Brian joined Financial Management Services, Inc. in 2014 after almost 13 years as a broker/dealer and registered investment advisor serving depositories from coast to coast. He has extensive experience in advising client financial institutions on balance sheet management strategies, interest rate risk, investments, and other strategic efforts. He has been a frequent speaker at industry events and serves as the chairman of the board of directors at Catholic Family Credit Union.
This study explores the relationships between cooperative and not for profit financial institutions (credit unions) and broader financial markets through an investigation of mortgage related adoption decisions and their impacts on performance. The project scope includes all federally insured natural person credit unions in the United States and its territories that operated between 1994 and 2014 and relies heavily on Call Report data collected by the National Credit Union Administration (NCUA). With 21 years of panel data observations, a quantitative approach leveraging linear regression was the primary investigative method utilized.
Periods of financial crisis play important roles in this study, with the regulatory, market, and legislative changes that occurred in the 1990s initiating upheaval and opportunities within credit union industry and the recent global financial crisis dramatically affecting many organizations. Given significant and observable trends related to Mortgage Backed Securities (MBS) adoption and increased membership in the Federal Home Loan Bank (FHLB) System, the data set was particularly well suited for focusing on market based behaviors centered on home mortgages.
The results of this research reveal that simply adopting the financial innovations of owning mortgage securities and joining FHLB System did not necessarily increase the performance of credit unions for their members. In the face of evolving markets, government interventions, and the diffusion of financial innovations, credit unions have become reliant on financial markets and seek additional advantages from those relationships beyond exclusively benefiting their members.Keywords: Credit Union, Federal Home Loan Bank, Government Sponsored Enterprises, Mortgage Backed Securities, cooperatives, investments, financial innovation, adoption, performance, diffusion, institutions, financial crisis