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Discovery Webinar on economic outlook draws 1100
MADISON, Wis. (3/18/11)--Many credit union leaders are more optimistic today than they were at this time last year. But 2011-12 will be just as challenging as the previous two years, but for other reasons, warned CUNA Mutual Group in its first Discovery Webinar of 2011, held Thursday.
Click to view larger image CUNA Mutual Group Chief Economist Dave Colby, right, answers an audience question asked by moderator Phil Tschudy, CUNA Mutual media relations manager, during Thursday’s Discovery Webinar on the economic outlook for 2011-12. (Photo provided by CUNA Mutual Group)
CUNA Mutual Group Chief Economist Dave Colby told about 1,100 registered participants that the next two years will be just as challenging, but for other reasons. The geo-political and geo-economic environment are presenting new challenges to credit unions, and previously deferred decisions by the government must now be made, Colby said in "Is it Over Yet … Or is This the Calm Before Another Economic Storm?" “The economy and credit unions achieved some recovery in 2010, including capital growth and net-worth ratio improvement,” Colby said. However, he warned credit unions will be faced with many risk factors. “We see credit unions managing their key ratios by managing growth. But the biggest challenge remains growing loans, especially short-term consumer loans," Colby said, adding this won't be easy because "consumers are in pay-off mode, and competition will continue from subsidized financing." He outlined some “headwinds” credit unions face, including weak consumer loan demand, regulatory caps on income (debit interchange, nonsufficient funds/courtesy pay) and rising compliance burdens. “All of those will continue to challenge credit unions’ ability to replenish capital by growing their bottom lines.” Further burdening credit unions are risks the economy faces on its road to a full recovery, including prolonged elevated energy prices, continuing credit market uncertainty and external shocks such as terrorism, weather or geological incidents. “The world is in a weaker state, thus the impacts of one of these external shocks would be greater,” Colby added. “All the risks to credit unions go directly to the bottom line and adversely impact our ability to replenish capital,” Colby said. He cited near-term risks that include the likelihood of rising compliance costs and the yet-to-be-written rules coming out of the Financial Reform Act. Longer-term risks are primarily two-fold, Colby said. “As we regain our capital ratios through limiting asset growth, sooner or later expense growth overwhelms us. In the spread business, it’s difficult to earn a positive spread without loans. We also need to redefine our role in consumer financial services," he added. “Boomers expect wealth preservation solutions, while the next wave of borrowers expects point-of-purchase financing. To whom will we be relevant?” Other 2011 Discovery events, which are free to credit unions, include:
* April 18--Lending Trends, presented by Dan Kaiser; * May 24--Technology Strategies and Trends, presented by Rick Roy; * June 18-21--Seventeen Discovery sessions will be offered at the Credit Union National Association's America’s Credit Union Conference (ACUC); * July 19--Regulation double-feature, presented by Bill Klewin & Brad Pricer; and * Oct. 4 – 2--Annual Online Discovery Conference.
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