At September 2009, the credit union industry reported the largest gap between average yield on investments and loan yields since 2004. Last week during Callahan’s 3Q Trendwatch webinar, Patrick O’Callaghan, vice president at Goldman Sachs Asset Management reported an economic outlook of historically low fed funds rates through 2011 – 12 months longer that its earlier forecast. The webinar featured speakers from Callahan & Associates and Goldman Sachs, and examined credit unions’ performance, provided an outlook for the future and discussed growth opportunities for the industry.
As investment yields remain low, credit unions need to focus on boosting earnings through higher earning assets—notably, loans. The Card Act presents an opportunity for credit unions to grow card balances at the expense of other financial institutions. And data from third quarter shows credit unions’ are doing just that. Outstanding credit card loans reached $33.8 billion and unused credit card lines hit $74.4 billion, while lines at FDIC-insured institutions fell by $1 trillion over the past 12 months.
Kevin Marvel, Marketing Director from APL Federal Credit Union (Laurel, MD), participated in the Webinar, sharing his organization’s success story with a basic credit card product. By offering a simple card, with no fees attached and the same, low interest rate of 7.5 percent to everyone, APL FCU saw its card program grow by three times – both in new accounts opened and outstanding balances. And Marvel used the Credit Card Act as a communication opportunity to show members why APL’s card was better.
To view the full presentation of Goldman’s economic outlook and an overview of credit union financial performance as of 3Q 2009, visit Callahan’s Trendwatch recording page on CUtv. Throughout the call, a recurring theme centered on the resilience and stability of the credit union system during our nation’s worst economic downturn since the Great Depression. Credit unions continue to benefit from consumers’ confidence in them and are seeing growth in many areas.