Credit Union Magazine - January 2009 - (Page 58)

BRANCHING OUT Will the new year be as dire as pundits predict? If you read the newspaper headlines, the economic environment in 2009 will be as empty as the electrical department in an Amish store. In fact, the Credit Union National Association’s 20082009 forecast says growth, burdened by a deep recession, will be negative through year-end 2008 and into 2009. Unemployment is expected to hit 7.5%—a rate not seen in years. In summary, the pundits tell us it’s going to be a tough year. But will it be as dire as predicted? My short answer: No. My long answer, in six retorts: Pundits: Banks will continue to fail. Retort: So? Remember those 8,000 Federal Deposit Insurance Corp.-insured banks? Did you know the top 50 used to control 60% of the entire market, according to MarketResearch.com? Did you notice the phrase “used to”? (For those still challenged by the logic, one additional hint: Are you a bank?) Pundits: In bad economic conditions, consumers transform from inattentive borrowers to conservative savers. Retort: Are these the same consumers who willingly inject Botox® (a natural poison) into their skin to hide wrinkles? Consumers have the same self-control as a drug addict outside a crack house. While the savings rate has been negative of late, even when it was positive it was pretty dismal. Pundits: Regulators will overreact, forcing organizations inward and away from consumers and lending. A Rainbow on That Horizon James Collins Retort: Face it, regulators overreact to everything (their motto: “In God we trust, all others are to be investigated”). However, regulators will be consumed with weaker organizations. For those capable of managing through the crisis, the pressure will be keeping business as usual. Pundits: Credit unions, banks, and thrifts will be viewed as interchangeable. Retort: This is the “if it looks like a duck and talks like a duck, then you must be watching an Aflac commercial” argument. After all, do the names Phil, Seuss, and Scholls all bring to mind physicians? Even if Congress opens up the matter, no politicians worth their souls (assuming they have souls) would willingly take on a constituency if they can help it. That’s especially true as credit unions are more observers than active participants in this financial tsunami. Pundits: Bank consolidation will decrease competition and concentrate power. Retort: What would you call a large organization that has poor service and is openly hostile to the average consumer? I mean, besides Walmart. I’d call it an opportunity. Pundits: Auto loans will collapse. Retort: This is a matter of semantics. At press time, J.D. Power and Associates predicted light car and truck sales would drop to 13.2 million units in 2009 from 13.6 million units in 2008. That’s not exactly a collapse in my book (to see a true collapse, look at Britney Spears’ career). With many captive finance arms failing, this probably will open up new avenues for credit unions. Alas, this doesn’t mean we’re out of the woods. Being successful lenders in 2009 will take determination and perseverance. It also will mean avoiding certain pitfalls, such as: u Viewing your main competitor as the credit union down the street. You want ex-bank customers, not current credit union members. u Trying to sell service. Good service is a great way to retain members but awful in attracting new ones. u Swinging for the fences. Now’s the time to get members’ attention, not their souls. Your perspective of the economy dictates your reaction. For many, the dark clouds looming on the horizon mean it’s time to head for the storm shelter. For others, those same clouds bring the hope for much-needed rain. Which do you see? JAMES COLLINS is chief financial officer at O Bee CU, Tumwater, Wash. Contact him at 360-943-0740 or at jcollins@ obee.com. 58 CREDIT UNION MAGAZINE uJANUARY 2009 ucuna.org http://www.MarketResearch.com http://www.cuna.org

Table of Contents Feed for the Digital Edition of Credit Union Magazine - January 2009

Credit Union Magazine - January 2009 Contents On My Way Leading Edge Spotlight President's Perspective Game Plan Washington Insider Wright Stuff Executive Suite Reverse Mortgages Come of Age Six Merger Myths Leading-Edge Lenders TwentyFour/Seven Bankruptcy Compliance Tools of the Trade Trendlines Rates & Ratios Council Corner Shoptalk System Scan Marketplace Branching Out Advertiser Index

Credit Union Magazine - January 2009

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