CUNA’s GAC once again kicked off with the Small Credit Union Roundtable, a gathering of member-owned financial cooperative managers who have a front-row seat to the challenges facing many Americans in a hollowing middle class.
Take, for example, John King of Eagle One FCU ($62.7M, Philadelphia, PA), a former post office SEG credit union that now holds a community charter.
“Our core membership is still postal workers, and many are now part of the working poor,” he says. “They’re making $40,000, $50,000 a year and having challenges. These are no longer career for a lifetime jobs.” In fact, income verification for loans often finds that members are working two or three jobs, jobs that often don’t last long.
His own credit union has challenges, too, in its own competitive market but is taking them on by relationship pricing loans, converting to a new core processor that will allow it to upgrade its mobile and other offerings, and even installing a personal teller machine in a postal facility. “It handles shared branching, so we can have people from multiple credit unions using it,” he says.
Eagle One also has leveraged grant money from the NCUA to help fund necessities, such as $7,000 last year it used for vendor risk assessment software and penetration testing. He plans to seek larger grants from the CDFI to help grow services in some underserved areas in his FOM.
Martha Ninichuk, director of the NCUA’s Office of Small Credit Union Initiatives, told the group Sunday afternoon that in addition to its own grants and revolving loan fund, the CDFI program is an underutilized resource. Working with the Treasury Department, the regulator has streamlined the certification application process. Now any of the more than 2,000 credit unions carrying the Low Income Credit Union designation can find out if they qualify for a streamlined application simply by sending their AIRES download to the NCUA.
Thirty-nine have qualified to apply that way and eight have been certified so far, Ninichuk says. The grants can be sizable, up to $2 million, and some credit unions have gotten as much as $200 million in them over the past 20 years or so the program has been in existence.
The roundtable also included a panel discussion with four manager/CEOs of small credit unions, each with their own success story to tell. They were Maggie Polk of Peru FCU ($17.5M, Peru, NY); Mira Ness of NYU FCU ($19.7, New York, NY); Lori Herrick of Manchester Municipal FCU ($20.7M, Manchester, CT); and Teri Robinson of Pacific Northwest Ironworkers FCU ($24.1M, Portland, OR).
Here are key points they made:
Polk: Peru FCU went from a teachers SEG to community charter two years ago and added mobile banking and their first ATM. “It was really necessary to survive,” she says. They’ve since seen 11% member growth and 20% loan growth. They also regularly get letters offering to merge from other credit unions in the area but their board wants no part of it.
Herrick: Manchester Municipal rolled out student lending eight years and then four years ago added consolidation of loans from other places into their credit union. They hold the loans in-house. Herrick shared the story of saving one member more than $20,000 in interest by consolidating his student loans into one 10-year note. “It’s a great way to make a member for life,” she says.
Ness: NYY FCU does a lot of mortgage lending and has automated the process to make it uber efficient, from application to underwriting to close. “All I do is sign,” Ness says. The credit union then sells the loans and retains servicing and has made significant non-interest income that way.
Robinson: Pacific Northwest Ironworkers focuses very tightly on a single SEG: union ironworkers in five states. The credit union went into net worth restoration after Robinson took over in 2009, and used secondary capital loans to restore capital position and provide stability for a comeback that has seen it become one of the top-performing credit unions of its size in the country. (Robinson goes into detail in this CreditUnions.com article last year.)