1 / 40

Dave Grace Vice President World Council of Credit Unions dgracewoccu woccu

. . Assets. AssetsEarning AssetsLoansLiquid InvestmentsInvestmentsNon-Financial Investments. Assets. Non-Earning AssetsLiquid AssetsAccounts ReceivableFixed AssetsOther AssetsProblem AssetsTOTAL Assets. Liabilities. Interest Bearing LiabilitiesSavingsSharesExternal CreditNon-interest BearingAccounts PayableOther LiabilitiesTotal Liabilities.

mab
Download Presentation

Dave Grace Vice President World Council of Credit Unions dgracewoccu woccu

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

    3. Assets Assets Earning Assets Loans Liquid Investments Investments Non-Financial Investments

    4. Assets Non-Earning Assets Liquid Assets Accounts Receivable Fixed Assets Other Assets Problem Assets TOTAL Assets

    5. Liabilities Interest Bearing Liabilities Savings Shares External Credit Non-interest Bearing Accounts Payable Other Liabilities Total Liabilities

    6. Capital Transitory Capital Educational Reserves Social Reserves Institutional Capital Statuary Reserves Retained Earnings Undistributed Net Income Total Capital

    7. P Protection E Effective Financial Structure A Asset Quality R Rate of Return & Cost L Liquidity S Signs of Growth What is PEARLS?

    8. What is PEARLS?

    9. It is logical & easy to use It is complete & concise It provides strategic direction in the management decision-making. It is a common language of understanding amongst employees Why do CU Managers like PEARLS?

    10. Integrates a CU social ideology with a business mentality, and helps achieve balance What does PEARLS do?

    11. What PEARLS is Not Not designed as a supervisory system Not a legislative or regulatory mandate

    14. How does PEARLS work?

    17. P E A R L S

    18. P = Protection

    20. P = Protection

    21. Social Value of PEARLS P= PROTECTION A Safe Place to Save your Money!!

    22. P E A R L S

    23. E = Effective Financial Structure 9 ratios measuring the most important assets, liabilities, and capital accounts of a credit union. As growth occurs, ratios help prevent structural imbalances.

    25. The Social Value of PEARLS E = EFFECTIVE FINANCIAL STRUCTURE Community Loans to Members Community Savings from rich or poor, no External Credit Capitalization through earnings, not Owner shares

    26. A = Asset Quality 3 ratios evaluating areas of common mismanagement: Delinquency and Excessive Non-earning Assets.

    28. The Social Value of PEARLS A = ASSET QUALITY Monitor Delinquent Members so they honor their financial commitments instead of forcing good Members to pay Affordable Buildings & other fixed assets

    29. P E A R L S

    30. R = Rates of Return & Costs 13 ratios measuring the yields of the most important assets and liabilities, and also analyzing operating expenses, provisions, and impact of return net on assets.

    31. INCOME R1. Net Loan Income / Avg. Net Loan Portfolio (Entrepreneurial Rate) R2. Liquid Investment Income / Avg. Liquid Assets (Market Rates) R3. Financial Investment Income / Avg. Financial Investments (Market Rates) R4. Non-Financial Investment Income / Avg. Non-Financial Investments (>=R1)

    32. FINANCIAL COSTS & MARGIN R5. Savings Deposits / Average Savings Deposits (Market Rates >Inflation) R6. External Credit / Average External Credit (<=R5) R7. Share Dividends / Average Shares (>=R5) R8. Gross Margin / Average Total Assets (Meets Needs � E9=10%)

    33. OPERATING COSTS & INCOME R9. Operating Costs / Average Total Assets (<=5%) R10. Provisions for Risk Assets / Avg. Total Assets (P1=100%, P2=35%) R11. Other Income (Expenses) / Avg. Total Assets (Min.) R12. Net Income / Average Total Assets (E9=10%) R13. Net Income / Average Capital (>Inflation)

    34. The Social Value of PEARLS R = RATES OF RETURN AND COSTS Real rates of Return on Savings & Shares Competitive Salaries for Employees Loan Rates that recover all costs, not maximize profits

    35. L = Liquidity 3 ratios measuring maintenance of adequate liquidity

    36. L1. Liquid Assets � Short-term Payables / Total Savings Deposits (15-20%) L2. Liquidity Reserve / Total Savings Deposits (10%) L3. Non-Earning Liquid Assets / Total Assets (<1%)

    37. The Social Value of PEARLS L = LIQUIDITY Enable Members to deposit and withdraw their savings when they need it. Provide Members with immediate cash, instead of going to bank. Minimize excess cash

    38. S = Signs of Growth 11 ratios measuring growth of most important, liabilities, and capital of a credit union, plus expansion of membership

    39. S1. Loans (E1=70-80%) S2. Liquid Investments (E2<=16%) S3. Financial Investments (E3<=2%) S4 Non-Financial Investments (E4=0%) S5. Savings Deposits (E5=70-80%) S6. External Credit (E6=0-5%) S7. Member Shares (E7<=20%) S8. Institutional Capital (E8>=10%) S9. Net Institutional Capital (E9>=10%) S10. Membership (>=15%) S11. Total Assets (>Inflation + 10%)

    40. The Social Value of PEARLS S = Signs of Growth Encourage anyone to join Encourage anyone to save Encourage anyone to borrow (who meets standards)

More Related