How Much Net Worth Is Enough?

BOSTON–How much net worth does a credit union really need? The figure is different for every credit union, but one CFO is cautioning it’s important to properly analyze the risks at CU faces in order to answer the question.Dan LeClerc, CFO with the $176-million Lacamas Credit Union in Washington State, said his fellow CFOs and CEOs must be willing to consider a wider range of risk scenarios that perhaps they have in the past, across the full spectrum of risk: Interest rate risk, liquidity risk, credit risk, operational risk and regulatory risk. “When you’re going through these risks, think creatively,” he said, noting he never imagined a year ago that his credit union’s membership capital in its corporate would be at risk, which is why he called for a wide number of variables when doing stress testing.In remarks to CUNA’s America’s Credit Union Conference, LeClerc said the risks credit unions must build into their stress tests and models moving forward include risks such as de-coupled debit cards, how to pay for additional corporate bailouts, high inflation rates, and the disappearance of automobiles (and related financing) purchased through traditional dealers.