Seasonality in cash flows refers to any predictable change or pattern that recurs or repeats over a one-year period. Credit unions may be affected by seasonality to varying degrees, if at all. Seasonality can be event-driven, industry-specific, or geographically based.
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Event-driven—A credit union may be able to plan for cash inflows and outflows that occur at the same time every year or follow an expected event every year. For example, many credit unions experience a surge in member deposits associated with tax refunds. In contrast, credit unions may experience higher outflows from share withdrawals and draws on credit card lines around the holidays.
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Industry-specific—When a credit union's field of membership includes members of a single profession or a concentration in a certain type of loan, its cash flows will follow a predictable pattern. For example, a teachers’ credit union can expect to receive a steady inflow of deposits during the school year, but may experience an outflow of shares in the summer. Similarly, a credit union with a concentration of agricultural loans may experience significant inflow of funds in the fall after the harvest.
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Geographically based—The geographic location of a credit union may impact its cash flows. For example, a credit union located in a popular vacation spot may experience a significant increase in deposits during peak season and a deposit decrease in the off season.
Last updated August 30, 2021
