MADISON, Wis. (11/17/15)--A new white paper from the CUNA CFO Council profiles four credit unions that fought their way back from financial peril in the wake of the Great Recession and are thriving today.
The white paper, "The Art of the Turnaround," investigates:
After seeing its capital shrink to a low of 7.3% in 2013 from 12.1% in January 2007, Antioch (Calif.) Community FCU, developed a capital restoration plan in which it identified capital ratio percentage thresholds and developed steps to take to mitigate additional losses and increase income.
“We took steps to modify and restructure members’ loans to lower rates/payments to prevent additional losses,” said Anna Tellez, president/CEO of the credit union. “We froze real estate lending as well as business loans.”
The credit union rewrote its consumer lending policy, placing tighter restrictions on recreational vehicle loans, such as requiring a larger down payment and shorter loan terms.
In a concerted effort to make ends meet, Antioch Community FCU also froze salaries, eliminated its bonus program, reduced credit union paid retirement contributions, cut back benefits, froze hiring of any new employees, including vacated positions of existing employees, and eventually restructured and eliminated two positions.
To date, Antioch Community FCU’s financial condition and capital continue to improve each month. The credit union has been designated as a “low income designation” credit union and Tellez said depending upon the results of its strategic plan for 2016, it may pursue a community development financial institution designation.
Tellez noted that lessons learned include carefully monitoring concentration limits in the loan portfolio and reviewing all mortgage loans on a quarterly basis for property values, members’ credit score and histories.