Tag: EFG

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Business Growth Economy

In A Position of Strength

Looking for a ray of sunshine these days? Consider this…credit unions are in a much stronger financial position to weather the COVID-19 pandemic and the looming economic fall-out versus the Great Recession of 2007-2009. According to the quarterly Trendwatch report from Callahan & Associates, as of March 31, assets held in the United States stood at $1,663.3 billion and capital registered at $193.4 billion – double those respective positions on Dec. 31, 2007. Member relationships were also stronger than those recorded in 2007, proving that at least some lessons were learned from that recession event.

There were also some bright spots in Q1 2020 metrics. Credit unions notched the largest ever quarterly net liquidity increase in Q1 2020 to $50 billion, providing lots of flexibility for strategic moves. This liquidity enabled credit unions to extend an additional $5 billion in credit card lines in the first quarter compared to the fourth quarter of 2019.

Buoyed by consumer confidence early in the first quarter, first time mortgages accounted for over a third of the quarter’s originations. Fixed rate mortgages more than doubled from Q1 2019 to Q1 2020, reflecting historically low interest rates. But a cloud did darken overall loan growth by 1.2 percent for the 12 months ending March 31, 2020 compared to the 12 months ending March 31, 2019.

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Uncategorized

Data Security Beyond Your Front Door

Brien Joyce Vice President EFG Companies
Contributing Author:
Brien Joyce
Vice President
EFG Companies

Credit unions are guided by a series of internal, state and federal rules and regulations pertaining to data security. One example is the requirements established by the National Credit Union Association (NCUA). This entity has set forth the IT Security Compliance Guide designed to summarize the obligations of credit unions to protect information in specific situations. One specific situation is the proper capturing – and disposal of information. It is often this situation, and the role of credit union partners and administrators, that puts a credit union at risk for a data breach.  Let’s take a look at the guidelines and the opportunity for risk.

The proper disposal of information requirements in the Security Guidelines applies to any personal information a credit union obtains about an individual. But those requirements also extend to a credit union’s providers. A credit union must require its service providers that have access to consumer information to develop appropriate measures for the proper disposal of the information, regardless of whether a loan is ultimately secured. In essence, if a dealership provides credit information to a potential lender, that information must be disposed of properly whether the loan is completed or not. How often do you assess the information disposal practices of your partners?

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Economy

Growth vs. Risk in Today’s Economy

Brien Joyce Vice President EFG Companies
Contributing Author:
Brien Joyce
Vice President
EFG Companies

The economy has been heavily featured in the news lately, with some pundits ringing the recession bell and others pointing to low unemployment and consumer confidence. Whichever way your divining rod is pointing, the fact remains that these economic indicators prompt savvy credit union lenders to be on alert.  

From a retail automotive standpoint, first quarter numbers are validating the forecasted plateau/slight downturn in both new and used sales. According to the first quarter Experian statistics, new vehicle registrations were down 100,000 as compared to Q1 2018. Used vehicle registration took a steeper dive, dropping by 300,000 versus the same time frame.

As context, quarterly auto loan balances reached a record high in Q1 2019, jumping 6.5% year over year. The average new loan also hit a record high, surpassing $32,000, reflective of the continued high cost of vehicles and lack of OEM incentives. The monthly payment amount on those loans also hit a record, passing the $550 mark across all loan types. The interest rate on all risk categories averaged over 6%. Credit may be cheap at the Federal Reserve lending window, but it is holding firm against pressure at the auto loan desk.

A few anomalies also appeared in Experian’s first quarter data. Surprisingly, new auto loan terms decreased while used terms increased in Q1 2019. It is likely that even with low unemployment in many areas of the country, job security and available discretionary income remains low. While longer term loans continued to dominate the market, new loans with shorter terms experienced growth. This factor may be attributed to a generational demographic. Millennials and GenZ tend to be debt averse, having experienced the fallout from the Great Recession first hand. As these consumers gain a credit history, they could become an interesting short term/low payment niche market if the data continues to follow the trend. 

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