c. myblog

August 29, 2013

Danger of Policy Limits on Net Interest Income

Establishing risk limits on only part of the financial structure is a common reason for why risks are not appropriately managed. Setting a risk limit focused on net interest income (NII) volatility does not consider the entire financial structure and can lead to bloated operating expense structures. For example, assume a credit union has a […]

August 22, 2013

Liquidity – Positioning Your Credit Union for Long-Term Solutions

With the recent focus on contingency liquidity planning, many credit union management teams are evaluating how to meet the potential demand that a rapid-onset, high-impact liquidity event may have on their balance sheet. In order to meet a hypothesized short-term contingent event, management teams are turning to the Central Liquidity Facility (CLF) or Federal Reserve […]

August 15, 2013

Borrowing Rates Are Up – Other Impacts to NEV

Continuing with our message from last week, if you are running NEV, there are some other changes you will notice as a result of borrowing rates increasing. As pointed out last week, NEV calculations for the current rate environment will result in shares showing increased value as “market rates” (generally represented by borrowing rates) have […]

August 9, 2013

Borrowing Rates Are Up– Now My Credit Union Has Less Risk?

Net economic value (NEV) is often cited as one way to quantify the interest rate risk exposure of a financial institution. While there are many concerns with relying upon NEV to provide good decision information, this discussion focuses on recent changes in interest rates and the resulting impact to the NEV of credit union shares. […]

August 1, 2013

Linking Strategy With Desired Financial Performance

The strategic planning season is right around the corner. At the end of their overall strategic planning process, many credit unions believe they have linked strategy with their desired financial performance. Some credit unions decide on targeted financial ratios and believe they are linking strategy with financial performance, but not high-functioning credit unions. They simulate […]

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