Managing Your Loan Portfolio

You’ve often heard that you shouldn’t put all your eggs in one basket. That advice is especially true for Financial Institutions. If you don’t believe me, google “Savings and Loans” or review a call report for a credit union that relies solely on auto loans.

Diversify Your Home Loans

Put loans in each of your “mortgage” baskets, but limit your exposure to each basket. Obviously, 30 year mortgages have a lot of interest rate risk. That doesn’t mean you can’t have any. It just means you can’t have too many. Same goes with 15 year mortgages. On the other hand, 5, 7 and 10 year mortgages should be priced right and, in most cases, should be kept on your books.

Home Equity Loans

Home Equity Lines of Credits (HELOCs) have less interest rate risk but the “default” risk is generally higher. Of course, you probably know this.

So, start doing more Home Loans. Your members are often paying excessive fees to get a home loan. Be a hero and step in with a fair and competitive deal for your members. They will thank you!

Next Steps

• Determine which mortgages you want to offer.
• Dertermine which mortgages you want to keep on the books.
• Get your ALM Committee to agree.
• Get Board Approval.
• Call Tactics and let’s collaborate on which “compelling message” will achieve your goals.