Asset liability management is a way credit unions address risk faced due to a mismatch between assets and liabilities, often due to liquidity or changes in interest rates. It's a vital part of a credit union's operations.
This week, CreditUnions.com features case studies and best practices from credit unions who have found solid ALM strategies.
1.7 Percentage Points
The third quarter of 2016 was the first quarter in the past three years to exhibit positive year-over-year net liquidity change, yet loans outstanding outpaced total share growth by 1.7 percentage points. Year-over-year loan growth has consistently exceeded 10% since the end of 2013, whereas share growth has slowly grown from 4.1% in the third quarter of 2013 to 8.7% in the third quarter of 2016.
Read more about the future of credit union liquidity in "The Importance Of First Quarter Share Growth."
Built into U.S. Postal Service Federal Credit Union's asset liability management framework are 64 different interest rate environments that have occured in the past, both in short- and long-term scenarios. U.S. Within these interest rate frameworks, Postal inputs product or service rates, term lengths, and volumes.
To see the credit union's modeling as well as see how it thinks beyond third-party reports, check out "A Strategy For ALM Years In The Making."
Over the years, a number of credit unions have shared their asset liability management policies and checklists with Callahan & Associates, and there are several best practics that all of the documents have in common.
In "5 Tips To Evaluate Asset Liability Management," we identify those that will help any credit union evaluate its own ALM policies, procedures, and management practices.
Credit unions have posted an 8.6% increase in share balances over the past 12 months, the fastest rate since fourth quarter 2009. Share balances increased $86.7 million year-over-year and approached $1.1 trillion as the third quarter of 2016 came to a close.
Learn more about this side of the balance sheet in "Shares By The Numbers."
343 Credit Unions
Share, loan, and member growth are three major metrics that help formulate a big picture of a credit union's performance.
In a third quarter clean sweep, Pioneeer Federal Credit Union topped the leader tables for all three of those measures, besting 343 credit unions in the $250 million to $500 million asset range.
See how the Idaho credit union uses marketing, deposit lending, and ALM strategies to increase member value in "Why Pioneer FCU Tops The Leader Boards In Share, Loan, And Member Growth."