Piloting Your Credit Union to Success

As we manage toward a post-COVID-19 environment unknown challenges abound. But credit unions can successfully manage through these challenges by sustaining a keen focus on critical dynamics, much like a pilot relying on an instrument panel to navigate summer storms.

As a pilot, I’ve seen firsthand the importance of managing each of the factors of your aircraft. When flying, I continuously manage my direction, horizon, airspeed, fuel use, and altitude, all with the goal of landing the aircraft at my destination safely. 

For credit unions, a keen, strategic emphasis on key operating basics and metrics will deliver a similar result – a safe landing at the end of this crisis. I’m confident that credit unions who focus on customer service, liquidity, capital, expenses, and earnings will not only survive but thrive. 

We know that a key long-term objective for any credit union is to meet the needs of its members. The needs of your members may have changed, with increasing needs for credit for example. Just as a pilot must continually adjust their aircraft while in flight, credit union leaders must adjust the focus of their organization as the crisis begins to resolve. 

Right now, credit unions are focused on re-opening post-COVID shutdown. This will occupy significant attention and will introduce new trends and potential uncertainty.  Additionally, as guidance has come forth, the “new normal” of branch and internal operations will need to be incorporated.

While attention is focused on operations, the specter of losses will likely continue to mount. Key things to remember – jobless claims have historically spiked 3 quarters ahead of loan loss peaks.  This means the losses from the crisis are yet to fully materialize.  

Additionally, mortgage forbearance at the federal level comes to an end 4 months after the end of the federally-declared state of emergency – meaning late 2020/early 2021 is when we may see the true effects on loan losses from the crisis.  Counterbalancing this is the fact that stimulus-backed unemployment benefits are truly robust and should take some of the brunt of potential defaults.

And although liquidity may not be a current concern, contingent liquidity plans are essential, and each credit union should have a backup provider of funding in place. Credit unions can take advantage of new rules adopted under the CARES Act that enhance the Central Liquidity Facility as a backstop for liquidity challenges.

When I get in a cockpit to begin a flight, I know that challenges may arise during flight. As a result, I always have 2 goals in mind. First, get back on the ground safely. In credit unions, this means maintaining the organization for generations to come.  Second, I remain focused on the destination to which I’m flying. In your credit union, this means keeping your long-term strategic goals in mind and utilizing the learning and experience of this crisis to accelerate your progress toward those goals. 

Just as I rely on my instruments and judgment to fly through bad weather to a successful landing, you and your leadership team will succeed through maintaining focus on key operations yet continuing to focus on long-term strategic objectives.