First-responder Credit Union Newsroom

I f history is a guide, the average yield on loans will take time to adjust to the sharp increases in the federal funds rate. Roman Ojala FEDERAL FUNDS RATE VERSUS YEILD ON LOANS FOR U.S. CREDIT UNIONS | DATA AS OF 06.30.22 © Callahan & Associates | CreditUnions.com   SOURCE: FEDERAL RESERVE BANK OF ST. LOUIS; CALLAHAN & ASSOCIATES The average yield on loans for U.S. credit unions historically lags changes in the federal funds rate by a minimum of one year. When the Federal Reserve cut the federal funds rate beginning in the second half of 2007, it wasn’t until mid-2009 that the yield on loans started to reflect the repricing of loan portfolios. Similarly, in 2016, loan yields at U.S. credit unions fell throughout the year despite the benchmark rate rising. The Fed has raised interest ra...

For credit unions, rapidly rising rates have increased net interest income and raised paper losses on investments. By Jim DuPlessis | November 02, 2022 CUTimes  Federal Reserve Building in Washington, D.C. (Source: Shutterstock) The Fed’s 75-basis-point rate hike announced Wednesday was its sixth increase in a row, a pattern that has increased borrowing costs for consumers, raised net interest margins for credit unions and lowered the value of their investments. It was the fourth 75 basis point rate hike in a row. It met the expectations of most economists, including those from CUNA and NAFCU. Fed Chair Jerome Powell said rates will rise further, but the size of the increases will lessen at some point. “That time is coming,” Powell said. “It might come at the next meeting or the next one.” The Fed next meets Dec. 13-14, then on Jan. 30-31, 2023. NAFCU Chief Economist Curt Long said the Federal Open Market Committee is “foreshadowing a slower...

Associated Press November 2, 2022, 1:00 PM The Federal Reserve’s move raised its key short-term rate to a range of 3.75% to 4%, its highest level in 15 years. WASHINGTON (AP) — The Federal Reserve pumped up its benchmark interest rate Wednesday by three-quarters of a point for a fourth straight time but hinted that it could soon reduce the size of its rate hikes. The Fed’s move raised its key short-term rate to a range of 3.75% to 4%, its highest level in 15 years. It was the central bank’s sixth rate hike this year — a streak that has made mortgages and other consumer and business loans increasingly expensive and heightened the risk of a recession. But in a statement after its latest policy meeting, the Fed suggested that it might soon shift to a more deliberate pace of rate increases. It said that in coming months it would consider the cumulative impact of its large rate hikes on the economy. It noted that its rate hikes take time to fully affect growth and inflation. Those words ind...

10/31/2022 CUTodayu WILTON, Conn.–Cryptocurrency investors are attracted by the opportunity for growth, but a high level of skepticism and lack of understanding remains, according to new research. In fact, 60% of respondents to the survey of more than 10,000 people admitted they don’t understand cryptocurrency The research by consumer insights provider  Toluna  surveyed people between the ages of 18 and 64 years from four regions and 19 markets to understand consumer perceptions around cryptocurrency during August 2022. The survey builds on previous waves of research carried out in December 2021 and June 2022, and examines how perceptions of cryptocurrency have continued to develop and change over time, the company said. ...

10/31/2022 CUToday HAMPSHIRE, U.K.–A new study from  Juniper Research  has found that consumer spending using  buy now, pay later (BNPL) platforms will reach $437 billion globally in 2027; rising from $112 billion in 2022. “This sizeable growth of 291% will be driven by escalating financial pressures from the rising cost of living, increasing the demand for cheap credit solutions,” Juniper said. According to Juniper, the research found that the most significant issue currently facing the BNPL market is the debt trap. “BNPL’s lack of credit checks poses a considerable market hurdle, as consumers are being approved for larger loans than they are actually able to repay,” Juniper said in its a...

October 28, 2022 by Ashley Stopinski , SWBC CUInsight In their Q2 report, Historically Low Delinquency Rates Coming to an End , economists at the Federal Reserve Bank of New York made the following observations about the economy that point to delinquency storm clouds brewing for many credit unions and their members: Total household debt increased by $312 billion during Q2 2022. Consumer debt balances are now more than $2 trillion higher than they were in 2019. All debt types saw sizable increases, with the exception of student loans. Mortgage balances have climbed $207 billion since Q1 2022. Credit card balances saw a $46 billion increase since Q1. Auto loan balances rose by $33 billion in Q2. In recent months, borrowing has increased significantly across the board due to inflationary pressure on just about e...

 SAN FRANCISCO–Noting that one of the biggest obstacles to switching financial institutions is the “overwhelming hassle” of moving accounts, SF Fire Credit Union is encouraging Bay Area residents to open up their financial relationships by exploring a credit union membership in addition to their main bank. It said the effort is aimed at “giving a nudge to those who are credit union curious, but hesitant to join.”  “We want this unexpected campaign to make people laugh, but also think seriously about the benefits of a credit union,” said SF Fire CEO Kathy Duvall. “We know that one in-three people are not familiar with Credit Unions, and only one in five know who SF Fire is. This campaign encourages Bay Area residents to get to know SF Fire and consider us for a better, more personalized banking experience we're sure they'll love."  Officially launching on Nov. 1, SF Fire said its “playful campaign” dubs the term “Side Bank...

The economy grew from spring to summer, but CUNA and others warn of what's ahead. By Jim DuPlessis | October 27, 2022 CUTimes Source: AdobeStock. The U.S. economy rebounded in the third quarter after two quarters of small declines, but the happy music might be ending soon. The U.S. Bureau of Economic Analysis on Thursday reported that real gross domestic product (GDP) increased at a seasonally adjusted annual rate of 2.6% from the second quarter to the third quarter. The gain reflected improvements in exports, consumer spending, nonresidential fixed investment and government spending. Reducing GDP were decreases in residential fixed investment and private inventory investment. CUNA Chief Economist Mike Schenk said the rebound was solid, but “widely expected.” CUNA’s baseline economic forecast called for the economy to grow by 2.5% in the third quarter and the consensus estimate among economists was 2.3%. “Healthy economic growth will not last,” Schenk said. “The Federal Rese...

Agency highlights surprise overdraft and surprise depositor fees OCT 26, 2022 Washington, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) issued guidance about two junk fee practices that are likely unfair and unlawful under existing law. The first, surprise overdraft fees, include overdraft fees charged when consumers had enough money in their account to cover a debit charge at the time the bank authorizes it. The second is the practice of indiscriminately charging depositor fees to every person who deposits a check that bounces. The penalty is an unexpected shock to depositors who thought they were increasing their funds. “Americans are willing to pay for legitimate services at a competitive price, but are frustrated when they are hit with junk fees for unexpected or unwanted services that have no value to them,” said CFPB Director Rohit Chopra. “We are providing guidance on existing law that will help law-abiding businesses seeking to fairly compete and the families ...

Fall is upon us and we’re heading into planning season. There is a lot to consider this year. It  seems like there’s more uncertainty for the near-term future than there normally is. We’re in a  qualified recession (although we’re not stating it  officially), we have mid-term elections coming in November, inflation is above 8% with little signs  of a reprieve and although we’ve been adding jobs at a considerable pace, wait times and member  service still seems to be feeling the effects of the pandemic shutdown and subsequent “Great  Resign”. This weakening of service & response is affecting every industry. Every one of my business trips  has been met with longer lines, closed-early signs, or an interaction with someone completely  overworked and exhausted from pulling the weight of two or more employees that have gone missing in  action. As we head into budget and planning season, we need to take the issue of weak service & staffing...