By: Alec Hollis & Michael Oravetz | CUNA Council

 

High performing credit unions understand the importance of evaluating all asset classes, including whole loans, when constructing their balance sheets. Just like a securities investment or loan origination, incorporating the secondary whole loan market into balance sheet strategy can often improve your credit union’s performance.

 

  1. Establish characteristics.

The most direct driver of a loan pool’s price is the characteristics of the collateral itself. These include:

  • Coupon (WAC)
  • Credit quality
  • Weighted average maturity (WAM)
  • Servicing type

 

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