Creating a budget is always a challenging and uncertain process. Developing the annual budget for 2011 may be unusually difficult as there is heightened uncertainty about loan demand, interest rates, investment yields and deposit trends. Net operating expense concerns include share insurance assessments, threats to non-interest income and provision for loan loss trends—stable, declining, or, […]
We strongly recommend that credit unions annually invest the time to forecast financial performance for at least three future years. The baseline forecast should compliment the strategic plan and include the cost of major initiatives, as well as expected growth trends. If the baseline does not produce satisfactory performance, determine what changes could be made. […]
As we discussed in our April post, Bankruptcies on the Rise and the Evolving U.S. Debt Burden, bankruptcies have been rising at an alarming rate this year. The trend is likely to continue—it will be interesting to note how the situation evolves (since 1st quarter) when the U.S. Judiciary releases second quarter figures in the […]
As you consider establishing concentration limits on loans, it is important to know how the rate of growth could impact risk. We understand that loan growth is anemic for many financial institutions. However, at some point, loan demand will increase and the rate of growth is something decision makers will need to consider. In fact, […]
At the moment, there aren’t many credit unions that would make this statement. Net interest margins continue to be squeezed by the extended low rate environment. Deposit pricing is nearing the bottom, but there’s still plenty of room for loan and investment yields to decline. It’s no different for big banks. Just from the first […]