YOUNGSTOWN, Ohio – Executives with credit unions who operate in the Mahoning and Shenango valleys report upticks in auto lending and cooling in the residential loan market as borrowers react to rising interest rates and inflation.
As the 74th recognition of National Credit Union Day approaches on Oct. 20, total credit union assets at the end of the second quarter stood at $2.14 trillion, up 8.1% from a year earlier. Insured shares and deposits grew 7%, or $110 billion, according to the National Credit Union Association.
Area credit union officers report growth in assets and membership as they navigate an environment that remains affected by the economic toll imposed by the pandemic.
The Business Journal contacted representatives of three credit unions that operate locally. They are Christine Blake, CEO of Cardinal Credit Union in Mayfield Heights, which operates a branch in Austintown; Sandi Carangi, CEO of Mercer County Community Federal Credit Union in Hermitage, Pa.; and Michael Kurish, president/CEO of Austintown-based Associated School Employees Federal Credit Union.
Associated School Employees Credit Union, which offers membership in Mahoning, Trumbull and Columbiana counties, reports assets of $180 million and just over 14,100 members, says Kurish.
Both are growing, although he acknowledges the net change has slowed because of the average older age of residents here.
“We are doing a good job of replacing them with younger members,” Kurish says. But the rate of growth is slower “than you would have if you didn’t have the older membership passing.”
Cardinal Credit Union entered the Mahoning Valley market in 2015 with its acquisition of Tri-County Credit Union in Youngstown, followed by mergers with Edison Financial Credit Union and Youngstown City Employees Credit Union. The 20,000-member credit union holds about $300 million in assets, according to Blake.
“It’s a very good market for us to be in,” she says. Throughout the pandemic and various “economic ups and downs,” as she describes them, Cardinal Credit Union has “been fortunate as an institution and fared very well.”
Blake also praises the Cardinal staff for engaging with its Mahoning Valley members to help them with their finances and leave them in a better position.
“My staff knows the members,” she says. “It’s exactly what credit unions are all about.”
Mercer County Community Federal Credit Union has about 12,000 members, up from around 9,000 just five years ago, Carangi reports.
Assets are close to $110 million, up from $68 million when she started with the credit union.
“Most of that has happened in the last couple of years,” Carangi says. “That’s a pretty big growth number for us.”
Carangi points to a couple of factors helping to drive growth of Mercer County Community Credit Union.
The credit union received approval to expand its charter in 2021, permitting it to serve customers in Mercer County as well as the surrounding counties of Lawrence, Crawford and Venango in Pennsylvania as well as Columbiana, Mahoning and Trumbull counties in Ohio.
The credit union also upgraded its core processing system, allowing it to do more, and it upgraded its mobile app.
In addition, the credit union supports several community nonprofit organizations, helping to increase its exposure and encourage membership growth.
Employment has grown as well to 30. “The technology allows us to do a lot more, which naturally attracted more people,” Carangi says.
In recent years, the credit union renovated its Sharon office and is now preparing to replace its 3,500-square-foot building on North Hermitage Road with a new building more than triple its size, about 12,000 square feet, Carangi says. The building it bought will be demolished to make way for the updated branch.
Like other institutions, ASECU has worked on developing its remote products and enhancing its tools, an effort that the pandemic made more of a priority. That became a selling point to new members who chose not to come into the offices of the credit union, Kurish says.
The credit union rewrote its home banking platform to provide members additional abilities to not only manipulate or transfer money among internal accounts but to transfer funds to or from accounts they have elsewhere.
In addition, ASECU’s mobile banking products provide “clearer, faster access to their account information and allows them to monitor their plastic card activity,” Kurish says.
With the technology in place, the alternatives available to consumers for their financial needs are greater than ever, he adds.
“One of the things that we find as we’ve been developing our digital platforms, and making access more accessible to our members, is that every time we bring that convenience level to them, we’re also bringing the convenience level to the bad actors,” he says.
“And we find that there are benefits to our members if we can provide this information to them easily so that they can see faster any strange activity that might be occurring on their accounts,” Kurish continues. “We give them the ability to lock down their cards themselves – so that they can stop any suspicious activity while they investigate it.”
ll financial institutions are coping with a volatile economy that includes the Federal Reserve hiking interest rates in an effort to stem rising inflation.
Interest rate increases have “significantly” affected real estate lending, for purchases and refinancing, the Cardinal CEO, Blake, says. For the past few years, before interest rates began to rise, many customers were refinancing and Cardinal Credit Union was “a very good place for many people in the area to refinance their mortgages.” Blake says.
Real estate also is being affected by the smaller number of houses available for sale, people putting off purchases of available properties because of the interest rates and the lack of new construction because of supply chain issues.
“If you went back maybe five years, [auto lending] would have been a stronger portion of our business,” Cardinal’s Blake says. That segment continues to struggle because of supply chain issues. “It’s not the same as it was prepandemic,” she adds.
Among the bright spots for Cardinal is business lending. “Our business lending is strong in all areas of northeast Ohio,” Blake says. “Business lending has been strong as businesses are rebuilding and starting back. That has been good for us.”
Real estate activity at ASECU has declined in recent months because of the interest rate hikes
and inflation, “working in concert” Kurish says,
to reduce the market. He sees auto loan activity increasing, driven by the increasing availability of inventory.
“A lot of people are seeing the rise in [interest] rates and they want to get ahead of that curve and maybe get into a car before rates go up higher,” he says.
Because of rising interest rates and the recent drops in the stock market, people are also becoming more aware of “alternative areas for deposits” – as Kurish describes it – and seeking certificates and other accounts that can offer higher rates of return, the CEO of ASECU says.
Auto loans represent most transactions at Mercer County Community, a turnaround from the past two years when that business “subsided pretty dramatically,” Carangi says. “We’ve seen unbelievable auto loan growth.”
That’s partially because vehicles have become more available but also because buyers are trying
to get loans “before the rates really go up a lot,” she says.