While the coronavirus (COVID-19) has dealt a series of blows to all credit unions, small shops, with their limited resources, are perhaps feeling the effects of the global pandemic most acutely.

With smaller staff, fewer branch locations, and limited financial resources, credit unions with less than $100 million in assets have much less flexibility to adjust to the sudden changes brought on by the pandemic.

The biggest blow was the sudden drop in interest rates and on the resulting loss of income on loans and investments, some CEOs say.

“We typically have home equity lines of credit that are tied to the prime rate,” says Cari Palmer, CEO of $38 million asset Energy Plus Credit Union in Indianapolis. “When the prime rate drops, our rate goes down as well, which means there's a large portion of our portfolio on which we’re less income.

“When we did a budget at the end of 2019, we figured the prime rate would either drop or stay roughly the same,” she continues, “but we didn't budget for the bottom to fall out.”

The loss of income on investments also hurts, says Sand Carangi, CEO of $90 million asset Mercer County Community Federal Credit Union in Hermitage, Pa., and a member of the CUNA CEO Council Executive Committee.

“When you see a drop in tens of thousands of dollars in income each month, that’s a huge blow to a small credit union,” Carangi says. “Small credit unions don’t have the reserves that larger credit unions have to sustain that kind of drop in income.”

Plus, her credit union has been flexible with members, waiving fees, and delaying loan payments.

“Of course, we want to do right by our members,” Carangi says. “But we still have to pay our core processor and other vendors. We need income to service those products and services.”

On the recommendation of an NCUA examiner, Carangi applied for and received an emergency $10,000 COVID-19 grant from the agency to cover some costs related to the pandemic.

“We were fortunate to get that grant,” Carangi says. “But I worry about credit unions that weren’t as fortunate.”

She’s still trying to find ways to cut costs. The credit union closed one of its branches on Saturdays to reduce expenses.

“So far we haven’t had any complaints,” Carangi says. “We’re looking to temporarily eliminate things that aren’t paying for themselves.”

Carangi is eyeing cost reductions for 2021 as well. She has reduced to travel the point of elimination for the next 12 months.

“We’ve looked at our strategic plan,” Carangi says. “We were going to open a new branch next year, but now we’re postponing that process, maybe indefinitely.”

Palmer feels the pinch as well. “We were looking at adding a program where we could text our members for marketing purposes and disaster recovery situations. But we’ve had to delay those plans.”

Her biggest worry is that one of her employees will contract the virus, kicking off a vicious cycle of quarantining and calculating COVID-19 pay as employees rotate on and off duty, above and beyond fielding enough staffers to serve members.

“Hopefully we’ll never have to cross that bridge,” Palmer says. “We’re an institution that cares for its employees. At the same time, we want to provide service to our members.”