A Note from Chris
In addition to welcoming the fall season and all the splendid colors that October presents here in the Midwest, this month is also a very special month for credit unions. It is the month in which we celebrate International Credit Union Day® (ICU Day). A day to celebrate the spirit of the global credit union movement. A day to reflect upon the movement’s history, promote achievements, recognize hard work, and share member experiences. The 74th anniversary of ICU Day is set for Thursday, October 20, 2022. This year, we will gather as a global movement under the theme: "Empower Your Financial Future with a Credit Union™." This day allows us to focus on the tremendous work that credit unions are doing across the globe. It also encourages us to collaborate more with one another and get more engaged. I encourage all of you to think about all the stories that shape your credit union and share the memories that you have made with your members and staff.
Sincerely,
Chris Felton
President/CEO
What's Trending?
The link between member experience and credit union performance.
What is the financial impact of your credit union’s member experience program? This is a common question among credit union executives, especially those considering investing in proactively managing the member experience. Research done by Member Loyalty Group shows that offering a great experience can really pay off, both with stronger financial results and lower operating costs.
Read the Article
Technology Solutions
Strategic planning for IT – It starts now.
In a recent article published by CUInsight, Chris Sachse, Think|Stack CEO, shares why credit unions should develop strategic IT plans, and why it is important to do so with a trusted vendor. Is your organization’s technology outdated or not working the way you need it? Are you investing in technology without looking at what it will solve across the organization? Strategic IT plans must align with an organization’s business plan. The fourth quarter is traditionally reserved for organizational planning and budgeting, so now is a good time to develop an IT strategic plan that aligns with your organizational business plan.
Learn More
Employee Benefit Resources
I-Care employee benefit solutions for small credit unions.
InterLutions, a CUSO specializing in Employee Benefit solutions, formed an in-house insurance agency to broker competitive medical plans for small credit unions. After thorough evaluation with our Advisory Councils, along with a detailed healthcare feasibility study, InterLutions truly understands the challenges small credit unions face with rising medical insurance costs. Our solutions were built to help the small credit union industry succeed through lower health plan costs, quality coverage, and specialized service. Please contact InterLutions to learn how our CUSO can help your credit union deliver competitive health plans to your employees.
Financial Services Consulting
How is your credit union’s ALM model working?
Volatility remains elevated as market analysts tweak shift their rate targets while maintaining the expectation that rates will continue their upward path into 2023 before reversing direction by year end. The Fed has been clear in its communications that they are focused on getting inflation under control. They have done their best to let the market know that we may not get a “soft landing” and some degree of economic pain may be experienced in their fight against inflation. Analysts have been getting the message and have backed off their forecasts that the Fed would take their foot off the brakes if the economy showed weakness.
There does appear to be little doubt that some degree of economic pain is in the future. With the past two quarters registering negative GDP growth, most economists threw out the “R” word before being scolded by the administration who declared we are not in a recession. The strong employment data and continued strong personal consumption were pointed to as evidence that the economy did not fit the textbook definition of a recession. Looking ahead, we may have a much easier time deploying the “R” word. The Fed’s 180-degree shift from two years of historic liquidity infusion to the current quantitative tightening is aimed at pounding down the demand side to combat inflation. Their repeated warnings that they will not stop their campaign, even if it hurts, signals that tough economic times are likely ahead.
The Fed’s aggressive tightening is expected to push overnight rates from the current 3.25% to the 4.75% range by the end of the first quarter next year. Expectations continue to look for rates to pull back after that point, although recent forecasts project it may hover near the highs for five or six months before heading lower. Year end 2023 forecasts are looking for a 4.5% fed funds rate. That represents half the drop previously expected by year end. We have been voicing some skepticism that the Fed would find itself in a position to quickly reverse course once they have made significant progress in the fight against inflation. Especially if that battle is won at the expense of economic growth, a quick turnaround could risk reigniting inflation. The longer period before a rate pullback and the more moderate drop both make more sense based on those thoughts.
The rising rate environment, combined with the massive liquidity shift in the market, has generated some concerns. As an industry, credit unions were much slower than banks raising loan rates, especially for autos. Many, if not most, banks pulled themselves out of the auto loan market once rates began to steadily move higher. Credit unions captured a significant increase of market share during this time as they failed to react to higher market rates. Looking at their low overall cost of funds, many credit unions embraced the increased loan volumes believing there was still plenty of margin to be had. The quickly shifting liquidity picture changed that for many as they had to turn to the CD market to raise liquidity and found a 4.0% plus cost of funds, a rate well above the auto loans they had booked.
We continue to work with credit unions to help avoid surprises going forward. We have found many were working with ALM reports that were overstating future income. The ALM models were generating loan revenues based on historic spreads while the actual loan rates were priced several percentage points lower. When we factored in the likelihood that delinquencies/defaults would be rising as the economy is negatively impacted by the Fed’s tightening, and that collateral values could tumble as the supply chain normalizes, it often painted an ugly picture. Now can be the best time to revisit those forecasts and see if there is corrective action necessary.
Need a hand? We are part of your corporate. That’s what we are here for, give us a call.
Contact Us
Did You Know?
The Beastro launch is only days away!
We are only days away from launching our new platform, Beastro! All CAFÉ users have access to Beastro now, so we urge you to log in and poke around a little before the official launch on October 11. We are providing prelaunch access to Beastro so that you will understand how to access Beastro, have an opportunity to login and register your security key, get comfortable, and are ready for the first day. Access to Corporate CAFÉ will no longer be available at close of business on October 7.
Below are some helpful resources for onboarding to Beastro:
Credit Unions Connect
Stories that exemplify the movement
Supporting those that help the community.
.png)
Following the credit union motto of, “For Service, Not Profit,” Arcadia Credit Union presented a $3,000 donation to the Fountain City Fire Department. The credit union stated, “We love giving back to our community!”
Taking action to end hunger.
.png)
In honor of September being Hunger Action Month, NuMark Credit Union volunteered at Northern Illinois Food Bank. Team members helped pack food for hungry neighbors in Geneva, IL. Through their hard work, the team was able to pack enough bags of sweet potatoes to provide 2,900 meals for those in need in northern Illinois.
Read More Credit Union Stories
What’s New and Who’s Who
Corporate Central welcomes Patrick Hunt as Business Development Executive.
We are very excited to welcome Pat Hunt as a Business Development Executive. Pat will proactively evaluate the financial climate and needs of credit unions and offer Corporate Central products and services to meet those needs. He will advise and schedule training, educational, and informational opportunities for member and future member credit unions in the western United States. Welcome to the team, Pat!
Read the Press Release
Learn More About Our Team