Pain at the Pump Is A Pain For The Portfolio
DOWNEY, Calif.-On a recent trip to the gas station, Mary Torsney put more than $100 into the tank of her Chevy Suburban-and still only filled it to three-quarters full. So the CFO at Financial Partners CU here certainly understands the affect that high gas prices are going to have as credit unions stare down the second half of 2011.
Gas prices affect everything, noted Torsney, who is a member of the executive committee for CUNA's CFO Council. "It all trickles down, because eventually it will affect food prices," she said. And with high unemployment and a paltry demand for a number of financial products, "I don't think overall that things are going to change too much" in the third and fourth quarters, she said. "I don't see significant improvement."
After a booming 2010, during which Financial Partners did more than $300 million in mortgage lending, that business has dropped slightly, leading Torsney to revise an earlier forecast for what 2011 will hold. Additionally, while deposits in checking, savings and money-market accounts are on the rise, consumers are seeking liquidity, and have been reluctant to invest in certificates. As a result, FPCU in 2011 has seen a 3% growth rate in core deposits, compared to a total of 9% for all of 2010. New checking accounts have increased 23% over last year, with balances rising 7% year over year.
Financial Partners has worked to contain costs, including layoffs a few years ago and followed by allowing attrition to occur; 2011 is the first time in three years that staff have seen raises. Torsney said that staffing would likely remain as it is, with no major changes unless the CU sees "a substantial pickup in [loan] volume."
Moreover, the credit union has been investing in new ATMs and remote deposit capture functionality-both desktop- and mobile-based.
Fee income has been a bright spot, and Torsney said she expects to see continuing revenue from members utilizing the overdraft protection option, which costs between $29 and $33 per overdrafted transaction. Additionally, members whose accounts are overdrawn for more than five days are charged an additional $30. CU officials are also considering instituting a $2-per-statement fee for those members who elect to continue receiving paper statements. But $2 will just be enough to cover costs, said Torsney, and that fee will not serve as a profit-driver.