Unsecured Loan Participations: Getting a Handle on the Risk
June 28, 2021 | Lorena Paredes

With loan demand down and cash deposits up, buyer demand for unsecured loan participations has increased over the past year, and many credit unions are broadening their loan participation policies to include unsecured loans. Although a great option for higher-yielding assets, it’s important to analyze the associated credit risk factors. Full story

Unsecured…to be, or Not to be? That is the Question.
April 30, 2021 | Jeff Hamilton

Before the pandemic era, interest in unsecured loan participations was minimal. However, in recent months, the Member Credit department at Catalyst Corporate has received increased inquiries from buyers looking for any type of loan participations, including unsecured loan portfolios. Full story

As Painful as it May Be…Invest!
January 04, 2021 | Leah Schlangen

Since March 2020, we’ve received many questions regarding the economy, market and rates. With so much economic and COVID-19 data available, it is hard to synthesize everything and come up with one conclusive answer regarding the future or what the new “normal” may be. The new normal for credit unions will vary depending on membership base, asset size and services offered. However, one aspect we must adjust to is the low interest rate environment. Full story

The Gifts of 2020...
December 21, 2020 | By Chris Shipman, CFA, CFP®

If the year 2020 could be characterized, I would relate it to Uncle Eddie, from National Lampoon’s Christmas Vacation – great intentions, but always seems to say or do the wrong thing. As we reflect, the year started with great intentions. After all, we were in the longest bull market in U.S. history, with no real end in sight. Then the pandemic hit, and it has been the gift that keeps on giving. Full story

The Basics of Backtesting
December 18, 2020 | Theresa Batoon

At one time or another, you’ve probably heard the term “backtesting” from your auditors or ALM provider. Backtesting is simply the comparison of your actual income statement to your projected income statement. This technique can provide valuable insights into the accuracy and reasonableness of your interest rate risk model. Full story

What Will it Take for Mortgage Rates to Rise?
December 07, 2020 | Zane Wilson

You’ve likely seen articles predicting that mortgage rates will rise in 2021. The rationale for these predictions is complex, but when I think about the direction of mortgage rates, there is really only one major factor I consider: economic growth. However, for mortgage rates to increase, one final variable must be realized: the 10-year Treasury yield needs to rise above one percent and remain within a range of 1.33-1.60 percent. Full story

Examining Investment Decisions Based on the Yield Curve
November 30, 2020 | Casey Peterson

The year 2020 has been like no other, and the financial services industry – like most – has felt its share of turmoil during the COVID-19 pandemic. Credit unions have endured a nationwide lockdown, modified branch activity and accelerated timelines for digital solutions and online banking. Over the last eight months, two major economic byproducts have also emerged: 1) deposit/share growth and 2) record low interest rates. Full story

The (Tur)Key to Understanding Asset Liability Management
November 23, 2020 | Maryssa Crews

Asset liability management (ALM) can be somewhat daunting. You may be wondering, “What is the best way to allocate the balance sheet to minimize risk and optimize earnings?” To fully grasp ALM, you need an understanding of different types of risk and how the balance sheet composition affects those risk levels. With the holiday season fast approaching, it may be helpful to compare risk assessment tools to a Thanksgiving feast. Full story

SOFR So Good, but Transition from LIBOR Will Come with Risks…
November 16, 2020 | Dan Abdill

In the U.S., LIBOR’s “heir apparent” is the Secured Overnight Financing Rate (SOFR). Regardless of the chosen benchmark, transitioning from LIBOR has its risks. In July 2020, the Federal Financial Institutions Examination Council (FFIEC) – of which the NCUA is a member – released its “Joint Statement on Managing the LIBOR Transition.” The statement enumerates the types of risk examiners will focus on but does not endorse a specific replacement benchmark. Full story

FOMC Guidance Sets New Tone for Future Rate Forecasting
November 09, 2020 | Jonathan Jackson

In late August, a new update to FOMC policy framework was introduced which included a major shift in strategy for potential rate hikes. In an effort to provide further clarity, the FOMC issued explicit guidance, reinstating its commitment to leaving rates unchanged until the new set of economic parameters is met. Here's a closer look at the new criteria. Full story

Clearing Loan Participation Hurdles without Breaking Stride
July 11, 2019 | Mark DeBree, CFA

Is liquidity tight and loan demand strong at your credit union? In the past, you’ve likely looked at selling loan participations to ease liquidity and create balance sheet capacity for continued loan demand. However, as interest rates rose, you may have been hesitant to enter into a loan participation sale due to potential pricing below par. But with the potential for falling interest rates ahead, are there reasons to revisit this decision? Full story

What to Consider when Selecting Liquidity Management Solutions
March 28, 2019 | Kathy Gensler

With total loans/shares on the rise and interest rates uncertain, liquidity management can be challenging. Squaring away available funding sources and stress testing your credit union's liquidity are two essential components of effective liquidity risk management. Full story