White Paper

Balancing Credit Quality With Profitability

By Beth Stetenfeld

posted 10.05.2017 (lending)

Balancing credit quality with profitability has always been a challenge, but no more so than during a volatile, changing lending environment. Higher lending volume, higher yields, operational efficiency, and lower charge-off rates are several ways credit unions can enhance profitability. But how can credit unions optimize profitability alongside credit quality and serving members?

This white paper examines:

  • Suggestions for maintaining effective yields;
  • Ways to approach risk assessments to adequately prepare the product and the team, and to plan for regulatory impact;
  • Methods for handling excess liquidity;
  • Collaboration between lending and finance leaders: how CLOs and CFOs can work together to balance (for example, loan yields vs. investments); and
  • The roles of automation and technology in balancing credit quality with profitability.

Two goals are shared by credit unions: helping members and making loans. This paper shares suggestions for achieving both goals, by providing credit solutions that align lender profitability with borrower success.

This paper is the second in a two-part series about balancing factors in lending. While this paper focuses on credit quality and profitability, the first paper, published earlier in 2017, focuses on balancing efficiency, growth, and scalability.

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