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New Orleans Firemen's FCU takes on challenges

NEW ORLEANS (8/30/06)--After the water subsided last October, New Orleans Firemen's FCU staff returned to its flooded East branch in the Ninth Ward and opened its mold-filled vault for the first time. They pulled out a disgusting wad of what used to be cash.

So one thing CEO Judy DeLucca considered in tweaking her disaster planning for the future was how to keep a vault's contents dry. Next time, "we're putting the cash in food saver ziplock bags," DeLucca told News Now. She also heard that Vaseline and duct tape around the door also help with water intrusion.

Little things like this--as well as the major challenges--have kept DeLucca occupied in the year since Katrina's aftermath destroyed two of the credit union's branches. The credit union will demolish the buildings and sell the property.

In October, Kathy Dionne, East branch manager, left, and Judy DeLucca, CEO, of New Orleans Firemen's FCU, examined contents of a mold-filled branch destroyed by Hurricane Katrina. The credit union plans to demolish the building and sell the property. Meanwhile, Dionne has become manager of another branch of the credit union. (Photo provided by CUNA)
The biggest challenge was to get the facilities back up and running, she said. Even today, credit union employees must work around contractors, insurers, adjustors and more. "You go in and tell a department, 'Today you're in such-and-such a room.'"

The credit union has seen a shift in membership toward the north side of Lake Ponchatrain. It remodeled a slightly damaged branch and opened it in March, with Kathy Dionne, formerly manager of the destroyed East branch, at the helm.

Overall membership--16,000--has remained constant. Two-thirds of the East branch's members are now out of state. Many do business electronically, accessing shared branches, home banking, and bill presentment. Forty percent of the credit union's statements are delivered online.

"Will that be forever? We don't know, so we're considering marketing to other groups in our field of membership," DeLucca said.

The second challenge is the emotional toll the year has taken. Some long-time employees suffer from post traumatic stress, she said. More stress-related illnesses occur. Employees make more use of the credit union's employee assistance program. The Mississippi and Louisiana leagues have brought in counseling groups.

The credit union lost 15 of its 57 employees, mostly due to spousal and family relocations, but it has made new hires for all but one or two positions. Many staffers who lost homes, including some who lived inside the credit union for months, are still with the credit union and have found homes. One employee has moved in with a co-worker's family.

New Orleans Firemen's FCU has had to adjust salaries to compete in an intense job market. It paid more to attract the new hires. The board also reassessed all salaries and made its first adjustment in July so the entire staff is paid competitively.

"It was a lot of craziness, but the members didn't see it," she said. "Our survey polls said members are very happy. They didn't feel the chaos in the credit union."

A third challenge is with regulators, said DeLucca. "As of Dec. 31, 2005, the credit union wrote off all its risky or overdrawn loans and ran at a loss for the year as a result. We were capitalized at over 7% and grew $53 million in deposits, going from $70 million in assets to $120 million. The National Credit Union Administration (NCUA) places capital as percentage of assets and this watered down the ratio. Even with all that, we're well capitalized. We have a conservator board that made sure the money is there."

NCUA said members needed their statements for their claims, while the credit union said it could reconstruct the accounts based on cash flow. Regulators say their job is to protect the insurance fund, but she disagrees. The situation, she said, "is about the members."

DeLucca expects more challenges ahead. Although financially strong, with a low delinquency rate now at 0.27%, the credit union will see more pressure on liquidity as loan demands rise and insurance payouts are used. It pays a competitive dividend rates on certificates.

There's also the issue of the long-term future of a city without its tax base. The credit union's main select employee group is firefighters. "The city doesn't have a tax base for raises, and we're not sure in the long term whether there will even be a fire department," DeLucca said. Many smaller SEGs--mostly mom-and-pop and self-employed groups--have moved or shut down. "They're gone, but most of the larger SEGs are still there."

DeLucca says it will be a challenge to replace its low-income designated East branch's membership base. Another challenge ahead lies in staffing, keeping people motivated, and assisting them in adapting to "the new normal."

Although she had a good disaster plan in place, it is tweaked regularly. "We've contracted with Agility Recovery and we're using a lot more replication outside the system. VoiceGard and CU-Locator will provide phone system replication so members can reach the credit union." And the credit union has added a pandemic committee.

"We run scenarios two times a quarter, not just for a hurricane but for everything--robberies, fires and others," she said. "We're doing every thing we can, nothing is laughed at if it's a potential solution."

The credit union is pushing e-services to its members. "Even if the city is down, we'll have vendors from elsewhere helping us keep our computers up, our home banking up," she said.

"We're not fully recovered yet, but our credit union offers all services it did before and more."

DeLucca tries to express gratitude to the people who helped. "I don't feel I can do good enough job in expressing this area's gratefulness for how much the credit union system came together and reflected its people-helping-people philosophy." Their support, she said, made a difference.

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