Two weeks ago, Credit Unions Concurrently
Achieve High Loan to Share Ratios and High Investment Yields
showed a list of the Top 10 Credit Unions over $50 million in assets
with loan-to-share ratios greater than 80% in terms of highest investment
yields. This list, which is reprinted below, tells the end of a
story. Following is the setting and rising action of the story:
how three of these credit unions structured their portfolios to
achieve high investment yields without being imprudent with regard
to liquidity risk.
These credit unions recognize that the current yield curve is steep
and one can gain 200 basis points by choosing investments with durations
of three to five years instead of overnight investments. Likewise,
rates on overnight borrowings are low at the moment, allowing credit
unions to borrow to manage their day-to-day liquidity needs. For
example, in order to fund his mortgage pipeline, Western Vista President
John Balser establishes funding sources both externally and internally.