ARLINGTON, Va.—While the pandemic has had many credit unions concerned about their own balance sheets as the result of fee waivers and forbearances due to the pandemic, most CU leaders believe that that within a year their financials will markedly improve.
That finding was shared by NAFCU during its State of the Industry virtual meeting, which it held in place of its annual convention and expo, which had been scheduled for Vancouver, B.C. During the event, the trade association released results from a new survey that polled its member CUs on their outlooks on delinquencies, lending and the new remote work environment.
“We thought now would be a good time to reach out to our credit union members to see where they are on several issues,” explained NAFCU VP of Research Curt Long.
The survey, which received responses from 218 C-Suite and non-C-Suite staff, asked for their take on where lending is now and where it will be one year from today.
“The result, and not too surprising, is credit unions are currently weak in credit card and student lending, and auto loans are weaker on average,” said Long, who added residential real estate was performing best. “The purchase loan apps have come back as strong as anything.”
But what stood out to NAFCU, according to Long, is that in one year most respondents believe many of their lending woes will be gone.
“In all but student lending, the responses are positive a year out. Most expect loan demand to be stronger than average a year from now,” Long said.
In terms of delinquencies, responses showed CUs in all geographic regions expect members who are behind on payments will still be an issue a year from now, explained Long.
“The responses across all areas of the country look similar—the Midwest, South, West…,” said Long. “They expect the current delinquency patterns to persist a year from now.”
Long noted the Northeast has an even more negative outlook regarding delinquencies in 12 months.
“All regions expect to be above average here, but the Northeast well above average,” he said.
Small CUs Doing Better
What is interesting regarding delinquencies and forbearances, noted Long, is small credit unions are currently doing better than mid-size and even large CUs, according to the study.
“Small credit unions are now seeing delinquency and forbearances below average,” said Long “That is not the case with mid-size and larger credit unions. Typically, larger credit unions have more of their loans in residential real estate, where we have seen a lot forbearance. Will that same pattern hold a year out from now? Every asset class says delinquency and forbearances are growing, but larger ones more than others.”
Response on Remote Work
The survey also looked into how credit unions are faring with staff working remotely. Long explained the report reveals all credit unions generally feel shifting to a virtual workforce has gone better than expected, and that those who had been accustomed to having more of their team working remotely before the pandemic struck have fared even better.
“What stuck out is how high the numbers were here for all of the credit unions who were part of the study,” said Long, noting that means across credit unions that might have had a lot of staff working offsite before COVID-19 and those who had very limited or no experience with the new mode of working.
“Overall, a very strong percentage (70%) said this has gone better than expected.”
But where the survey indicates credit unions have had the most success with work from home are the institutions that had half of their staff or more familiar at working outside the office.
“These are credit unions have had this in their culture, across all divisions. They are accustomed to doing remote meetings with staff…That is where the real benefits of working from home has been seen. These credit unions hit the ground running and remained highly productive,” Long said.
Some Disagreement
Long said the survey further asked credit unions about their expectations for remote work two years from today, and most were positive about the new practice.
“But what we did see is more respondents from the C-Suite saying things have been going very well. That percentage was lower among the non C-Suite respondents,” Long said. “So maybe the C-Suite should check in with the rest of the staff to see if things are going as well as they think, because that might not be the case.”