MADISON, Wis.-The U.S. economic picture is gradually improving, but one observer says CUs must make their own recovery by finding clever ways to boost loans, as the nation's financial fortunes could still dip again.
Patrick McElhenie, sales planner at CUNA Mutual Group, noted during the company's Online Discovery Conference that the U.S. has gained back nearly half of the 8.8 million jobs lost between January 2008 and February 2010, with household net worth on the rebound and the unemployment rate on a gradual decline. But consumers continue to deleverage debt, and until unemployment gets back to pre-recession levels, lending will continue to be a challenge, he said (see chart, right).
The good news is that vehicle lending is on the rise, and McElhenie said that once U.S. auto sales hit the 14.5-million mark, dealerships will begin to roll back some of the aggressive rates they've been able to offer, meaning an easier auto lending environment for CUs. He predicted that would begin to happen sometime within the next year.
Still, overall loan-to-asset ratios remain flat as members continue to put money into savings rather than borrowing. "We anticipate members will continue to do this for the next three to four years," he said, adding that CUs shouldn't expect major changes to their loan-to-asset ratios in that time period.
In the meantime, McElhenie stressed the importance of finding ways to rewrite members' loans, to recapture programs and to also meet local challenges. He pointed to the "HutchCard" at Hutchinson CU in Hutchinson, Kan., for instance, which has boosted card lending with a program that also benefits the local zoo. By using that card, the CU's membership has contributed $300,000 to park and zoo improvements.
One CU's Example
McElhenie also offered the example of EECU, Jackson, Mich., which makes calls to members every three months as part of its loan recapture efforts, and has direct loan promotions for college grads, teachers and first time borrowers-folks who may need a loan but don't always have the credit history for one or think they can't afford a car loan.
Like others, McElhenie also stressed the importance of mobile. He pointed out that the average CU member is 47 years old, while the prime borrowing years are between ages 25 and 44 (only 9% of total CU membership). He added that 66% of smartphone users are consumers between the ages of 18 and 44 (see chart, above), so it's important for CUs to not only have a mobile presence, but to find ways to incorporate lending into their mobile strategy.
More info: www.cunamutual.com
See also: "Yolo's 'Challenge' Drives 48% In Lending," July 30