Robust earnings eliminate a potential impediment on the road toward progress with strategic objectives. The current environment, however, is placing pressure on earnings in a variety of ways. Net interest margin compression, increasing operating expense ratios, higher projected reserves for loan losses, and potential decreases in non-interest income sources all seem to be impacting financial … Continued
4 minute read – Over the last 18 months, the conversations we’ve had with management teams and board members across the United States have focused on concerns around interest rate risk – rates sat at or near 0% for so long that most people in leadership positions were not in decision-making positions the last time … Continued
5 minute read – It’s no surprise that borrowings have increased significantly over the last year. With non-maturity deposits shrinking, institutions have been filling the gap with borrowings. As more borrowings are being added and used more actively, it is important to keep a few points in mind. * First, borrowing strategically can … Continued
4 minute read – Risk often comes in pairs, and right now, interest rate risk (IRR) and liquidity risk are the dynamic duo putting pressure on financial institutions’ balance sheets. In looking at paths to address these risks, the options don’t always look that great. In some cases, they may create other issues with earnings … Continued
7 minute read – As rates have increased materially, and liquidity pressure continues to build, leaders will continue to be faced with high-impact decisions that can have longer term consequences. Reliable and timely financial decision-information is a huge component of a successful decision-making process. This blog on Static Balance Sheet Analysis (sometimes referred to as … Continued
6 minute read – The NCUA recently released an update to its Interest Rate Risk Supervisory Framework that specifically addresses the NEV Supervisory Test. In short, while the update provides some relief for credit unions, it also increases the amount of judgement in the exam process. This will require credit unions to make sure they … Continued
3 minute read – With inflationary pressure and rapidly changing interest rates creating a lot of earnings uncertainty, leadership teams are laser-focused on increasing revenue streams to help support the bottom line. As important revenue opportunities are explored, frequently refreshing and assessing where to potentially take more risk will be key. A helpful exercise is … Continued
3 minute read – With the Federal Reserve using monetary policy and increasing rates to combat inflation, there will be different winners and losers. Every financial institution has a unique exposure to rising interest rates. Some financial structures will experience an increase in earnings from higher fed funds and prime rates while others could see … Continued
4 minute read – Many CFOs and leadership teams of eligible credit unions are evaluating whether secondary capital might be a strategic fit for their business models. Here are two scenarios to consider: Scenario 1 – We want to continue to grow and expand our markets Consider a credit union that has robust growth in their current markets and has … Continued
4 minute read – As many leadership teams are in the process of building their 2022 budget, a common theme is emerging and that is an expectation for lower earnings next year. With the potential for less profit, no stone is being left unturned for important revenue generating opportunities. One way to increase Return on … Continued
