ALM 101 for Marketing

Asset Liability Management (ALM) at a credit union refers to the strategic management of assets and liabilities to ensure the credit union’s financial stability, liquidity, and profitability. Here’s what it involves:

  • Asset Management: This is all about managing the credit union’s assets, which include loans, investments, and any other income-generating holdings. The goal is to maximize returns while managing risks appropriately. This may involve diversifying investments, monitoring loan portfolios, and optimizing the mix of assets to achieve desired financial objectives. One consideration of ALM is to manage concentration risk to ensure assets are not too heavily concentrated in one loan type or investment pool.
  • Liability Management: Liabilities refer to the funds the credit union owes to its members and other creditors, such as deposits and borrowings. Liability management ensures the credit union has sufficient funds to meet its obligations. This may include managing interest rate risk, refinancing debt, and maintaining adequate liquidity reserves. ALM must be concerned about balancing the cost of deposit balances by product type. The goal is to balance deposit balance retention and interest paid to attract these deposits.
  • Interest Rate Risk Management: Credit unions often face interest rate risk, which arises from differences in the timing and amount of interest rate changes on assets and liabilities. Effective ALM involves assessing and managing this risk to minimize its impact on the credit union’s financial performance. It is challenging to anticipate the rate the Federal Reserve is charging and the competitive environment, but there needs to be a keen focus on mitigating interest rate risk. In a low-interest-rate environment, it is problematic if the credit union has many certificate balances acquired in a high-interest-rate market. The reverse is true; if the credit union has a lot of low-interest-rate certificates in a high-interest-rate market, the money will quickly leave.
  • Liquidity Management: Maintaining sufficient liquidity is crucial for a credit union to meet its short-term obligations without disrupting operations or resorting to costly emergency funding. ALM involves managing liquidity by ensuring that assets can be converted into cash quickly when needed and by maintaining appropriate reserves. Liquidity management often requires a credit union to borrow money from a corporate credit union or bank to continue to loan. The typical credit union manages liquidity using eight tactics:
    • Maintaining Adequate Reserves – Reserves are held in highly liquid assets such as cash, cash equivalents, and short-term investments.
    • Forecasting Cashflow – Analyzing historical trends and projecting future cash inflows and outflows enables credit unions to anticipate future liquidity needs.
    • Establishing a Contingency Funding Plan – Outlines credit unions’ specific actions in response to various liquidity stress scenarios.
    • Diversifying Funding Sources – Don’t put all your eggs into one basket.
    • Managing Asset Quality – The credit union will need more reserves if asset quality is poor.
    • Utilizing Centralized Liquidity Funding – Credit unions may participate in centralized liquidity management arrangements, such as shared branching networks or liquidity pools offered by credit union service organizations (CUSOs).
    • Implementing Liquidity Stress Testing (shock testing) – Credit unions can identify vulnerabilities and refine their liquidity management strategies by simulating hypothetical stress events and assessing their impact on liquidity positions.
    • Establishing Lines of Credit – Held at a bank, the feds, or a Central Credit Union, these lines of credit serve as a secondary source of funds during liquidity strain, helping credit unions manage short-term liquidity fluctuations effectively.
  • Capital Adequacy: ALM also manages the credit union’s capital to ensure it meets regulatory requirements and has enough capital to absorb potential losses. This may involve assessing risk-adjusted returns, managing capital allocation, and planning for future capital needs.

Asset Liability Management at a credit union is a comprehensive approach to balancing the institution’s assets and liabilities to optimize financial performance, manage risks effectively, and fulfill its mission of serving its members’ financial needs.

How Does Marketing Help ALM?

Marketing plays a crucial role in ALM by influencing both sides of the balance sheet—assets and liabilities:

  • Deposit Gathering: Marketing efforts significantly attract deposits, a crucial component of a credit union’s liabilities. By effectively promoting deposit products and services, such as savings accounts, certificates of deposit (CDs), and checking accounts, marketing helps ensure a stable and sufficient source of funds for the credit union’s lending activities. An essential element of deposit gathering is to build a strategy to attract low-cost-of-fund deposits. Low-cost-of-funds deposits include checking, savings, and money market products. Marketers should consider deposits as their “inventory” needed to make loans, and the lower the cost of this “inventory,” the better for the credit union and the member.
  • Loan Origination: Marketing also influences the credit union’s asset side by driving loan origination. Effective marketing campaigns can generate demand for various loan products, including consumer loans, mortgages, and business loans. By attracting qualified borrowers and promoting responsible lending practices, marketing indirectly contributes to the growth and quality of the credit union’s loan portfolio. Loan origination strategies for marketing should be a collaborative effort with lending to understand what balances and products they want marketing to focus on. Also, using data, marketing can be laser-focused on the campaign targets and quality of applicants.
  • Product Development and Innovation: Marketing teams often collaborate with product development and management teams to identify market opportunities, understand customer needs, and design new financial products and services. These efforts can lead to the creation of innovative deposit and loan products that meet members’ evolving needs while optimizing the credit union’s balance sheet structure and profitability. Most credit unions offer only legacy loan and deposit products. There may be an opportunity for marketing to understand the gaps and wants of the members to innovate new loan and deposit alternatives that better meet their niche or membership, like credit builder loans, first-time homebuyer mortgages, etc.
  • Interest Rate Sensitivity: Marketing campaigns may also influence the interest rate sensitivity of both assets and liabilities. For example, promotional offers on deposit accounts or loan products can impact the volume and mix of interest-bearing accounts and loans on the balance sheet, affecting the credit union’s overall interest rate risk profile. Working closely with finance and, when available, the pricing committee and marketing can influence rates based on competitive and market research. Remember, just throwing out a high certificate rate or pricing loans to always be the cheapest in the market may not be what the credit union needs from marketing.
  • Brand Reputation and Member Loyalty: A strong marketing presence helps build and maintain the credit union’s brand reputation and member loyalty. Positive brand perception and strong member relationships can enhance deposit stability, reduce loan delinquencies, and support overall financial performance, contributing to effective ALM. Most people agree with Mark Twain when he said, “I am more concerned with the return of my money than the return on my money.” The greater the reputation and the trust members have in their credit union, the more elastic and forgiving they will be on your product pricing.
  • Educational Outreach: Marketing can play a role in educating members about financial products, services, and risks. By providing clear and transparent information through marketing materials, educational seminars, and online resources, credit unions can help members make informed financial decisions, ultimately impacting the credit union’s asset and liability composition. Marketing can also influence the purpose of employees’ conversations with the members by helping tellers, MSRs, loan, call center, and collection staff work to understand the member’s intentions when discussing a loan, deposit, or payment and not just become order takers.

While marketing’s primary focus is attracting and retaining customers and members, its efforts influence the balance sheet dynamics and overall effectiveness of Asset Liability Management strategies within a credit union. This discussion with the CFO and CEO will enhance the perceived value marketing brings to the credit union.


Rich Jones is the Founder/Principal of Leading2Leadership LLC. Before starting his strategic planning agency, he spent over 20 years in leadership roles in the financial services sector. Before becoming an executive in the financial services sector, Rich was an entrepreneur, building and selling two businesses and working for early-stage start-up companies in executive roles in marketing, business development, and seeking investment partners. With more than three decades of experience, he brings innovative thought to companies and executives. Rich published “Leading2Leadership, a Situational Primer to Leadership Excellence.” The book is available on and was designed to be used as a book study for leadership development programs; it breaks leadership skills into manageable situations for discussion and reflection. Rich works with credit unions, CUSOs, and vendors, designing digital, data, culture, marketing, and branding transformation strategies. In 2014, Chosen as a Credit Union Rock Star by CU Magazine, and in 2018, Rich received the Lifetime Achievement Award from CUNA Marketing and Business Development Council. A Marine and graduate of Colorado State University, Jones shares his expertise at

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