Posted March 25th, 2020 No Comments
A Message from the President: Battling the COVID-19 Outbreak Together

The League is committed to partnering with member credit unions to navigate the outbreak of COVID-19. Our number one priority is ensuring the safety and well-being of our staff, member credit unions and the communities in which we are engaged. {Read The Full Article}

Posted March 17th, 2020 No Comments
INTECH Rebrands as VisiFI

Three innovators come together to develop pivotal tools for financial institutions. {Read The Full Article}

Posted March 17th, 2020 No Comments
CO-OP Empowering Member Experience

PymntsBrndAd_NECULNwsltr_800x530

Posted March 17th, 2020 No Comments
NCUL and Chapter Cancellations

Recently the following events/meetings have been cancelled due to the effects of the COVID-19 hitting our state.  If you have any other meetings or events scheduled in the upcoming weeks, please be sure to check to make sure they are still taking place. {Read The Full Article}

Posted March 17th, 2020 No Comments
VICTORY for MembersOwn CU

In a tremendous victory for MembersOwn Credit Union and for all Nebraska state-chartered credit unions, the District Court of Lancaster County Judge Andrew Jacobsen ruled on March 11, 2020 in favor of the credit union by dismissing a suit brought by the Nebraska Bankers Association (NBA) and Nebraska Independent Community Bankers Association (NICBA).  {Read The Full Article}

Posted March 17th, 2020 No Comments
CUMONEY Visa Gift Cards

GC-Sales-Slick-Final-2.25-1_Page_1

GC-Sales-Slick-Final-2.25-1_Page_2

Posted March 17th, 2020 No Comments
Don’t Hitch Your Strategy to a Rate Forecast

Fate Has Earned its Reputation

Twenty-nineteen may best be remembered as the year when things that weren’t supposed to happen, happened anyway. The world’s major economies weren’t supposed to have spiraled downwards, but they did. Bond yields were not supposed to have fallen, but that’s what happens when growth decelerates. The Fed was not supposed to have reversed monetary policy and cut rates, but that happened, too. Three times. The presence of these conditions would be less significant were it not for the fact that most community financial institutions have been readying their balance sheets for rising interest rates ever since the end of the Great Recession almost eleven years ago.

And who could blame them? Since the beginning of the current growth cycle in mid-2009, regulatory authorities of all ilk have been loudly and repeatedly sounding the alarm of higher interest rates couched in their concern that this inexorable fate would harm earnings and impair capital. Risk, though, is a tricky thing. Its genesis does not typically spring from what is expected, it comes from the unexpected things that sneak up on us.

As a result, most credit unions are very well prepared for rising rates, a condition that doesn’t exist, but less well prepared for low and falling rates; circa 2019. Preparing an institution’s risk profile for only one environmental condition is the perfect strategy to employ as long as one’s prescience is also perfect. But, managing interest rate risk and/or an investment portfolio should not be about outguessing the market. Nor should it be about trying to get ahead of the Fed or making bets based upon economic forecasts that are less reliable than astrological ones. What if a credit union could make itself indifferent to interest rates? What if earnings projections could be made to be consistent across a wide spectrum of interest rate backgrounds? What if risk managers prepared their balance sheets for more than one outcome?

Accomplishing those ideals sounds great as a concept, but in practice, very few institutions ever reach the promised land of interest rate indifference. One reason for that may just be the nature of human nature. Most people tend to think that their beliefs and perceptions about the universe, including interest rates, are the correct ones. If they didn’t believe that, they would have different ones. Self-belief is a good thing, but so is self-awareness and managing risk for multiple outcomes requires at least a tacit admission that one’s view of the future might be wrong. Such an epiphany can suggest behavior that might seem to go against the grain.

The Boy That Cried “Bear”!

In 2009, the winter edition of the FDIC publication Supervisory Insights contained a piece entitled “Nowhere to Go but Up: Managing Interest Rate Risk in a Low-Rate Environment.” It was filled with cautionary encouragement for institutions to make preparations for higher market rates; not at all unreasonable given that short-term rates were barely hovering above zero. But also back then, Ten-Year Treasuries were yielding close to 4% and the nominal yield of the Bond Buyer 20 Year G.O. Muni Index was around 4.25%. Needless to say, those risk managers who were only managing for a single outcome, the one defined by higher rates, avoided such things. The “smart” money was staying short because that’s what smart money does when it “knows” that rates have nowhere to go but up. As a result, many “smart” portfolio managers missed some big investment opportunities because their strategy was too invested in a perception that allowed no room for any world that didn’t involve higher and rising interest rates. A world that is still worlds away.

What If You Didn’t Have to be Right?

What about risk managers who operate without an overriding market bias? How do managers manage without an emotional investment in a rate forecast? They do it by allowing for the possibility of multiple outcomes; even some unlikely ones. Those portfolio managers who invested in long-term, taxable municipal bonds back in 2009 didn’t do it because they “knew” rates were going to fall, which they did, they did it because they didn’t know what rates were going to do. They loaded up on high cash-flow instruments at the same time and for the same reason: they didn’t know where rates were headed but they wanted to be ready for anything. And they have been. Their long-term, high-yielding bonds have provided much needed income during times when yields trended downward, and their reservoir of short-term cash flow has been a repricing boon for those times when rates trended higher or back-up liquidity was needed. Successful risk managers don’t have to be smart enough to see into the future, they just have to be smart enough to realize they can’t.

 

Lester Murray joined The Baker Group in 1986 and is an Associate Partner within the firm’s Financial Strategies Group. He helps community financial institutions develop and implement investment and interest rate risk management strategies. Before joining The Baker Group, he worked at two broker/dealer banks in Oklahoma City and was also an assistant national bank examiner. A graduate of Oklahoma State University, he holds Bachelor of Science degrees in finance and economics. Contact: 800-937-2257, lester@GoBaker.com.

TBG-Logo

 

 

Posted March 17th, 2020 No Comments
Data Privacy and Credit Unions: What to Expect in 2020

In a changing digital world, many consumers continually weigh convenience and customized experiences with the privacy of their personal information. {Read The Full Article}

Posted March 17th, 2020 No Comments
CUFN Creates High School Scholarship

As a reminder, we are proud to announce the newly created CUFN High School Scholarship.  This scholarship will be available to any high school graduation senior that has been a credit union member for at least 60 days prior to applying.  There will be one $500 scholarship available for each of the credit union chapter areas.  Applications are accepted from January 15th through March 16th.  Please be sure to promote this within your credit union and chapter.

Click HERE for more information about the scholarship and to download the application.

 

cufn2cprocess

Posted March 17th, 2020 No Comments
COVID-19 Preparation and Planning for Your Membership

Over the weekend you may have seen the announcement by the Nebraska Bankers Association that numerous banks are planning to limit lobby access, are encouraging the use of technology to conduct and complete financial transactions and ask that in person meetings be requested in advance and by appointment. {Read The Full Article}

Posted March 17th, 2020 No Comments
Carter to Serve on CUNA Mutual Group, Region CU Council

Linda Carter, President of MembersOwn Credit Union has been appointed to serve on the CUNA Mutual Group (CMG), Region CU Council. {Read The Full Article}

Posted March 17th, 2020 No Comments
CFPB Hosts Webinar on Elder Financial Abuse Trends

The CFPB is hosting an webinar on April 9, 2019, highlighting the findings from its new report: Suspicious Activity Reports on Elder Financial Exploitation: Issues and Trends{Read The Full Article}

Events Calendar
March Edition

MISSION STATEMENT


The mission of the Nebraska Credit Union League & Affiliates is to protect, promote and perpetuate the credit union movement in Nebraska.
What's Inside
Archives