Directors Cede Rate-SettingRole
ARLINGTON, Va. - (05/17/05) -- Decision-making for setting rates onloans and shares, once the sole purview of the board of directors,is increasingly being taken over by management, according to a newNAFCU survey. Less than a third of credit unions surveyed, just28%, said their boards alone continue to set rates for loans andshares. Of the remaining credit union surveyed, the majority, or62%, said the CEO sets the rates, 18% said their asset/liabilitymanagement committee sets the rates, 12% said senior managementdoes, and the remaining 8% said various committees contribute tothe rate-setting. The survey found that 47% of respondents settheir regular share rates based on local market conditions; while31% base theirs on the Fed Funds rate; 6% set theirs to thethree-month Treasury yield; while another 6% set theirs based onearnings goals. NAFCU's monthly Flash Report also found that 38% ofrespondents set their money market share rates based on marketconditions; while 29% set theirs based on the Fed Funds rate; and15% set them based on the three-month Treasury yield.