By Ray Birch
WASHINGTON—Small credit unions are dividing their limited workforces into teams and paying attention to partnerships with surrounding credit unions as means to survive the pandemic.
With much smaller staffs than larger credit unions, small CUs could be dramatically impacted by any COVID-19 infection among their workforce, notes Tom Sakash, CUNA’s manager of small credit union initiatives.
“Staff getting sick is a concern for many credit unions, but especially shorter-staffed, small credit unions,” said Sakash. “If one, two or even three employees were to get sick, it could be a significant impact on the credit union. I think small credit unions are being extra cautious and doing things to minimize the potential the entire staff could be unable to work.”
In response, Sakash said some small shops are dividing their workforce into teams, having one group work in the office while the remainder work at home, and then rotating on a scheduled basis.
“These teams have no interaction with each other so there is no possibility of one individual infecting everyone,” said Sakash. “That way the credit union could not be shut down because no one could work.”
Risk from Small Staff
A number of small credit unions have been reaching out to CUNA and sharing concerns about having a small staff during the pandemic.
“These are often credit unions with two or three people,” explained Sakash. “What would happen if they were to have to close the branch?”
As CUtoday.info reported here, Hudson Valley CU in Poughkeepsie, N.Y., closed two of its branches after an employee at each tested positive for coronavirus.
What CUNA is encouraging small credit unions, and credit unions of all sizes, to do is begin building relationships with other credit unions in their area that already have a strong business continuity plan.
“I think a lot of credit unions are looking at their disaster recovery and business continuity plans and forming these relationships with other credit unions that could be their backups,” said Sakash. “Credit unions are good at this; we have seen it during the California wildfires, for example. A credit union has to close a branch and they get help from another CU nearby. Credit unions step up to help each other, and I think if a credit union’s entire staff went down with the coronavirus that other CUs would help.”
Risk From Delinquencies
Tom Sakash
Another growing concern of small CUs today, said Sakash, is potential delinquencies.
“Right now they haven't seen the delinquencies and charge-offs. But we are only in the early stages of this crisis,” said Sakash. “But when those happen, what will they mean for a small credit union? Their members are losing their jobs and asking for relief on loans, skip-a-pays and more…And small credit union CEOs are now pulling double duty—working with their members to help them but also having to look down the road to maintain the financial stability of the credit union.”
Sakash said it remains to be seen how this crisis will affect the ability of credit unions to survive, much like the early days of the Great Recession. He acknowledged the challenge today is different, with credit unions having to issue large numbers of forbearances and fee waivers while at the same time experiencing a greater reduction in revenue.
“Out of the financial crisis of 2008, certainly small credit unions closed at a high rater or merged out, even some with large capital buffers,” recalled Sakash.
A potential scenario moving forward, suggested Sakash, is similar to what occurred more than 10 years ago—small CUs that leave the industry through merger or failure will be those already struggling with profitability heading into the crisis.
“Often times, we saw in the last recession, is those credit unions that were not doing well could not survive,” he said. “We’ve been talking to small credit unions now, giving guidance to those that have a high delinquency rate, aren't making money and don't have a diverse loan portfolio, to shore up their fundamentals.”
The First Step
An important step small CU CEOs should take now, advised Sakash, is to not lose sight of their own, personal needs.
“First and foremost, I say take care of yourself,” said Sakash. “The small credit union CEO is facing a great deal of stress now. They're so close to all this—they're the ones making the decisions about the well-being of their employees and are working with members one-to-one to make sure they receive the assistance they need. Plus, they have to keep the operation going and keep things running as smoothly as possible. All these things are challenging, and I think it can lead to a greater rate of burnout among small credit union leaders. That is a big concern of mine, and why I say first and foremost take care of yourself so you can then take care of your employees, members and the credit union.
“I would ask leaders of all credit unions to reach out to your peers and ask if they're doing OK,” continued Sakash. “Ask if they need anything. We have seen a lot of this within the CUNA Small Credit Union Community, which is our online network serving 1,200 small CUs across the nation. It’s time to collaborate even more and work together—reach out to each other and support each other, because we are not alone in this fight.”