Episode lI: High Loan to Share Ratios and High Investment Yields

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.

 
 

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.

 

 

 

Nov. 3, 2003


Comments

 
 
 
  • Interesting, but mostly overview information. More detail would be nice, but I suppose we can call the CU directly for that.
    Anonymous
     
     
     
  • We're 130% loaned out through Loan Participations. $57 mil in loans on $52 mil in assets, $42 mil shares. I think you're going to have to look harder at those call reports these days boys and girls. Gerd Henjes, Pres./CEO Countryside FCU
    Anonymous