December 17, 2007


  • For most credit unions core deposits will not reprice faster than loans if short terms rates fall in 2008. Most CU''s raised core deposit rates minimally during the rising rate environment starting in 2004. This means rates won''t have the ability to be lowered if rates drop. If 58% of the portfolio is core deposits and the other 42% consists of long term funding (1 year or more CD''s) CUs may not be able to reprice shares. Core deposits always show short durations and exaggerate NEV in a rising interest rate environment. This also exposes, and exaggerates NEV if rates fall and you can''t reprice funds.