Published in: creditunions.com

Top-Level Takeaways

  • Balance sheet management helps credit unions better understand how current and future economic scenarios will affect assets and liabilities.
  • For this year and beyond, credit unions should monitor rates, liquidity, and technology costs.

Interest rates and fixed costs are rising, liquidity is shrinking, and the U.S. economy is showing signs that it could soon slow down. These factors and others underscore uncertainty in today’s economic climate, which can prove challenging to credit unions. However, organizations that manage their balance sheets to absorb potential shocks are well positioned to report positive performance in any environment.

In practice, balance sheet management involves forecasting a credit union’s cash flow and other behaviors for each asset and liability in a variety of scenarios. MJ Coon, chief financial officer of Ent Credit Union ($5.6B, Colorado Springs, CO), describes balance sheet management as “planning to ensure the credit union remains safe and sound in any interest rate or economic environment.”

For Ent, it looks at how economic changes will affect its net economic value (NEV) ratio and its net interest income. 

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