WASHINGTON — At least one analyst is urging CUs to "make big plans" in 2011.
"Overall the economy's fundamentals keep improving and there is momentum in the consumer now," said Jay Johnson, Callahan & Associates EVP. Johnson cited four straight months of 100,000-plus new private-sector jobs, consumer confidence (reflected in recent retail sales) is up, and auto sales in October and November were higher than in any months since Cash for Clunkers.
Ready For A Comeback
"Our theme for 2011 is 'make pig plans'," Johnson said. "Our view is that Corporate America has been coming back and now the consumer finally is, and that will give us the underlying momentum for good growth in 2011, compared to where we have been."
Credit unions have momentum, as well, noted Johnson. "We know third quarter lending activity picked up to a very high level, and the second quarter picked up over the third quarter. So I think we will see higher lending activity in 2011 and an increase in credit unions' balance sheets."
What will also boost the bottom line is the improved health of the credit union industry, noted Johnson, who believes that could lead to lower assessments and an ROA spike.
"It's a wild card, and we cannot guess what NCUA will do, but fundamental factors across the board, from earnings and asset-quality perspectives, are getting stronger. So a continued improvement in the overall health of the industry, in our opinion, should lead to lower assessments."
Johnson said that through the third quarter about 45% of credit unions are showing year-over-year increases in net income. "Not just a handful of the big guys, but in all areas and sizes. There does not seem to be any reason for any type of assessment at the levels we've seen the last couple years."
