I manage an $8-million credit union in the Dorchester, Mass.-area. We have had loan loss issues, which have resulted in a capital ratio of 4.68% and a required Net Worth Restoration Plan.
We finally received approval on our 3rd try-NCUA didn't approve the first two due to incompleteness/inaccuracies (having never completed one before). In the approved plan, the following steps were taken: cut staff by two part-time tellers (leaving only two full-time employees), continued to decrease dividend rates, closed on Mondays, review all contracts to cancel where appropriate, received a rental waiver for 12 months and agreed to strategically shrink deposits (why, I don't know).
These changes will have a positive effect on earnings, and according to the NWRP, could make 6.00% by the end of 2013. But at what cost to our membership?
I have many problems with NCUA's micro-management style. Though they claim they are here to help smaller CUs, in my opinion that is far from the truth. They are so focused on "compliance" that a CU of our size cannot survive. Have you heard your examiner say "stay short in investments, rates will eventually start to increase?" I have, and I ask: at what opportunity loss to the industry's potential revenue? Compliance is a hot topic. How are institutions our size to properly address vendor due diligence, disaster planning, IRR, modification policies, TDRs, to name a few. These are hurdles that have caused small CUs to be unable to properly serve our membership with our attentions on Big Brother.
It is my opinion that unlike many CUs, the NCUA has lost its way and has become judge, jury and executioner of our proud industry. Throw in NCUA's mismanagement of the corporates causing additional pain to all CUs for years to come; the push for higher MBL limits (and God knows what type of issue may arise out of this), and the ever-increasing budgets year after year while CUs are doing everything in their power to survive. And last but not least-and perhaps my favorite-the fact that the NCUA has more than 500 employees making over $100,000. NCUA has become a monster thriving on its young!
Francis R. Harmon, CEO
Delta-Wye FCU, Dorchester, Mass.