Economic Insights â€“ Bill Hampel, SVP/Chief Economist, CUNA did an outstanding job of making economic stats understandable:
â€¢ Credit unions have been collateral damage in the financial crisis (but be sure to tell members about share insurance to put them more at ease.)
â€¢ Home prices in most of the country have hit bottom, consumer confidence back up to 50% (was 20% at one time).
â€¢ 2nd quarter of year is when jobs will start coming back, but likely 4th quarter before consumer confidence is back.
â€¢ People will be wanting to pay down debt in future.
â€¢ Spread is good between loans and savings right now. Should be September before Fed changes rate.
â€¢ Low growth economy; good time for “poaching” members.
â€¢ Look for 4% loan growth in 2010 and 6% in 2011.
â€¢ Rising delinquencies do not necessarily mean major modifications are needed. At 1.8% delinquency rate for CUs (compared to 5.37% for banks).
â€¢ Net loan write-offs have gone from .5% to 1.2% this year, forecasting .8% in 2011.
â€¢ Credit card charge offs @ 4.29% (compared to 10% for banks).
â€¢ Savings growing 8% this year, 6% next.
â€¢ Net worth is more important than net income.
â€¢ Net income to average assets: 2008- 31 basis points, 2009- 15 basis points, 2010 estimated at 40 basis points.
â€¢ It’s OK to let capital ratio fall — Net capital to assets: 6.5% in 80s, 11% in 90s, should be 9.6% this year (as a reference, 6% is when the auditors show up, 7% is considered well-capitalized).
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