Published in: CUNA Finance Council

Last year was a profitable one for most credit unions. Despite increased volatility and global concerns, credit union performance reached post-crisis highs as shown below in Figure 1. As we continue into 2019, many institutions are looking for ways to maintain and grow profitability. At ALM First, we suggest going back to the basics with these three core lending principles: asset pricing discipline, marginal return analysis, and leverage strategies.

As Figure 2 highlights, industry securities portfolios have dwindled as a percentage of average assets since 2011. As institutions focused on lending, this allocation to credit-riskier assets has led to higher profits. As of Q318, loans-to-assets sits at over 70%, while securities-to-assets was below 15% for the credit union industry.

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