Start planning post-COVID-19 investment strategies now
CARES Act impacts—followed by rising interest rates during a lengthy recovery—can make non-703 investments for benefits pre-funding and CDA programs worth another look.
The impact of the COVID-19 pandemic on credit union income statements won’t be clear for many months or even years, but it’s not too soon to consider some long-term recovery strategies. One of these could be shifting more of your investments to those allowable for employee benefits pre-funding programs and/or charitable donation accounts.
Some of the most likely income losses from this crisis include:
- Net interest margin: Restructuring loans at lower rates and deferring loan payments will hurt net interest margins. A flight to safety by members could also result in credit unions parking excess liquidity in short-term investments due to increasing interest rates that make long-term bonds unattractive.
- Fee and other income: The National Credit Union Association issued guidance on March 16 about reducing or waiving fees for non-sufficient funds, skip-pays, loan restructurings and foreign ATM usage.
continue reading »
