The CU Balance Sheet: Nemo Vs. The Hulk
BOCA RATON, Fla.-"January 2001 was the last time common sense made sense," according to CUNA Mutual Group Financial Consultant Tim Gardner. As Gardner told CUNA Mutual's Discovery Conference, "You remember, those were the days when, if you lowered your deposit rate, people stopped bringing their money in to you."
But the rocky economy-in particular rocky returns in the stock market-have caused a "flight to safety" among people seeking reliable places to park their money. And it seems that no matter how low credit unions keep their deposit interest rates at, the money just keeps coming in, he noted.
Gardner's session on ROA was going on at the same time the Fed was meeting to determine what it was going to do with interest rates, and as most people had anticipated, the rates were cut yet again. With that in mind, Gardner asked attendees for a show of hands of who expected their credit union to consider lowering their dividends on savings deposits below 1%. A smattering of hands reluctantly rose into the air, with one attendee indicating that his credit union's deposit rate already was below the magical 1% level.
"Concentration risk on the liability side is the 'Finding Nemo' of risk management," Gardner said. "It's finding the tiny rate that will finally keep members from bringing their money in. The real estate loan portfolio, then, is 'The Incredible Hulk.'"
Product For Joe Sixpack, Not Just J. Champaign
With CUNA Mutual Group's newly chartered national trust company taking center stage at Discovery, a number of credit unions were wondering how to convince "Joe Sixpack" that he needs trust services just as much "Joseph Champaign." The answers may sound a tad morbid and cynical-but then, that's life, according to Dan Wroblewski, AVP-wealth management at CUNA Brokerage Services.
"People think trusts are just for rich people," Wroblewski told The Credit Union Journal. "But that's just not true."
In fact, all it takes is a look at the divorce rate in the U.S. to see why trust services should be a hot item. "Let's say you get divorced, and you want to make sure you take care of your kids," he offered. "But you're not fond of your ex- wife-and let's face it, most people aren't-and you want to make sure that she can't touch that money. You need a trust."
And it doesn't have to be the ex-spouse who is the problem-it can be the new spouse, too. "You get divorced, and then you remarry. Let's say your kids from the first marriage are all grown up," he suggested. "How do you make sure that when you die, your children from that first marriage are still taken care of? You need a trust. What happens if you and your spouse die at the same time, or the two of you die within days or weeks of each other?"
Truliant FCU CEO Marc Schaefer, who attended Wroblewski's session on trust services, agreed with the speaker. "It's the kind of thing people don't like to think about," he told The Credit Union Journal. "But it's exactly the kind of thing our members need to think about."