A Pattern Of Service

Greater Abbeville FCU steps up to ease financial pain when members unexpectedly lose their jobs.


Manufacturing is a major industry in South Carolina. According to the U.S. Bureau of Labor Statistics and the U.S. Bureau of Economic Analysis, the state’s 2011 total manufacturing output was $26.4 billion, accounting for a 16% share of the state’s total gross product. In 2011, the industry employed more than 216,000 people; that’s 11.8% of the state’s workforce.

That workforce took a hit at the end of 2012, and the employees of Mohawk Flooring’s carpet manufacturing plant in Abbeville, SC, knew layoffs were on the horizon.

“When the layoffs were announced, we felt like we had a commitment to that group of employees,” says Faye Crocker, CEO of Greater Abbeville Federal Credit Union ($12.2M, Abbeville, SC).

Greater Abbeville converted to a community charter in 2004, but even before that the flooring plant was among the credit union’s select employee groups. Of the approximately 100 people the plant let go, 60 were GAFCU members and 24 had loans with a cumulative balance of $122,728. For those soon-to-be-unemployed workers, the credit union offered loan refinancing and payment extensions and reductions to help ease members’ debt load and ensure continued timely payments of loans.

The credit union had the assistance ready, but it still needed members to ask for help. GAFCU reached out through the plant. It sent press releases and made an announcement in the local newspaper. The credit union even looked at its payroll deduction list to identify members affected by the layoffs. The institution sent these members personalized letters requesting they come in and discuss their options.

“When you talk about debt, the change in circumstances, and the fact we’re willing to work with borrowers, it takes the relationship to a personal level,” Crocker says. “And they build on that loyalty.”

Crocker admits the credit union did suffer some losses as a result of the plant layoffs. There were members for whom the circumstances were too overwhelming and they couldn’t pay off their loans. GAFCU offered the assistance for approximately five months. During that time, all but three members came in to discuss their options. The credit union charged-off those members’ loans for a total of $4,400.

For the majority of the affected members, though, the credit union’s assistance paid off.

“Those members worked with us, we worked with them, and we all came out on the other side,” Cocker says.

From second quarter 2012 to first quarter 2013, GAFCU’s delinquency ratio has remained well below its peer group and the national average. According to Callahan’s Peer-to-Peer data, GAFCU’s delinquency ratio peaked at 1.02% during the Mohawk plant layoffs. Although this is higher than its first quarter 2013 ratio of 0.60%, it is still lower than the national average of credit unions with $10-20 million in assets, which is approximately 1.50%. And GAFCU’s first quarter 2013 ROA, 1.74%, was more than a full percentage point ahead of the average for its asset size across the country.

A History Of Helping

Unfortunately, part of the reason Greater Abbeville was able to take the Mohawk layoffs in stride was because it had experience assisting abruptly unemployed members. In 1993, a union strike at a local manufacturing plant resulted in the termination of the plants’ entire workforce of union employees.

“That they were good members didn’t change, that they were loyal members didn’t change,” Crocker says. “Just the circumstances changed, and we tried to help them find ways to get through that time period.”

The current board chair of GAFCU was on the board in 1993 and remembers the tough times. Having this historical context helped when Crocker approached the board about offering assistance to the Mohawk employees.

“We learned with the union shop that we have to be proactive and we have to get out in front of it,” Crocker says. “I reached out to the president of my board of directors. He was receptive and we took it to the full board. They were 100% supportive of us.”

From its experience with the union strike, the credit union learned a personalize approach is better than a blanket one. Taking a hard-line and forcing payment without considering the members and their situation only leads to unpaid loans and charge-offs, which ultimately damages both the members and the institution.

“Credit unions were formed for this reason,” Crocker says. “We learned that during the union strike in 1993 and applied it to the Mohawk situation. It serves both the member well and the credit union well.”