By Mark H. Smith, Founder
As we close out 2015, the credit union system will complete its seventh year hobbled by historically low interest rates. The Fed pushed the rates down to these historic lows in the fourth quarter of 2008. Most of us assumed that it would be a temporary condition and rates would return to traditional levels within a year or two. Yet here we are almost a decade later with no end in sight. So who, exactly, is the Fed and who's really in charge?
The Federal Reserve Bank of the United States is the government's bank and functions as the nation's central bank. It is an independent agency. It is controlled by a board of seven governors who are nominated by the President and confirmed by the Senate. It also reports to the Congress on a regular basis. It maintains a high level of autonomy.
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By Cynthia Walker, CEO
Life has a way of pestering you with issues from a myriad of directions, and sometimes it seems like the only response to the incessant and constant demands is to raise your voice and issue a command that does not leave room for further discussion. One of these issues we encounter at Mark H. Smith, Inc. is the request from regulators to value non-maturity shares (NMS) at par in the NEV analysis.
While the results of this analysis can be added to the plethora of information and discussion, and may provide some sort of a starting point, I would hope that none of you are tempted or persuaded by the regulators to manage to the results of this analysis. When asked to do so, the response should be NO.
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By Mark H. Smith, Founder
Almost all credit unions would welcome an increase in loan demand and the resulting increase in loans-to-total-assets ratio. After all, that is the basic credit union strategy: borrowing from the savers and loaning the funds to the borrowers.
The concept of one-third to one-half of total assets in an investment portfolio has never been a good fit in the credit union business model and it will be nice to begin moving away from that condition. Nevertheless, a potentially major change, albeit gradual, calls for some thinking and strategizing with regard to the credit union's balance sheet.
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By Cynthia Walker, CEO
The credit union industry posted some positive trends during the last quarter. Loan balances grew at a 10.4% annualized pace with July historically being a strong loan growth month due to seasonal factors attributed to car purchases and vacation spending. Credit union delinquency rates fell to .64%, down from .83% one year earlier due to the continued strength in the economy as the labor market approaches full employment.
Deposit costs continue to hover at historic lows and yet balances increased 6.7% over the last 12 months. In short, the credit union movement continues to grow, as the first half of 2015 saw credit union savings balances move over 1 trillion dollars. CUNA estimates total credit union membership in the U.S. at 103 million, or 32.5% of the total population.
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Nov./Dec. 2015
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Client Corner: Service to Clients is our Top Priority
The process of lifting your IRR assessment burden doesn't end with your quarterly ALMPro report.
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Upcoming Webinars
Webinar: Organizing and Utilizing an Effective ALCO
Thu, Dec 3, 2015
12:00 PM - 1:00 PM MST
Register for this webinar
Description: This Webinar will explore the informational needs of the financial and management team who rely on the credit union CFO for meaningful and relevant information, not just volumes of data.
In this 50 minute webinar we will learn that one of the most challenging duties of the financial and management team's CFO is to pare down the massive amount of financial data at his/her fingertips into usable information and analysis for the credit union stakeholders.
We will also review the financial related needs of each of the following groups:
1. CEO
2. ALCO
3. CFO or Financial VP
4. Other Senior Manager
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Third Party IRR Process Validation
The third party review is frequently requested by regulators who would like to see an independent or outside review of the quality and effectiveness of the credit union's IRR management process.
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