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Credit Union ALM Trends and Economic/Rate Outlook for 2016 Now Available
Friday, October 30, 2015 6:35 AM

The next segment of the ALM educational audio/visual CD series presented by Dr. Charles R. Idol, titled "Credit Union ALM Trends and Economic/Rate Outlook for 2016" (October 2015), is now available from ALM Resources and Cornerstone Credit Union League.

In this 100-minute ALM educational CD, Dr. Idol discusses four significant credit union ALM-related topics for 2016 of interest to credit union managements, boards, and asset/liability management committees (ALCOs):

  1. Nationwide federally-insured credit union (FICU) balance sheet, liquidity, earnings, and loan quality trends in the past six years subsequent to the 2008-09 recession.
  2. The likelihood of continued moderate economic growth and an improving labor market in 2016.
  3. Factors affecting the timing and magnitude of the Federal Reserve's anticipated tighter monetary policy and rising interest rates in 2016.
  4. ALM strategies to improve (or maintain) spreads and boost earnings in the 2016 higher interest rate environment.

The CD has 16 topical segments, each running from two to 15 minutes, that can be viewed sequentially in a single viewing or selectively from an on-screen outline that allows pausing for discussions and questions.

Topical Segments on the October 2015 CD

  • FICU loan mix rose to 63.8 percent in June, and liquidity fell slightly as the number of FICUs declined 1.8 percent to 6,157
  • Loans should grow 8 percent to 11 percent in 2015 with autos up 12 percent to 15 percent
  • Total share growth only around 5 percent again this year
  • FICU investment portfolios continue to shrink
  • Stable spreads and net ROAs and near record-high loan quality
  • RE and business loan delinquencies are now both less than 1 percent
  • June 2015 FICU peer statistics: notable differences in liquidity and earnings
  • Continued moderate economic growth expected in 2016
  • Economic expectations for 2016: positive factors, negative factors, and bottom line
  • Money market trends: near record-low rates with modest yield curve flattening in 2015
  • Rate outlook for 2016: rates expected to rise 100 bp to 175 bp through year-end 2016
  • Expected FICU loan/share growth in 2016: lower liquidity expected next year (2016)
  • ALM strategies for 2016: reduce asset durations and extend liability durations
  • Dividend guidelines: rationale for pricing share certificates
  • Loan pricing guidelines: managing loan net spreads to maintain ROA targets
  • Pricing credit spreads:  consistent net loan spreads across all credit-risk classes

The October CD is part of a two-CD series designed to offer credit union management teams, board members, and ALCO members' ongoing ALM education throughout the year in a convenient/cost-effective manner.

The CDs can be viewed individually or in group gatherings, such as board educational sessions, ALCO meetings, or strategic planning venues. This semiannual CD series is a collaborative joint production of Dr. Charles Idol's ALM Consulting & Research, Cornerstone Credit Union League ALM Resources, and iCap Leverage, Inc.

For more information, please contact Vicki Larkin, financial analyst in ALM Resources at vlarkin@cornerstoneleague.coop, or 800-442-5762, ext. 6497.

To view a sample of the CD, visit our website here.