Another Atlantic hurricane season has come and gone without great incident. Except for the crazy semi-remnant storm Patricia. Best wishes to those affected by heavy rains.
If you cringe when I say, “cone of uncertainty”, then you are in hurricane territory, and are amply prepared for this discussion. For those facing weather challenges of blizzards, tornadoes, earthquakes, haboobs, or mudslides, let’s paint a picture:
The sun is shining, temperatures are warm, and there is a gentle breeze caressing your skin. Just another day in paradise, as some may say. “Nothing could spoil this scene,” you tell yourself. The warnings will pass; the storm will turn. It always does. Sure, you see some fast-moving clouds on the horizon, and the surf is beginning to spray with the increasing winds. But it’s still so pretty! And then, BAM! You’re in the midst of a Category 5 hurricane. Up is down, left is somewhere behind your missing shoe, and confusion reigns. “It may not be Kansas, but wherever we are, it’s not here,” your twisting mind exclaims. Nothing makes sense. You took all possible preparations, yet feel as lost as everyone else. Wasn’t there a building surrounding you earlier? Best to just crouch into a corner, cover your head, and wait it out. This tempest had a beginning, surely it must also have an end!
When the winds finally subside, you assess the damage. Trees? Uprooted. Roads? Blocked. Utilities? No water in the faucet, no A/C, and even the cell doesn’t work! This is going to be a long journey back to normalcy. Oh look, there’s no roof. No matter our losses, we will rebuild, together.
I’ve lived through a number of storms here in Florida. It was Hurricane Andrew which taught us that crisis can appear out of nowhere and give you little time to prepare. Hurricane Wilma taught us that a storm can continue to strengthen even when over land, since part of our land is actually the great River of Grass, the Everglades. I stepped outside as the eye of that storm passed over and experienced a moment of eerie stillness in-between hours of lashing winds and rain.
For the former, our preparations consisted of taping the windows (waste of time) and putting batteries in the portable TV (black and white, kids). We were lucky, having no structural damage, only devastation of the “thousands of trees blocking everything, including our door” type. It took a week of us and our neighbors cutting downed trees before we could even drive down our street. By Wilma, we had all the modern necessities…steel shutters, reinforced garage doors, roof tie-downs, and impact-resistant glass. Sure, we lost a good portion of our roof tiles, spent weeks clearing all the downed trees (some on the house, others everywhere else), but we were ready for the work.
It’s been 10 years. None have passed over since. So do we become complacent? Not at all. We now have a generator, a full set of impact doors and windows, and further improved structural support. Nearly all trees at risk of falling on the home have been removed or trimmed.
The credit union industry is in a similar situation. Things are great in all areas. The economy is on an upswing, fuel is remaining low, interest rates are rock bottom, and every indicator is positive. Car loans? Not only are they up, but even more are going to credit unions. Membership is growing, as are the number of people using a credit union as their PFI. Portfolios are increasing year over year in a seemingly-endless cycle. This is what I’d like to call, “the calm.”
When do we have a calm? Yes, before the storm.
Am I saying we are poised for a crash? No. Yet business runs in cycles, unfortunately an undeniable fact. While things are good (calm), it’s easier to be successful. People are buying. If you’re getting in front of them at the right times, they will work wth you. But the good days will end. The hurricane warnings will be posted, and the storm will arrive. In this case, it could be an economic decline, a slowdown in auto buying, or another lending crisis. Most likely, it will be something we haven’t even yet considered.
Are credit unions ready for the inevitable downturn?
What is your credit union doing to prepare? Look to emerging products and services and evaluate if they pose a threat to your future success. Can you improve on their ideas? Maybe a partnership is in order (see Want Tomorrow’s Tech? Team Up!). Will your annual plan stand up to a major economic shift? A crash in lending could reduce profits, while a drop in liquid assets could reduce your ability to lend. While we are in hurricane season, we watch every disturbance as it blows off the African coast or begins in the Gulf. Advisories are issued every three hours. Are you watching your own industry indicators?
You don’t want to be caught in the storm unprepared. Discuss in the comments section how your credit union will weather the next “big one”. I look forward to everyone sharing their ideas!
Image credit: http://www.panoramio.com/photo/42729472