How To Handle The Pressure

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"In just the last few months, all of a sudden pressure to raise deposit rates has emerged, and I think that trend will continue," said Dwight Johnston, vice president of economic and market research at WesCorp. "I think it behooves credit unions to go ahead and be competitive at this point."

He urged credit unions to keep all options open. "Always look at other sources of funds," Johnston advised. "In some cases, it may be cheaper to borrow. Sometimes itpays to sell off loans instead. You have to be competitive on both sides of the balance sheet. A lot of credit unions lagged too much on the loan side, too."

Another issue, he added, is double-dipping.

"If a credit union is big into mortgages on the lending side, they are often also big into mortgage-backed securities," Johnston commented. "They need to make sure they're not compounding the problem. They need to have more of a mix instead of having too much of a match."

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