Analysts Share Views On What The Q1 Numbers Mean

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ARLINGTON, Va.-While data for Q1 2011 is not yet final, several experts are offering up some predictions for what those Q1 numbers will hold-including a potential new wave of retirements for credit union CEOs.

In the meantime, a number of credit unions that had been reporting red numbers in recent years posted positive numbers during the first quarter (see related story).

"Our most recent Economic Monitor looks at only a small sample, but it can give us a sense of what's going on, and we're seeing charge-offs continuing to decline," NAFCU Economist Tun Wai said. "I believe we are now toward the end of the Fed action, so we should soon see consumers looking for greater returns, and some of that excess liquidity in credit unions will move out."

While that's good news for credit unions, some of which have actually been trying to run off some of those deposits as the "flight to safety" poured money into the safe haven of credit union savings accounts, the difficult news remains that loan growth is likely to remain negative to flat, predicted CUNA Mutual Group's Dave Colby.

"Everyone is scrambling with the multiple reductions in income-a compressed spread on the interest income side, plus hits to the non-interest income side and potentially more to come from debit interchange," Colby said. "Hopefully, there's a large number of credit unions out there that, because they tend to be conservative, overshot on loan-loss reserves, and then that can be a sort of temporary income replacement."

In some ways, observed Colby, it's easier and safer for an economist to make predictions about results that haven't been reported yet than it is for credit union CEOs to predict under which regulations they are going to have to act.

Lot of Frustration

"There's a lot of frustration out there right now about what the damn rules are anymore," he said. "You're hearing CEOs saying, 'Give me a good rule, give me a bad rule, but give me a set rule so I know what I'm dealing with. It's very difficult to plan right now."

Indeed, Colby suggested that perhaps the greatest loss credit unions have sustained over the last few years, aside from assessments, failures and other tangible losses, is the loss of strategic planning.

"No one's doing enough strategic planning, because everyone's so focused on putting out brush fires," he said. "There's a real danger when you're not able to do the strategic planning."

And there are other potential losses on the horizon as well-of spirit and talent.

"I think we underestimate the exhaustion and frustration out there," Colby said. "CEOs have been running full speed in multiple directions for three years, cleaning up other people's messes and trying to help members at the same time, and they're asking themselves whether it's worth it."

And, ironically enough, as the markets stabilize and 401(k) plans start coming back-things that should be good news-could spell bad news for some credit unions, as CEOs who were already getting close to retirement but had put it off because they didn't feel they could afford to stop working or because they felt the credit union needed them to stick around, start eyeing retirement again.

"After three exhausting years, they're seeing those 401(k)s come back, and they're thinking, 'Hey, I can get the hell out of here.' Everyone is really burned out,'" Colby observed.

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