For small credit unions it's a chilling reality: grow, merge or die trying.
So it should come as no surprise that CUNA's Governmental Affairs Conference kicked off with a standing-room-only session on small CUs.
"2014 was a banner year for small credit unions," said Mike Schenk, a CUNA economist who serves as the staff liaison to the trade association's Small Credit Union Committee. Schenk noted a number of bright spots for small credit unions, including the highest loan growth since the financial crisis.
But while overall credit union membership grew at a rate four times faster than the growth of the general population, at small credit unions membership actually declined. "Clearly, we're not out of the woods yet," he said.
Of critical concern to small credit unions: just what should the definition of "small" be.
Debie Keesee, CEO of the $10 million Spokane Media FCU, Spokane, Wash., as the current chairman of CUNA's Small CU Committee, kicked off the discussion citing NCUA's current proposal to raise its definition of a small CU from $50 million to $100 million.
Noting that the Small CU Committee's initial response to the agency's proposal was positive, Keesee asked the audience to weigh in on it.
"We're a $92 million credit union, and we're having to look at do we hire a full-time compliance department? Do we hire full-time IT. Do we need to look at a full-time marketing department," said Rick Blue, CEO of White Eagle CU, Augusta, Kan. "This would be a positive for us."
Another executive from a $44 million CU in Texas agreed raising the threshold to $100 million would be good for the community. But others expressed some concerns.
"I've worked for a $200 million credit union, an $80 million credit union and a $50 million credit union, and each one had different concerns," one Tennessee CU executive observed. "My concern is will we be losing some of these $5 and $10 million credit unions because we're focusing on $50 to $100 million credit unions?"
Keesee tried to put that concern to rest. "The Office of Small Credit Union Initiatives would still be geared for much smaller credit unions," she said, noting that the OSCUI has determined that it can have the biggest impact on CUs with fewer than $10 million in assets. The point of raising the threshold is to offer regulatory relief to a greater number of institutions, she explained.
Still, some were skeptical about this being the best route toward regulatory relief.
"There's a big difference between a $10 million and a $100 million credit union," said Cookie Yoder, CEO of City Co FCU, Pittsburgh. "I'm not completely against it, but I'm concerned. Reg relief is fine as long as it comes at no cost to the rest of us."
And it wasn't just credit union executives expressing concern. "There's a difference in a way a $100 million CU thinks compared to a $30 million credit union," said Stephen Nelson of the Utah League of Credit Unions. "I'm also worried from a political standpoint. With the risk-based capital rule, NCUA is calling credit unions over $100 million in assets complex. If we raise the definition of small to $100 million, then you're either small or complex, and there's nothing in between. It gives the banks the ability to divide us."
OSCUI Deputy Director Martha Ninichuk, herself a former CEO of a $7 million faith-based credit union, assured attendees that the agency understands these concerns.
"Our sweet spot is credit unions between $1 and $10 million in assets. For those smaller than $1 million, we find that they just can't free up their time to work with us. That doesn't mean we don't want to work with them," she added. "If a $100 million credit union asks for marketing assistance, we're going to look at that and say they can afford to hire someone, so let's save that for a smaller credit union. We can help bigger credit unions with things like field of membership expansion or what sort of products and services do they need to develop to serve low-income members Even if the definition is raised to $100 million, that doesn't mean OSCUI's definition goes up, too."