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Katrina took toll on low-income CUs
MADISON, Wis. (12/11/07)--Hurricane Katrina took a toll on New Orleans-area credit unions, especially those serving low-income members, but social networking helped to increase credit union membership by 2.3% after the hurricane, according to a Filene Research Institute study. From May 2005 to May 2006, credit unions in the affected areas of New Orleans and Mississippi grew their memberships to 358,016 from 350,096. The increase is largely due to the strength of Mississippi credit unions, and the fact that some areas of Mississippi are on higher ground, making rebuilding easier. The number of credit unions impacted by the storm totaled 63--41 in New Orleans and 22 in Mississippi. Fifteen credit unions in New Orleans and one credit union in Mississippi ceased operations because they either moved out of the area or merged with another financial institution. Credit unions serving low-income members were the financial institutions hit hardest by Hurricane Katrina. From May 2005 to May 2006, return on assets for low-income credit unions in New Orleans decreased by 164.1%, compared with a decrease of 107.6% on assets for other New Orleans credit unions, the study said. “While some of the key lessons learned from this catastrophe involve contingency planning and emergency operations, one of the most practical lessons that credit unions can take away from this study has to do with understanding the potential strength of their cooperative structure in the face of wild-card external events like hurricanes and terrorist attacks,” said George Hofheimer, Filene chief research officer. “Credit unions have the opportunity to learn from past experiences and apply these lessons going forward.” The study, “Cooperative Comebacks: Resilience in the Face of the Hurricane Katrina Catastrophe,” is authored by Mark Klinedinst, an economics professor at the University of Southern Mississippi. Copies of the study are available free to Institute members; $125 to non-members. For more information, use the link.
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