c. myblog

April 19, 2011

NEV Shares At Par

Q: Does assuming NEV non-maturity deposits at par isolate changes in balance sheet structure? A: No. Some people think that valuing non-maturity deposits at par is more conservative and isolates changes in balance sheet structure simulation to simulation.  This is not the case.  NEV with non-maturity deposits at par shows exactly the same result whether […]

April 7, 2011

Static Income Simulation – Things To Consider

One of the traditional approaches to income simulation is to use a static balance sheet, which assumes that a credit union’s mix of assets and liabilities remains constant, regardless of external forces.  In other words, static analysis assumes that every dollar of mortgages that matures is immediately put back into a new mortgage at the […]

March 31, 2011

Lower Earnings Or Increased Interest Rate Risk?

If there is one thing to be said infallibly about risk management, it is never black and white.  The historically-low rate environment coupled with mostly-anemic consumer loan demand has put increased pressure on credit union margins across the nation; moreover, many are reaching their floor with regard to lowering deposit rates.  In light of the […]

February 17, 2011

Shifting Deposit Trends

Over the last couple years, credit unions have grown lower-cost deposits.  This growth has largely been the result of a flight to safety that has occurred due to the economic environment.  Certificates of deposit (excluding IRAs) have decreased from a high of about 28% of funding in late 2007 to about 24% as of 3rd […]

February 15, 2011

Deposit Pricing Lags As Rates Rise

Many financial institutions see an eventual rise in market rates as an opportunity to create greater margin between what they pay on their non-maturity deposits and what they can yield on their new and or variable-rate assets.  This idea is not new.  However, what is different is that many credit unions are building into their […]

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