CEO Roundtable: Credit Unions

Each month, we gather around the table with a different group of Springfield business leaders to discuss industry trends, workforce and company operations. Join us as we get a behind the scenes look into our business community from the C-suite. Now available as a podcast, the full discussion is at SBJ.net/CEORoundtable.

Springfield Business Journal Executive Editor Christine Temple discusses lending, consumer trends, workforce and the regulatory environment in credit unions with Judy Hadsall, president/CEO of Multipli Credit Union; Loretta Roney, president/CEO of Volt Credit Union; and Bruce Webb, president/CEO of Assemblies of God Credit Union. Below is an excerpt from the conversation.

Christine Temple: I want to start with credit union loan balances. Last year was one of the fastest-growing years recorded with credit union loan balances growing 20% nationwide. The Credit Union National Association estimated it’s been about 7% annually the last several years. So, I’m curious what you’ve experienced in your financial institutions?
Judy Hadsall: At one point, we were like at 56% growth last year and it was all across all channels: commercial, real estate and consumer. And it dropped. So, by the end of the year, we were at 28%, which is phenomenal for us, but with that comes some bad because of liquidity issues. Deposits weren’t there to support that kind of growth.
Bruce Webb: It was a unique year for us. It kind of comes down to how many loans stay on our books versus get sold in the secondary market, primarily on our mortgage side. So, last year, there was some unique opportunities with some local partners to be an exclusive lender. A lot of those loans stayed on our books versus being sold. So, even though our loan originations were about the same as ’21, our balances grew 75%.
Loretta Roney: For us at Volt, we don’t dabble in the commercial space as much as Multipli or AGCU, so we don’t typically have some of the same amount of loan growth that maybe they do. A lot of our loan growth just really centers around consumer home and auto loans. We still performed well at the beginning of the year at 20% growth, but then like with Judy, toward the end of the year, we were all the way down to around 9% growth at the end of ’22. But in ’21 we had 20% loan growth in those spaces, which we’re pretty proud of.
Temple: What’s driving some of this growth?
Hadsall: Commercial really took off. There was just a lot of activity going on in our community, which was very nice. We got to take advantage of that. But like I said, there was a downside. We needed the liquidity, like a lot of us are saying, because deposits are leaving too. So, this year is not going to be as good as the last couple years.
Temple: How’d you solve for the liquidity piece in this last year?
Hadsall: That’s a good question because everybody is still trying to determine that. A lot of us are borrowing from the Federal Home Loan Banks or the Federal Reserve or trying to figure out how to keep that pipeline going because loans are what makes us money, the interest off the loan.
Webb: I think we all agree with the low interest rate environment, you had a lot of people pent-up demand, whether it was for vehicles or investments. We were still low on inventory with residential housing. So, as we know, prices went up, people were bidding over the asking price. Things were on fire and appraisal values went up. Between pent-up demand, liquidity, investors that had money – they’ve sold their businesses, what do I do with it? Well, let’s invest in a property whether it’s (multifamily) or one- to four- or something else, and let’s lock into a 3%, 4% rate. Now that’s kind of doubled now, that rate. Like Judy said earlier, it’s slowing down this year.
Roney: I think the thing that we’ve learned over the last couple years is some of the things that have been steady or the things that we thought we knew all are changing and they’re changing so rapidly. To project future revenue streams has become more and more difficult because we’re in this rising rate environment. We’re not sure how far the Fed’s going to push it. We’re not sure how far the consumers are going to pull back and if we are actually going to enter into recessionary activity toward the end of the year, as a lot of people are predicting.

Excerpts by Editorial Intern Presley Puig, intern@sbj.net.