Our Success Story of the Month

 Interest Income and Cash Positions Analysis: A Successful Consultation 

By Steve Borgerson

December 2024

I recently concluded a two-part consultation for a small 135-million-dollar Credit Union. The consultation was a success as it provided the CEO and CFO some critical information which they used to bolster their 2025 loan interest income and put the Credit Union on a path to meet their 2025 Strategic Plan’s revenue goals. 

Part One: Estimate the CU’s 2025 Loan Interest Income

After analyzing their YTD Loan Interest Income GL’s through 10/31/2024, I did some calculations and produced a report that estimated their November and December 2024 loan interest income and their estimated 2025 Loan Interest Income. The next step was to calculate the interest income from their 2025 new loan originations. Once completed, I produced and sent a report with my estimates for the Credit Unions 2025 Loan Interest Income to the CEO and the CFO.

The big test came a few weeks later when a follow-up meeting took place at which I walked the CEO and CFO through my calculations and data. The CEO asked me what my estimate was for the November 2024 Loan Interest Income. I directed him to my final report which provided a figure of $356,752. The CEO then asked the CFO if she had closed the November books, and if, so what the actual figure was. 

How did I do? When compared to the actual figure my estimated Loan Interest Income for November 2024 was off by $42. I passed the test!

Part Two: Provide a Cash Flow and Cash Position Analysis for 2025

When the Credit Union completed their budget for 2025, the CEO was not satisfied with the income that their overall budget projected. The income was not where he needed it to be and he had to find a way to increase it. The CEO asked me to do a monthly cash flow analysis for 2025. I had all the data I needed from the previous assignments request list and accepted the consultation.

After analyzing their YTD monthly cash flow through 11/30/2024, I then overlayed their 2025 new loan originations. I then completed and sent a final report to the CEO and CFO that projected the CU’s 2025 cash position for each month of 2025. 

After reviewing the report and the data provided in it the CEO and the CFO determined that their cash flow and positions were strong, especially in February of 2025. They concluded that in February of 2025 they could comfortably take 2 million dollars and put it to work by purchasing a residential participation. This participation would provide the credit union with an additional $100,000 in interest income in 2025, and an additional $120,000 in annual interest income in 2026 and 2027.

Conclusion 

By bringing in SBorgerson Consulting LLC for a short four-day consultation, the CEO and CFO, used the data provided, to increase their 2025 loan interest income by an additional 100K, a figure which slightly exceeded the income goal detailed in their 2025 Strategic Plan. Their investment in the consultation will be returned tenfold in 2025 and repeat that return for 2026 and 2027.

What is that old saying: Plan the work and work the plan.