Friday, September 18, 2015

Federal Reserve Says "Not Yet" on Rates

The graph above is not a pretty one, especially for those looking to save money. It reflects the history of the Federal Reserve overnight rate from January 1998 to January 2015, although that graph can be extended to show a continued flat line to September 2015 since the Federal Reserve did not raise rates this week. The target rate has been set at 0.00% to 0.25% for seven years. Deposit rates and investment rates have been extremely low during this time as a result. 

Compare a quarterly dividend rate on $10,000 at 0.15% that would pay $3.69 versus earning $98.63 for the same dollar amount at a 4.00% rate. (Basic average historical rate). This is a huge difference and is just destroying deposit earnings on account holders, especially senior citizens who had planned for higher earnings in their retirement years. 

Banks and credit unions can't offer good deposit rates in this environment because their earnings on investments is low too. The average investment yield of North Alabama Educators Credit Union is only 1.15% which is actually higher than our average peer group ratio of 1.08%. The very large credit union category peer group only has a 1.20% average yield on their investments. (All as of June 30, 2015). 

Loan rates of course have been historically low during this same time period so the spread between what a credit union pays on deposits versus what they earn on investments and loans has been reduced. This environment of low rates has been great for borrowers but horrible for savers. Nothing new to anyone there. 

The Federal Reserve Board met this week and the possibility of an initial interest rate increase was good in the eyes of many pundits. It didn't happen. When rates will be raised is a matter of intense speculation. The borrowers have had it pretty good for many years now. It's about time for savers to have some good years! 

Friday, September 4, 2015

Labor Day Recognition

With the upcoming Labor Day weekend upon us, it is fitting to recognize the talents and service of our own employees here at North Alabama Educators Credit Union. The credit union is fortunate to have a group of employees who serve the membership well with their dedication to member service. Having worked myself as a teller many years ago, I know full well how challenging and important these front line employees are to the success of a financial institution. Members work with our front line staff day in and day out and their service is what keeps them doing business with North Alabama Educators Credit Union. Our back office and support area employees do their part in helping members with all the electronic service channels that exist these days. Management and the Board of Directors greatly appreciate the work of our employees. The benefits provided to our employees is a good package and reflects the appreciation of their efforts on behalf of all members. We certainly want to do more whenever possible.

I know that our employees will enjoy a long weekend filled with family gatherings, college football kickoff parties, outdoor events, and just general relaxation on their own terms. They deserve it.

If you are a member of North Alabama Educators Credit Union and really appreciate the service of one or more employees here, please take a moment the next time you visit to let them know. All employees love to be recognized for good deeds. Trust me, it would be appreciated!