May Get Rid of Overdraft Product
CHARLESTON, W.V.-Dana Rawlings, too, said any drastic move by the CFPB could lead his credit union, Pioneer West Virginia FCU, to make a sharp business model change.
"If I am not making any money on the product I will get rid of it," said the CEO. "If the CFPB cuts back overdraft fees to a ridiculously small amount I will get rid of the overdraft and go back to non-sufficient funds."
Another route, noted Rawlings, is that the revenue cutbacks would drive up the cost of borrowing for consumers.
'We Are Making Plans'
MASSENA, N.Y.- SeaComm FCU's Scott Wilson is another who believes growth now can help offset revenue losses down the road.
"We are concerned and are making plans," said the CEO, who added that the potential impact of the recent Visa and MasterCard settlement, which allows merchants to add a credit surcharge, could curtail usage of credit cards. "If you are going to lose revenue the obvious answer is to look for ways to grow the portfolio."
Wilson feels SeaComm is in good position (1.68% ROA) for any future revenue cuts.
"We look at every dollar to see how we can squeeze yield out of it. We have had to become prudent investors-look at numerous vehicles to put our money to work. No longer can we afford to leave excess liquidity at Fed funds paying less than 25 basis points."
A number of individuals agree that if growth can't come from within, the CU should look for ways to grow beyond its current borders. Wilson is one, saying a good way to address revenue pressure is to grow market share and lend money out. "But there are charter restrictions, so you have to become more attuned with mergers and acquisitions."
Ensuring All Those Assets Are Working
SAN BERNARDINO, Calif.--Gregg Stockdale, CEO of 1st Valley CU in San Bernardino, Calif., agrees that CEOs have been great lenders but need to be better investors now that excess liquidity has increased and margins are razor thin.
"We now have more in excess funds than what's needed for liquidity purposes. We have to get away for thinking we have excess liquidity. No, we have an asset that needs to be working."