CUNA white paper examines the state of small credit unions in the US

The paper identifies six challenges faced by credit unions, for which it provides solutions

The Credit Union National Association (CUNA) has published a white paper that looks at the key opportunities and challenges facing small credit unions in the USA.

Authored by CUNA’s Small Credit Union Committee, the paper calls for cross-industry support and provides recommendations for the preservation of small credit unions nationwide.

There are more than 10 million members who have US$50bn in loans from small credit unions nationwide.

The paper identifies six challenges faced by credit unions: technology, member growth, generating income, health care costs, and increasing overall costs. CUNA’s paper suggests solutions for each of these challenges, adding that these are not directed to CUNA and the CUNA board, but rather to all within the credit union movement who wish to sustain small credit unions.

It also encourages small credit unions to collaborate in new ways to achieve the scale necessary to access the technology they need to remain relevant.

“We believe stakeholders across the industry must come together to preserve this important segment of credit unions,” reads the paper.

“Small credit unions are serving members and communities in extraordinary ways and play a vital role in helping sustain the credit union movement,” said Greg Michlig, CUNA chief engagement officer. “As this paper demonstrates, for every challenge facing small credit unions, there is a solution that we can provide through system-wide collaboration.” 

CUNA produced a Small Credit Union Committee report in 2001, which paved the way for recent paper.

“We all run credit unions all over this country that mean a whole heck of a lot to our members,” said Dale Hansard, president/CEO, Caprock FCU, and chair of the Small Credit Union Committee. “I’d contend we are more relevant now to the needs of our members than we’ve ever been before.

“The problem is that the operating environment keeps moving the goal posts for us on how we’re allowed to serve our members, and that continuous pinch and the shifting requirements means smaller shops just need an extra boost to keep doing this much-needed work. It’s on us as small credit unions to adapt, without question, but as we point out in the white paper, the whole movement has a stake in what happens to our smallest institutions. And we hope folks will stop and listen.”

The US is home to over 3,500 small credit unions, with under $100 million in assets. Around 53% of these credit unions are run by women. They have $18 million in assets and around 2,000 employees.

“Contrary to conventional wisdom, small credit unions are efficient, growing and diverse,” said Tom Sakash, CUNA manager of small credit union initiatives. “As the financial services landscape continues to expand, the credit union movement needs a deeper understanding of the role small institutions play so that we can sustain our cooperative, not-for-profit structure.”

However, the paper points out that supporting small credit unions does not mean supporting poorly run financial institutions, adding that “there is no significant difference between the average operating expense ratio of an average $10m credit union and an average $750m credit union.”

This report commemorates the 20-year anniversary of the formation of the CUNA Small Credit Union Committee, which serves as the voice and advisory body for small credit unions to the CUNA Board and Advocacy Committee.

CUNA’s Small Credit Union Committee intends to address the findings of this research by developing resources to address major challenges facing small credit unions. The full paper is available on CUNA’s website.

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