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What is the Major Threat to Credit Union Success and How to Control It

August 28

Almost all successful businesses operate by; (1) producing products in a cost-effective manner and then; (2) selling those products at a price that covers costs and provides a fair return to the company. In other words, revenues cover all costs including raw materials, production, overhead and sales and then provide a fair profit margin.
In a credit union, our primary products are loans. Deposits are our raw materials and operational expenses account for the balance of costs. If we follow the rule listed above, we would expect that loan interest income would cover dividends and all other operational costs. Decades ago, that was the case in all credit unions, but since the economic downturn of 2008 to 2010, credit unions have seen interest on loans decline while they have become increasingly dependent on fees to just break even. Recent studies suggest that roughly 70% of all credit unions are what we call Fee Dependent, with some requiring millions of dollars of fee income just to cover costs and break even.
In this webinar, we will identify the factors that have created this Fee Dependency and then examine specific actions and strategies credit unions can take to eliminate Fee Dependency and thrive.


For nearly 30 years, Dr. Randy Thompson has consulted with Credit Unions delivering training on loan and deposit pricing, credit migration and ALLL to federal and state examiners in six western states in addition to credit unions. He holds advanced degrees (Ph.D. and MS) in Finance, Statistics, Economics and Public Health and taught graduate courses in finance and statistics at several Universities in the western United States. He is a frequent speaker at League and Association meetings and has authored papers and articles for Credit Union trade journals, the New Jersey Credit Union League, California/Nevada Credit Union League, CU Times and CU Business trade magazines. He is the creator of TCT Suite of products including risk-based pricing, deposit pricing, Credit Migration, with ALLL, and the CostPro Earnings at Risk ALM Simulation Model. Dr. Thompson is the 2013 Kim Bannon Eternal Flame Award recipient for his service to credit unions. He is the father of 12 children and grandfather to 35 grandchildren. He is a private pilot and an avid gardener.

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