LAKE BLUFF, Ill.-The "rate business" will no longer carry the bottom line load, and one economist insists it's time CUs become more efficient-and that means adding fees for more of the services they provide.

"Strategically the major thing credit union management is not seeing is that they can no longer make the bottom line with rates-margins off of loans and what investments are paying are too low," said Michael Moebs, economist and CEO at Moebs $ervices here. "That being the case, credit unions must get paid for what they know and improve efficiencies."

First, insisted Moebs, is the credit union movement can no longer afford to be the Cecile B. DeMille of the financial industry and employ a "cast of thousands. Credit unions need to have $6 million in deposits for every employee they have," said Moebs, who also noted that higher capital standards are coming as the NCUA will likely align policy more closely with Basel III capital standards in the near future (Credit Union Journal, May 9, 2011).

Hardest Thing To Accept?

What may be the hardest for CUs to accept, at least philosophically, posed Moebs, is charging more fees for the services they provide. "Credit unions will have to charge more fees. If the CU is providing very good rate-related services, say in the form of an IRA, HSA, or a loan, they should charge an application fee-not a large fee, but at least $10. Getting paid and providing good service are not two separate things, they are the same thing."

As Moebs has consistently stated in Credit Union Journal over the last few years, credit unions must also do a better job of expense control.

"Since the Great Recession, credit unions, largely, have failed to become more efficient. They must get their cost of operations, as a movement in total, below 3% of assets," insisted Moebs, who pointed to an example of one Milwaukee, Wis.-based credit union that for the last 15 years has been moving in the right direction. "The credit union 15 years ago had 33 employees, $31 million in assets, and three branches. Today they have well over $100 million in assets, two branches, and 14 employees."

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