One of the advantages of running thousands of what-ifs for hundreds of credit unions each year is that it provides a window into what is on the minds of credit union executives. The what-if scenarios that are being requested by our ALM, budgeting, and forecasting clients are widely varied, but the top three financial tests we’re being asked to run are:
- Increasing deposit rates to retain or acquire new deposits
- Adding borrowings or selling investments and loan participations to provide additional sources of funding
- Increasing operating expense
Increasing Deposits, Adding Funding Sources
Even though the federal funds rate has been increasing since 2015, credit unions only recently began testing higher deposit rates in earnest. While the federal funds rate has risen 2 percent since late 2015, credit union cost of funds barely moved until 2017.
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