. Setup module contains configuration setup and related institution information,

Who Benefits From This System

Chief executives, chief financial officers, investment managers, and comptrollers will benefit from the IRR-Solutions® II software. Maintaining the software (assumption setting and analysis) should be performed by personnel familiar with and involved in managing the Asset/Liability function.