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Financial Risk During Widespread Disruption: What the Board & Management Should Monitor

Apr 06 2:00 PM - Apr 06, 2020 3:30 PM
Apr 06, 2020 2:00 PM - 3:30 PM

COVID-19 is already having a huge impact on the economy. But closer to home, how is it likely to affect your credit union’s financial health? Join us to learn more about the impact and how to monitor key financial gauges during this epic disruption.

Learning Objectives

  • Find what the key causes of rapidly declining capital are
  • Negotiate the mark-to-market accounting, and understand what declines in investment market value will mean to your capital and income
  • Consider the suddenly changing allowance for loan losses (ALLL) climate and why recent historical models won’t provide the allowance you will probably need
  • Understand why attracting deposits right now may be counter-productive for your credit union
  • Create teams to handle specialized areas and work to protect both the members and the credit union
  • Create scenario balance sheets based on different near-term possibilities

As the COVID-19 effects ripple across the economy, the board and management need solid, up-to-date information on key financial issues that may change rapidly. It’s too soon to know much about changes in members’ ability to repay loans, or about the coming effect on capital and the allowance for loan losses. That said, it’s imperative to quickly set up and monitor systems that will provide some leading indicators of the coming changes.

This session will address ways to protect as much capital (net worth) as possible. Learn ways to identify weakening loans before the payments stop coming in. Explore how to help financially troubled members stay in their loans and reduce the risk of charge-offs. Understand why attracting deposits now could be a real burden to both the balance sheet and income statement, and how to avoid a rapid increase in unwanted and unneeded deposits. Discover how to manage the ALLL at a time when the typical look-back period of 12 to 24 months suddenly makes no sense. Investments have a mark-to-market issue that could well contribute to a rapid decline in capital. Learn how to monitor this. The importance of staying in touch with commercial borrowers at a time when their worlds have been turned upside-down will also be covered.

It is important that the board and management have a broad, up-to-date set of gauges to provide a window into the credit union’s key financial issues as this crisis progresses. Having this information available will allow for faster and better decisions. Now is not a time to panic – there may even be opportunities in this chaotic period. But good data and information are the keys to keeping your credit union from becoming a COVID-19 victim.



Tim Harrington, CPA, TEAM Resources

Tim Harrington is President of TEAM Resources and has been a financial institution consultant for over 27 years. Tim has advised lenders on verifying income from tax returns since 1992 and consults with financial institutions nationwide on issues of strategy,profitability, and board governance. He speaks at nationwide conferences and has presented in Canada, Mexico, Puerto Rico, Jamaica, and the Virgin Islands. Tim is the author of the popular software, Lenders Tax Analyzer. In addition, his book “Eisenhower on Enlightened Leadership” has been used by management teams nationwide to improve leadership skills. He did his undergraduate studies at Gonzaga University and graduate studies at the University of Washington.




Additional Info

Event Type

On-Demand Webinar

Topics Covered

  • On-Demand Webinars
  • Leadership
  • Executive Management
  • Coronavirus
  • Board Governance