CEO Message – October 2024

At this time of year when we’re focused on things like fall and football, many of us have had their fill of the upcoming presidential election hoopla. Rarely does a day go by in our busy lives when we aren’t subjected to advertisements or news about the candidates and politics.  And yet, like 2024, it will soon be in our rear-view mirror.

Like 2023, when many economists expected that the American economy would be in a recession in 2024, once again we are entering the 4^th Quarter with an economy that has been resilient and continues to have momentum.  That said, it is entirely possible that the “soft landing” the Federal Reserve is intending will turn into a recession at some point in 2025.

Interest rates, which moved up precipitously since the start of 2022, have remained relatively stable throughout 2024 to date because of the Federal Reserve’s position. That news has been welcomed by members seeking safe, solid returns for their savings and who have benefited from Patriot’s competitive rates.  At their July meeting, the Fed continued their pause on rate hikes with the goal of getting closer to an inflation rate of 2%. When the Fed does decide to cut rates (by the time you read this it may have already happened), consumers can expect to see rates on savings accounts, money markets, certificates and IRA’s begin to decline.

On the borrowing front, it appears that some consumers are experiencing ‘FOLO’ (Fear of Losing Out) relative to travel, entertainment and other experiences to make up for lost time during the Pandemic. Spending in these areas was up 27% over the previous year, with consumers depleting savings or borrowing from credit cards to cover the cost of these experiences. Those that funded expenses through borrowing will be faced with paying down balances with higher rates. Additionally, consumers are having to make higher monthly payments on new auto loans, typically $100 to $200 more per month, as a result of higher average new vehicle prices and interest rates. Although the share of credit card debt transitioning into delinquency remains below normal levels, it has risen leading to concerns about delinquency ahead, especially in credit cards and auto loans.

Mortgage lending has been very soft across the area for much of 2024 due to low inventory and high interest rates.  However, there was a slight uptick in mortgage applications in recent months as rates for 30-year fixed mortgages have trended down in July and August to their lowest level since May 2023. This trend resulted in the industry experiencing a boost in refinancing. Mortgage rates are not expected to recede much in the coming months, and rates will likely need to come down another 1 ½ to 2% before refinancing activity becomes robust.

At Patriot, we’re here to meet your financial needs whether it be for borrowing, savings, or handling your everyday banking business.  We continue to earn the coveted 5-Star rating by Bauer Financial, an independent financial services research firm, recognition that we have received for over 31 consecutive years. This 5-Star rating, Bauer Financials’ highest rating, demonstrates that Patriot is performing at its very best financially as one of the strongest credit unions in the nation in key areas such as capital, profitability, liquidity, and asset quality.

We recently added two experienced leaders to our management team: Mark McCoy, Chief Revenue Officer, and Joe Lombardi, Chief Information Officer. Both individuals bring broad experience in the credit union movement and financial services industry. We welcome them and are fortunate to have them on Team Patriot.

In early August, we opened our drive-up ATM at Letterkenny Army Depot on Coffey Avenue.  Like our other Smart ATMs, it dispenses a variety of denominations for withdrawals and has a Spanish option. As I have mentioned previously, we are planning to open new branches in Greencastle and Spring Mills – north of Martinsburg, West Virginia – during 2025.  And we continue to look for additional branch sites to conveniently serve the needs of our growing membership in other communities.

As I conclude my remarks, I want to again thank each of our members for the opportunity to be of service to you.  We are here to provide you with the financial services that you need and assist in your financial wellbeing.  Please let us know how we are doing and, if you would kindly do so, recommend us to your friends and family.

Sincerely,

Ron Celaschi, CEO