Inflated interest rates and soaring asset prices sidelined many would-be buyers in 2023. Unfortunately, uncertainty surrounding the U.S. presidential election and a possible recession lurking in the shadows could suppress lending well into 2024.
CreditUnions.com asked lending executives across the country: Given the current environment for your field of membership, what is your outlook for 2024?
Read on to learn about their hopes and fears for the year ahead.
Geoff Grimes is the senior vice president of consumer credit at Atomic Credit Union ($622.8M, Piketon, OH). He been with the Buckeye State credit union for 16 years and in his current position for more than a year.
He says: “Loan growth is projected to be strong in 2024. Although we are based in a predominantly rural part of Ohio, our community charter is adjacent to two of the hottest real estate markets in the nation, Columbus and Cincinnati.
This provides opportunities for all loan types, not just mortgages. We continue to grow our membership by adding branches and new indirect dealer relationships. Atomic now serves more than 73,000 members in Southern Ohio.”
Richard Hubeny has been with California Credit Union ($4.7B, Glendale, CA) for more than 20 years and has been executive vice president and chief lending officer for nearly five years.
He says: “We believe we’ll see a slight drop off in loan demand, but we anticipate it will remain steady considering the current environment. Often with economic uncertainty, consumers tend to be a little more cautious about leveraging their personal balance sheet with new debt. However, when there’s a loan need, it’s important for us to be there for our members. For instance, in 2023, we originated nearly $250 million in loans to first-time homebuyers and approved nearly 80% of our completed vehicle loan applications.
Whenever possible, we provide financial guidance so we can say “yes” next time. We’re also aware that providing debt they can’t afford is not in the member’s best interest. We want our members to have healthy finances for life-long financial success — and we believe we’re valuable partners in making that happen.
Carrie O’Connor has been with CommunityAmerica Credit Union ($4.7B, Lenexa, KS) for more than 10 years and is the Kansas City cooperative’s senior vice president and chief lending officer.
She says: We believe member engagement will be extremely important as it aids our efforts in helping members achieve financial peace of mind. So, member loyalty and a strong brand continue to strengthen our position in Kansas City as well as the growth opportunity we are excited about in the St. Louis market.
Overall, in consumer lending we’re projecting a growth rate higher than the America’s Credit Unions E-scan, and we expect good growth in mortgage lending production as well. We’re also amplifying our focus on SBA lending and expect to become an SBA Preferred Lender in 2024 to support an underserved area of our markets.
Jim Pack has been with Coastal Federal Credit Union ($4.9B, Raleigh, NC) for more than 15 years and became chief lending officer seven months ago.
He says: I believe 2024 will be another tough year in the lending space. Although many of the industry experts are predicting loan growth in the 7% range, we have budgeted for growth of around 10%. This will be driven heavily by our home equity portfolio. We’ll keep a close watch on net income to ensure our cost for share growth doesn’t badly erode our margins.
Kris Lewis is CEO of Ignite Credit Union ($153.3M, Grandville, MI), which was formed in January 2023 through the merger of Allegan Community and Rivertown federal credit unions. He had been CEO of the predecessor credit unions since 2015 and 2021, respectively.
He says: We are a CDFI-designated credit union and will look to use some grant funds to drive new commercial loans into our portfolios that represent CDFI target market areas in our FOM. With a loan growth goal of 9%, we will also look to grow traditional portfolios in the second quarter, along with GGLs. We believe we can accomplish this by bringing in outside sales training for the front-line team. In previous credit union roles, I’ve seen that deliver 5%-7% lifts in loan growth.
Overall, I feel good we can accomplish our goal with the above strategies. We are blessed with a great group of members and potential members, and I have a hungry team that’s always looking to provide value to our members.
Whitney McLeod joined Texas Trust Credit Union ($2.0B, Arlington, TX) in 2010 as an assistant branch manager and for the past year has been senior vice president for consumer lending and collections.
She says: Our field of membership is looking for help. Our goal is to assist as feasible but not stop there. We want to help members with a future-looking perspective, not just an immediate “now” focus.
This year, we’re looking into loan products that can better help members for immediate needs while also reviewing the slate of our current loan products to ensure we are staying true to our “Building Brighter Financial Futures” philosophy. If rates decline this year, we anticipate seeing members re-evaluate their current loans and look to refinance or finance additional items.
Jeff Kusler has been with Journey Federal Credit Union ($178.9M, Saint Johns, MI) for five years and its CEO since 2021.
He says: JFCU stands at a pivotal juncture. Our recently expanded FOM has opened up new opportunities in central rural Michigan, areas typically underserved or unbanked, and coincides with the retreat of traditional banks from these regions. However, our strategy doesn’t involve establishing a wide network of physical branches; instead, we’re heavily investing in technology and omnichannel service delivery. This focus aligns with our expectation of a continued decline in natural walk-in traffic and a growing preference for self-service channels among our members.
The launch of our self-driven, online loan acceptance program in late 2023 has contributed nearly 20% to our unsecured loan originations across the year. During the next few years, we plan to bring mortgage and commercial operations in-house, aiming to strengthen these segments from efficiency, cost, and service perspectives.
Ken Bauer is executive vice president and chief lending officer at OneAZ Credit Union ($3.4B, Phoenix, AZ). He joined the cooperative in March 2020.
He says: We’ll continue to serve our members and provide them with the loans they need to purchase a home or car, take care of their families, or grow their business. We have worked hard to ensure OneAZ remains financially stable even in a challenging economic or interest rate environment. To that end, we expect to see a slight uptick in mortgage lending volume in 2024, especially in the latter half, and auto loan production comparable to 2023.
Tom Ernsperger is executive vice president and chief lending officer at One Nevada Credit Union ($1.3B, Las Vegas, NV). He has been with the cooperative for nearly 25 years and in his current position for nearly five years.
He says: We anticipate flat to moderately declining interest rates, a slowing economy, lower levels of inflation, and a less enthusiastic consumer. We also expect some surprises, primarily related to the election year.
Nevada has recovered quite nicely over the past year but still leads the nation in unemployment. The Nevada outlook will be highly dependent on national economic trends. As always, Nevada will go as the U.S. goes, but probably a bit sooner. If rates do come down, that will help our members a bit, particularly regarding housing affordability. Home prices have remained high throughout the year despite the high mortgage rates and the anemic sales market, and supply continues to be challenging.
Management expects 2024 to bring similar mortgage volume, a bit slower auto volume, and definitely slower commercial lending volume as the regulatory cap is now on the radar. We also anticipate slower member transaction volumes as consumer spending is expected to slow with the economy.
The 2024 budget also calls for slowly diminishing net interest income levels as short-term rates come down. Lower mortgage rates could help our volume there, but we’re not anticipating any sort of sharp drop. With stable to declining market interest rates, solid asset quality, and a strong mix of core deposits, we anticipate another strong earnings year. As such, with continued economic uncertainty, we’ll continue to employ a conservative, flexible balance sheet management approach during the coming year.
Interviews have been edited and condensed.
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