ISU Credit Union and the Great Recession: Asset-Liability Management Issues

Idaho State University Credit Union (ISU CU), despite being a well-managed depository institution, had to deal with the fallout of the worst recession since the Great Depression. As its capital-asset ratio fell precipitously, it successfully restored its capital with three strategies, but in turn these actions lead to increased interest rate risk. A basic measure of interest rate risk is called the “GAP.” This case describes actions by the Asset-Liability Management Committee (ALCO) to respond to these conditions and keep the GAP within acceptable levels, and explains how to perform a GAP analysis and interpret the results.