The Great Recession proved to be more than an economic event for our credit union. The recession was an opportunity to validate our business model.

We believe credit unions were built for challenging economies. Because of our unique structure and philosophy, members expect more from their credit unions. When the economy is in the doldrums, members rely on credit unions more than ever to act and think differently. The recession was our opportunity to shine even brighter. With a closed field of membership, LGFCU was not immune to economic pressures. We felt the stress of higher delinquencies and slower loan demand. Despite this, there were a few lessons to be learned.

We learned to throw out the old marketing book. The message we constantly presented to the membership was one of hope and empathy. For many member households, times were very tough. Members needed to know that we had not abandoned them. We provided ideas on financial survival, finding a job and making ends meet. We identified community resources and made our members aware. We think our members appreciated our assistance and focus.

Sticking To 'Lending Guns'

We discovered the importance of sticking to our lending guns. Many local institutions froze credit lines, hardened their underwriting standards and restricted lending. Our Board decided from the outset of the recession that we would not retreat from our members' needs. No changes were made to the qualifications for a loan. We made it loud and clear to our members that we are not going away. We believe the message resonated.

Finally, we learned how to better deal with our regulator. During the height of the recession, we noticed the examiners were a bit skittish. Not without good reason, I suppose. We were raked over the coals a few times, but so it would seem with most. We learned the importance of advocating for our business model and the needs of our members. Eventually, we gained a better understanding of each other.

I think we learned enough during the recession. We are now ready for recess.

Maurice R. Smith
Local Government FCU, Raleigh, N.C.

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