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Auto loans will be difficult to make. We are a heavy indirect lender, but we cannot compete with the offerings of national banks. We compete on funding quickly. We are also an active mortgage lender, but our volume has slowed with rates creeping up. Deposit growth has been consistent, and we anticipate it will be around 6% next year.
Unemployment is going down; home sales and prices are in recovery; car sales are strong; overall loan demand is good; deposit flows are tepid; loan delinquencies are back to pre-recession levels; net charge-offs are at pre-recession levels; Florida tourism is strong; businesses are relocating to Florida at a healthy pace; new business and startups are better but still weak; residential and commercial new construction is improving but there is still a long way to go to get back to pre-recession levels.
Our local economy continues to improve. We didn't see tremendous run-up before the collapse in 2008; therefore, we didnt have a large crash when the economy tanked. To say it didn't affect us, however, would not be true. Our local economy has a good mix of government (military), professional services (healthcare), farming, and small business. Each has its own unique economic stabilization built in to its business model. We are mostly rural, and Dothan, AL, is the largest city in our metropolitian statistical area. It has a population of 70,000 in an MSA population of about 300,000.
I think we are all waiting on the next shoe to drop. The economy is still very unstable. Unemployment is still very high. I don't believe the numbers we are being fed are even remotely the truth. At my credit union, we still have people receiving unemployment benefits longer than I have ever seen in my lifetime. There is an age bracket that has stopped even looking for jobs. They are considered "too old to hire for new jobs and too young to retire." I am sincerely hoping for a great 2014 but do not feel at all optimistic.
Don Cates, CEO
3 Rivers FCU ($763.6M, Fort Wayne, IN)
Economic conditions are slowly improving, but consumers remain cautious and have paid down debt versus making purchases and borrowing. Improved credit quality has allowed some stressed institutions to get out from under regulatory growth restrictions. We are in an ultra competitive market and are chasing minimal loan demand. This will keep margins tight despite an anticipated steepening loan curve.
Brevard and Volusia Counties (FL) continue to rebound as unemployment drops and the housing market improves. New home construction has increased significantly in 2013.
We are a single-sponsor (healthcare), $50 million credit union. Loans are way up, especially used cars, and shares are doing fine. Membership has grown a steady 5+%. We expect 2014 to be more of the same. Condo and commercial construction is underway, and we expect housing construction to start soon.
Robert Harris, CEO
Health Facilities FCU ($23.5M, Florence, SC
Loan production is still off terribly. Our Loans to Share continues arougn 39%. It seems that the market is still scared and much of it has to do with the ACA and the unknown. Our primary business is in health care industry. Many of the medical leaders are painting a dismal picture for 2014.
The local economy is showing gradual improvement with a floor in housing and commercial property. Tallahassee typically grows around 3% annually, so slow and gradual is the norm. There is noticeable improvement in consumer sentiment, especially in light of the fact that most employment is centered on state government or education.
It appears our area is on the verge of a year of increased activity in the construction market. Jobs are available, although they provide lower wages and benefits than those that used to be present in our market. We continue to see the addition of suppliers for the auto manufacturers in our area. We anticipate a slight increase in demand for consumer loans and construction loans remain stable.
Jeremy Hinton, CFO, SVP
Innovations Federal Credit Union ($154.7M, Panama City, FL)
Tourism will continue to be the largest economic driver for the Florida Panhandle, so expansion beyond that economic niche will benefit this area. There is a need for lower paper grade loans, primarily autos, in this area. Credit unions that do this well will have opportunities to expand market share by luring business away from high-priced lenders and increasing the share-of-wallet among their current members.
Fort Knox Federal had the best loan disbursal year in its history in 2013. The overall growth of the loan portfolio was balanced between auto (up 19%), home equity (up 10%) and credit card (up 15%). We are optimistic about lending in 2014. The credit union’s adjustment in the mortgage lending process, methods to communicate the value of our existing mortgage products, and the tools we use to make the process simpler for member have already had an impact, and changes will continue into 2014. Commercial lending is a small portion of our overall loan portfolio; we have the opportunity to select the right loan business as other financial institutions continue to stay away from small business loans. We’ll continue to look for ways to enhance efficiency in 2014. The credit union has an operating expense-to-average assets ratio approximately 150 basis points lower than most local banks and is one of the primary ways we are able to drive value back to members.
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