GRAY, Tenn.–Appalachian Community FCU here, which has returned a $1-million grant to the federal government, said it’s getting back to the basics and is not in a position to support grant-funded activities.
As CUToday.info earlier reported here, Appalachian Community FCU has been through some tumultuous times. In January, its former CEO, Ron Scott, had announced plans to leave, but was found dead shortly thereafter after having led the credit union for eight years.
Following Scott’s death, the credit union then announced the layoffs of 11 employees, most of whom worked in its community development area. The layoffs reduced the headcount at the $228-million CU to approximately 73 people.
‘Shift in Strategy’
Now in a statement the credit union said the $1 million Capital Magnet Fund (CMF) grant it won from the Treasury Department’s CDFI Fund, which was to be used in portions of metropolitan Johnson City to rehabilitate substandard rental housing, is being returned.
But following Scott’s death and the staff layoffs “a shift in strategy was necessary and the credit union has since evolved under new leadership,” reads the statement issued by ACFCU. New President/CEO Kelly Smith said the credit union has had to streamline its operations.
“As a member-owned cooperative we have a fiduciary responsibility to carefully evaluate how we spend and lend every penny, and to balance between serving our communities and serving our own members who participate in this cooperative,” Smith said. “Credit unions are not charitable entities. We do not seek extra profit, but we still need a margin of profit for operating expenses. While we ultimately did not feel it was in ACFCU’s best interest to utilize the CMF grant, we continue to serve our communities.
‘Changing Families’
In the statement, the credit union added that since 2017 Appalachian Community FCU has helped more than 225 people achieve homeownership through a grant-funded down payment assistance program, providing more than $2.4 million in interest-free loans. Those grants have generated roughly $20 million in home sales, “changing families’ lives and boosting the region’s economy,” the credit union said.
“We believe in the DPA program because it’s a great way to give members in our community a hand up,” Smith said. “Each loan of $10,500 per member helps make their dream of homeownership a reality. What’s even better is that the member also has skin in the game. They learn about budgeting and saving to pay their mortgage, insurance, taxes, or even to buy furniture. Sometimes people just need a little extra lift.”
On its Q1 5300, Appalachian Community reported a loss of $1.1 million and a net worth ratio of 8.49%.