Latest Articles from Our Team
The Tides They Are A’–Changin’
By the Olden Lane Team, 7/11/22
The combination of IRS administered stimulus checks (issued in April 2020, December 2020, and March 2021) and historically low interest rates meant credit unions were flush with shares. Moreover, accommodative Federal Reserve policies ensured that anomalously low interest payments were required for credit unions to maintain these shares. Credit unions of all sizes enjoyed abnormally high share growth following the stimulus payments. In fact, the six quarters from Q2 2020 to Q3 2021 represented each of the top six quarters of share growth for the average credit union since the start of data in 1998. Leaving no doubt as to causation, the industry’s initial uptick corresponds directly to the issuance of the first stimulus check, and the peak in 2021 Q1 corresponds to when the deposits of the latter two stimulus checks were likely processed.
To Dividend or Not to Dividend
As the books closed on 2021, the industry was treated to the traditional flurry of credit union special dividend awards announcements. Against this backdrop, we asked a fundamental question: what should motivate a credit union’s special dividend policy?
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Reflections on our time at CUNA GAC 2022
My team and I had the great pleasure of attending CUNA GAC 2022 this year. It was wonderful to be able to reconnect with friends and associates whom I hadn’t had a chance to see since the global pandemic scattered us and forced our connections to become digital. The conference also provided a time to reflect and take stock of the industry I spend every day immersed in. Below are my key takeaways from CUNA GAC.
1. The Credit Union Business is a People Business – The return of an in-person CUNA GAC was a welcomed development on so many levels. Chief among them, however, was the good feeling that comes from being in the presence of other industry leaders and their ideas, collegiality and personality. One cannot help but imagine that a similar human interaction is taking place at the 5,000 credit unions across the country. It was inspiring to see so many credit union people being well and doing well.
2. The Credit Union Business is Not Getting Easier – Competition is coming fast and furious. Aside from the traditional channels, credit unions are being called upon to manage the complexity that comes from dynamic fintech developments. The pandemic has also changed the habits and expectations of members. And, credit unions have to remain as vigilant as ever to remain responsive to these needs. The choices that credit unions are making today will dictate their level of success for the foreseeable future.
3. Regulation is Not Lightening Up – As we move on from the pandemic, the primary regulator will be taking stock of how each credit union fared. The return to in-person exams will be an adjustment for the regulator and credit unions alike. In addition, the CFPB is also waiting in the wings to bring its version of proper oversight.
4. Interest Rates Will Be Moving – It is clear that there will be interest rate volatility for the foreseeable future. This means that credit unions need to be prepared to understand, manage and hedge those risks. While the NCUA has encouraged credit unions to pay greater attention, we are fearful that too few are prepared.
While the times are not easy, and do not look to be getting any easier, I look forward with optimism to the path and growth of the credit union movement. My team and I cannot wait to play our role in the coming years.
The Treasury’s emergency capital investment plan is a real boost to 85 credit unions
In December 2020, as part of its COVID relief package, Congress created the Emergency Capital Investment Program (ECIP) to encourage low- and moderate-income (LMI) community financial institutions to augment their efforts to support small businesses and consumers in their communities. The program is limited to Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs). Treasury formally launched the ECIP in March 2021…
Read the Full Article on CUInsight.com
Our Team in the News
Credit unions gird for M&A, piling up 69% more secondary capital YOY
By Lauren Seay and Zuhaib Gull, 8/23/21
U.S. credit unions are building a war chest for more M&A in what is already shaping up to be a banner year for deal-making.
Total outstanding uninsured secondary capital for U.S. credit unions surged roughly 69% in the second quarter to $533.8 million, up from $315.7 million in the year-ago period. Secondary capital consists of uninsured loans — from banks, other credit unions or socially conscious investment pools including foundations and endowments — that credit unions can assume and classify as net worth on their balance sheets with regulatory approval.…
Armed with secondary capital, more credit unions aim to buy banks
By Lauren Seay, 8/1/21
Credit unions remain on the hunt for bank acquisitions, and a bank with $500 million to $1 billion in total assets could trade as early as this week, one deal adviser said.
A growing number of credit unions are using secondary capital to expand their deal capacity. One such institution, Tuscaloosa, Ala.-based Alabama CU, said Aug. 5 that it plans to acquire Jasper, Ala.-based Security Federal Savings Bank in an all-cash deal. The tie-up marks the sixth credit union acquisition of a bank announced this year…
Read the Full Article on S&P Global Market Intelligence