Popular anger at big banks helped make the past few years good ones for Bethpage Federal Credit Union and its chief executive Kirk Kordeleski.
Bethpage, the state's largest credit union by assets -- $4.7 billion at the end of March — has added 38,600 net new members since the end of the 2009 and last year reported record earnings.
Kordeleski expects its growth to continue, and not just because consumers are fuming about bank bailouts and proliferating fees. He forecasts Bethpage's assets will grow to $5 billion by the end of this year on improved awareness of credit unions and what he says are friendlier prices for products like mortgages and checking accounts. Bethpage plans to add 12 branches over the next three years to the 26 now operating on Long Island, Kordeleski said.
Most of its lending is in mortgages and car loans. But Bethpage's growing commercial lending business represents about 15 percent of its loans, or about $200 million a year.
On Feb. 15, Kordeleski was elected chairman of the Long Island Association, this region's largest business group. Meeting recently with Newsday editors and reporters, he spoke about Bethpage, banking, the Long Island economy and the need for business to make a better case for development here. Following are excerpts.
Do you think people feel better now about the economy?
Yes. We see lots of demand. We had a record month in home equity borrowing [in March]. We had a record month in auto loans. We see strong demand for commercial real estate, and we see significant refinancing business. They're refinancing down in terms; they're not taking cash out, they're moving from 30 year to 20 year or 15 or 10-year loans.
Foreclosed homes are glutting the market and depressing prices. Should lenders be modifying mortgages to help prevent still more foreclosures or, as some suggest, let the free market work, let these houses be foreclosed and resold so that home values can rise again?
I think the truth is in the middle. We must speed up the foreclosure process. It's three years-plus in New York — the longest in the country. In the states that have worked through this process faster — Arizona, even Nevada — housing prices have hit bottom and are starting to come back.
Having said that, we believe strongly that, for some people in tough situations, loans need to be modified. But some people are just so far under water there is no help for them. They've lost a substantial amount of their income, often for the classic reasons in foreclosures — divorces, significant illness or significant job losses. In those cases the foreclosure process needs to take place or this hangover will last for years in the housing market.
How do you feel about banks renting out some of those foreclosed homes?
I think it's a great idea. Look at Long Island, where we need rentals across the board. There is not enough affordable housing here.
What can be done to increase jobs without adding to the tax burden?
First, we have to fight to keep the companies already invested on Long Island and who have the opportunity to move and are thinking about moving. Those jobs are critical to us; typically they are professional high-quality jobs.
The other thing we need to do is to build on Long Island. There are great opportunities to create affordable housing, to create hublike communities in places like Hicksville and other areas for small businesses and medium-size businesses to grow.
Business organizations and companies need to do a better job of getting across that reasonable and managed growth adds great value to the economy of Long Island.
In a recent poll of local businesses, sponsored by Bethpage Federal, more than half claimed difficulty in obtaining credit. Yet, some bankers say businesses aren't seeking new borrowing. How do you view it?
Small businesses have had some challenges over the past five years, and so getting their finances in order and being in a position to borrow — it's a tough situation for them. Where we disagree with some of our banking friends is we see plenty of demand. I think it's about the quality of the borrower, but I think we're all moving in the direction of providing more credit. There are many, many companies out there in good financial shape and who have the ability to borrow.
The credit unions have enjoyed an increase in business thanks to public anger at the banks. How much longer will that last?
You can look back at the savings and loan crisis and at other events where the banks' brands were dramatically diminished. It's about a three-year cycle. [However] it's a different world out there for financial services than it was two decades ago in the S&L crisis. Credit unions have become much more significant community financial institutions. We present a real difference in the marketplace — as a cooperative, the way we price, the way we service, the size and number of branches we have. I think that will sustain this growth for a longer period of time.
The Federal Reserve Board has indicated that it plans to keep interest rates through 2014. Do you think that's wise in terms of helping to stimulate the economy? Banks hate low interest rates.
Yes, our margins are squeezed and it is a challenge, but having said that, for Bethpage's success and the future of Long Island, the economy has to be strong and growing. All the data we've seen is showing moderate improvement — jobs improving, housing still bouncing along the bottom. The European debt crisis is challenging. There's so much unknown we think keeping low interest rates makes all the sense in the world.