2016 Annual CFO Conference

Transcription

1 2016 Annual CFO Conference Optimizing your Institutions Earnings Presented by Robert Colvin - CNBS May, 16th 2016

2 Historic Asset Growth Yr End Amount (Mln) CFO Conference 2

3 Historic Share Growth Yr End Amount (Mln) CFO Conference 3

4 Historic Net Interest Margin (NIM) Yr End NIM (%) % % % % % % % % % % % % % % % % 2016 CFO Conference 4

5 Historic Net Worth Ratio Yr End Net Worth (%) % % % % % % % % % % % % % % % % 2016 CFO Conference 5

6 Historic Return on Equity (ROE) Yr End ROE (%) % % % % % % % % % % % % % % % % 2016 CFO Conference 6

7 Fed Funds History 2016 CFO Conference 7

8 Historical FF & Share Balances 2016 CFO Conference 8

9 Previous Rate Increases & Current Rate Projections by Fed Recent Increases in Fed Funds 2/94 (3.00%) - 2/95 (6.00%) - 300bp rise 6/99 (4.75%) - 5/00 (6.50%) - 175bp rise 6/04 (1.00%) - 6/06 (5.25%) - 425bp rise 12/15 (0.25%) -? Current Fed "Median" Projections for Fed Funds Year Ending % Year Ending % Year Ending % 2016 CFO Conference 9

10 FOMC Fed Funds Projections Year Ending Proj Date Long Run 06/18/ % 3.875% 3.875% 3.875% 12/17/ % 3.625% 3.750% 3.750% 06/17/ % 2.750% 3.625% 3.625% 12/16/ % 2.375% 3.250% 3.500% 03/17/ % 1.875% 3.000% 3.250% Proj. Chg % 2.000% 0.875% 0.625% 65.0% 51.6% 22.6% 16.1% FF Projections for year-end 2016 have declined bps or 65% since 6/18/ CFO Conference 10

11 Headwinds to Rising Rates 1. Low Inflation Expectations well below Fed Targets. 2. Turmoil in the Energy Sector..this problem will not be resolved quickly. 3. Slow Global Growth.particularly in China. 4. Potential Break-Up of Eurozone 5. Strengthening Dollar Dampening Export Activity and affecting Corporate Earnings CFO Conference 11

12 Change in Yield Curve Yield Curve Yield Curve 2/8/16 Yields declined 40-60bps in the 2-10 yr. sector in the first 5-weeks of the year CFO Conference 12

13 Yield Curve YTD Yields have declined by 30-60bps in the 2-10 yr. range CFO Conference 13

14 2-Yr Treasury Yield Avg. Yield 1.528% High Yield 1.793% on 12/30/15 Low Yield 1.156% on 1/30/15 5/9/16 Yield 1.195% 2016 CFO Conference 14

15 5-Yr Treasury Yield Avg. Yield 1.528% High Yield 1.793% on 12/30/15 Low Yield 1.156% on 1/30/15 5/9/16 Yield 1.195% 2016 CFO Conference 15

16 10-Yr Treasury Yield High Yield 2.485% on 6/10/15 Low Yield 1.642% on 1/30/15 Avg. Yield 2.133% 5/9/16 Yield 1.754% 2016 CFO Conference 16

17 Interest Rates 1. Interest rates are expected to remain relatively low for much of the year. 2. Margin expansion should not be expected to assist in earnings growth. 3. Strategies to fully utilize equity should be explored. 4. Continued growth in both earnings and assets will be necessary to offset pressure in non-interest expenses CFO Conference 17

18 Current Metrics 12/31/15 Credit Union CU's $250-$500 Beg. Assets (mln) 354 Beg Cap Ratio (%) 10.98% Beg. ROE 5.77% Target Cap Ratio (%) 10.00% Target ROE 7.50% Note: Beginning Asset, Capital & ROE Data taken Callahan & Associates as of 12/31/ CFO Conference 18

19 Earnings Potential by Achieving ROE & Cap/Asset Targets 2016 CFO Conference 19

20 Earnings Potential by Achieving ROE & Cap/Asset Targets Increased Earnings Potential (000) 5-Year Earnings Potential (000) Current Earnings Path (000) 2016 CFO Conference 20

21 Summary Results (000) Optimization Overview: Based on our analysis the average credit union in the $250 - $500 million peer group could increase their 5-Year earnings potential by $4.3 million (35%), through the full deployment of their equity. Results CNBS Proj. Current Change 5 Year Earnings 16,932 12,584 4,348 5 Year Asset Growth 168,973 91,854 77,119 5yr - Ending Equity 55,800 51,452 4, CFO Conference 21

22 For More Information - Contact CNBS, LLC: Robert Bob Colvin - Chief Strategist & Senior Advisor Direct Phone #: CNBS, LLC Address: rcolvin@cnbsnet.com Special Notes & Disclosures: Data for this report was sourced through Callahan & Associates. CNBS, LLC is an investment adviser registered with the SEC. For more information see Form ADV Parts 1 and 2A on file with the SEC CFO Conference 22