Board Role In Rate Setting Decreases
Decision-making for setting rates on loans and shares, once the sole purview of the board of directors, is increasingly being taken over by management, according to a new NAFCU survey.
Less than a third of credit unions surveyed, just 28%, said their boards alone continue to set rates for loans and shares. Of the remaining credit union surveyed, the majority, or 62%, said the CEO sets the rates, 18% said their asset/liability management committee sets the rates, 12% said senior management does, and the remaining 8% said various committees contribute to the rate-setting.
The survey found that 47% of respondents set their regular share rates based on local market conditions; while 31% base theirs on the Fed Funds rate; 6% set theirs to the three-month Treasury yield; while another 6% set theirs based on earnings goals. NAFCU's monthly Flash Report also found: 38% set their money market share rates based on market conditions; 29% set theirs based on Fed Funds, and 15% set them based on the three-month Treasury yield.