Simplified Investment Portfolio Management Strategies for Smaller Credit Unions



Screen Shot 2014-11-18 at 3.15.01 PMAs a credit union manager, there are many factors to consider when deciding how to manage your excess liquidity. Many credit unions face the challenge of running at a low loan to share ratio.

Letting excess liquidity, even in a low interest rate environment, sit in the overnight account without earning any yield is just not the correct strategy; you’re not going to meet your income goals. Doing this for an extended period will put downward pressure on your ROA.

However, in the eight-plus years that I have been in the credit union industry, I have seen many smaller credit unions operate in this fashion. Why? Because somewhere along the way it was suggested to them that the risk is not worth it; they were given incorrect information or have just not been educated to the simplistic strategies that are associated with putting together a basic CD ladder.

The strategy to build an investment ladder is simple to implement, avoids the need to make any market timing decisions and provides stable cash flow. Although yields have been low, a quick snapshot below will disprove the “waiting for rates to go up” mindset.

This content is for CU BUSINESS eMagazine , Special Deal: 2 websites , and NEW! The Leadership Team Builder Group Subscription members only.
Log In Register

Share post:



More like this

Rebecca White Joins Texas Trust as Vice President of HR

ARLINGTON, Texas – June 6, 2022 – Strengthening and...

There’s more to overdraft reform than just fees

The great overdraft debate has focused on fees. And...

Rising Inflation Impacting Non-Prime Borrowers Most, Though Many Consumers Proving to be Resilient under Challenging Circumstances

New TransUnion study explores consumer resiliency amid rising inflation Chicago,...