CEO Commentary: Reflecting on 2007 and Planning for 2008

In the 4th quarter edition of Credit Union Strategy and Performance, 15 CEOs from 7 states offered their view on 2007 and what lies ahead in 2008. One of the credit unions understands this economy from prior experience at the local level.


The Labor Department released April payroll figures on Friday, May 2 nd . While the overall numbers were better than economists had predicted with a net loss of 20,000 jobs, different industries were affected more heavily. In April , 61,000 construction jobs were lost. Since peaking in September 2006, some 457,000 construction jobs were lost. Manufacturing and other goods-producing businesses cut 110,000 jobs in April, on top of the 88,000 lost in March.

In the 4th quarter edition of Credit Union Strategy and Performance, 15 CEOs from 7 states offered their view on 2007 and what lies ahead in 2008. One of the credit unions, Visions Federal Credit Union ($2.0B in Endicott, NY) understands this economy from prior experience. Frank Berrish, President/CEO of Visions, offered his thoughts about the year ahead:

"Upstate New York has an economy described by Governor Spitzer in his pre-election campaign, as similar to that of Appalachia. Since 1992, we have lost many employees of large employers who have tremendously downsized, such as IBM, Carrier, Endicott/Johnson Shoes, Anitec Plastics Corporation, and Singer Aviation, to mention a few.

In 2007, we saw an up-tick in home prices, only because they have been depressed for 15 years. Having lost many employers over the past 15 years, whose employees have moved away; now many of our companies are looking for employees in this market.

In 2007, we saw a decline in consumer confidence. When we spoke to our members, they indicated their confidence was down because of the price of energy due to geo-political problems, the war in Iraq , and politics in Washington .

In 2001, Visions Federal Credit Union diversified its loan portfolio from just consumer loans to include real estate lending, business lending and participation loans. Consumer loans came in at about half of its goal, or 6%, while other areas of loans were over 10%.

Our major focus for 2008 includes:

  • We see the need and have been discussing for quite a while new income streams or blue ocean products. Many of our projects, such as car loans, have become commoditized and are not profitable for the credit union. We're hoping to launch a blue ocean product in our area where there are few competitors and see a need among our senior citizens for reverse mortgages. We see reverse mortgages as a fresh, new product, similar to Home Equity Lines of Credit introduced over 15 years ago.
  • Visions Federal Credit Union has extremely tight expense controls, being less than 1.7% in expenses-to-average assets, and maintains capital that will be necessary if income margins continue to shrink.
  • We see 2008 as being similar to 2007. We see a continued lack of consumer confidence. We believe that business lending will continue to be robust in Upstate New York, and we expect a return to first mortgages as people look to take advantage of opportunities with lower rates.

We are optimistic that 2008 will be similar or better than 2007 and we will continue to be profitable despite tighter margins."