By Ray Birch
COLORADO SPRINGS, Colo.—Credit unions across the country that have been quick to offer extensive member assistance in the wake of the coronavirus pandemic are now acknowledging the longer the crisis persists, the tougher the decisions are going to become in continuing that assistance.
Since the start of the coronavirus outbreak in the U.S., the $8.7-billion Ent CU, for example, has been supporting its members with new programs and special assistance to help them manage their way through the economic downturn.
By the start of April, just weeks into the pandemic, the CU had approved more than $24 million in emergency loans and deferred more than $90 million in loan payments. In addition, Ent has eliminated and reduced many fees and doubled its business lines of credit, while also taking steps to prioritize the safety and welfare of its employees.
Steps To Help
According to Jennifer Sussman, chief marketing officer, Ent has:
- Deferred loan payments on business loans totaling $89 million
- Provided more than 5,000 emergency loans totaling more than $24 million
- Increased lines of credit by more than $1.6 million for Colorado small businesses
- Skipped more than 30,000 monthly consumer loan payments (including personal, auto and home equity line of credit)
- Deferred more than $1.7 million in mortgage payments
- Waived and eliminated fees for thousands of members
“We’re fortunate in that we have a really strong system to build capital and strong net worth (11.86%). And we have that in place just for rough periods, like this one,” said Sussman. “So we'll be in good shape.”
But how long can the credit union keep helping members at its current level is a question Ent—like most credit unions--will soon have to answer, acknowledged Sussman.
“If this pandemic is protracted, then we will have to adjust how we help our members, because giving back at this level is not something that's sustainable for long period, obviously,” she said. “So we're trying to get our members through the hardest part of this and then we'll look at moderating our assistance and maybe other options. But if a member reaches out to us, and has a particularly tough story, we will consider doing all that we can even after we start adjusting some of this short-term help.”
Rolling the Dice in Vegas
That is a sentiment shared by CEO Rick Schmidt from WestStar CU in Las Vegas, who told CUToday.info that as the pandemic first hit the gambling capital and placed more than 50% of his CU’s members out of work, likely for an extended period of time, he was uncertain how long the credit union could forgo income by waiving fees and deferring loans before it, too, would face some tough decisions.
Jennifer Sussman
“If this economic downturn here lasts for an extended period, how deep do I have to cut in order to keep the credit union going?” stated Schmidt in a previous CUToday.info report. “That means how many branches do we have to close? Will my own staff be impacted?”
In Arvada, Colorado, Partner Colorado CU has increased its emphasis on banking legal cannabis businesses as a way to create broadened revenue streams after the $466-million CU suffered its first negative quarter since the Great Depression. CEO Sundie Seefried said she believes that move will help keep Partner Colorado from having to make some tough calls related to staff and member assistance.
“This could be the growth opportunity credit unions need in a tough time,” said Seefried in a previous CUToday.info report.
Tough Choices
But CEOs and analysts have told CUToday.info they understand there are hard decisions ahead if the economic doldrums persist. All that assistance for members, for example, may have to be limited as the strain on the balance sheet become more apparent. Then there is the big question around how to potentially trim employee expenses, including pay reductions, cuts in hours or even furloughs or layoffs.
Ent’s Sussman said she still recalls being part of a management team during the Great Recession and having to make those kinds of choices.
“I have been in situations where we had to make really tough decisions, like back in 2008 when I was with another financial institution,” she recalled. “It's always heartbreaking. That's why I'm empathetic for any credit union now that’s facing difficult decisions.”
Helping Small Businesses
Ent has also been seeking to work with another constituency, its small business members. In addition to the lines of credit increases and providing loans through the Small Business Administration Payroll Protection Program, Ent has run a contest for local entrepreneurs in which the community was asked to nominate small businesses that needed support during the pandemic via Ent’s Facebook site.
The contest awarded a $20,000 grand prize, a $15,000 second prize, a $10,000 third place prize and another $5,000 for fourth.
“We received 11,000 entries and more than 12,000 comments,” said Sussman.
Ent’s selection committee chose the winners in April and the credit union awarded the prizes. That was the easy part of what the credit union is doing now, noted Sussman—handing out money to businesses that need help.
The more difficult decisions likely lie ahead.
As for the rest the credit union is doing and facing through this pandemic, Sussman concluded, “There is no easy about this. This is a difficult situation that we're all in and I don't think it's ending anytime soon.”