CEO Message – October 2023 Newsletter

As I complete my first six-months here at Patriot, I have to say the organization, members, and communities that we serve have been as advertised and then some.  It’s gratifying and humbling to serve our members, but also to represent the Patriot brand in our local communities.  Though times are filled with uncertainty and challenges, remember that YOUR credit union is here for you and, as much as times do change, our commitment to YOU and your financial will-being remains our top priority.

While many economists hinted the American economy would be in a recession in 2023, here we are entering the 4th Quarter with an economy that is resilient despite sputtering on occasion. The Federal Reserve hoped to slow the economy by lowering consumer demand and provide a soft-landing for the economy.

Eighteen months ago, interest rates began to increase after a lengthy period of low rates. At that time, the prime rate was 3.25% and the Federal Reserve would raise it 300 basis points from the start of 2022 to 6.25% in September. This marked the first time since the start of 2008 that prime was over 6%. Today, the prime rate is 8.50%, having moved up 5 times since a year ago and 11 times since the start of 2022.

Rising interest rates often impact different consumers in a variety of ways.  For example, higher rates can be beneficial by providing increased earnings on savings accounts, money market accounts, share certificates and retirement accounts. It is particularly great news for members seeking safe, solid returns for their savings. For those focused on long-term savings, our share certificates are at the top of the list in local competitive rate surveys. While members can lock in rates in certificates, Patriot is also offering more value with money market rates for individuals who want ready access to their savings. And our Dividend Checking with a 2.5% dividend rate combines the best of a savings and checking account with payment options including debit card, eBranch and Mobile, mobile wallet, online bill pay, and more.

On the flip side, rising interest rates have proven costly for borrowers. Consider that an auto loan for $25,000 at 4% for 4 years had a monthly payment of around $564 less than 2 to 3 years ago. Today, that same auto loan carries a rate of over 7% and has a $600 monthly payment.  While that’s less than $40 per month in terms of a monthly payment, consider that the average new vehicle price has increased as well, diminishing a consumer’s buying power.  According to the US Bureau of Labor Statistics, new cars are over 21% higher than they were in 2020, with an average price of over $47,000.  Further, the average monthly payment on a new car is now $729!

While that news may be disheartening, it is minimal when compared to the impact of higher rates on a consumer looking to purchase a home.  Higher interest rates have a direct impact on a monthly payment, but indirectly effects both inventory and sales prices. Here’s an example – families looking to upgrade to a larger home aren’t as likely to do so because they are faced with trading in a 3.75% mortgage that they got in 2019 for one with a fixed rate at over 7% today.  In fact, the average rate for a conventional 30-year mortgage hit 7.31% in August, the highest level since 2000.  A $300,000 home loan will see the monthly payment increase from under $1400 in 2019 to over $2000 today.  As a result, many families decide to stay in their current home longer, which reduces inventory. And when homes do go on the market, it is not unusual for a bidding war to inflate prices – it’s a seller’s market, so the consumer in the market for a home ends up spending more.

It is important that you know that your money at Patriot is safe and secure.  As a credit union we are member-owned cooperative, not a publicly traded company with shareholders.  Earlier this year, the sudden collapse of Silicon Valley Bank (SVB), Signature Bank, and First Republic Bank put the banking system under pressure. Then news this summer surfaced that Moody’s downgraded the credit ratings of a number of small to mid-sized banks and warned that larger backs could also be downgraded, citing growing financial risks and strains could erode their profitability.

Patriot has been awarded the coveted 5-Star rating by Bauer Financial, an independent financial services research firm for over 30 consecutive years. This 5-Star rating, Bauer Financials’ highest possible rating, demonstrates that Patriot is one of the strongest credit unions in the nation in key areas such as capital, profitability, liquidity, and asset quality.  This rating, and our strength in these areas, give you, our valued members, the confidence that your credit union is performing at its very best financially.

We’re also especially proud that Patriot was named as one of America’s best credit unions, ranking as #3 Best In State Credit Union for Pennsylvania.  This recognition was extended to only 146 credit unions in the nation and was determined from a survey conducted by Forbes and industry ranking provider Statista, Inc. based upon customer service, quality of financial advice, transparent and reasonable fees, branch locations, services offered, overall level of trust, and more.

Our entire Patriot family is honored to receive this very special and significant recognition. We greatly appreciate the support that so many of our members expressed to Forbes in their survey. Your confidence in how we serve YOU, our members, is a source of pride for every Patriot team member and volunteer.

As I conclude, let me remind you that we are here for you, our members – in good times and in challenging ones.  Whether you are financially stable or are concerned about your financial future and health, Patriot can help with services, support, and financial education to help – – – whether it is to get control of your finances. to build confidence with them, or to provide you with options to help improve your financial well-being.



Ron Celaschi, CEO