Featured Article

Searching for Gremlins
Re-Examining the Credit Union Balance Sheet

Part 1 of 2

Never in my 35 years advising credit unions have I seen greater challenges facing management. Over the last three years, multiple and unprecedented events have occurred. The outcome of these events for the credit union balance sheet is multifaceted. However, much of the impact is not apparent on its face. Click for the full article.

Money Matters

Economic Forecasting:
Why Even Try?

By Mark H. Smith
CEO, Mark H. Smith Inc.

Economics is not referred to as the dismal science for nothing. Interpreting and adding meaning to the huge volume of economic data available is challenging in and of itself. Utilizing data and providing forecasts of future economic condition adds another level to the challenge. It is no wonder that the term "imprecise" is often used. Nevertheless, credit union executives are in the business of risk management and mitigation as it pertains to future economic events. Here are a few tools available to you...click for the full article

The Economic Outlook

Outlook 2012

By Mark H. Smith
CEO, Mark H. Smith, Inc.

The economic outlook for the short to intermediate term can be summarized in four words: More of the same. Chairman Bernanke of the Federal Reserve Board of Governors signaled that intention at their most recent meeting in early December 2011. Short-term interest rates appear to be headed for an extended period of stagnation, as far as 2014, at these near-record low rates. Long-term rates are also forecasted to remain low.

In this Economic Outlook, we have used the Survey of Professional Forecasters, The Outlook for the U.S. Economy, by Andrew Tilton, Senior U.S. Economist, Goldman Sachs & Co., and the Economic CU Forecast provided by CUNA. The CUNA forecast includes some elements that are not typically included in other general forecasts. I will mention a couple of them here.

From the Field

The Best of the Best

Introduction by Mark H. Smith

In each issue of CU ALM Report, we will point you to timely article which we have encountered recently and deals with a current credit union topic. Mark H. Smith Inc. is not affiliated with any of these authors, but we provide these links as a courtesy to our clients.

In this issue, William J. McGuire, Ph.D has generously given permission to reprint his recent article "Too much of a Good Thing? Why the Recent Surge in Low-Cost Deposit Funding–And What to Do About it Now." I have attended several of Bill's presentations over the years. I find him to be a knowledgeable advisor in the field of deposits management. This article summarizes some of Dr. McGuire's thoughts on the current state of deposits and makes suggestions as to managing the liability side of your balance sheet.

Client Corner

Budgeting for Success

By Cynthia R. Walker, COO, Mark H. Smith, Inc.

Very simply defined, a credit union generates revenue by maximizing the spread between what is paid for deposits on the liability side of the balance sheet and the interest earnings from putting the money to work in loans or investments on the asset side of the balance sheet.

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