PLANO, Texas (7/20/12)--Credit unions will need to have a very proactive management of cash flow to keep available funds working in this challenging economy, according to an executive at a Catalyst Corporate FCU subsidiary.
"It will also require credit unions to retain a relatively low as possible cost of funds management in order to assimilate some form of spread," Brian Turner, Catalyst Strategic Solutions director and chief strategist, told the Texas Credit Union League (LoneStar Leaguer July 19).
Interest rates--in light of Federal Reserve Chairman Ben Bernanke's statement Tuesday to the U.S. Senate Banking Committee--are not going to increase much during the next couple of years, Turner told the league.
"Loan demand will continue to be moderate at best as consumers continue to temper their spending behaviors in light of uncertainty," Turner said. "Share growth will not be impacted (as to trends). Unless the employment sector again turns south, delinquencies will be unaffected while liquidity profiles will continue to strengthen."
Net margins will remain tight, Turner said. Industry trends from the first quarter will continue through the remaining months this year, he added.
"Industry stats show some improvement in earnings and loan growth but it is isolated with the larger credit unions ($500 million in total assets or greater), which although accounting for only 5% of the number of institutions, control about 65% of the assets and equity of the industry," Turner told the league.