The old curse, “May you live in interesting times,” came to mind as I read a recent issue of the Raymond James Economic Research report. Among other things, it states:
“Interesting times” indeed. Credit unions continue a delicate balancing act between meeting members’ individual needs and maintaining sound financial practices for members.
Credit unions rely on member confidence and willingness to borrow. But times are tough. Low interest rates and soft loan demand plague net interest margins. The regulatory environment threatens noninterest income, and operating expenses continue to increase. The 2011 NCUA assessments are simply icing on the cake.
Our members remain cautious—believing the economic recovery they’re hearing about is mostly on Wall Street, not Main Street.
To maintain balance amid these challenges, my credit union has:
We put aside past practices and assumptions to conduct the evaluation. We assessed risk/reward tradeoffs with a determination to improve return on assets without mortgaging our future. We sought structural change, rather than a few quick fixes. And we never lost sight of our mission, the credit union philosophy, or our obligation to our members.
Your credit union probably will weigh risk/reward considerations differently depending on its budget. But here are key issues we found useful:
Business conditions likely will remain challenging this year. The economy is improving, but unemployment remains high and interest rates stand at historic lows. In these interesting times, we must work hard to maintain fiscal balance and continue to grow.
ERIN MENDEZ is executive vice president/chief operating officer of SchoolsFirst FCU, Santa Ana, Calif., and chair of the CUNA Council Forum. Contact her at 714-466-8109. For more information about CUNA Councils, visit cunacouncils.org.