NEW YORK — While credit unions might turn up their noses at theprospect of unloading nonperforming loans for pennies on thedollar, financial consultant Peter Duffy said that for those whocan spare the capital, a weak market beats no market at all.
|Though he declined to name names, the associate director atSandler O'Neill & Partners said he's currently working with 10large credit unions to restructure their balance sheets, accordingto his financial “state of readiness” plan. He warns that toughertimes are ahead for all financial institutions, thanks to anoversupply of lending institutions.
|“It's been common, and still is, to hear a credit union or bankCEOs say 'we have seven lenders competing for the same piece of Apaper',” Duffy said, “and while that was good for the consumer, itwas awful for the lending community, because it wrung out themargin on quality loans.”
|Survival in an oversupplied market will require not just ahealthy balance sheet, but also the “will to win”, he said, whichwill include innovative and effective marketing and businessdevelopment, a clear, focused message about the institution'sunique culture, and the ability to adapt to new regulations. Creditunions must act now to unload poorly and non-performing assets, andprepare for lower loan to share ratios, which will require moresavvy investing.
|“We are truly experiencing a fundamental tectonic shift in theway we do community lending,” he said.
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