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March 2016
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FOCUS is a monthly e-newsletter of the Office of Small Credit Union Initiatives. It helps small credit unions achieve success by providing news and highlighting opportunities.
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 Featured this Month
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The
Secondary Capital Best Practices Guide
is OSCUI's newest publication for low-income designated credit unions. It identifies the benefits, best practices, regulatory requirements and common pitfalls of this funding method.
Secondary capital can be an appropriate tool to support growth and improved services for low-income credit unions. It is not a fix for credit unions experiencing financial or operational problems. While secondary capital can increase the cushion for growth, it cannot supplant the due diligence and planning necessary to grow in a safe and sound matter.
Tongass Federal Credit Union in Ketchikan, Alaska is a good example of a credit union that successfully used secondary capital. This community development credit union with assets of $69 million took in $1.6 million in secondary capital in 2010. The credit union used the secondary capital to leverage share growth, expand a branch network and expand commercial lending.
By Dec. 31, 2015, the credit union was showing excellent financial results: very strong growth trends while maintaining a sound return on average assets and a well-capitalized net worth ratio. That is, ROAA increased steadily from 0.47 percent in 2010 to 0.76 percent in 2015, and the net worth ratio remained stable from 9.92 percent to 9.86 percent over the same period.
Even without the secondary capital, the credit union would still be well-capitalized as of Dec. 31, 2015. In addition, the credit union maintains adequate liquidity to repay the secondary capital all while posting growth numbers that compare favorably to its peer group. The key was proper planning.
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| Select the image to access the guide. |
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In Focus With Bill
Five Years Before the Matz*
*With apologies to Richard Henry Dana, Jr.
[1]
During my 2011 interview for the job I now hold as Director of NCUA's Office of Small Credit Union Initiatives, the Board expressed concern about the state of small credit unions. Two hundred were disappearing each year. Was it possible to understand the causes well and use the existing resources of OSCUI to intervene? All Board members - Matz, Hyland and Fryzel, and later Metsger and McWatters - joined in enthusiastic support for small credit unions.
After five years at NCUA, as I am preparing to move on to my next challenge, I'd like to share the new OSCUI small credit union message.
"Small" is not a marginal group within credit unions. Eighty-five percent of federally insured credit unions are OSCUI clients, including the "new" small (under $100 million), Minority Depository Institutions, low-income designated and newly charted credit unions.
Small credit unions have greater net worth ratios, are a source of innovation, a source of new players through chartering, a source of new large credit unions through growth and a source of merger partners. What is sometimes termed the "rate of decline" of small credit unions might more fittingly be called the natural progression of small credit unions.
It has been a pleasure to continue my work with credit unions through NCUA and I look forward to assisting with the transition to a new OSCUI Director.
William Myers
[1] Author,
Two Years Before the Mast
, published in 1840, a memoir written after a two-year sea voyage from Boston to California on a merchant ship.
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Take Note for April
Plan Now for Your Members
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Select the image for more information. |
Money Smart Week is April 23 - 30
Created by the Federal Reserve Bank of Chicago, Money Smart Week is a public awareness campaign to help consumers better manage their personal finances. Financial institutions, schools, not-for-profits, government agencies and businesses throughout the country collaborate to accomplish this. The Money Smart Week website has ideas and materials to help your credit union participate, select the image to learn more.
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April is National Financial Literacy Month
During this month, financial institutions, government agencies, and other community organizations encourage individuals to increase their knowledge of finances to make informed financial decisions. Free resources to help your credit union design activities and materials for your members are available at
www.MyMoney.gov.
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"Mergers as a Growth Strategy"
More than 700 individuals have viewed this webinar on mergers. If you missed the live session, the recorded version will soon be available here.
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"Hot Topics for Compliance"
On April 27, Economic Development Specialist Vanessa Lowe will host experts in the field of compliance. Credit unions will get an in-depth review of the latest Bank Secrecy Act Requirements, common compliance violations and more.
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"NCUA - 2016 Grants"
Do you need a grant to offer new products and services to your members? Join this webinar to learn what grant initiatives NCUA will offer in 2016.
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Webinars begin at 2 p.m. Eastern. There is no charge to participate. A live question-and-answer session with the experts follows the presentation. A certificate of completion is available for those who successfully complete an online quiz.
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Funding Opportunities
CDFI Fund Opens FY 2016 Funding Round for CDFI Program and NACA Program: The U.S. Department of the Treasury's Community Development Financial Institutions Fund is accepting applications for its Community Development Financial Institutions Program and Native American CDFI Assistance Program. The deadline to apply is April 18. Refer to the Notice of Funding Announcement for details and pre-application requirements.
Partner Announcements
"Fundraising Strategies for your CDFI": April 5 is the last date of the "Expanding CDFI Coverage in Underserved Areas" webinar series.
The series, sponsored by the Community Development Financial Institutions Fund. There is no charge for the webinar, but registration is required. The webinar begins at 2 p.m. Eastern.
Training Opportunities
Integrating Financial Capability into Youth Employment Programs: "Boosting the Power of Youth Paychecks" is the theme of this half-day event on April 5 from 1 to 5 p.m. at the Federal Reserve Bank of San Francisco. MyPath and the Federal Reserve Bank of San Francisco will convene local and national stakeholders from youth workforce programs, financial institutions, philanthropy, government agencies and universities will be present to share what they are doing to scale effective practice. There is no cost to attend, but advanced registration is required.
Master Event - The New Face of Today's Credit Union Member: VirtualCorps presents a three-hour virtual conference on April 12 at 1 p.m. Eastern. The web event will focus on available resources and guidance on the strategic direction for credit unions that hold or are contemplating NCUA's low-income designation, the Community Development Financial Institution's CDFI certification, and the National Federation of Community Development Credit Union's CDCU designation.
Join CFSI for its annual EMERGE Forum: The 11th annual EMERGE: Consumer Financial Health Forum will be held June 15-17, 2016, in New Orleans. This year's forum will provide insight, best practices and business strategies you need to serve new customer segments.
Other
Filene Seeks Credit Unions to Test Programs to Serve Underbanked Minorities: Filene Research Institute is inviting credit unions to participate in its newest Incubator initiative, Reaching Minority Households, to test solutions that improve the financial lives of minority families. Up to 50 credit unions will be selected to test one of five in-market products designed to close access gaps for minority households. Filene will work closely with each credit union to provide implementation expertise and resources throughout the pilot, which is supported by grant funding from Ford Foundation and Visa. Filene will host a series of webinars explaining the details of each product and the benefits of participating in the Incubator. For more information contact Andrew Downin, Filene Managing Director of Innovation, at [email protected].
Mobile Payments Risks: The Pew Charitable Trusts offers new research on this topic. Included among its new resources are a video, infographic, results from its consumer focus group and several whitepapers.
Child Poverty Higher and More Persistent in Rural America: T
his brief from the Carsey School of Public Policy at the University of New Hampshire looks at both the incidence of high child poverty and the places where such high child poverty has persisted for decades. The analysis documents that high child poverty is growing nationwide and that rural America includes a disproportionate share of children living in counties with persistently high child poverty.
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