When COVID-19 slammed the doors on the U.S. economy, and thousands of credit union branches, lenders at the nation’s member-owned financial cooperatives responded to sudden losses with loan deferrals and emergency loans.

Now, as the economy slowly reopens, these same lenders are planning their response for the months ahead, including what happens when all those deferrals and forbearances expire while joblessness is still high. Here, seven credit union executives from California to the Carolinas answer two questions about how they’re getting their books and staff ready for what’s next.

Holidays are generally tough on members’ disposable income without COVID, so this will give us an indication about the degree to which COVID has impacted our members’ ability to repay their loans.

Coastal Federal Credit Union

Joe Mecca has been with Coastal Federal Credit Union ($3.5B, Raleigh, NC) for 16 years, the past three as vice president of communication.

Coastal currently has slightly more than 700 mortgages in forbearance and 15,500 loans in skip-a-pay or other deferrals, affecting $302 million in total loan balances. The credit union also funded 217 emergency relief loans for $276,700.

Are you anticipating a wave of delinquencies, then charge-offs, foreclosures, repossessions, and related issues?

Joe Mecca, VP of Communication, Coastal FCU

Joe Mecca: Yes. We expect these trends to pick up in late third quarter or early fourth quarter this year for consumer loans. Relief checks, deferral programs, and Fannie Mae’s forbearance rules have helped members stay current. By the end of Q3, the deferral programs will be up, but we’re expecting unemployment to still be high. This also assumes no additional relief payments.

Mortgage loan delinquency and foreclosures could push into 2021, likely late Q1 or early Q2. This is due to the generous forbearance period allowed for Fannie loans, which is two six-month forbearance periods.

How are you responding and preparing?

JM: We plan to or are: Hiring temp staff to prepare for a spike in volume, using existing staff from other departments if possible; reviewing automation opportunities for payment due reminders, etc.; reviewing current policies and procedures to ensure we are up to date; conducting refresher soft skills training for all collections staff; touching base with vendors to ensure they’re prepared to handle the potential volume of repossessions; and reforecasting charge-offs and allowance for loan losses. We will adjust if necessary.

Element Federal Credit Union

Linda Bodie has been CEO at Element Federal Credit Union ($54.8M, Charleston, WV) for 21 years.

Element doesn’t offer first mortgages but does have home equity lines, none of which are in forbearance. Bodie says 102 of her 4,500 members needed to skip their payments; however, they needed no more than two months and they’re now back on normal pay schedules. Two other members needed longer deferrals, affecting $72,000 total in auto loans.

Are you anticipating a wave of delinquencies, then charge-offs, foreclosures, repossessions, and other issues?

Linda Bodie, CEO, Element FCU

Linda Bodie: This is a difficult question to answer because there are still so many unknowns. We’re definitely planning for above average repossessions and charge-offs. We don’t know if members have not yet reached out to us or if, at some point, they will give up and stop paying without us even knowing they’re in trouble.

How are you responding and preparing?

LB: We implemented an outbound calling campaign to our entire membership at the start of the pandemic. We reached a lot of members and most were doing fine. We were not able to reach other members, so we’re not sure about them.

We’re still offering financial relief and counseling. We think there are more job displacements coming in the future. We’ve added another body to our collections team, but, so far, we’ve not seen a spike in collections activity.

We will boost PLL. We’re still reviewing scenarios.

The biggest thing we can do right now is keep communicating with our members. Keep asking about their wellbeing. And let them know we’re here to help. It’s really no different from what we’ve been doing for 21 years. When people know you care, it can make a big difference in their lives.

North Bay Credit Union

Chris Call has been CEO at North Bay Credit Union ($80.1M, Santa Rosa, CA) for six years.

North Bay has deferred payments on 25 mortgage loans totaling $8.9 million.

Are you anticipating a wave of delinquencies, then charge-offs, foreclosures, repossessions, and related issues?

Chris Call, CEO, North Bay Credit Union

Chris Call: We are not anticipating a wave of delinquency problems inasmuch as we see evidence the job loss situation is a temporary one that will return to normal once the economy is opened again.

During the past 90 days under shelter in place, our delinquencies have gone down. Those that needed loan payment deferrals expected to be back to work as soon as county health officials would allow it.

How are you responding and preparing?

CC: For an abundance of caution, we are increasing our PLL moderately. We are immediately contacting borrowers as they fall delinquent and helping them structure their financial obligations to stay current on their loans.

North Bay Credit Union grows its business while calculating risk and reward in its Bay Area market. Learn more in Cannabis, Wildfires, And Wineries .

Notre Dame Federal Credit Union

Tom Gryp has been president and CEO of Notre Dame Federal Credit Union ($670.8M, Notre Dame, IN) for nearly 10 years.

His credit union has approximately $20 million in auto loans and HELOCs in forbearance and approximately $11 million in first mortgages in forbearance, the latter representing approximately 5% of those loans.

Are you anticipating a wave of delinquencies, then charge-offs, foreclosures, repossessions, and related issues?

Tom Gryp, President and CEO, Notre Dame FCU

Tom Gryp: We’re seeing no increase in delinquencies right now, which is very good news. However, that could be due to the loans in forbearance as much as a quick return to economic normalcy. Only the future will show us what reality is.

How are you responding and preparing?

TG: In the pandemic’s early days, we felt providing some breathing space would help calm our members and give them time to assess their current and future financial situation.

Now, we’re hoping for the best but are aggressively adjusting for a challenging future. We’re increasing our loan loss reserve as a cautionary step. We usually have our reserve at about 0.85% of our non-guaranteed loan portfolio. At the onset of the pandemic, we set out to increase our reserve to about 1.25% by year-end. As the true effect of the pandemic becomes clearer, we will adjust that target accordingly.

We’re also proactively calling our members, taking advantage of the free time created by closed lobbies. Following our financial physician model, we check on our member’s financial health and offer assistance as appropriate. This assistance can take the form of offering forbearance on existing loans or, if the member qualifies, offering to refinance existing debt at lower current rates.

Notre Dame FCU is devoted to financial wellness and opportunity for each member. That includes a team devoted to diversity and inclusion Here are some You Tube videos:

• Navigating the Market Personal Finance (In Spanish, with branch manager Mireya Olvera)
• Navigating the Current Mortgage Market (English)
• Navigating the Current Mortgage Market (Spanish)

Nymeo Federal Credit Union

Vicki Johnston has been with Nymeo FCU ($293.6M, Frederick, MD) for 16 years, the past 11 as president and CEO.

Nymeo has 30 mortgages worth $6.9 million in forbearance and has granted skip-a-pay deferrals for 856 loans worth $14 million.

Are you anticipating a wave of delinquencies, then charge-offs, foreclosures, repossessions, and related issues?

Vicki Johnston, President and CEO, Nymeo FCU

Vicki Johnston: We’re expecting an increase in delinquency most likely in the third and fourth quarters this year and increased charge-offs for the same time into 2021. We’re also prepared for an increase in foreclosures and repossessions.

How are you responding and preparing?

VJ: In three ways: We’ve been funding our loan loss allowance for this possibility with a special environmental factor (the pandemic); we’re fully staffed in our collections department and prepared to add additional temp collectors if we need to; we’re reaching out to members and offering credit counseling and webinars on these topics.

A suburban Maryland credit union is calling members to offer assurance and advice. Learn more in COVID-19 Checkup Calls: Nymeo Reaches Out By Phone.

Resource One Credit Union

Brady Popp joined Resource One Credit Union ($575.2M, Dallas, TX) as chief lending officer 18 months ago.

The Texas credit union has deferred 89 mortgages totaling $122.6 million, 14 commercial loans totaling $45,537, and 4,904 consumer loans totaling $4.1 million.

Are you anticipating a wave of delinquencies, then charge-offs, foreclosures, repossessions, and related issues?

Brady Popp, CLO, Resource One Credit Union

Brady Popp: Yes, in all categories, beginning not later than November or December this year. Holidays are generally tough on member’s disposable income without COVID, so this will give us an indication about the degree to which COVID has impacted our members’ ability to repay their loans.

We’re guessing delinquencies will increase to 3%-5% and losses to 1.5%. This assumes we do not see another shutdown of the economy in the fourth quarter. We’ll be keeping an eye on some leading indicators such as voluntary repos, lease turn-ins, bankruptcy filings, and foreclosures.

How are you responding and preparing?

BP: We’re reassessing the methodology for the allowance for loan lease losses to account for the current economic environment, which will increase our ALLL.

We will not be hiring additional collections staff, but we are prepared to repurpose staff to assist collections. We’re also considering temporarily bringing in-house collections functions that are currently outsourced. We’ve outsourced some aspects of collections, such as bankruptcies, because the tasks were not a full-time job. As these increase, we might fill the job with an internal person and save the credit union money.

Teachers Federal Credit Union

Francis Collins has been with Teachers Federal Credit Union ($7.8B, Hauppauge, NY) for the past seven years and senior vice president of credit since April 2016.

Teachers currently has 587 mortgages in deferment, totaling approximately $157 million and representing about 5% of the cooperative’s mortgage portfolio. Deferments and extensions also are in place for more than 6,500 other loans, totaling approximately $432 million, or about 9% of the big New York credit union’s total portfolio.

Are you anticipating a wave of delinquencies, then charge-offs, foreclosures, repossessions, and related issues?

Francis Collins, SVP of Credit, Teachers FCU

Francis Collins: The economic effects of COVID-19 have been significant. The delinquency rate in April increased 15 basis points from the previous month. May’s delinquency numbers were tempered increasing 2 basis points from April so we’re optimistic delinquencies will stabilize over the next few months and ultimately decrease later this year.

How are you responding and preparing?

FC: We’ve increased our PLL by approximately 30% to account for an expected increase in credit losses. We’ve also put a few different measures into place to increase the bandwidth of our collections and lending teams and provide the best support and education we can to our members during this time.

During the early stages of the pandemic March and early April our first priority was quickly responding to the increase in member inquiries, offering counsel and options that addressed immediate concerns. When that subsided in May, we increased the volume of our proactive, outbound member service calls, ensuring members get the information they need to plan and manage their finances for the months ahead.

We’re also exploring outsourcing functions such as early-stage collections. This would allow our core team to focus on late-stage delinquencies and modification requests that will undoubtedly increase for members unable to make lump-sum payments as deferment periods expire.

Masks in hand, one of New York’s largest credit unions is now in a phased reopening process. Learn more in Teachers Shares Stories From COVID-19 Hotspot.

Interviews have been edited and condensed.