Catalyst’s Q1 Insights & Outlooks: Trends, Tactics, and Takeaways

March 4, 2025

Catalyst’s Q1 Insights & Outlooks webinar provided a deep dive into the economic trends shaping 2025, offering credit unions strategies to navigate uncertainty. Hosted by Mark DeBree, Catalyst Managing Principal, the panel featured Steven Houle, Vice President of Asset Management and Compliance Officer; Chris Uhl, Senior ALM Consultant; and Jonathan Jackson, Manager of Brokerage Services. Together, they analyzed key economic shifts and provided actionable takeaways for credit unions.

Economic trends and market outlook

Houle set the stage by highlighting the Federal Reserve’s decision to cut interest rates by 100 basis points in late 2024, signaling a shift in monetary policy. “Uncertainty is the word on everyone’s mind,” Houle remarked. With ongoing tariff discussions and inflation reports coming in hotter than expected the outlook for additional rate cuts remains unclear. “We were expecting two to three cuts this year, but now it’s looking like only one — if that,” Houle added.

Jackson echoed this sentiment, pointing out the increasing risks of inflation persistence. “The risk that rates may actually rise again is something we need to keep on our radar,” he noted. This potential volatility requires credit unions to remain agile in their financial strategies.

Investment and balance sheet strategies

The panelists emphasized the importance of a proactive approach to balance sheet management. Jackson shared that credit unions entered 2025 with stronger liquidity positions, allowing for more strategic investment opportunities. “We’re seeing credit unions locking in 5%+ yields to protect future earnings,” he said. Strategies such as extending investment ladders and leveraging collateralized mortgage obligations and mortgage-backed security products were discussed as ways to optimize portfolios in the current rate environment.

Uhl provided insight into credit union loan portfolios, noting that demand remains high, particularly for auto loans. “The affordability of vehicles has diminished, and members are looking for streamlined lending processes,” Uhl explained. He also stressed the importance of member service, stating, “The biggest factor driving loan growth is ease of access — credit unions that simplify the lending process see the most success.”

Tactics for navigating the now

1. Monitor interest rate movements: The expectation of rate cuts has been scaled back, requiring credit unions to remain flexible in their planning.
2. Diversify investment portfolios: Credit unions determine their optimal duration and allocation profile to ensure stable cash flows.
3. Enhance member experience: Competitive rates alone won’t drive growth; simplifying loan application processes and improving member service are key.
4. Strategically manage liquidity: While liquidity has improved, maintaining a balance between cash reserves and investment opportunities will be crucial.
5. Assess pricing strategies: With regulatory pressure on fee structures, credit unions must focus on optimizing loan pricing and interest margins to sustain profitability.

As 2025 unfolds, the ability to adapt to shifting economic conditions will be essential. “Being nimble is critical,” Houle concluded. “The credit unions that can adjust their strategies in real time will be the ones that thrive.”

If you missed the live session, you can still gain key insights to help prepare your credit union for the road ahead. Check out the Q1 Insights & Outlooks webinar, now available on-demand. The Second Quarter webinar is set for May 15, register today to save your seat.

Contact your GoWest Solutions team to learn more about how Catalyst can help your credit union with innovative payments, asset management, and liquidity solutions.

Posted in GoWest Solutions, Top Headlines.