2014 Economic Outlook: Region 1

2014 Beige Book Responses

 
 

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Bruce Beaudette, President/CEO
Sunmark FCU ($401.3M, Latham, NY)

Market conditions are good in our area. The computer chip-making industry continues to expand, creating new jobs and enhancing property values. We have numerous colleges and universities in the area as well as the New York state capital, so this is a sound market that is generally immune to normal market fluctuations.

Susan Whitehead, CEO
NorState Federal Credit Union ($171.9M, Madawaska, ME)

The local economy is still weak and consumer spending is conservative. This is typical of our area, though; as the national economy bounces back, we will lag behind for some time. We have an elderly population, and consumer confidence and spending will be slow to recover.

Larry Holderman, CEO
Mutual Security ($239.4M, Shelton, CT)

Midlevel jobs have declined and with that the opportunity for replacing good paying jobs that have been lost. Government has failed to insent businesses to add employees, and businesses have become more efficient and reduced the need to add employees. It's a vicious cycl, but without job growth, our economy will continue to falter.

Martin Hansen, CEO
Southeast Michigan State Employees Federal Credit Union ($31.1M, Southfield, MI)

In metro Detroit, particularly the urban core, the employment situation remains weak, which hinders loan demand and deposit growth. Families are strained as they try to support their younger and older members who are having the most difficulty finding employment. At the same time, competition from national and regional banks, auto dealderships, and larger credit unions remains intense.

Anne Heggelund, CEO
MCECU ($21.8M, Wausau, WI)

We are a closed-chartered, $21 million credit union with a staff of six. Our biggest competitors are the other local credit unions that have been merging in all of the other local small credit unions. We have seen merger mania and only have three closed-chartered, SEG-based credit unions left in our area. We serve government employees, and Wisconsin's ACT 10 has severely impacted their take home pay. Our unemployment figures are not improving. Our local economy was based in manufacturing but has been moving to a service base with health care leading the field. Our economy always lags behind the rest of the nation. Home sales and prices are rebounding slowly, but I feel we'll see more bankruptcies and layoffs in 2014. My vice president of lending does not think we can survive the CFPB compliance onslaught. I think he is wrong, but lending has become much more difficult. Lending has been a struggle and will be a struggle in 2014.

Robyn Young, CEO
Great Erie Federal Credit Union ($69.6M, Orchard Park, NY)

The Buffalo, NY, market has been relatively consistent over time. We generally don't experience the highs and lows that affect surrounding areas. The housing market remains strong; homes aren't for sale for very long.

Terence Field, SVP - Finance
VSECU ($618.6M, Montpelier, VT)

The local economy is characterized by very low unemployment. Low to the point of being unable to find qualified candidates for entry-level positions. This empowers employees to look outside the credit union for other employment options. Consequently, we're experiencing wage pressure. Lack of population growth for future employees is the greatest economic threat.

The housing market is stable. New houses that go on the market sell quickly, the inventory of houses for sale is low, and housing prices are stable to growing. There is very little - if any - new house construction due to an adverse permitting environment. The new and used vehicle market is stable. Dealerships are expanding inventory and footprint. We are seeing almost no new car loans. Indirect used vehicle financing is driving our vehicle lending. Deposit growth stagnated the second half of 2013. We have increased our CD pricing, but it has not generated any level of interest as members might be getting more comfortable with getting back in the stock market. In 2014 we expect to see continued low unemployment, increased homes purchases, and stronger used car financing. Deposit growth will be low in 2014.

Gary M. Abrams, EVP, COO & CFO
Leominster Credit Union ($633.6M, Leominster, MA)

The local market is relatively stable although unemployment, including the underemployed and people not collecting unemployment benefits, is still too high to sustain a reasonable recovery. There is a lot of money on the sidelines waiting endlessly for interest rates to rise. Our lending business has slowed. Competition in our area is tough with ourtageously low rates for commercial and auto loans.

Shay Santos, CFO
Dane County Credit Union ($135.3M, Madison, WI)

We expect modest growth in our local economy. A decline in the unemployment rate coupled with strong demand for new vehicles and above average housing starts are expected to drive economic growth. Employers are cautious given the uncertainty in health care. Stable energy prices will boost consumer confidence. We expect more homeowners to return to positive equity and mortgage rates to rise. Foreclosures will play a smaller role in 2014. We are planning for a stable rate environment and above average loan demand and deposit growth.

Jim Veneskey, President/CEO
Peninsula Federal Credit Union ($115.9M, Escanaba, MI)

Local market economic conditions are stable. For the credit union, loan growth has been strong in 2013 but is slowing somewhat because mortgage volume has slowed with higher interest rates. Credit card growth continues to be strong and steady. Used vehicle growth has been strong and steady, as well. With deposits, we are able to attract funds with aggressive rates; otherwise, deposit growth continues to be sluggish. We've had a strong year with our financial planning/retirement services. Charge-offs and delinquency continue to be much lower than peer averages. For 2014, we are anticipating slow mortgage activity, continued steady used vehicle and credit card demand, and slow savings growth unless we decide to become relatively more aggressive with rates. Financial planning services will be slower than for 2013 but still relatively strong compared to the past several years. Charge-off and delinquency ratios should trend up slightly but remain below peer averages.

Maurice D. Simard, President
Triangle Credit Union ($507.4M, Nashua, NH)

Local employment rates are low. Unemployment is at 5.2% in New Hampshire. Delinquencies are approximately 1.0%, charge-off rate is 24 basis points, no foreclosure for the year. Things are much improved. Loan growth was double-digit. Profitability was mediocre. We expect the same or better performance in 2014 with the exception of net income. For us, net income will improve when rates begin to increase, which is forecasted in 2015.

David J. Jurczynski, EVP / CFO
CAP COM Federal Credit Union ($1.1B, Albany, NY)

The Capital Region of NY is benefiting from the expansion of technology through Global Foundry in Saratoga County and the School of Nanoscience and Technology at the State University of NY. Refinance of residential real estate loans is down significantly since last year, resulting in a mortgage pipeline that is a third of our highest near the end of 2012. Commercial lending has picked up through both domestic originations and participations in other markets. Deposit growth was strong during the first half of 2013 but fell off considerably in the third and fourth quarters. What was an abundance of liquidity at the beginning of the year has evolved to acceptable levels in third quarter and then to short-term borrowing position as the end of fourth quarter approaches.

Eric Schornhorst, V.P. of Finance
Michigan First Credit Union ($676.4M, Lathrup Village, MI)

Deposit growth has slowed compared to the past few years, which has reduced the excess liquidity in the balance sheet. Although home prices are stabilizing, it is at a level significantly below pre-recession levels, and depressed housing prices means the demand for home equity loans remains low. Car loan pricing continues to be competitive, causing thin net yields.

Bill Lawton, CEO
Community Financial Credit Union ($543.1M, Plymouth, MI)

Deposit growth has slowed compared to the past few years, which has reduced the excess liquidity in the balance sheet. Although home prices are stabilizing, it is at a level significantly below pre-recession levels, and depressed housing prices means the demand for home equity loans remains low. Car loan pricing continues to be competitive, causing thin net yields.

Brian Snyder, CEO
Olean Area Federal Credit Union ($243.4M, Olean, NY)

We are in Upstate New York near the Pennsylvania Border — the Southern Tier. Industries are leaving the state and the economy is economically depressed. The ripple effect of the loss of the manufacturing jobs is hitting small businesses. Restaurants are closing. Automobile repossessions are high. Foreclosures are high. Loan demand is low. Loan growth is negative. We are not looking forward to a recovery in 2014. Loan growth will be minimal, at best.

Tim Smith, SVP - CFO & Treasurer
Workers CU ($1.0B, Futchburg, MA)

Our loan demand remains strong and we expect it to remain strong in 2014. Purchase volume is picking up significantly; the refi market has slowed dramatically. Many borrowers are now taking the hybrid ARM rates. We are the exception where deposit growth is still not keeping up with loan growth. Housing prices are stable to rising and delinquencies are declining. Outlook for 2014 is for another year of strong earnings.

Bob Morgan, SVP - CEO
NorthCountry FCU ($435.3M, South Burlington, VT)

For the local and state economies, we expect unemployment to remain low in Vermont. We expect continued layoffs at larger employers, but other employers such as Dealer.com and Mywebgrocer will minimize the economic impact. We expect continued economic expansion in the Newport area through the implementation of the EB-5 program. Louis Garneau has already begun construction of its new facility, Wal-Mart has plans to begin soon, the marina and new hotel will begin construction, and several new hi-tech companies are set to relocate to the area. These developments will continue to make the Newport — and to a lesser extent, the Orleans branches — a growth engine for the credit union. Although the low unemployment rate is good, the declining participation in the labor force in Vermont is not. This trend will put pressure on us to find qualified new hires and might eventually lead to wage pressures. However, the declining labor force participation rate will also likely slow the pace of property value appreciation.

John Buckley, President/CEO
Gerber FCU ($121.9M, Fremont, MI

In West Michigan, the real estate market is solidifying, but the lack of significant job growth means there is no net influx of population. Schools are struggling with smaller student counts and reduced funding. Loan demand is weak, but it is still better than two years ago. Many of our members are using current times to reduce debt. Stealing members from banks is critical if we want to grow and prosper.

Brian Clarke, CFO
Bethpage FCU ($5.4B, Bethpage, NY)

Deposits continue to be the softest since the beginning of the financial crisis. Loan demand has been consistent in 2013, although the increase in rates keeps mortgage applications well below the five-year average.

Jon Lowrey, CEO
Dane County ($135.3M, Madison, WI)

We anticipate a general repeat of 2013 with borrowing expanding slightly toward the latter part of summer. Our two largest areas of success in 2013 were first mortgage real estate loans and used auto borrowing. This year, we expect new and used car borrowing to accelerate and first mortgage purchase loans to increase slowly while we continue to look for members to refinance their first mortgages that haven't done so yet. We expect savings to increase modestly, approximately 6%.

Thomas J. Powers, Jr., CEO
Hudson River Teachers FCU ($43.8M, Mohegan Lake, NY)

Deposits keep coming in; loans are harder to sell; members remain debt averse; margins are tight. So we beat on, boats against the current, hoping to find that ROA of the past. (apologies to F. Scott Fitzgerald)

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April 14, 2014


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