Optimization Analytics

Optimization Analytics 

The Optimization section helps credit unions make data-driven decisions by simulating and ranking strategies that improve portfolio performance, funding efficiency, and overall balance sheet health. It uses advanced modeling techniques to identify the most effective combinations of assets, liabilities, and trades.

Trade Simulation

Simulates the impact of proposed trades—such as bond swaps, loan sales, or funding changes—on your balance sheet and income.

Key Benefits

• Helps evaluate buy/sell decisions before execution.
• Quantifies the effect of trades on earnings, risk, and capital.
• Supports leverage and funding optimization strategies.

How to Use Trade Simulation

1. Navigate to Optimization Analytics > Trade Simulation
2. Select Create/Edit Simulationand define the trade (e.g., sell MBS, buy Treasuries)
   1. Select Candidates is the first step in the Buy Optimization workflow
   2. It is important to filter the investable universe of inventory according to your specific criteria prior to running the optimization to remove any instruments you don’t want to include or outliers in your opportunity set
3. The Investment and Loan inventory windows display instruments modeled within the Platform available for selection in the Optimization
4. Choose funding assumptions (e.g., FHLB advance, deposit inflow)
5. Run the simulation to view:
   1. Pre- and post-trade balance sheet
   2. Changes in NII, EVE, and liquidity
   3. Strategy ranking via Efficient Frontier

Use insights to guide ALCO or investment committee decisions.

Optimize Portfolio

Simulates buy/sell transactions and funding strategies to identify the most profitable and risk-efficient portfolio adjustments.

Key Benefits

• Enhances portfolio returns while managing risk.
• Supports regulatory and internal policy compliance.
• Helps evaluate trade-offs between yield, duration, and liquidity.

How to Use It Optimize Portfolio

1. Navigate to Optimization Analytics > Optimize Portfolio.
2. Select the portfolio you want to optimize (Buy Optimization/Fund Optimization/Bond Swap Optimization/Leverage Optimization)
   1. Select Candidates is the first step in the Buy Optimization workflow
   2.  
3.  it is important to filter the investable universe of inventory according to your specific criteria prior to running the optimization to remove any instruments you don’t want to include or outliers in your opportunity set
   1. 
4. Define constraints (e.g., duration limits, sector exposure, liquidity needs) and select candidate categories.
   1. 
      

5.  Click Optimize to run the simulation to view:

1. Recommended trades
2. Projected performance metrics
3. Risk-adjusted return rankings

Add to Strategy Library

To save an objective and constraints combination for future use, click the Add to Strategy Library button, as shown below.

After saving the strategy, it can be accessed using the Set Pre-Defined Objective/Constraints drop-down menu.

Optimize Balance Sheet

Analyzes the entire balance sheet to identify optimal funding and investment strategies that align with institutional goals.

Key Benefits

• Improves net interest margin and capital efficiency.
• Supports strategic planning and stress testing.
• Aligns balance sheet structure with risk appetite and policy limits.

How to Use It Optimize Balance Sheet

1. Navigate to Optimization > Optimize Balance Sheet.
2. Select the scope, method and objectives.
3. Input constraints such as capital ratios, liquidity thresholds, and growth targets.
4. Run the optimization to generate:
   1. Recommended asset and liability adjustments
   2. Impact on earnings, equity, and liquidity
   3. Compliance with internal and regulatory limits

Strategy Manager

Ranks and compares multiple strategies using the Efficient Frontier to help credit unions choose the best path forward.

Key Benefits

• Provides a visual and quantitative comparison of strategic options.
• Helps ALCO teams and executives make informed decisions.
• Supports long-term planning and performance tracking.

How to Use Strategy Manager

1. Access Optimization > Strategy Manager.
2. Select strategies to compare (e.g., trade simulations, portfolio adjustments).
3. View the Efficient Frontier chart showing:
   • Risk vs. return for each strategy
   • Rankings based on profitability, risk, and policy alignment
4. Export results for board presentations or internal review.