Industry Braces for Changing Financial Landscape

It’s becoming the mantra for troubled times: things will get worse before they get better.That’s certainly the case within the credit union industry as many buckle down for what could be a bumpy ride that will impact all aspects of operations. The CUNA Mutual Group’s February 2009 Credit Union Trends Report said credit unions began the year “with one arm tied behind our backs, but this is one of the reasons we built our capital levels.”While capital growth of 5.5% in 2007 was more than adequate, troubling credit quality issues have sharply curtailed gains in 2008, wrote CUNA Mutual Chief Economist Dave Colby. Early estimates showed just 1.4% capital growth in 2008. Going forward, the combined challenges of a recessionary economic environment and NCUSIF assessments may cause credit union capital to decline in 2009, Colby wrote.Early estimates showed the credit union count finished the year at 8,147, a net loss of just 249 CUs in 2008, the report noted, citing data from CUNA’s economics and statistics division. Preliminary estimates showed membership ended 2008 at 92.5 million. This reflected an “unrealistic” net increase of 3.1 million members in 2008. April’s data could reveal a lowered revision.In other areas, lending generated 7.6% annual loan growth, and the $47 billion savings gain was primarily driven by the 15.8% increase in money market accounts, according to the report. A “surge of mortgages” late in the year helped credit unions achieve 7.6% loan growth in 2008, CUNA Mutual said.“The environment has deteriorated to the point where even those consumers and institutions whom played by the rules are getting hurt,” Colby wrote. “To make matters worse, they are also being asked to pick up the tab for those whom played fast and loose. To successfully manage through these troubling times will take every ounce of our skills and focus.”–[email protected]