C (Capital Adequacy)

In a December 12, 2019 article on cutimes.com, Roy Urrico writes: “TransUnion forecasts balances and originations to grow for most key credit products and serious delinquency rates to either decline or remain steady for auto and unsecured personal loans, cards, and mortgages.”

Tina Orem, in a December 9, 2019 article on cutimes.com, writes that credit unions are less efficient than banks and thrifts when it comes to assets per employee, according to new data from financial institution research firm Moebs Services.

Jim DePlessis writes in a December 5, 2019 article in cutimes.com that mortgage loans have been doing relatively well  for lenders in 2019 but auto loans have decreased from a year ago.

Credit unions (particularly smaller credit unions) will find it more difficult to compete in a shrinking auto loan market.  Fortunately, there are ways to profitably reach deeper into the auto loan pool by effectively pricing risk into lower credit-grade loans.

Gwen Everett and Shahien Nasiripour, in an October 28, 2019 article in bloomberg.com, report that American homeowners appear to have learned the lessons of the 2008 Great Recession and are not using the equity in their homes to finance large purchases unrelated to housing.

A September 27, 2019 article in thinkadvisor.com, written by Michael S. Fischer, shows that a third of survey respondents said they expected their finances to remain a source of stress in the future, and two in five worried that they would not enjoy their later years because of money issues.

Joyce M. Rosenberg, in a September 30, 2019 article in apnews.com,writes that small businesses are having difficulty expanding their companies because traditional lenders are cutting back on lending.

Credit unions may find this an opportunity to expand lending providing they: (1) carefully track profitability of individual services; (2) price loans based on individual risk; (3) have policies in place to assure compliance with regulations and risk control, and (4) manage the risk in loan portfolios.

Amanda Dixon, in an October 2, 2019 article in bankrate.com, reports that ATM and Overdraft fees have risen steadfastly over the last 20 years.

Credit unions have become dependent on fees even to the point that some subsidize their loan programs with fee income. This trend has attracted the attention of litigators and legislators. Credit unions should make sure their loan programs are profitable and not dependent on fee income to subsidize lending.

Jeff Berman, in a September 10, 2019 article in thinkadvisor.com, writes that Gen Xers (age 39 to 54) are struggling with debt so overwhelming that they are not saving for retirement. These people need to be watched by lenders.

Jonathan Barkley in a September 11, 2019 article in cuinsight.com writes that loan delinquencies are on the rise and projected to get worse.

Credit unions should have tools in place for pricing and managing the risk in their loan portfolios.

A September 9, 2019 article in apnews.com written by Martin Crutsinger describes how consumer borrowing in July, 2019 was the highest in two years.

This is good news for credit unions so long as they are participating in the loan growth, risk is being managed and lending is profitable.