Louisiana CUs will face challenges during recovery

BATON ROUGE, La. (11/1/05)--Louisiana credit unions affected by the recent hurricanes will face several challenges, according to the Louisiana Credit Union League.

To help them, the league has invited Dennis Dollar of Dollar and Associates to conduct sessions on tactical planning for the next three, six, nine and 12 months, says Anne Cochran, president/CEO of the league.

Dollar will conduct two sessions--one for small-asset credit unions and one for larger-asset sizes. Dollar, former chairman of the National Credit Union Administration (NCUA,) also will discuss what regulators might begin looking for and will help Katrina-affected credit unions prepare accordingly.

Among the continuing challenges for credit unions affected by the hurricane:

  • Field-of-membership issues for credit unions whose members have scattered across the country. "There is uncertainty about how many members will return to the area and what they'll be returning to--especially in terms of jobs and housing," Cochran said.

  • Lending issues. Credit unions stopped lending--in some cases momentarily, in others for a few weeks--and the lack of new loans will impact their year-end financial statements. "Many credit unions have waived fees for members during this period of crisis, and those actions, too, will impact year-end" results, she said.

  • Increase in delinquencies. Collection efforts against dispersed people may be ineffective, if not next to impossible. "The issue of collateral and whether credit unions will be able to repossess it in delinquencies is still uncertain. If you drive through New Orleans, there are still stacks of abandoned cars, and yachts and boats overturned on shore," Cochran said.

  • Issues with membership dues. The league calculates that for next fiscal year (April 1, 2006 through March 31, 2007), about $207,000 could be at risk. Credit unions in the affected-areas pay about $50,000 in dues toward the Credit Union National Association.

  • For many of the New Orleans-based credit unions, there are concerns about capital/asset ratios, delinquency, and overdraft issues. Many credit unions extended loan payments for 90 days, which means it will take time for delinquencies to surface.

  • Staffing is a major challenge. "Credit unions are competing for a limited number of workers with entities such as Burger King, which is offering a $6,000 year bonus and up to $8.50 per hour for workers." However, state eviction notices will expire soon and many apartments should become available for rent.

Meanwhile, the league is working on Phase II distribution of foundation grants. It will distribute between $500 and $1,500 to credit union employees who have lost and/or have severe damage to their homes. It's also working with the North Carolina Credit Union Foundation to disburse more to severely affected credit union staff.

It has provided laptop and desktop computers and other equipment to nine credit unions affected by Hurricanes Katrina and Rita.

Cochran said the league has facilitated the adoption of 17 credit unions in the New Orleans area by credit unions, leagues, and credit union-related businesses throughout the country. Louisiana credit unions also are offering to help by adopting hurricane-affected credit union employees and/or families for the holidays.

The league also said the African American Credit Union Coalition has developed a three-phase plan to provide financial and human resource partnerships to African American-owned and operated credit unions in the area affected by Katrina.

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Resource Links
Relief Effort and Support for CUs (R.E.S.C.U.)
NCUF Disaster Relief Fund
News Now Related Stories: Hurricanes 2005


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