Forecasting Best Practices

With the first half of the year drawing to a close, the sluggish loan demand has persisted, and it is common to see loan portfolios contracting. Budgets created in the prior year are well outside the growth actualized thus far. As a result, we are seeing an increase in requests for reforecasting to help to stabilize earnings and regain clarity. This environment brings to mind a quote I return to whenever the path forward feels uncertain:

“When you don’t know what to do, try something; if that doesn’t work, try something else.” - Richard Russo

The theme of the 2026 budgeting season was moderate loan growth with the majority of credit unions planning for 5%-7% annual growth. Since then, market conditions have shifted. Inflation, particularly rising fuel costs, is putting pressure on household budgets, weakening consumer sentiment, and increasing financial strain for many members. With studies suggesting that households earning $150,000 and below are reaching their tipping points and starting to carry larger credit card balances and tapping into buy now pay later platforms to manage cash flow. While higher-income households have more spending power, consumers appear to be apprehensive about adding more debt regardless of their earnings level.

When planned loan growth is not materializing how can we reset and move forward? How can forecasting help in this new phase of planning?

Here are several principles to keep in mind as you redesign your strategy.

Know Your Membership

Understanding member needs is essential to building products and messaging that meet people where they are today, not where we expected them to be six months ago. Consider practical ways to help members navigate higher costs and tighter budgets:

• Can you promote personal loans designed to consolidate higher-rate credit card balances and reduce out-of-pocket interest?
• Are HELOCs a good fit for members who want to improve their current homes rather than move?
• Can auto promotions include options like a payment deferral or delayed first payment to reduce initial pressure?

The best growth strategies often start with one question: how can we make life easier for the member?

Build a More Diverse Think Tank

New ideas rarely come from the same voices in the same room. When developing solutions, intentionally bring in new perspectives that may not have been present in prior planning cycles—branch teams, call center staff, and frontline lenders. Member facing teams often spot member needs earlier than leadership teams do, and their insights can help shape more practical, actionable strategies. And when lending demand is uneven, strategic use of investments can help fill gaps and stabilize earnings.

Be Clear on What the Balance Sheet Requires

Monthly cash flows matter—and they matter even more when loan pipelines are low. In many forecasts, management teams are surprised by the amount of production required to simply maintain current balances, let alone grow them. A refreshed forecast can clarify:

• What volume is needed to offset paydowns and prepayments
• How much pipeline is required to support the target end-of-year portfolio
• Where gaps are forming early enough to take corrective action

Don’t Overlook Funding

Funding is an unavoidable part of the conversation. With the cost of funds still elevated, deposit competition continues to pressure margins and challenge earnings performance. In response, many credit unions are getting more creative and enhancing the member experience while also working to manage overall funding costs.

This can take several forms, including offering targeted incentive accounts, introducing strategic rate tiers to reward deeper relationships without overpaying across the entire deposit base and selectively lowering fees to improve retention. When paired with clear pricing discipline and ongoing monitoring, these strategies can help protect liquidity while limiting unnecessary margin compression.

Keep Planning Fluid

Plans need to be dynamic, revisited and adjusted as the balance sheet changes. Forecasting is a management tool to navigate volatility in real time.

When growth does not meet expectations, don’t keep chasing after the same unobtainable goal. It’s time to test, learn, adjust and try again. The institutions that stay close to their members, broaden their internal collaboration and use forecasting as an ongoing guide will be well positioned to stabilize today and accelerate when demand returns.

Melissa Scott serves as Vizo Financial’s vice president of ALM services. In this role, she is responsible for managing and providing ALM reporting, modeling, validation and consulting services to credit unions. She is also responsible for providing ongoing training, support and education for ALM users, management and their board of directors. She also holds the designation of certified public accountant (CPA) and is a member of the North Carolina Association of Certified Public Accountants.