Patelco Credit Union identified a few strategies to better weather the economic hardships over the last few years.

First, there was no silver bullet. Performance matters and Patelco strove to perform on multiple levels. For instance, through sound investment strategies, we were able to recognize timely gains on the sale of investments representing millions of dollars in realized profits.

Second, we evaluated third-party vendor contracts and such as plastic card processing, ATM switch fees and branch leases, and made changes wherever possible.

Third, Patelco worked diligently to manage its net interest margin (the spread between yield on assets and cost of funds). With the share insurance fund (NCUSIF) charging credit unions 15 to 30 basis points on every insured dollar and the Federal Reserve overnight rate paying 10 to15 basis points, any deposits we were unable to lend raised the credit union's overall costs. The result was to strategically manage deposit growth in line with loan demand.

Fourth, Patelco diversified its loan portfolio and applied rigorous risk management techniques to identify specific areas of risk in the loan portfolio and drive down delinquencies and charge-offs.

Ken Burns, President and CEO
Patelco CU
Pleasanton, Calif.

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