Mike Schenk delivered much the same economic outlook at this year’s CUNA Supervisory Committee and Internal Audit Conference as he did a year ago.
And that’s a good thing, because again Schenk projects solid credit union asset, loan, and membership growth, along with continued progress in the economy, with negligible short-term impact from this year’s contentious election.
“Overall, 2016 was a great year for credit unions,” says Schenk, CUNA’s vice president of economics and statistics, “and we’re projecting more of the same for 2017.”
Schenk praised credit unions for not just bolstering their balance sheets but using their success to improve the financial lives of their members, which in turn validates credit unions’ federal tax status.
Last year, estimates valued the credit union tax exemption at roughly $2 billion, Schenk says. Credit unions leveraged that benefit by offering members better rates and lower fees than other financial institutions, saving members $9.3 billion.
Additionally, the market pressure credit unions generated forced more consumer-friendly pricing at banks, saving nonmembers approximately $3.7 billion.
“Policy makers need to understand that you’re delivering that value,” Schenk says. “What you’ve done over the last year has made a huge impact on people’s lives.”
Credit unions are on track for a third straight year of double-digit loan growth in 2016, the first time that’s happened in 30 years. CUNA projections for 2017 credit union loan growth remain high, at 9.5%.
That should offset the impact of rising market interest rates, as CUNA projects the federal funds rate to increase by one percentage point by the end of 2017 to 1.5%.
Another big positive: Credit union membership has grown at 3.8% in 2016, more than four times the rate of U.S. population growth.
“Increasingly, the general public understands who you are, what you do, and the power of cooperative finance,” Schenk says. “And better yet, they’re voting with their feet.”
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